ReportNo. 327a-PNG FILECOPY PapuaNew Guinea Appraisalof the SecondPower Project (ElectricityCommission of PapuaNew Guinea) Public Disclosure Authorized

May 15, 1974 Asia ProjectsDepartment Public Utilities Division Not for Public Use Public Disclosure Authorized Public Disclosure Authorized

Public Disclosure Authorized Document of the International Bank for Reconstruclionand Development InternationalDevelopment Association

Thisreport was prepared for officialuse only by the BankGroup. IL may not he published, quotedor cited without BankGroup authorization. TheBank Group does not acceptresponsibility for the accuracyor completenessof the report. CURRENCY EQUIVALENTS

Before September9, 1973

A$ 1 - US$1.42 A$ 1,000 - US$1,420 A$ 1,000,000 - US$1,420,000

From September9, 1973

A$ 1 - US$1.4875 A$ 1,000 ' US$1,487.5 A$ 1,000,000 - US$1,487,500

Weights and Measures Equivalent

kW - Kilowatt MW - Megawatt (1,000 kW) kWh - Kilowatt hour MWh - Megawatt hour (1,000 kWh) GWh a Gigawatt hour (1 million kWh) kV = Kilo volt (1,000 volts)

cro andrs Abbreviations

Commonwealth - Commonwealthof Australia Territory - Territoryof Papua and Administration - Administration of Papua and New Guinea PNG - ELCOM - Electricity Commission CONWORKS - Commonwealth Department of Works Offshore - Overseas Onshore - Domestic

ELCOM's Financial Year - Year beginning July 1 and ending June 30

(Unless otherwise stated, the year quoted in the text refers to the financial year.) PAPUA NEW GUINEA

PAPUA NEW GUINEA ELECTRICITY COMMISSION

APPRAISAL - SECOND POWER PROJECT

TABLE OF CONTENTS

Page No.

SUMMARY AND CONCLUSIONS ...... i-ii

I. INTRODUCTION ...... 1

II. THE ECONOMY AND THE POWER SECTOR ...... 2

The Country and its Economy ...... 2 Energy Resources ...... 3 The Power Sector ...... 4

III. THE BORROWER AND THE BENEFICIARY ...... 5

Elcom's Management and Organisation ...... 5 Existing Facilities ...... 6 Future Development Plans ...... 7

IV. THE POWER MARKET ...... 7

V. THE PROJECT...... 8

In-Service Training ...... 8 Distribution Expansion ...... 10 Foreign Exchange Shortfall of Loan 737-PNG ..... 10 Procurement and Disbursements ...... 11 Construction Schedule ...... 11 Consulting Services ...... e. 11

VI. JUSTIFICATION OF THE PROJECT ...... 11

In-Service Training ...... 12 Distribution Expansion ...... 12 Foreign Exchange Shortfall of Loan 737 PNG ..... 12

This report was prepared by Messrs. E. A. Minnig (Power Engineer) and S. S. Scales (Financial Analyst). -2-

Page No.

VII. FINANCIAL ASPECTS ...... 13

Past and Present Earnings...... 13 Present Financial Position ...... 13 Sinking Fund ...... 1144...... Insurance ...... 15 Audit ...... 15 Proposed Financial Plan ...... 15 Future Financial Position ...... 16

VIII. AGREEMENTSREACHED AND RECOMMENDATION...... 18

LIST OF ANNEXES 1.1 Diagram Economic Data - Chart (8026) 1.2 Gross National Product (CurrentPrices) 2. Diagram OrganisationChart - Chart (8027) 3. Power Plant as InstalledJune 30, 1973 4. Overhead Line Statistics at June 30, 1973 5. Supply Point TransformerStatistics at June 30, 1973 6. DistributionSubstation Statisticsat June 30, 1973 7. Future DevelopmentPlans 8.1 Generation,Sales and Maximum Demand 1964-1973 8.2 Generation,Sales and Maximum Demand 1974-1980 9. Consumer Statistics 1966-1972 10.1 Sales and Revenue per Tariff Classifications1964-1968 10.2 Sales and Revenue per Tariff Classifications1969-1972 10.3 Sales and Revenue per Tariff Classifications1973-1976 10.4 Sales and Revenue per Tariff Classifications1977-1980 11. Review of Economic Trends and Prospects in the Area to be served by Upper HydroelectricProject 12.1 Diagram - Actual & Forecast Maximum Demand (MW) (Chart 8025) 12.2 Diagram - Actual & Forecast Generation (GWH) (Cha