US THREATENS TO WITHDRAW FROM PNG ELECTRIFICATION PARTNERSHIP

“The US Government and American corporations are believers in fair play and the US Government reaction is not surprising,”

The O’Neill Government has placed the PNG Electrification Partnership in jeopardy by awarding power projects to companies from China without calling for open and competitive tendering, said Opposition Leader Patrick Pruaitch.

Problems have arisen because the National Executive Council has approved the Ramu-2 hydro electric project, which is uncompetitive against gas-fired power and other energy sources. This has led the Americans to reconsider their involvement in the five-nation partnership forged at the recent APEC Summit.

“The US Government and American corporations are believers in fair play and the US Government reaction is not surprising,” Mr Pruaitch said.

The Opposition Leader said it was possibly not too late for the O’Neill Government to rectify this embarrassing situation.

He said: “To save face and to comply with PNG laws the government should allow the Board of PNG Power Board to call new tenders for Ramu-2, along with rival bids for similar quantities of electricity from gas and other energy sources,” Mr Pruaitch said.

He added: “The same process should be undertaken for Yonki to Hagen electrification, allowing companies from the US, Japan, Australia and New Zealand to participate in competitive bidding.

“Besides resolving the current impasse facing the PNG Electrification Partnership, these actions would be in the public interest – the increase in future power rates would only be a fraction of what the public would otherwise face under the Ramu-2 deal.

“Similarly, the Yonki to Hagen power distribution could cost much less than K1 billion to construct, reducing the nation’s debt burden.”

Mr Pruaitch said if the O’Neill Government failed to adopt these sensible measures it would just add to the list of scandalous, corrupt and wasteful deals it has undertaken.

These include the K3 billion UBS loan fiasco, expenditure of more than K2 billion on the APEC Summit, the Manumanu land deal and the resulting deterioration in funding of education and health services around the country.

The 180-Megawatt Ramu-2 hydroelectric project was awarded to a Chinese company, Shenzen Energy,at a projected cost of US$800 million even though a gas-fired power plant,currently being commissioned in Port Moresby to generate 58 MW, has only cost US$100 million to build.

Mr Pruaitch said the US Government may not be aware that the associated K1 billion Yonki to Hagen electrification project has also been awarded to another Chinese company,TBEA Ltd, without a tendering process. This project will be funded through aloan from China’s ExIm Bank.

He said: “NEC declined to approve this project when it was presented to Cabinet because of the realisation it would be breach the Public Finance Management Act. Instead it has gone through the back door and been approved by Kumul Consolidated without participation of PNG Power.

“The signing of the PNG Electrification Partnership deal between PNG and the US, Japan, Australia and New Zealand was a highlight of the recent APEC Summit in Port Moresby,especially since PNG has one of the lowest electricity distribution rates in the world.

“Only about 12% of PNG households have access to electricity as compared with war-torn Afghanistan, which has gone from supplying power to 0.1% of its population in 1990 to a situation in 2016 when 84% of its population has access.”

Mr Pruaitch said if the US pulled out of the partnership, it was likely New Zealand would follow suit because its current Prime Minister, Ms Jacinda Ardern, would refuse to be drawn into any deal that had the stench of corruption.

“It is my belief the Japanese may take a more diplomatic approach while the Australian Government is happy to encourage third parties from Australia to enter ‘secretive sweetheart’ deals as shown by recent publicity surrounding the Paladin Group’s security contracts for the Manus detention centre and secrecy surrounding construction of a A$20 million detention centre at Bomana,” he said.

Mr Pruaitch said that if the US ended up pulling out of the multi-nation partnership this would represent a major embarrassment for all Papua New Guineans because this is the first agreement that has been endorsed by a US Vice President.

Picture courtesy PPL

March 7, 2019