Australia needs to support Andrew Forrest’s energy ambitions for Papua New Guinea

Readers will probably know I have been a passionate supporter of the Purari River hydro power project in the Gulf Province of Papua New Guinea – a massive project with the potential to deliver affordable electricity to the majority of Papua New Guinean families, and businesses.

Between 2010 and 2014 Origin Energy and the PNG Sustainable Development Program seriously considered the project, with a focus on its capacity to deliver affordable "clean energy" to Northern Australia as well as Papua New Guinea. The respected engineering group, AECOM, did extensive studies on the project and declared it would be viable, but would need to tap into carbon credits to ensure that viability.

While the initial plan was to deliver electricity to North Queensland via a submarine cable and a overland transmission system – feasible but costly – that would have to be constructed, unfortunately the Australian section of the proposal was jettisoned at an early stage because of the cost, the reluctance of Queensland energy authorities to embrace it, and land rights issues on Cape York.

In 2014 Origin effectively withdrew from the project. And it lay dormant until Andrew Forrest visited Papua New Guinea last year and discussed Purari with the PNG Government along with a range if other potential "green energy" projects he wanted to advance to at least the feasibility stage.

At the time I welcomed his interest, and encouraged him to look seriously at Purari which would be the largest electricity project in Papua New Guinea, and world-class in terms of its capacity and the affordability of the electricity it would generate. To his credit, he has established a professional team to look at Purari and as many as 20 other much smaller green hydrogen and clean energy projects across Papua New Guinea.

Purari, even for the first stage which would deliver about 2,500mw of power, is not cheap – seven years ago it was estimated to cost around $6 billion.

If Papua New Guinea is to really develop economically, and the living standards of the nine million people genuinely advance, Purari offers the best hope of delivering both. In a country where industry is small and downstream processing limited it offers a way forward with wide benefit for the nation and its people.

The Australian Government ought to be in dialogue now with Andrew Forrest and Fortescue Futures Limited on partnering to deliver the feasibility study, and then hopefully, early construction of Purari. The PNG Government needs to assist with approval processes, landowner engagement, and infrastructure, as well as ensuring the PNG Sustainable Development Program to be a partner as well.

This project can be Australia's most significant and enduring contribution to Papua New Guinea's secure future. The PNG Government will need assistance with power transmission lines and other infrastructure and that is where the Asian Development Bank or other international agencies could contribute.

The sad reality is that barely 15 per cent of Papua New Guinea's nine million people today have access to reliable and affordable power.

The China Belt and Road debt funded Ramu2 hydro will meet neither need. The editor of

"On Line Opinion" has estimated the power it would deliver will be among the worlds' most costly, and it would be accessible only by a minority of the population

And the cost – around $2 billion – would have to be guaranteed, and repaid, by the PNG Government at a time when the state debt level is already too high.

It is possible a number of the other projects Andrew Forrest is "evaluating" In Papua New Guinea are worthy – but that should be left to the Australian Government, working with the PNG Government, encouraging the private sector, both in PNG and Australia, to consider involvement. The "green energy" agenda is clearly going to be very attractive to investors in the immediate future.

But there is a second reason why Purari merits Australian Government serious consideration.

As a major iron ore exporter, Andrew Forrest not unreasonably has extensive connections in the Peoples Republic of China. The Chinese Government, via a state grant of around $30 million, has secured a foothold in the proposed Kikori –Ihu economic zone in the Gulf Province. The economic zone is very close to the Purari River estuary where the hydro plant would be located.

Given the proximity of both the Kikori-Ihu economic zone, and the Purari River to Australia it is clearly in the Australian "strategic national interest" to watch what happens on our northern border - and that most certainly encompasses both Kikori-Ihu and Purari. And it certainly includes the island of Daru which I have written extensively about.

I have seen no evidence China is interested in Purari – its focus seems to be more on ports, fishing zones and forestry, as well as mining and gas.

But what the development of Purari would do is enhance the feasibility of establishing major industry – including hydrogen and even a smelter, at Kikori-Ihu where the PNG Government has on offer the most generous taxation and other incentives that are very attractive to major project development.

That might interest the Chinese!

It MUST interest Australia. We simply cannot afford to rely on dribbling out funding support under the Australian Infrastructure Financing Facility for the Pacific (AIFFP).

I have just looked again at the AIFFP website (aiffp.gov.au). Just one project in Papua New Guinea is listed – a solar energy farm in the Markham Valley that might not even proceed!

Quite frankly, the AIFFP website should be taken down. It is just not delivering the substantial impact Australia needs in Papua New Guinea and the South Pacific!

But a partnership with a businessman of substance – Andrew Forrest – offers Australia enormous potential.

And that "potential" not just includes rebuilding and cementing our standing in our closest neighbour – it offers Papua New Guinea not to be repeated opportunity to deliver affordable power to the great majority of the people, to attract downstream processing industries, create employment, and grow the small PNG private sector.

It will make a real difference. But it is simply not guaranteed to proceed. Andrew Forrest has signed agreements with a range of countries that in total would amount to an investment of $200 billion. He will clearly "pick and choose" on the basis of the feasibility studies his team is undertaking.

We need to urge him to look at the "big picture" – a large scale hydro power scheme that will deliver clean and green AND affordable electricity.

Purari can become a reality - but we should not expect Andrew Forrest to do it alone. Now is the time to get engaged constructively, drawing on the expertise Australian engineering and other contractors have in building hydro power plants and delivering electricity to remote and distant areas.

The electricity industry in Papua New Guinea today is in a terrible state. Hydro power scheme established before and soon after independence have not been properly maintained, blackouts are common, and the average power bill faced by domestic consumers, and businesses, is crippling.

Purari can begin the long process of rectifying that disastrous position. It is not the only solution, but it is an essential part of the overall solution long term.

That is both the challenge and opportunity confronting the Australian Government today!