By Staff Reporter

O'Neill Calls for Halt on Payments to Foreign Entities in Dirio Power Deal

3/10/2024

Former Papua New Guinea Prime Minister Peter O'Neill has urged the government to halt all payments to foreign entities involved in the 25-year Power Purchase Agreement (PPA) between PNG Power and Dirio Gas & Energy. O'Neill raised concerns about the involvement of Pacific Energy Consulting, a foreign-owned contractor, and its offshore ties, stating that millions of Kina could be funneled out of the country unless a thorough investigation is conducted into the deal. He called on PNG Power and the responsible authorities to exercise caution in handling payments related to the controversial agreement.

O'Neill detailed that the PPA, signed in October 2019, obligates PNG Power to pay for 45MW of electricity from Dirio Power Station, regardless of whether the power is needed or not. He highlighted that the cost of power from Dirio has been significantly higher than other suppliers, with Dirio charging an average of K1.40 per kilowatt-hour between January and August 2024. This is almost double the rate of K0.75 per kilowatt-hour from NiuPower, another power supplier, and far above the K0.91 tariff metered by PNG Power to its customers.

The former Prime Minister expressed alarm over the financial burden this agreement places on PNG Power. According to O'Neill, PNG Power will be forced to pay Dirio over K1.379 billion over the next 25 years, even in cases where the power is not needed or transmission issues, such as fallen power lines, prevent access to the power. O'Neill estimated that this would result in an immediate loss of K886.95 million for PNG Power, without taking into account other operational costs.

O'Neill also questioned why payments to Dirio, a PNG-owned company, are made in US dollars. He linked this to the involvement of Pacific Energy Consulting (PEC), a company established by Geoffrey Lawrence and Nathan Daly in 2013. PEC is reportedly owned by Asia Pacific Energy Ventures, a Singapore-based company with ties to several offshore entities registered in the British Virgin Islands. O'Neill suggested that these offshore companies could be involved in funneling money out of PNG, warning that the arrangement poses a serious risk of corruption.

In a statement, O'Neill referenced the late Sir Mekere Morauta's concerns about the Dirio deal. In December 2019, Sir Mekere raised suspicions that the deal between Dirio and its foreign contractors might undermine national interests and use landowners as fronts to move millions of Kina offshore. O'Neill echoed these concerns, urging transparency and accountability in the handling of Dirio's contracts and finances.

He further criticized the involvement of Pacific Energy Consulting in the construction of the Dirio Power Station and the related substation, which was reportedly built at 100% cost to PNG Power. O'Neill warned that over K1 billion will be paid to Dirio over the next 25 years at rates far higher than what PNG Power can charge its customers. He added that without a thorough investigation, it remains unclear how much of this money will end up in the hands of foreign contractors and shadowy offshore companies.

O'Neill calls on the PNG Power board and Dirio shareholders to act with caution and ensure that no payments are made to Pacific Energy Consulting, Pacific Energy Contracting, or any associated foreign entities until the full details of the deal are thoroughly investigated. He stressed the need for independent experts to scrutinize the agreement and urged authorities to compel witnesses to share information on the matter. According to O'Neill, the current state of PNG’s power sector is a direct result of corruption and mismanagement under the Marape government.

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