PPL issues notice on project

By CLARISSA MOI
PNG Power Ltd has exercised its legal right to issue a “notice of termination” to Oil Search Ltd regarding the PNG Biomass project in Markham, Morobe, says managing director Flagon Bekker. Bekker told The National that the notice to terminate a power purchase agreement (PPA) signed in Dec 2015 between the two companies was due to the expiry of a due date for the closure of the project.  “This project has been around since 2010,” he said. “PNG Power issued a PPA to this long-running project, including repeated extensions, to give it the best possible chance of success. “It can be no surprise given the repeated extensions to the project over the last 10 years.“However, despite these extensions, this project was still unable to dispatch power into the Ramu grid.” According to Oil Search, the notice could impact the PPA, hence, the company was engaging with stakeholders, including Markham landowners and development partners, to assess the potential impact of the cancellation. A company spokesperson told The National that they were confident that a favourable solution for everyone could be reached. “The PNG Biomass project team continues to prepare the project for sanction, both in terms of the tree farming operation as well as the design of the integrated biomass power plant, solar farm, and utility-scale battery,” the spokeperson said. “It is close to completing front-end engineering design (Feed) for the integrated renewable power project.”  Bekker, however, said there had been “no discussions started or ongoing – between the parties and there have been none since the letter was issued many, many weeks ago”.  He said that PPL would work with stakeholders to minimise the disruption this might have caused. Bekker said the contract was conditional on the project reaching financial closure within 18 months of the start of the agreement.