RAMU 2 PROGRESS UPDATE

Thursday May 5, 2016 – Kumul Consolidated Holdings (KCH) today released details of progress on the Ramu 2 Hydropower Project, a proposed 180MW hydroelectric power station on the Ramu River.

The Project was launched on Wednesday December 9, 2015 in Kainantu in the Eastern Highlands Province.

Since then KCH has focused on Phase 1 of a three-phase transaction management process, seeking Expressions of Interest (EOI) from suitably qualified development partners to develop the project and operate under a Public-Private Partnership (PPP) model.

The Project was listed for Expressions of Interest as a public tender on February 29, 2016. A total of 65 proponents responded and were provided access to the virtual dataroom. The response period for the EOI process closed on March 2, 2016.

During the EOI process advertisements were placed by KCH in major newspapers in Papua New Guinea and the region.

At the close of the EOI period a total of 7 submissions were received and assessed by a panel consisting of representatives from KCH, Advisian (project transaction advisors) and project legal advisors Norton Rose Fulbright.

TOP THREE SUBMISSIONS

The assessment process ultimately saw the 7 submissions reduced to the top three. The process rated each proponent based on a number of factors related to their capability and understanding of the project.

The top three proponents were (in order of ranking):

  • Posco Daewoo, Korea Western Power, Daelim Energy, Hyundai Engineering Consortium
  • Sinohydro Corporation Limited
  • Shenzhen Energy Group Co. Ltd

 

STATEMENT BY MINISTER FOR PUBLIC ENTERPRISES & STATE INVESTMENTS

Speaking at the KCH media conference today, Minister for Public Enterprises & State Investments Hon. William Duma said:

“Kumul Consolidated Holdings is following a process of full transparency and due diligence. For a project of this size such processes, while time consuming and thorough, are mandatory. Inevitably we will be in a position to give the National Executive Council a detailed, thorough and informed recommendation regarding the Ramu 2 Project.”

 

NEXT STEPS

The next steps in the three-phase process is for KCH to issue a Request for Proposal (RFP) from the top-three proponents and then as the final phase close the financial arrangements for the Project.

The milestones are as follows:

  • Request for Proposal (RFP) issued: May 6, 2016
  • Closing date of RFP: October 28, 2016
  • Announce preferred development proponent: December 16, 2016
  • Close of financial arrangements: March 2017

 

ABOUT RAMU 2

Ramu 2 is a major infrastructure project being managed by Kumul Consolidated Holdings (KCH). The project site is located downstream from the existing Yonki Dam and is capable of generating 180 megawatts (MW) of renewable energy.

It is expected to lift Yonki’s electricity capacity from the current 93MW (once all major refurbishment and upgrade works are completed) to 273MW, an expansion of 194% in scheme’s generation capacity.

More significantly, Ramu 2 is expected to increase total electricity generation capacity in Papua New Guinea by 36% by way of a low-cost renewable source.

The development of the Ramu 2 project is in line with the PNG Development Strategic Plan 2010-2030 which outlines the following priorities:

  • increase household access to electricity from current 12% to 70% by 2030;
  • provide a national grid to increase reliability of electricity supply across the country;
  • provide a secure, renewable energy base for PNG development pathway;
  • reduce energy costs through greater hydropower development; and
  • deliver on the Government’s commitment to support mining and industrial developments within the Highlands and Momase regions.

 

The scope of the Ramu 2 project includes a new 471,000m3 storage facility; three 61MW turbines; 30kms of new project access roads; 7km underground headrace tunnel;  powerstation; 12km of new 132kv transmission lines; and various other temporary works.

KCH has engaged the services of Golder & Tanorama to undertake an extensive Environmental & Social Impact Assessment (ESIA) and Environmental & Social Management Plan (ESMP) to comply with CEPA permitting and international standards such as the Equator Principles and Performance Standards. This firm will also have carriage over all land access requirements and landowner management on behalf of KCH.

Ramu 2 will be based on a public-private partnership (PPP) model which, for the first time, will see traditional landowners also assume equity in the project.

KCH has already achieved a number of milestones in the project, including a detailed feasibility study (February 2015), and more recently selected expert transaction & legal advisors to support the project. KCH is also in the process of finalising the transaction structure to best attract a first class private sector development partner.

KCH has already laid the foundation for on-going developments in the Project with the appointment of Norton Rose Fulbright as a legal advisor and Golder & Associates with local partner Tanorama as environmental and land management advisors.

Advisian has also been appointed as Transaction Advisor on the Project and acted as the the EOI Process Manager.

All advisory appointments were made after extensive advertising and procurement processes.