K108m turbines head for capital

 The two 52-megawatts gas turbines purchased by the State will be installed in Port Moresby next month.

The turbines were bought at a cost of US$39 million (K108m) under a special arrangement between the Papua New Guinea and Israeli governments.

PNG Power board chairman Larry Andagali said the need for additional power generation equipment was real and necessary.

“My board has given approval for LR Group, the consultants of Israeli government, to do the construction,” he said.

It is understood the PPL board was not consulted on the purchase of the turbines but was instructed by the Government to enter into contract with LR Group of Israel to install the generators.

Andagali said he had met ExxonMobil to secure gas from the PNG LNG Project for the turbines in Port Moresby. 

He added that according to advice received from General Electric Asian region office, the cost of one megawatt generating capacity was US$800,000. 

Andagali said the total cost of the two gas turbines was about US$42m plus another K$2.5m for maintenance parts.

“Through the special arrangement with the Israeli and PNG governments, we got it at a cheaper rate which is US$39m so it’s a saving of well over US$20m on our part.The State, as a shareholder of PNG Power, saw the need to get the turbines.”he said.

“From PNG Power’s perspective, we needed the turbines and PNG government owes a lot of money in terms of rental. So it is like going to the bank, borrow the money and buy the generator or using the  Government to offset the money they owe us and we can refinance it to improve our cash flow. 

“These are options that the board has looked at and we are happy with what was presented to us. They are new and I have the serial numbers. I am working closely with the board and the management to ensure that the proper maintenance programs and warrantee issues are properly addressed.”

Andagali said Prime Minister Peter O’Neill had wanted the two turbines to each be installed in Lae and Port Moresby.  However, both will be installed in Port Moresby instead.

“We might look at the options to purchase one or two at a lower capacity 25 or 26 Megawatts but may be 10 or 11 megawatts to be established in Lae. That is something we needed to work on but at the moment those two are definitely needed for Port Moresby,” he said.

Acting CEO Chris Bais said the gas turbines would be Located at Kanudi power station to supplement Port Moresby system with 45mw.

He said the turbines would supplement the existing diesel units and if water level goes down then Rouna output is reduced. The currently generation capacity is hydro 50mw and thermal  40mw.

Bais said negotiations were underway with ExxonMobil to supply the gas.

 He added that the turbines were designed for gas but would initially use diesel until gas became available.