Category Archives: Tax

Panguna work to cost K18.8 billion

Source: The National

CONSTRUCTION of the Panguna mine is estimated to cost US$4-6 billion (K12.5- K18.8 billion).

 
Bougainville Copper Ltd (BCL) secretary Mark Hitchcock said significant tax revenue would be generated in the estimated 25-plus years’ mine life, with operations starting around 2025-26.

 
Hitchcock spoke during the Autonomous Bougainville Government’s (ABG) three-day tax and revenue summit in Buka last week aimed at finding ways to improve the financial outlook for the region and the government’s ability to fund services for its people.

 
Hitchcock was invited to present development of a new Panguna mining project, including its potential revenue and broader economic benefits.

 
Once developed, the mine would generate significant tax revenue over the 25-plus years operational life of the project.

 
The presentation was drawn from an order of magnitude study which was updated late last year.

 
A realistic timeline for the Panguna project will see the mine operational around 2025-26, Hitchcock said, and the potential tax revenue gains had to be viewed as a longer term prospect with no short-term, direct tax generation, although the project’s development and construction period would present income generation opportunities.

 
Hitchcock highlighted the need for certainty in relation to the tax regime that would apply to the project and warned that excessive tax imposts would undermine its viability. “One potential pathway is for the ABG and PNG national government to work towards a joint agreement to provide assurances regarding applicable taxes that would apply over the longterm,” Hitchcock said.

 
In addition to tax revenue, he said the Panguna project would have a wider multiplier effect in terms of economic benefit.

 
“A project of this scale will help stimulate the economy in a multitude of ways in areas such as training and employment, new business opportunities in the supply of goods and services and the provision of new infrastructure to name a few,” he said.

 
Hitchcock congratulated the ABG for holding the tax and revenue summit and said BCL welcomed opportunities to contribute to important policy discussions in Bougainville.

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Govt to inject K310mil into forex market

Source: The National

THE Government plans to inject US$46 million (about K142.6 million) into the foreign exchange market to ease the shortage problem.

 
A statement from the Bank of Papua New Guinea and the International Revenue Commission yesterday said there would be a further US$54 mil (about K167.4 mil) released into the market later this week as part of the two-phase intervention by BPNG.

 
The statement said: “In regard to the US$100 million (K310 mil) intervention in the market, the bank has decided to implement the intervention in two phases.

 
“The first release of US$46 million  to be effected immediately for many small import orders.

 
“The remaining US$54 million will be effected for few large imports in the first week of October 2017.”

 
Deputy Prime Minister and Treasurer Charles Abel thanked BPNG and IRC for undertaking immediate measures as part of the Government’s 100-day economic recovery plan.

 
“The fundamental issue is the over-reliance on imports of processed goods for our needs and the lack of self-sufficiency in agricultural food production which will result in major import replacement,” Abel said.

 
“This is exacerbated by a tax system that is quite complex to administer affecting collection of tax revenue that is due to the State. The 100-day plan intends to begin the process to address these issues.”

 
A memorandum of understanding will be signed this month to allow Puma’s purchase of crude oil from Oil Search to be in kina.

 
BPNG met with Oil Search and Puma Energy to implement the agreement reached between Abel and both parties to sell to Puma Energy domestically-produced crude oil which will be finalised and a memorandum signed.

 
The arrangement will accommodate 50 per cent of Puma’s crude imports.

 
BPNG is also in the process of reviewing offshore foreign currency accounts to assess if those accounts holders have to remit some of the balances to their inshore accounts.

 
The Government is also understood to be in talks with the Asian Development Bank and the World Bank for a further loan facility which is expected to be finalised this month.

Government Cuts Rice Imports

05:00PM 


BY GORETHY KENNETH of Post-Courier

Annually the government is spending K600million to import rice.

 

The government plans to cut the import of rice despite an increase of 5 percent annually in consumption.

 

IT will take at least five years for Papua New Guinea to start producing and exporting its own rice and for the eight million people to consume.

 

Agriculture Minister Benny Allen in his response to Menyamya MP Thomas Pelika said there are at least five companies that are in the process of producing rice locally – one of which is Naime Rice.

