An Australian company is pushing ahead with plans to open a coal-fired power plant and coal mine in Papua New Guinea, despite the recent call from the world's most authoritative climate science body to completely cut greenhouse emissions by 2050.

Key points: Mayur Resources plans to open a power plant and possible coal mine in PNG

Mayur Resources plans to open a power plant and possible coal mine in PNG A new power facility is expected in just over two years, the Energy Minister says

A new power facility is expected in just over two years, the Energy Minister says Activists say the move would be counter to PNG's commitments under the Paris accords

Australian-based and PNG-focused Mayur Resources is proposing the establishment of an "Enviro Energy Park" in the industrial hub of Lae in PNG's Morobe province.

Mayur has been in talks for the project since at least 2014, but now a new memorandum of agreement (MOA) has been signed between the company, the Lae City Authority, and the Morobe Provincial Government.

The MOA details plans for a new 60 megawatt power station, with the ability to burn coal as well as use renewable biomass, solar energy, and by-product heat.

Mayur Resources' managing director Paul Mulder told the ABC the company was essentially at the stage of being "construction-ready" for the project, which he said would significantly reduce the energy cost for Papua New Guineans.

On Tuesday, Mayur released a statement to the Australian Stock Exchange detailing further non-binding plans to work with coal exporter Square at a coal mine in another province, touting the "low-ash, low-sulphur coal" found at Gulf Province's Depot Creek.

If the projects are built, they would mark the first coal-fired power plant and coal mine in the country.

Coal generates mixed reaction

If the projects are built, they will be the first coal-fired power plant and coal mine in Papua New Guinea. ( Flickr: Parolan Harahap )

The project has attracted high-profile supporters, including Energy Minister Sam Basil who did not respond to an ABC request for comment, but said in a Mayur press release that "we can expect a new power facility in just over two years from now".

"Whilst there are always those that will criticise, I take this opportunity to outline that Australia enjoys its first world developed lifestyle with 70 per cent of its total energy coming from coal," Mr Basil said in the release, adding that this project would only be a much smaller fraction of PNG's total energy.

PNG is a signatory to the Paris Agreement and, like Australia, recently signed the Pacific Islands Forum's Boe Declaration, which says climate change "remains the single greatest threat to the livelihood, security, and wellbeing of the peoples of the Pacific".

Some experts believe there are alternatives in PNG for energy generation. ( ABC News: Josh Bavas )

An assessment from PNG's Conservation and Environment Protection Agency has given its endorsement to the plan, but it still faces community backlash.

"Our neighbours are really facing an existential crisis from sea level rise," Christian Lohberger, head of anti-coal activist group Nogat Coal, told the ABC.

"So we think it's irresponsible for Papua New Guinea to invest in coal, especially because there are many, many alternatives in Papua New Guinea for energy generation," added Mr Lohberger, who also works for the Astra Solar company in PNG.

In 2016, World Bank data suggested only 23 per cent of the population had access to electricity, and even larger, electrified cities like the capital Port Moresby and Lae experience severe and frequent power outages.

Mr Mulder of Mayur Resources said PNG was an "energy-starved nation" and that the proposal "reduces the emissions footprint of what is currently the state of play in Papua New Guinea."

Most prominent businesses in Lae use diesel-powered generators, which can produce carbon dioxide and other particulate emissions, and are known to reduce air quality.

"We've got the emission thing, but by the same token, if you lived in Lae, you would understand," Lae MP John Rosso told the ABC.

"We have huge power fluctuations and we [sometimes] go a week without power.

"Our factories are suffering, our consumers are suffering, and I had to make that call, because we can't keep sitting in the dark and letting our kids sit in the dark."

The plan does have some resistance within government circles, with the Minister for Lands and Asia-Pacific Economic Cooperation (APEC) Justin Tkatchenko telling the ABC "for me personally … I am against coal fire, 100 per cent".

Final hurdle is 'unsolicited' power agreement

Generic image of power lines in unknown location. ( Pexels.com )

The recent MOA is not an official contract, but Mayur said it had completed a feasibility study, selected a site, secured environmental approval, and received bids for the construction of the facility.

The plan also details a commitment to fully fund a research institute at the University of Technology, and provide $130,000 per year for 25 years to a local charity.

The sticking point for the project is now getting national provider PNG Power to sign a Power Purchasing Agreement (PPA) before energy could be sold to the country's grid.

PNG Power's acting managing director Carolyn Blacklock said they had received four "unsolicited" PPA proposals from Mayur over several years, without a public tender process, and that it was unlikely a deal would be signed without a competitive bidding process.

But Mr Mulder said the company received a written request for a PPA and was provided with PNG Power documentation to submit, which they did in March 2016.

The ABC has sighted a letter that appears to be from then-director of strategic planning and business development Chris Bais dated October 2015, which "welcomes" Mayur to submit a PPA proposal.

Ms Blacklock took on the acting managing director job earlier this year following a reshuffle of the company's board and has overseen a massive restructure of the company.

She said regardless of what correspondence the company had engaged in to date, PNG Power had no obligation to accept any PPA proposal.

"In PNG we have very high costs over power, in part driven because what has been done at PNG Power: uncompetitive processes that have led to uncompetitive prices that leads to uncompetitive tariffs for our consumers," Ms Blacklock told the ABC.

Meanwhile Energy Minister Sam Basil was quoted in the press release as saying "there is no cheaper alternative ready to be built" and that it was time for PNG Power to "act swiftly" to finalise the agreement.

"It doesn't mean just because there's pressure applied, that the PNG Power board or myself or management are going to be swayed," Ms Blacklock said.

A month ago, Mayur resources was floated on the Australian Stock Exchange and raised $15.5 million in an over-subscribed initial public offering — money they say will go towards developing further projects in PNG.