PNG Power SAFE, RELIABLE & FINANCIALLY VIABLE August 2019 PNG Power SAFE, RELIABLE & FINANCIALLY VIABLE Carolyn Blacklock | Acting Managing Director

ELCOM high to 2017 low Mostly imported, expensive and dirty fuel Financially unsustainable business model Regression on access to electricity Reliably unreliable energy Not following a least cost power plan Reactive, outdated, unsafe Poor financial governance Lack of stakeholder trust

2018 — Our “Blackstart” year Revitalised board established in May 2018 Leadership restructure in late 2018 Better cash flow management and expenditure Reduction in bank debt Thorough auditing & discovery with actionable outcomes Performance based enterprise agreement Reliability improvements Financial Reform

Develop PNG Power through safe, reliable and financially viable means. Today and beyond: Develop PNG Power through safe, reliable and financially viable means. Continued reform of PNG Power Least cost power development Large industrials to supercharge the power ecosystem PNG Electrification Partnership Improving Safety

Our path ahead Reliability Growth Rewiring

Reliable Reliability Port Moresby, Lae & Gazelle grid focus Increased energy security for isolated centres Frequent reporting on results Proactive not reactive approach to maintenance and planning

Energy Security Distributed generation N-1 (planned interruptions but not disturbing customer supply) Grid interconnectivity Replacing shipped diesel with solar, battery, diesel hybrid solutions in remote centres Modern protection engineering

Growth PNG Electrification Partnership Customer centricity New Industrial Customer loads Reduce illegal and free power (currently around 1 in 4 kW of power is stolen)

PNG Electrification Partnership Creating 30,000 new connections 2019 Turning settlements into suburbs Powering up villages 2020 to 2030 Electrification Plan being built by NRECA with World Bank/DFAT Funding (counterpart is Department of ICT & Energy)

Customer Centricity New easier ways of paying for power Lower cost and financially accessible Rebranding & reposition (late 2019/2020) Smart Meters and AMI Relationship managers dedicated to corporate and industrial customers

Powering up our country We create the connection Powering up our country

Rewiring Changing our attitudes Changing the way we do business Safety Performance based management Least Cost Power Development Plan Bureaucracy busting: Streamline cumbersome processes to allow staff to spend more time on the frontline and leading

Least Cost Power Development Plan DEMANDS AND SOLUTIONS—RAMU & POM GRIDS Refurbishment of Hydro Distributed Hydropower Hybridised solutions for isolated centres Gas in the Interim These initiatives put around K250m back into PNG Power each year in reduced fuel expenditure, and reduce cost to generate power by about half across the company. New Generation and Transmission to be added according to Least Cost Power Development Plan to ensure a low-risk, financially viable approach

Least Cost Power Distributed Plan Port Moresby Grid Switch from high cost Heavy Fuel Oil IPP & gas turbines operating on diesel to Domestic Gas and Hydropower Ramu Grid Refurbish YTOD; Ramu 1 & Paunda Hydropower stations to name plate capacity Gas as transitionary fuel. GE Gas Turbine relocation project to Hides. Distributed, locally owned hydropower IPPs Isolated Centres and Small Grids Lower cost, hybrid solutions

How we will achieve this reform

Hydropower refurbishment & Connectivity Program Financial remediation Village of Experts Family of Funders Hydropower refurbishment Network Upgrade PNG Power Revenue & Reliability Program Power Infrastructure & Connectivity Program Business improvement program Financial remediation Cash flow management PIP Bank South Pacific Export Credit Agencies Australian Fund for Infrastructure in the Pacific PEP Partners: Australia New Zealand United States of America Japan

Be a company fuelled by good governance Build trust with all stakeholders from community through to international Remove Corruption, including time theft Supportive policy environment and government that can move with the pace of PPL's reform agenda Competitive, transparent procurement to drive value for money and quality delivery

1 2 3 4 By 2020 we will be: K400-K500m profit (or tariff reduction) Transparent Quarterly Reporting More Accountability Community Importance Stakeholder Support is crucial for our joint reform journey By 2020 we will be: 1 2 K400-K500m profit (or tariff reduction) Safe 3 4 POM Grid 99% reliable Ramu Grid 98% reliable Double access to electricity

Managing Director’s Report Thank you.