PNG jolts donors over power grid roll-out as China sale dismissed

The chairman of Papua New Guinea’s national power provider has called for a faster U.S. and foreign donor roll-out of promised electricity infrastructure while saying there is absolutely no plan to sell critical grid assets to China. 

At APEC’s Port Moresby meeting in 2018, the U.S, Australia, New Zealand and Japan pledged to fund new electricity infrastructure in the Pacific country with the goal of connecting 70% of PNG’s population by 2030. 

The deal was announced against a backdrop of growing concern in Washington and Canberra about China’s inroads with Pacific island nations, especially as an economic partner.

But six years later, there is little to show in terms of electricity connectivity, according to analysts and industry insiders, with one donor admitting the “2030 target remains ambitious.”

“It could be faster, and there are a lot more discussions that need to be made between the parties,” Moses Maladina, the chairman of PNG Power, told RFA affiliate BenarNews on the sidelines of an investment conference in the Australian city of Brisbane.

“There is room for improvement. We just have to work closely and make sure we achieve the target.”

Maladina, who is also the chairman of Kumul Consolidated Holdings, the government’s investment arm in state-owned infrastructure, ports, logistics and financial services, batted away reports that the power grid was for sale. 

Australian broadcaster Channel 7 claimed last week that management from PNG Power had traveled to China seeking investment in its power grid, triggering a furious denial from Port Moresby which accused the station of inflaming geopolitical tensions.

Maladina said that legally and officially there had been no talks about any potential sale to Chinese investors. 

“From a shareholders point of view, there has been no discussion on it and absolutely no interest on our part to sell our transmission lines or our distribution lines in any way,” he said.

Papua New Guinea is the most populous Pacific island country with an estimated 11.7 million people, but its economy is small, underdeveloped and plagued by infrastructure problems.

Only about 13% of the population is estimated to have access to electricity, and even then it is unreliable and confined primarily in urban areas, according to the Asian Development Bank.

In 2018, the Trump White House touted the Papua New Guinea Electrification Partnership (PEP) as a “principles-based, sustainable infrastructure development that is transparent” – in an apparent rebuke of what it frequently said was China’s secrecy-shrouded development financing to poor nations.

Australia committed A$25 million in the first year of the multi-year PEP project. The Department of Foreign Affairs and Trade did not provide figures on overall investment by the time of publication. 

New Zealand has invested NZ$41 million (US$24.7 million) to date towards electrification in PNG under the partnership, including rural grid extension and renewable generation projects.

“The constraints to broad based grid connection in Papua New Guinea are significant, including geography, land ownership structures and the regulatory environment, so a 2030 target remains ambitious,” said a spokesperson for the Ministry of Foreign Affairs and Trade. 

The U.S. Agency for International Development (USAID) launched a five-year US$57 million electrification program under the PEP in November 2020, but did not reply to a request for comment about its continued involvement.

Mihai Sora, director of the Pacific islands program at the Lowy Institute, said the partnership’s 2030 target was looking increasingly out of reach. 

“The PEP was designed as a multi-party flagship development initiative that was intended to present an alternative to the BRI for PNG,” he told BenarNews, using the acronym for China’s globe-spanning infrastructure program, the Belt and Road Initiative.

“But progress has been slow, complicated by the deep governance challenges in PNG’s domestic power sector, the rugged geography of PNG, the difficulty of coordinating so many separate partners, and low capacity among domestic stakeholders in PNG.”

Sora said the strategic context during which the deal was signed in 2018 has become more pronounced today, as China vies for influence in PNG with the U.S. and its allies. However, it would be difficult for PNG to “pivot to China for the same kind of support in the power sector, given the work that is already underway on this project.”

PNG’s Minister for State Enterprises William Duma demanded an apology from Channel 7 over its report, calling it “ridiculous.” But the broadcaster said it stood by the story. 

Duma’s demand was not the first time he has squared off with Australian media. He successfully sued the Australian Financial Review last year for defamation over claims that he acted corruptly in granting a petroleum license and won A$545,000 (US$340,000). 

BenarNews is an RFA-affiliated online news organization.