09/10/2024
By Hon. Philip Undialu, MP
■Governor Hela and Director Dirio■09th October 2024|
I, first of all, challenge Mr. Oneill: Are you fit and proper person to question Dirio on its first 45 megawatt gas power project for Port Moresby city? Is this the same Peter O’Neill as who was Prime Minister in 2014 bought two defunct GE genset through the Israeli Group at the cost of over K144 million? Can Peter O’neill explain what happened to that money and where are those two gensets now?
I must remind Peter O’Neill that Dirio came into the picture just in 2017 after his failure to deliver to his promises to the two metropolitan cities of Port Moresby and Lae. As former PM and leader of our nation, he should speak with respect and apply common courtesy that companies like Dirio deserve. Just imagine the situation in the city without 45MW generated by Dirio and 58MW from NiuPower after his two gensets gone missing?
Second, I must remind Peter O’Neill and the general public that Dirio or any other IPP control cost of power. Or even, PPA is not same as Cost of Power. Putting into perspective, Dirio has the cheapest PPA rate at K0.39t/KWh. That forms part of cost of power. Other costs of power include cost of fuel or gas price in this case. Inflation, CPI, Interest Rates, Forex, etc strain adds on to the costs of power. As you can see, Dirio has no control over those costs. Dirio only stick to the PPA price signed with PNG Power. Every other costs are just pass through costs just like any other manufacturing business.
Thirdly, I must remind Peter O’Neill that when Dirio says, cost of Power is K2.54/KWh, it doesn’t mean that the Power Purchase Agreement (PPA) is K2.54KWh. It means all costs involved including cost of gas which is the leading cost to Dirio business. Of the K240 million owed to Dirio, more than K100million or 50% is for gas price that Dirio owed to owners of gas none other than PNGLNG project.
Had leaders like Hon. Peter O’Neill cared for the people of PNG and Port Moresby City residents as he is claiming now, his first business would have been reducing gas price. Best opportunity he had was during his tenure as Prime Minister for the last 8 years (2011-2019) which he failed miserably.
ExxonMobil, as the operator of PNGLNG project, has always been generous on this matter. They started supplying during the 2018 APEC Meeting which PPL could still owe them now. It was our leaders like PO who was sleeping and dreaming about dirty deals like the two useless gensets which remain defunct rather than getting better and cheaper gas prices.
Let me remind Peter O’Neill and general public again that our first indicative gas price was 2% of Japanese Crude Cocktail (JCC) sourced from Gobe Oil Field. Negotiation started when PO was PM in 2017. That’s why name “Dirio” adopted from a river near Gobe Oil Fields, Erave, SHP. However, with lack of support from then Government and Prime Minister Peter O’Neill, we were pushed back to PNGLNG project with higher price of 6% JCC. So when global oil price increases, gas price increases which are passed on to Dirio, further passed on to PPL and eventually to the power consumers in the city. So for me, if I was Peter O’Neill as former Prime Minister, I would be the last person to jump up and down. The reason being that, companies like ExxonMobil charge us based on what our leaders negotiate and sign at every project agreements.
So if PO wants to know who is responsible for the high cost of power, it was his Government who paid no attention to technical advice to negotiate cheaper gas price under the Domestic Market Obligation (DMO) provisions. We had no choice but to accept the 6% JCC instead of 2% that was initially offered.
Only if leaders like then Prime Minister Peter O’Neill cared for the welfare of the people, he would have assisted us reduce gas price to 2% JCC, not 6% JCC that we are buying now. That’s the very reason why Dirio will pay more than K100 million to PNGLNG from the K240 million owed.
On record, the former PM has miserably on two fronts led down PNG; first his corrupt and failed two Israeli gensets that costed PNG over K144 million and secondly, his failure to negotiate a cheater gas price when he had the opportunity as then Prime Minister.
I also wish to refute his claims that I am the only director at Dirio Board. I only joined in 2019 as an ex-officio. There where other four Directors since 2017. The IPA records are clear on that.
I therefore, in conclusion, call on Peter O’Neill to stop playing politics over Dirio business. On record, Dirio has the cheapest PPA of K0.39t/KWh. The costs of power is totally different from PPA rate that Peter O'Neill has been misleading public about. Dirio has no control over Cost of Power as it relates to gas price, capital recovery costs which is global standard and compounding interests for unpaid invoices. Those adds up to high cost of power as reported.
On the other hand, PPL can also can consider two obvious options to avoid escalating costs. First, PPL must pay invoices on time to avoid added interest. Secondly, PPL must take full power as they will still pay for the full capacity under the “Take or Pay” provisions.
In conclusion, Governor Undialu refuted entire allegations by Peter Oneill as utter nonsense and he should concentrate on his two Israeli Gensets: stop sticking nose to Dirio which he failed to help secure cheaper gas price. We are carrying the higher cost of gas that he failed to help negotiate. Now you should be the last person to come yelling.
At this junction, I call on current Prime Minister Hon. James Marape, Hon. Jimmy Maladina, Minister for Petroleum and Hon. Thomas Opa, Minister for Energy to renegotiate cheaper gas price with all the licensees of oil and gas projects such as ExxonMobil, Santos, TotalSA...etc. Something less than 1-2% of JCC would be a bonus to Papua New Guinea. Dirio is prepared to reduce cost of power to consumers if that can be done.