US funding for electrification in Papua New Guinea starts to ramp up

Welcome,

The project to connect 70 per cent of Papua New Guinea’s population to electricity by 2030 is making progress, according to senior officials from the United States-funded component, the USAID-PNG Electrification Partnership. They told the recent 2021 Business Advantage PNG Investment Conference of their aim to leverage millions of investment dollars for PNG’s electricity sector.

The ambitious target of connecting 70 per cent of PNG’s population to electricity by 2030 using funds provided by international donors, was announced at the 2018 APEC meeting in Port Moresby. It is finally starting to gain some traction.

Under the PNG Electrification Partnership (PEP), each of its four donor nations – the United States, Australia, New Zealand and Japan – is funding specific power generation, transmission and distribution projects.

‘We believe it will have a significant impact in mobilising private investment to help meet the gap in off-grid infrastructure’

The US-funded component, the USAID-PNG Electrification Partnership (USAID-PEP) is being funded through the United States Agency for International Development and differs somewhat from that of the other donor nations.

Rather than fund all its projects entirely, USAID is aiming to use seed funding to leverage private sector investment into PNG’s electricity sector. An initial US$57 million (K200 million) has been allocated for this purpose, through which the project is looking to generate investment worth some US$200 million (K701 million).

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Five-year project

According to Julinette Bayking, Senior PPP/Project Finance Advisor for the USAID PEP, the project has four objectives:

  • to strengthen PNG Power Limited’s (PPL) financial viability and operational efficiency.
  • to develop viable off-grid electrification models.
  • to enhance PNG’s energy regulator
, the newly-formed National Energy Authority, and
  • to catalyse private investment in energy projects.

‘PPL’s [PNG Power Ltd’s] financial viability and operational efficiency will be improved. The aim is for PNG Power to have 130,000 new household connections, a reduction of 15 per cent in the share of diesel-based generation, losses reduced by eight per cent and revenue increased by 10 per cent,’ she said.

Another objective will be to establish 210,000 new off-grid household connections, have 10,000 connections from mini-grids, and have 20 mini-grids installed. Communities will also be trained in the operation and maintenance of solar power plants.

Five provinces in PNG have been initially identified for the program: East Sepik, Milne Bay, Bougainville, Oro (Northern) and Hela.

Bayking said the USAID-PEP has brought together a consortium of utilities, off-grid providers, regulators, private investors and community-engagement experts. These include prime contractor RTI International, Delphos International, the Oil Search Foundation, Energy and Security Group, the Kaizen Company, Fraym, and the Hawaii Natural Energy Institute.

Energy funds

USAID’s Julinette Bayking.

Another focus of the project will be to attract private sector investment. Bayking said a ‘network of private sector investors in the PNG energy sector’ will be created, with a digital platform helping to share information on investment opportunities for the private sector.

‘We have started engaging local and international financial institutions to support the energy sector,’ said Bayking.

Brian Tarmey, Lead Finance Specialist and Transaction Advisor for the USAID-PEP, said a US$3.2 million (K11.2 million) Catalytic Energy Fund (CEF) will be launched soon to target specific interventions that help advance the off-grid energy sector.

‘This is envisioned as direct funding that does not need to be reimbursed. We believe it will have a significant impact in mobilising private investment to help meet the gap in off-grid infrastructure,’ he said.

‘Our team can help connect with a full range of funding sources, whether that is the north-lateral or bilateral development banks, international commercial banks, private equity, strategic investors or others.’

Tarmey said two sources from which ‘billions of dollars have been raised in the past’ are the United States Development Finance Corporation (DFC) and the Export-Import Bank of the United States (EXIM).

‘DFC can provide long-term debt, equity, and technical assistance to private sector- backed energy projects in PNG. EXIM can provide long-term debt financing – project finance and trade finance – for public and private sector entities.’

Another avenue for funding is the US Trade Development Agency (USTDA), which works globally to link US businesses to export opportunities.

Comments

  1. Rana Nema says

    Welcoming news for PNGians and hope for the best in 7-8 years time.
    Electricity is a need for our country as we are under developed and poverty ridden.
    Thanks USA..

  2. Peter Mathew says

    Good initiative, some parts of Markham plain have poles planted but work have stopped due to unknown reasons, waterise junction to Umi market have left domaint.

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