 

Minister Allen was taken to task by Mr Pelika during Question Time in Parliament about the Government’s plans to have rice grown locally and help with job creation for provinces like Menyamya.

PM O’Neill dismisses Sir Mekere’s claims

 

Source: PNG Facts Online

 

Prime Minister Peter O’Neill has dismissed claims by Moresby North West Sir Mekere Morauta that the divesting of shares in Oil Search Limited had cost the Government a major loss.

O’Neill, speaking from New York where he is attending the UN General Assembly, questioned the integrity of of Sir Mekere Morauta, over comments he has made in relation to the decision by Kumul Petroleum Holdings Limited to divest shares in Oil Search Limited, saying it is just typical Opposition politics.

 

 

The Prime Minister dismissed the claims that are based on Sir Mekere’s imaginary figures, saying instead that on balance the State had made about 100 million from the sale in Oil Search project.

 

 

“The State’s investment in Oil Search was the right decision at the time, it helped maintain confidence in the oil and gas sector, but was undermined by unforeseen global factors and baseless political opposition,” the Prime Minister said.

 

 

“This has been a business decision based on anticipated return on investment, and has delivered the most prudent outcome for the State considering the consequences of the earlier energy price lows.

 

 

“Terminating the collar arrangement has resulted in a recovery of the remaining prepaid interest on the loan.

 

 

“The balance from this deal will likely be a K100 million gain for Papua New Guinea.

 

 

“This is nothing like the shady deal by Sir Mekere’s friends in the Somare Government, who lost the State hundreds of millions of Kina through the IPIC deal and subsequent losses suffered as result of currency swap on the loan from US dollar to Australian dollar.

 

 

“The reality is that the Oil Search arrangement did not cost the State a toea from Treasury in repayments or interest.

 

 

“Repayments were made through the collar and the sale of shares was scheduled over time to repay the loan.”

 

 

The Prime Minister said in early 2014 that action had to be taken to protect the interests of the State, and investment in the largest resources company was the right move.

 

 

“We were at risk of a situation where shareholding in one of the largest companies in the country would fall into the wrong hands.

 

 

“We had seen similar outcomes ten years earlier when a previous Government had allowed this to happen.

 

 

“The Government’s intervention to buy shares in Oil Search had a positive influence in the direction Oil Search has taken and boosted investor confidence in Papua New Guinea.”

 

 

PM O’Neill condemned the blatant ongoing negative politicisation of investment in the country’s resources by people who should know better.

 

 

“There are arm-chair critics who make no positive input to business and investment.

 

 

“The Oil Search investment is more complex than they can grasp, and misleading claims by the likes of Morauta only ever undermine confidence.

 

 

“Who is he to talk about investment?

 

 

“He ran all state investments into the ground nearly twenty years ago, and today he maintains his illegal control of PNGSDP. This is fraud against the people especially in Western Province and our Government will commence criminal investigations.

 

 

“The question must be put back on Morauta to explain the many hundreds of millions of Kina that have gone missing from PNGSDP in the form of advisory fees and commissions and excessive board fees.”

 

 

The Prime Minister said the divestment does not diminish the excellent relationship between the State and Oil Search.

 

 

“The Government and Oil Search have continued co-operation and mutual interests across a range of activities in Papua New Guinea.

Kumul Holdings to account for sale of stake

By HELEN TARAWA of The National 

 
DEPUTY Prime Minister and Treasurer Charles Abel says Kumul Petroleum Holdings Limited  will report on the net outcome of the government’s 10 per cent stake in Oil Search Limited that it has divested.

 
Abel told The National that KPHL was holding the debt and the shares.
The debt has been cleared and shares sold.

 
“The collar loan protected KPHL from some of the share price drops,” Abel said.
“They will calculate and report on the net outcome of the transaction.”

 
KPHL managing director Wapu Sonk said they were preparing for the PNG LNG project expansion, the Papua LNG, the power project and their own investments.

 
Responding to claims of the sale of shares as a rescue package for the government, Sonk said the government did not pay anything.

