Statement By Solomon Islands Minister Of Mines

Statement By Minister Of Mines, Energy & Rural Electrification At Opening Of The Tina River Hydropower Workshop

Delivered by the Undersecretary for the Ministry of Mines, Energy & Rural Electrification

28th September 2010

Distinguished Guests

Ladies & Gentlemen,

I have the pleasure to address you at this very important workshop to discuss the way forward in the development of the country’s largest hydro-power scheme.

Firstly, I would like to warmly welcome all of you here today. This welcome is extended to our overseas friends who are present with us today.

Ladies and gentlemen, I feel that it’s appropriate by setting the scene right by providing you an overview of the Tina River Hydropower Project. The Tina River Hydropower Project is currently in its planning stages and involves the potential construction of a hydropower scheme on the Tina River on Guadalcanal.

A key step in this planning is the Feasibility Study; the initial results of which are to be discussed over the next few days. The study is designed to provide high quality information on the technical, economic, engineering, finance and, very importantly environmental and social safeguards of the project. This information will allow the government and potential investors to then move on to assessing the best way of financing, building, and operating a hydropower station on the Tina River. The information is also critical in forming a view on the costs, benefits that will arise from the project, and how these might be shared.

A hydropower scheme will have a number of benefits for Honiara and Solomon Islands as a whole by reducing the cost of electricity, and increasing the reliability and access to electricity for Solomon Islanders.

The options for hydropower along the Tina River would result in a 12 to 20 Megawatt run-of-river scheme, possibly with a small storage.

These are essential improvements for Solomon Islands.

Solomon Islanders currently have to pay the most for electricity within the region. This is due to all electricity currently being generated from imported and expensive diesel fuel.

The development of hydropower will allow Solomon Islands to make use of one its most abundant renewable resources – water – to generate electricity.

Hydropower is a lower cost alternative to diesel generation and a reduction of diesel imports (which account for 30 percent of all imports) will help the overall health of the Solomon Islands’ economy

This hydropower project would also reduce carbon dioxide emissions in Honiara by up to 70 percent.

It is these benefits that have made the Government of Solomon Islands determined that a hydropower project on the Tina River would be an important source of cheaper, more reliable energy source that must be harnessed.

The Solomon Islands Government (through the Ministry of Mines Energy and Rural Electrification’s Tina River Hydro Project Office) is managing the project and ensuring that all arms of government that are necessary to develop such a project are actively involved; including the Ministries of: Lands, Attorney General Chamber, Environment and Conservation, and Finance & Treasury. Local landowners are being consulted, as is the Guadalcanal Provincial Government.

The Government of Solomon Islands is also being assisted in this Project by the World Bank, Government of Australia, IFC, and the European Investment Bank who are providing technical assistance and funding towards preparation of the project.

This technical assistance includes: technical and economic analysis; ensuring the highest standards of environmental and social safeguards are applied; and transaction advisory services to assist the government in attracting private sector investors. Eventually, these development partners may also look to provide investment finance to assist in developing this project, if it proves to be feasible.

It is currently expected that the project will be financed, built and operated by a private energy company (an Independent Power Producer or IPP) that will be selected by the government. This company will sell power to the SIEA under a long term contract.

There are two main reasons for seeking to harness the resources of a private sector developer and operator:

Firstly, the government finances are limited as is its ability to borrow funds, particularly for such a large capital investment for Solomon Islands. The private sector is not subject to these financing constraints, and as such using the resources of the private sector will allow the hydropower scheme to be developed, where such development would not be possible if only the government was involved.

Secondly, a good private sector developer will bring extensive skills in managing hydropower construction and operations that does not yet exist in Solomon Islands. Building and operating a run-of- river hydropower scheme of 12 to 20 MW is considerably more complex than operating a similar sized diesel power station. This knowledge will be passed on to the Solomon Islanders involved in the planning, development, construction and operations of the hydropower scheme. This transfer of knowledge to Solomon Islanders will be very useful for future hydropower developments in other parts of the country.

Ladies & Gentlemen, it is an exciting project but it is also very important to note that it is still in its early stages.

There are many questions and details yet to be answered, and this workshop is an important step in reaching conclusions to the pressing questions related to the project.

Ladies & Gentlemen, this workshop will run over three days to outline the findings of a feasibility study that was recently completed.

The feasibility study outlined several potential sites along the Tina River for the feasibility study. During the workshop, it is hoped that one of these locations will be decided upon as the preferred location for the first hydropower development along the Tina River. After this decision, the second and last phase of the feasibility study will focus on the preferred location, with more analysis of the potential energy output, risks, benefits, and the development of environmental and social safeguards plans for the preferred site. Additionally, several sessions of the workshop will be devoted to environmental and social safeguards.

Observance of these safeguards will make certain that the project uses international best practice standards to ensure that the proposed project poses minimal risk to the environment and that engagement with landowners is based on an equitable, detailed and comprehensive review of their role within the project.

Open, transparent, consultation processes are being and will continue to be followed, so that all interested parties have the opportunity to air their concerns and have them addressed.

Since it became operational six months ago, the Tina River Hydro Project Office within my Ministry has been working with land owners in the Tina River area, discussing the project, informing them of potential sites, and ensuring landowners are aware that there are plans for a hydropower site. The Project Office is also working with the World Bank, IFC and EIB to ensure that the consultation and negotiations processes with landowners, environmental safeguards, and other safeguards associated with hydropower development are all in line with international best practice standards.

To conclude I would like to stress that the Tina River hydropower project represents a great opportunity for the future of Solomon Islands and that such a renewable energy infrastructure project of this size requires detailed and devoted planning.

This workshop is, therefore, one step in many steps ahead towards the beginning of the project right up to the commissioning of the scheme. Your active participation in this Workshop is sought to contribute to make the Tina River Hydro Power Project a success. The success of this project will set a model for future hydro power development in other parts of the country.

With these few words, I would like to declare the Workshop on the Tina River Hydropower Project Open!

Thank You.

ENDS

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