Narrative
Full Description
Project narrative
On February 5, 2022, China Eximbank and the Government of Papua New Guinea signed a $223 million government concessional loan agreement for the Ramu System Extension Yonki-Mt. Hagen Phase 2 Project. The estimated borrowing terms of the GCL include a 19.6666-year maturity, a 5.1666 year-grace period, and a 2% interest rate. The borrower is expected to use the proceeds of the GCL to finance 100% of the cost of a $223 million (K800 million) commercial contract between PNG Power Ltd and Tebian Electric Apparatus (TBEA) Ltd, which was signed in July 2021. The purpose of the project is to extend the National Electricity Transmission Grid (Network) from Ramu Grid in Yonki to Mt.Hagen in order to enable electricity access to Yonki in Eastern Highlands Province, Mt. Hagen in Western Highlands Province, and Simbu in Chimbu Province and Jiwaka Province. The project involves the erection of the transmission towers, the stringing of 132kV transmission lines, and construction of 132kV substations in Kainantu, Goroka, Kundiawa, Yonki, Minj, and Mt. Hagen. TBEA is the contractor responsible for project implementation, which is expected to take place between 2022 and 2025.
Staff comments
1. This project is also known as the Papua New Guinea Power Grid Second Phase Project, Phase 2 of the National Power Grid Development Project, the Ramu System Extension Yonki-Mt. Hagen Phase II Project, the Mt Hagen to Ramu Transmission Line-Phase 2 Project, Phase 2 of the Transmission System Upgrade for Yonki (Eastern Highlands) to Mt Hagen (Western Highlands) Project, and the Port Moresby to Ramu 132kv Power Transmission and Transformation Project. The Chinese project title is 巴布亚新几内亚国家电网二期项目 or 巴布亚新几内亚(Mt.Hagen-Yonki)132kV变电. 2. This project corresponds to the Government of Papua New Guinea PIP Number 05660. 3. This project should not be confused with the ADB-financed and TBEA-implemented Tari-Hides Power Project, which involves the construction of transmission lines for electricity transmission between Hides and Tari in Hela. PNG Power Ltd and Tebian Electric Apparatus (PNG) Ltd (TBEA) signed a commercial contract for the Tari-Hides Power Project July 15, 2021. 4. The China Eximbank loan that supported Phase 1 of the National Power Grid Development Project (or Papua New Guinea Power Grid First Phase Project) — also known as the Tari-Mt. Hagen 132 kv Transmission Line Project — is captured via Record ID#61203. 5. According to the World Bank's Debtor Reporting System (DRS), the weighted average grace period of all official sector lending from Chinese creditors to government and government-guaranteed borrowing institutions in Papua New Guinea was 5.1666 years in 2022. AidData estimates the grace period of the China Eximbank loan that supported the Ramu System Extension Yonki-Mt. Hagen Phase 2 Project by using this figure. See https://www.dropbox.com/scl/fi/drf58ay3c2fr6hlv24vq8/December-2023-DRS-Data-Extraction-for-Papua-New-Guinea.xlsx?rlkey=9gqc03oudt91eas7nf53zec38&dl=0 6. According to the World Bank's Debtor Reporting System (DRS), the weighted average maturity of all official sector lending from Chinese creditors to government and government-guaranteed borrowing institutions in Papua New Guinea was 19.6666 years in 2022. AidData estimates the maturity of the China Eximbank loan that supported the Ramu System Extension Yonki-Mt. Hagen Phase 2 Project by using this figure. See https://www.dropbox.com/scl/fi/drf58ay3c2fr6hlv24vq8/December-2023-DRS-Data-Extraction-for-Papua-New-Guinea.xlsx?rlkey=9gqc03oudt91eas7nf53zec38&dl=0 7. According to the World Bank's Debtor Reporting System (DRS), the weighted average interest rate of all official sector lending from Chinese creditors to government and government-guaranteed borrowing institutions in Papua New Guinea was 2% in 2022. AidData estimates the interest rate of the China Eximbank loan that supported the Ramu System Extension Yonki-Mt. Hagen Phase 2 Project by using this figure. See https://www.dropbox.com/scl/fi/drf58ay3c2fr6hlv24vq8/December-2023-DRS-Data-Extraction-for-Papua-New-Guinea.xlsx?rlkey=9gqc03oudt91eas7nf53zec38&dl=0 8. As of 2024, the China Eximbank loan that supported this project was not included in the China's Overseas Development Finance (CODF) Database published by Boston University’s Global Development Policy Center.