How PNG can power into the Asian Century

I've been a strong believer in Papua New Guinea's future since my first visit in 1980. That's why ANZ is investing in ideas to help support a national conversation about Papua New Guinea's future.

"Economic development moves in lock-step with increased power supply. Social development relies on access to clean, affordable and reliable energy."
Mike Smith, Chief Executive Officer, ANZ

Our latest ANZ Insight report, Powering PNG into the Asian Century, looks at new approaches to improving the availability and reliability of power in the Pacific nation.

The work builds on themes identified in our Bold Thinking report on PNG's

Long-term future and the opportunity it has to lock-on to Asia's growth based on its significant endowments of minerals, energy and fertile land.

In the Bold Thinking report, we estimated that by 2030 PNG could expand its exports of natural resources by four to six times or as much as US$36 billion per annum.

And with half of global growth in demand for food to come from Asia over the next 20 years, the soft commodities sector has a similar opportunity.

This means there is an enormous opportunity, with the right investment, the right infrastructure and the right institutional and governance environment.

The scale of the opportunity provided a framework to re-imagine PNG's future in the Asian Century and it highlighted the need for government, for business and for the community to prioritise new thinking about national development.

The importance of understanding the 'size of the prize' is that we all know the challenges in realising this vision for PNG are many and, at times, they can seem insurmountable.

As we talked to government and to our customers about the Bold Thinking report, it seemed the big picture of PNG's future was miles from today's reality.

Everyone here knows PNG's potential but attention needed to be prioritised around pressing issues. And the availability and reliability of power is one of the PNG's largest challenges.

That's because economic development moves in lock-step with increased power supply. Social development relies on access to clean, affordable and reliable energy.

The PNG Government has set a goal of having 70 per cent of PNG's population with access to electricity in 2030.

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Today though, the majority of people in PNG are currently unable to access power and, for businesses, reliability and availability remains a major challenge.

The availability of power in rural areas, where around 85 per cent of the Papua New Guineans live, is even more challenging with access confined to around 8 per cent of the population.

Power is also a significant cost for many businesses and manufacturers operating in Papua New Guinea – where anecdotal feedback from businesses suggests electricity is at least 30-40 per cent higher per unit than comparable peers.

According to the estimates in our report, closing the gap between the Government's target and the current reality will require a tripling of power supply – which equates to an increase of 225 per cent.

Powering PNG into the Asian Century was prepared as a practical response to this critical issue. It outlines new directions for electricity supply in PNG.

This includes an extension of current electricity sector reforms and the introduction of new, cheaper energy technologies which could save around US$5 billion to 2030.

This report has been specifically prepared to support a conversation already underway in PNG about approaches to the power sector and how reforms and innovative technologies can deliver significant economic and social improvements.

It is not a blueprint – that would be presumptuous. But it is designed to be practical, specific and challenging in areas in order to jump-start the discussion about power and add to the good work already underway. So while this is not a blueprint and we don't claim to have the answers, we – like everyone with an interest in PNG's future – know power generation must be a priority. And so action and significant reform does need to be undertaken.