Korean companies Korea Water Resources (K-Water) and Hyundai Engineering Corporation are meeting with representatives from Solomon Islands Government ministries and Solomon Power in a bid to finalize key project agreements for the planned Tina River Hydropower Project.
The discussions, which began in Honiara last week and are now continuing in Brisbane, are a crucial component in the preparation phase of the project, with discussions focused on key technical and financial arrangements for the project, including the future operating and financial structure of the hydropower facility, all factors which will contribute to the cost of electricity delivered to Solomon Power through the project.
The Solomon Islands delegation for both the Honiara and Brisbane meetings includes representatives from the Prime Minister’s Office, Ministry of Finance & Treasury (MoFT), the Ministry of Mines, Energy & Rural Electrification (MMERE), Solomon Power, and the Investment Corporation of Solomon Islands (ICSI). ICSI would hold the government shares in the project company.
A number of international development partners are attending the meetings including the International Finance Corporation (IFC), which is supporting the Solomon Islands Government to secure agreements with the project developers. Representatives from the World Bank and the Asian Development Bank (ABD) have also attended the meetings as observers, with both continuing work to secure low cost financing for the project, which if approved, will be a large-scale infrastructure project and represent an international vote of confidence for investment in the Solomon Islands.
Solomon Islands Prime Minister, Hon. Manasseh Sogavare, said he was very pleased with the extensive concessional and grant financing which is being mobilized for the project as this will help to reduce the overall cost of the project.
“I hope the negotiations in Honiara last week and this week in Brisbane will bring some additional cost savings for the Tina River project, so that the cost of electricity in the country can be further reduced. In any case, I am confident that the Solomon Islands delegation will reach an agreement with the Korean delegation on the overall cost and financing terms as well as the substance of the project agreements so that we can move to financially close and document signature in the next few months and start construction by the end of this year,” he said.
Michel Kerf, Country Director for the World Bank in Timor Leste, Papua New Guinea & the Pacific Islands, who was in Honiara last week to meet with high-level officials regarding the project, said the World Bank was committed to supporting the Solomon Islands Government turn the Tina River project into reality.
“Tina River Hydro is a milestone project for Solomon Islands; with the potential to reduce the cost of electricity for Solomon Islands families and reduce the country’s dependence on expensive diesel fuel,” he said. “The successful implementation of the Tina River project will send a powerful signal internationally that Solomon Islands is a country where complex infrastructure projects can be delivered.”
Donors that have proceeded to seek approval of funding for the project include the Asian Development Bank (ADB), the Green Climate Fund, the World Bank, Economic Development Cooperation Fund (EDCF) of Korea, and the Government of Australia. The respective boards and governments of these funding bodies are expected to finalize their funding support over the next few months.
The International Renewable Energy Agency (IRENA)/Abu Dhabi Development Fund (ADFD) has already approved and announced funding support of US$15 million for the project, and K-Water has secured the approval of its management to make an investment in the project.
Tina River Hydro is a significant national project for Solomon Islands that aims to reduce the cost of electricity for Solomon Islands families and help the country to meet and exceed its climate change mitigation targets. When completed, it will allow Solomon Power to provide lower cost electricity to thousands of homes, schools, hospitals, clinics and businesses whose growth has been hampered by electricity costs that are amongst the highest in the world.
The planned project includes the construction of the main hydropower facility (including a dam, headrace tunnel and powerhouse), access road, transmission lines linking the hydropower station to Solomon Power’s Honiara grid, and technical support to the Solomon Islands government during construction and until the commissioning of the hydropower plant.
Through landmark agreements with the landowning tribes, the government has already acquired the land required for the project, and is in the process of supporting the establishment of innovative arrangements to distribute land compensation and future royalty funds equally to all members of the tribes, regardless of gender or age.
To ensure that the broader community benefits from the project, the Solomon Islands government is also advancing plans to establish a benefit sharing fund for investing in community development activities to support the health and wellbeing of communities in the project area.
