The Asian Development Bank (ADB) and the Governments of Australia and Papua New Guinea (PNG) have agreed to financially back the $305m Power Sector Development Project in PNG.

The project is aimed at strengthening and expanding the electricity network in PNG.

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ADB and the two governments are supporting the power project by providing loans and grants.

They will focus on five sub-projects within the main power grids operated by PNG Power (PPL), which is the country’s power utility company.

Under this initiative, ADB has offered two loans amounting to $208.6m, while the Australian government is providing a $59.5m loan and a grant of $12.8m.

The Government of PNG will contribute the remaining $24.1m for the project together with PPL.

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The funds and grants will be used for constructing and upgrading transmission lines and substations in Gazelle, Ramu and Port Moresby.

They will also be used to build mini-grids in West New Britain and increase PPL’s capacity by introducing utility operation and financial management reforms.

ADB Pacific Department Energy Division director Mukhtor Khamudkhanov said: “PNG has one of the lowest rates of electricity access in the Pacific, with only 13% of households having access.

“The project will contribute to the government’s objective of connecting 70% of its population to electricity by 2030 and will help advance reforms in the power sector.”

Limited electricity access impacts economic growth in the PNG, as well as aggravates poverty and inequality in both urban and rural areas.

The Covid-19 pandemic has also impacted the local economy and the government has made quality infrastructure a central component of its post-pandemic economic recovery strategy.

ADB said that the stable power grids proposed under the project will help maintain urban health facilities’ basic operations and are ‘critical’ to reducing risks from Covid-19.