War of Words: Dirio Hits Back at O'Neill’s 'Grossly Inaccurate' Power Deal Allegations

Former PNG PM O'Neill

​Dirio Gas and Power has refuted claims made by former Prime Minister Peter O’Neill, stating that his allegations against the company are “grossly inaccurate” and “fictional.” O’Neill had raised concerns over a 25-year contract between Dirio and PNG Power, claiming that the agreement was heavily skewed in favor of Dirio and its foreign consultants.

O’Neill argued that the terms of the agreement would compel PNG Power to pay Dirio K1.379 billion for 45 megawatts (MW) of electricity over 25 years, even if the electricity generated by Dirio is not needed. Dirio responded by explaining that PNG’s electricity supply operates on a Capacity Market model, which compensates power generators for making their capacity available, a common global standard. The company added that the power purchase agreement (PPA) with PNG Power follows the same design as that of NiuPower.

Dirio further clarified that since receiving its license from the Independent Consumer and Competition Commission (ICCC), several external factors have affected the cost of production. These include a nearly 20 percent depreciation in the US Dollar exchange rate, a 25 percent increase in gas costs, and PNG Power only utilizing 50 percent of the power generated by Dirio. The company noted that these factors have increased operational costs, which are beyond its control.

In response to claims that payments to Dirio are made in PNG Kina while the company has to cover its expenses in US Dollars, Dirio confirmed that while PNG Power pays in local currency, it must convert those funds to US Dollars to pay for gas, gas turbines, and maintenance sourced from international suppliers like Caterpillar.

O’Neill also alleged that Dirio’s shareholders, primarily the Hela government and landowner groups, may be unaware that payments first go to Pacific Energy Consulting (PEC) and then to companies in the British Virgin Islands. Dirio did not directly deny this, but clarified the standard cash flow structure, stating that revenue is used to pay operating expenses, taxes, and debts before shareholders receive any dividends.

Recently, Dirio suspended power supply to PNG Power due to unpaid debts. The National Court intervened and ordered the company to resume power supply. Dirio, a subsidiary of the Mineral Resources Development Company, emphasized that any payments made by PNG Power go directly to Dirio, not third parties.

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