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Port Moresby
February 18, 2020
Business News

Gas Fired Power Station to Address POM Power Challenges

The 58MW NiuPower gas fired power station in Port Moresby was switched on Friday in a major breakthrough for Papua New Guinea’s power sector.

The 58MW Port Moresby Power Station is PNG’s first dedicated grid-connected gas-fired power plant and is located in Port Moresby near the PNG LNG project plant site.

The NiuPower plant is comprised of six high efficiency reciprocating gas engines ensuring high thermal efficiency, less fuel, lower costs, and reduced emissions.

The Port Moresby Power Station will provide more reliable power to Port Moresby and should immediately assist in alleviating the recent power supply issues caused by our supplier’s decision to cut off diesel supplies to PNG Power due to late payment of its diesel bills.

NiuPower heralds a new age of gas fired power in Papua New Guinea that will see PNG Power increasingly harnessing domestic resources through domestic market obligations (DMO) to generate power rather than relying on expensive imported diesel.

The project will also have some of the lowest cost dedicated grid connected thermal generation in the country. It is priced at just under 12c/kWh versus an average cost of generation across the PNG Power network that exceeds 20c/kWh.

It will have an immediate impact on PNG Power’s bottom line that should see its financial performance begin to improve.

Using gas-fired power plant also brings a material reduction in the environmental impact from power generation in PNG. The new power station was constructed with an average labour force of 300 over 12 months with more than 90% of people employed being PNG citizens.

Papua New Guinean subcontractors received PGK130 million and estimated tax of PGK28 million was paid to the PNG Government by the construction workforce.

The commencement of power generation by the NiuPower plant is an important milestone in PNG Power’s reform journey.

It is a key part of PNG Power’s fuel switch, whereby it is seeking to replace expensive diesel generation with renewables and gas fired power to reduce generation costs. Moving forward, PNG Power will rely increasingly on independent power producers to generate power and assist it in improving the efficiency of its operations.

This includes exploring options to divest existing power assets to domestic institutional investors to assist in refinancing debts across PNG’s state owned enterprise portfolio.

Minister for State Enterprises Sasindran Muthuvel was glad to see the Marape Government’s reform strategy yielding results.

“Alongside Dirio, Niupower is a key aspect of our plan to increase reliability and reduce the cost of generation in the Port Moresby Grid. This will allow us over time to incrementally reduce tariffs and support PNG Power to decrease its current diesel fuel bills. This is a key public policy for the Marape Government in order to stimulate broad based economic growth and improved affordability for all Papua New Guineans through the “Connect PNG” strategy.”

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