Transcript
PAUL BARKER: It's basically downstream, so it's using the waters coming out from the existing Ramu dam and they drop down into that basin and into the valley below. So yes it is connected, and it would utilise the same grid, although the grid would probably have to be... They upgraded the grid a decade and a half ago but never completed the job, so there would need to be work done on that. I mean I suppose the questions that comes is had they had that planned for a long time? Whether that was a genuine, fully competitive tender, and so is the whole project competitive, and did the company that won really put in a competitive bid? Yes it did win but yes is that really going to be a price that would be affordable and sustainable? Because the issue is that power in PNG is pretty costly, and it's pretty unreliable, and it is pretty unavailable. So the aim is to make sure power is available, affordable and reliable, and that the power provider - PNG Power - can actually make money and not lose money in the whole process. PNG Power certainly was pretty concerned about this project, I understand, when they were looking at it earlier, because they really do need to be refocusing on power sources where the power is available at an affordable price, that the capital cost burden is not going to drag them down into decades. PNG Power is under-capitalised, it's near insolvent, probably is insolvent. Despite the fact that it's been declaring so-called profits and handing dividends to the government, you'd have to say it would be pretty well at or close to insolvency, and it really needs to be able to address the bottom line, which is to ensure that it has a viable business and has the funds to be able to do its basic tasks of maintenance and upgrade and provision of reliable service to its clients.
JOHNNY BLADES: Do you see any significance in the Ramu 2 hydropower project being billed as a Public Private Partnership, well that's at least according to Shenzhen's president?
PB: Yeah well we've had owner-operate type plants in the past and yeah it is a mechanism to reduce the burden on the local provider. There's some merit in that but it depends really on the bottom line, and how it's negotiated and who is really sharing and carrying the costs. Some of the deals that we've had in the past including the arrangement here in Moresby for providing power out of the Kanudi Power Plant really added to the costs considerably of power provision. It did provide power... but it was certainly not the best option. And so it really depends on how those things are negotiated and whether PNG Power is having to carry a disproportionate burden of the actual costs.
JB: There's another big infrastructure project which Chinese involvement in PNG - the cable. The domestic component to a big new project, I understand it may be Huawei involved. Is this going ahead, Paul?
PNB: Yeah, well again I understand projects are agreed. I understand that the government, or its business arm, has been drawing funds down for that project. It's a pretty extensive domestic network stretching around the coast to the different centres, linking them in to PNG broadband network. Again the real question is. at what cost, is this affordable? Obviously you've had domestic businesses that have been installing different options, including use of satellite, lower orbital satellite technology, that have been providing improved internet access in different places around the country. This will clearly undermine and compete with them. But then the state service provider and the government which will probably be providing a sovereign guarantee on this, on the debt. It's whether it is what PNG needs, whether it's an appropriate, affordable model for a developing country that's really struggling financially and has been experiencing pretty tough economic times for the last many years. Whether PNG is obtaining an appropriate model or whether it's a model that is a step too far, is too expensive and is just further posing debt on PNG and its citizens.
