NEC: New Special-Purpose Company for Yonki Expansion

The Minister for Public Enterprises, Sir Mekere Morauta, said today National Executive Council had authorised the
creation of a special-purpose company within PNG Power, Yonki Hydro Limited, to rehabilitate the Yonki power assets
and expand the scheme.

“This brings the full development of Yonki, in three stages, a step closer to fruition,” Sir Mekere said.

“The O’Neill-Namah Government’s aim is to stabilise generation as soon as possible to prevent the current widespread
power cuts affecting the Momase-Highlands region, especially in Lae and Madang.

“Our long-term aim is to greatly increase power supply to the region to allow the development of new resource
projects, promote economic development and increase the standard of living of the people in the area.

“We now have a coordinated strategy for repairing and expanding Yonki and ending the power cuts that have crippled
the business sector over the past 10 years of the Somare Government and caused such problems in the daily lives of
ordinary Papua New Guineans.”

An important element of the plan is to make provision for landowner equity in the Yonki scheme. The Somare
Government failed to deal with this very important issue, Sir Mekere said.

The O’Neill-Namah Government will tackle it in two ways. “The first is to develop a framework for landowner
participation as private equity partners,” he said.

“The second is to encourage the employment of landowner companies in the development and construction phase by
acting as preferred providers of services.

“Other private sector participation in the project is to be encouraged through existing PPP arrangements.

“PNG Energy Development Limited, a 50-50 joint venture between PNG Sustainable Development Limited and Origin
Energy of Australia, has joined the Project Steering Committee recently set up by IPBC. This committee will continue
with its technical, social, environmental and social investigations.”

The Yonki project has three phases. They are:

  • The refurbishment and upgrade of Ramu 1 power station, at a cost of K58 million. Further work will be needed to return the station to full operational capacity, which is expected late this year.
  •  The completion and commissioning of the Toe of Dam generation system. The Toe of Dam project is designed to generate 18 megawatts of power from water flowing down the dam spillway that would otherwise be wasted. Construction began in 2009 but was suspended owing to problems with the contractors. PNG
  • Power has now resumed construction work with support from two Japanese companies – Nippon Koei and Daiho – and expects the plant to be commissioned by the middle of next year.
  •  The construction of a new powerhouse, Ramu 2, which would generate an additional 120 – 180 megawattsbringing the total power generated at Yonki to from 45 megawatts to 180-240 MW.

Sir Mekere said the transfer of assets into Yonki Hydro would be subject to due diligence, and a final feasibility study
would be needed for Ramu 2.

ENDS

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