Ramu 2 deal a lifesaver

I HAVE read a lot of comments against the Government’s decision to bring in a Chinese investor to build the Ramu 2 hydro-electricity project which is expected to produce up to 180 megawatts of power.
A lot of the comments are fueled by the fear of having more Chinese loans and not looking at how significant this project is for energy security and as a catalyst for economic growth.
Countries take major risks to invest billions in energy security.
Countries like the United States even go to war with other foreign countries to secure and control oil supplies.
Papua New Guinea is no exception. Every investment is risk-bound. As long as the risks are identified, it is manageable. Nothing will ever happen if we are afraid of taking calculated risks.
According to the World Bank, less than 15 per cent of the population have access to electricity. Therefore it is important for the Government to invest more into such projects so that it has the capacity to light up the country.
I believe this is a commercial arrangement under the private-public partnership model and not a loan.
The Chinese company has provided the capital, expertise and technology to invest in the country, mainly in the renewable energy generation sector.
Because the Chinese will be investing the capital, they want 70 per cent ownership of the project and the remaining 30 per cent will be shared between the Government and the landowners.
This is a commercial deal and it is for 25 years.
The Government will take over the infrastructure after 25 years.
I think this is a good deal given the investment is significant, contributing to the economic growth of the country.
This is similar to deals the government have signed with major mining, oil and gas companies.
But in the oil and gas sector, the government only takes 22.5 per cent equity in the project.
The government gives 2 per cent to the landowners as equity. But the oil and gas companies don’t hand over the facilities to the government after 25 years; they continue to operate the project until the resources are depleted.
But in this case, when the dam is handed over to the Government after 25 years, the Government will still have another 65 years, at least, of the project life left.
K3 billion is a lot of money and it is the reason why the Government agreed to a 70:30 partnership arrangement.
What I don’t like about the deal is that most of the employees during the construction phase of the project will be brought in from China.
This is not a loan but an investment, so it is only fair that our government should ask that 60-70 per cent of the construction workforce be local.
Again we need this investment as it will provide the energy needs of the country.
Energy is an important pillar that fuels and accelerates economic growth.

Lucas Kiap