Dirio easing electricity issues

The commissioning of Dirio Gas and Power company is a game changer for the power generation business. People will now be able to access cheap and affordable electricity in the city. Commentary by CLARISSA MOI

THE recently commissioned Dirio Gas and Power Company in Papa Lealea, Central, marks the entry into power generation business a nationally owned company.
Mineral Resources Development Company (MRDC) managing director and chief executive officer Augustine Mano said during the commissioning last Thursday that Dirio would complement NiuPower Ltd and add more value to businesses in terms of accessing reliable and cheap power in the city.
Dirio is owned by PNG LNG project landowners in Hela, Southern Highlands, Gulf, Western, and Central.
The five provincial governments are partners in the project.
Mano said the petroleum and energy sector had a huge potential in the upstream through to downstream value chain.
For a very long time, business along this value chain had been dominated by foreign businesses.
The landowner company is expected to supply Port Moresby with 45 megawatts of power using natural gas from the PNG LNG project.
It can deliver up to 48MW and take up another 50MW which is similar to what NiuPower is offering.
Mano said Dirio’s power supply was to collaborate with its development partners and the Government to provide a solution to PNG’s electricity supply problems.
“Dirio is here to complement NiuPower,” he said.
“Reliance on a single plant is really risky and exposes the grid to shortage in the event of a plant failure and weather dependent hydro.
“One of the challenges is access to cheap and reliable power supply. Access to reliable electricity improves the quality of life and stimulates economic growth whether it be in downstream processing, manufacturing, SME (small medium enterprise) or any economic activity.
“You need cheap reliable power.
“Unfortunately, we all know that PNG has one of the lowest per capita electricity consumption and highest retail price nowhere in the world.
“The peak demand is just 27watts per person.
“In Australia, it’s about 1,800 watts per person.”
Mano said the low rate in consumption and demand were driven by the combination of low electrification ratio.
“The irony here is that right here, we have nine million tonnes of LNG (liquefied natural gas) cargoes sold annually to Japan and China at market price,” he said.
“Yet their citizens and industries are paying lower retail price compared to us.
“It does not make sense when we import expensive diesel fuel to supply power to our citizens and to sustain all the major industries.
“If we had a better domestic market obligation earlier, imagine the multiplier effects of import replacement.
“It only means more jobs, more savings in foreign exchange, more economic opportunities for the citizens and the list goes on.”
The Government plans to provide 70 per cent of the population electricity by 2030.
This is impossible unless there is a shift in which the economic rational is based.
“Instead of demand driving the economy, it should be the supply,” Mano said.
“When there is excess supply and competition, market forces come to play and cheap and reliable energy will be available.
“Niu Power with 58MW and Dirio with 48MW will give NCD and Central more than 100 megawatts of cheaper reliable and energy-friendly power.
“With Papua LNG coming on board with five per cent domestic market obligation, the issue of power generation will be solved.
“It is up to PNG Power to fix the transmission and retail and pass the savings to the consumers.
“It is no secret that Dirio and Niu Power now sell reliable power at ICCC (Independent Consumer and Competition Commission) sanctioned below 38t per kilowatt.
“The question is how much PNG Power can sell to the retailers and business. Dirio is here to compliment Niu Power.”
Dirio has a gas sales agreement with ExxonMobil PNG for 100MW but is only using 30MW.
“We have a 25-year power purchase agreement with PNG Power Ltd and the (project) investment is about K350 million including all the covered costs.
“It’s not easy to operate over the past year during the construction phase but we are one of the few business that has been operating during the crisis period (Covid-19).”
The construction phase took 18 months.
The contractors were Pacific Energy Consultant and Twenty20 employing 160 people.
Prime Minister James Marape, who is the shareholder and trustee of MRDC, commissioned the power station outside Port Moresby.
As per the Oil and Gas Act, MRDC manages benefits of the PNG LNG pipeline landowners of the five provinces.
Thirty per cent of any benefits from oil and gas set aside specifically for community impact projects, another 30 per cent is set aside for investments and 40 per cent is paid to landowners as direct cash benefits.