IEEJ: April 2010

COUNTRY REPORTEnergy Policy Situation inPapua New Guinea
Presentation by Nelson Kumosa Tai
Course: Energy Policy (A) (J10-00604)
JICA Training & Dialogue Program 2010

IEEJ: April 2010

Outline1-PNG Energy Sector Overview, Organization& Practices
2-PNG Energy Sector Policies
3-Policy Difficulties & Bottlenecks
4-Expected Outcomes of this Course

IEEJ: April 2010

1- PNG ENERGY SECTOR OVERVIEW,
ORGANIZATION & PRACTICESInstitution with Policy Role over Energy Sector- Department of Petroleum & Energy, constituted of twoDivisions:(1) Petroleum Division- focal role in development of country’shydrocarbon resource(2) Energy Division- generic role in sectors other than oil andgas extraction(3) Petroleum Division’s role in policy is focused on oil and gas
development(4) Energy Division’s role in policy is focused on overallnational energy policy and subsector policies other thanthose for oil and gas

IEEJ: April 2010

1- PNG ENERGY SECTOR OVERVIEW,
ORGANIZATION & PRACTICESOil and Gas sector:(1)

Extractive industry- governed by Oil & Gas Act of1998 and its accompanying Regulation
Service industry- oil products has two suppliers(InterOil & Mobil)InterOil operates only refinery in PNG to meet both
domestic and offshore markets
Mobil imports products to meet demand in PNGmarket
InterOil’s products are based on import-paritypricing

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IEEJ: April 2010

1- PNG ENERGY SECTOR OVERVIEW,
ORGANIZATION & PRACTICESElectricity Industry:(1)

PNG Power (PPL) - the corporatized state-ownedenterprise (SOE) operates in major markets/loadcentres and largely a monopolist
Advent of new independent power producers in recenttimes is limited to two (2) entities
Electricity industry is a regulated industry and PPL is aregulated entity under Independent Consumer andCompetition Commission (ICCC) Act of 2002
ICCC is regulator of this industry
PPL has 10-year price path and exclusive supply(retail) areas under regulatory contract with ICCC
which will lapse in 31 December 2011

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IEEJ: April 2010

1- PNG ENERGY SECTOR OVERVIEW,ORGANIZATION & PRACTICESRural electricity:(1)

PPL, under its corporate charter withdrew from all rural
electrification investments that cannot be profitableenoughApprox. 90% of population live in rural areas, and havevery limited access to electricity
Electricity service facilities at rural district headquarters
under provincial government’s responsibilities aredeteriorating

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IEEJ: April 2010

1- PNG ENERGY SECTOR OVERVIEW,
ORGANIZATION & PRACTICESEnergy efficiency:(1)

Energy efficiency is given very limited focus by thegovernment- more focus is on generating energy tomeet growing demand
ADB began intervention in power sector efficiency
in 2009- initiated power factor correction programwith pilot project conducted in Port Moresby(2)

IEEJ: April 2010

1- PNG ENERGY SECTOR OVERVIEW,
ORGANIZATION & PRACTICESRenewable energies:(1)

Hydropower constitutes just under 40 % of total power
generation capacity in PNG. Vast potential remains untapped
Solar thermal and photovoltaic applications are limited
Wind energy is not currently being used, only trial projects(<=80kW) installed
Biomass use is widespread in rural households. Only few
agricultural industries use biomass
Geothermal power has only one 55MW plant in mining enclave,built in 2006. Also the only CDM project in PNG.
Potential for bio-fuel exists with surplus of potential raw materials,
but the energy is not developed fully and used.

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IEEJ: April 2010

2 - PNG Overarching Policies & Energy
Sector Policies
Medium Term Development Strategy (MTDS)MTDS is the overall guiding framework foreconomic growth and social wellbeing for
PNG(2) Term of MTDS:2005-2010(3) All sector policies to be aligned with the MTDS
(4) Energy is not captured as a priority under theMTDS(1)IEEJ: April 2010

2 - PNG Overarching Policies & Energy
Sector Policies
Vision 2050
(1) November 2009, Government sets vision for

development and prosperity, 2010-2050


Long Term Development Strategy(1)

Government currently working on Long TermDevelopment Strategy (LTDS) (2010-2030)
LTDS finally recognizes and captures energy as agovernment priority for development(2)

IEEJ: April 2010

2 - PNG Overarching Policies & Energy
Sector Policies
Petroleum policies:(1) Petroleum policies are under the oversight role of thePetroleum Division of DPE Draft Electricity Industry Policy (EIP):(1) Objectives of EIP are to: improve reliability of electricity
supplies, increase access to electricity by people,
ensure electricity is affordable.
(2) Policy measure proposed: (1) state provisions forcommunity service obligations, (2) appropriate
regulation, (3) competition under various marketdetermined models, and (4) private-sector participation
IEEJ: April 2010

2 - PNG Overarching Policies & Energy
Sector Policies


Draft National Energy Policy (NEP):(1)

Draft NEP remains incomplete since 2006
Sets vision as “vibrant energy sector that improves
quality of life and supports sustainable nationaldevelopment”(2)

Draft Rural Electrification Policy (REP):(1) REP remains incomplete since 2006
(2) Objective of REP is to increase access to electricity
for the rural population

IEEJ: April 2010

2 - PNG Overarching Policies & Energy
Sector Policies
Draft Geothermal Energy Resources Policy:(1) Government has engaged the services of a private
consultant to develop a model for this policy Policy on renewable energies:(1) A renewable energies policy is increasingly
becoming necessary, and is driven by sectors inagriculture, forestry, and environment.
IEEJ: April 2010

3-Policy difficulties and bottlenecks


Lack of capacity:(1) Energy Division lacks adequate manpower capacity, and skills andknowledge specific to policy development


Lack of government’s focus:(1)

Government’s focus has never been on the energy sector, as
shown in the MTDS
There has also been a lack of political will to develop the energysector(2)Lack of needed support:(1) Lack of focus by the government has resulted in a total lack ofsupport (funding, political and administrative backing, capacitybuilding, etc)

IEEJ: April 2010

3-Policy difficulties and bottlenecks
Disarray in sector policy management:(1)

An encroachment by the Department responsible for nationalplanning matters (a central agency Department) on energy
matters is creating a disarray in sector policy management
Overlapping issues need proper and stringent delineation ofresponsibilities, such as between environment and energy, inrenewable energies
An encroachment by the National Planning Department also
carries the feature of diverting funding and other support (forwhich this Department is the focal point) to itself.

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IEEJ: April 2010

3-Policy difficulties and bottlenecks
 Lack of comprehensive data:(1) There is a lack of comprehensive data to supportand inform the policy development process(2) Lack in data is attributed to: (1) lack of adequate
manpower, (2) continual lack of funding, (3) lack ofpolicy for guidance, (4) insufficient skills andknowledge to carry out all tasks relating to data work.

IEEJ: April 2010

4-Expected Outcomes of this Course
Capacity acquisition:(1)
I expect that I will acquire the skills, insight, and knowledge
necessary to facilitate and carry out policy development processand formulation policies that are a great need now for the energy
sector in my country.
(2)
This capacity should enable me to comfortably carry out thetasks set in our (Department’s) work program for 2010 on
development of various policies for the energy sector.
Experiences from Japan:(1) The course should provide me sufficient experience from Japanthat I can take home and refer to in my work on energy policy.
IEEJ: April 2010

Nelson kumis tai

DOMO ARIGATO GOZAIMASU

Contact:report@tky.ieej.or.jp