The $34.5 million contract with China National Electrical Equipment Corp. is for the construction of an 18-megawatt hydropower station at Yonki for additional power generation to supply the Hidden Valley gold mine.

PNG Power contracted CNEEC under an engineering procurement and construction contract to construct the power station at Yonki Toe, a part of the Yonki Dam in Eastern Highlands province.

Additional funding for the project will come from a PNG consortium of financial institutions led by Bank South Pacific and including ANZ, Westpac, Nambawan Super and Nasfund.

"The additional 18 megawatts will give a total power output of 80 megawatts from Ramu power station, sufficient to meet existing Ramu system demand plus Hidden Valley gold mine," an official said in a statement.

CNEEC reportedly started design work on the project in May with actual construction work to start on site next January. The power plant is expected to be fully operational by 2010.