 
“This is not a rescue package because this was never on the government’s balance sheet,” Sonk said. “The government wasn’t paying anything. It was Kumul.

 
“We’re preparing for the PNG LNG project expansion, Papua LNG, the power project, our own investments going forward. So it’s got nothing to do with the PNG Government.”
KPHL on Friday announced that it had sold its shares in Oil Search Limited and had ceased to have any interest in the firm.

 
Sonk, who announced the decision in the presence of KPHL chairman Sir Moi Avei, said it would continue to be responsible for managing the State’s 16.77 per cent equity in the PNG LNG project.

 
“As a close partner of Oil Search in PNG, we look forward to continued cooperation on our numerous projects.”

 
Sonk explained that the UBS collar loan was not a normal loan.

 
The value of the parcel of shares on any day supports the loan itself which, in this case, was approximately 149 million shares.

 
A collar is a protective-options strategy that is implemented after a long position in a stock has experienced substantial gains.

 
Sir Moi said KPHL had made about K100 million (A$35 million) as a result of the transaction.

 
He said the current oil and LNG price environment and projected  long-term views indicated that oil prices would remain about the same for the next few years.

Pruaitch welcomes Oil Search decision

By: Freddy Mou via Loop PNG.

21st September 2017.

 

Opposition Leader Patrick Pruaitch has welcomed the decision by Oil Search to discuss the future sale of domestic crude oil to the Napa Napa refinery in Kina, rather than US dollars.

 

Pruaitch says he stood by his earlier statement that it is in the national interest for locally produced resources such as crude oil, copper, gold, fishery and forest products, to be sold to local purchasers in PNG’s national currency, the Kina.

 

 

Pruaitch believes it is an infringement of our sovereignty for lenders, or any other entity, to insist that domestic resources have to be paid for in US dollars or other foreign currencies, even when sold to PNG buyers.

 

Such arrangements add to the cost of doing business and hamper efforts to encourage domestic processing.

 

“If it is true that lenders to Oil Search or the PNG LNG Project made this a requirement of their loan, the government of the day should disallow this practice in future.”

 

Pruaitch says he was not convinced by the Oil Search assertion that LNG project lenders had a loan condition that gas and condensate sold by the project must be priced in US dollars.

 

“I am fairly sure PNG Power is not paying in US dollars for gas used by ExxonMobil to generate electricity for Port Moresby. This should also not be the case for gas-fired power from Hides that Oil Search sells to the Porgera gold mine.”

 

He states under the 100-Day Plan announced by PNG Treasurer Charles Abel, it was disclosed that discussions are underway for Puma Energy, operator of the Napa Napa oil refinery, to pay for 50 percent of crude oil and condensate purchased from Oil Search in Kina.

 

rer Charles Abel, it was disclosed that discussions are underway for Puma Energy, operator of the Napa Napa oil refinery, to pay for 50 percent of crude oil and condensate purchased from Oil Search in Kina.

 

Acting Prime Minister Abel on Tuesday confirmed this arrangement when meeting with provincial governors in Port Moresby.

No Cut To DSIP, PSIP

Source: Post- Courier 

 

September 21, 2017 

 

 
There will be no cuts to province and district services (provincial services improvement program and district services improvement program) funds, says Prime Minister Peter O’Neill.
He said in a statement yesterday that 2017 was almost over therefore Governors and Members of Parliament will receive only K2 million each, two months of their PSIP and DSIP funds this year.
Mr O’Neill, who is in New York for the United Nations’ General Assembly, expressed confidence that the Supplementary Budget will be tabled when Parliament meets, starting on Monday, September 26.
He said the supplementary budget was necessary to balance the budget due to the adjustments in revenue collection, and more importantly, to reprioritise expenditure to focus on the key development agenda.
“The 2017 Budget plan was based on commodity prices for our exports together with revenue generation,” the Prime Minister said.
“We are still in a challenging global economic environment with a slow rebound in commodity prices, and this places pressure on expenditure.
“We will continue to adjust and reprioritise expenditure to ensure that we protect and build on the gains we have achieved in the past five years in healthcare, education, infrastructure, law and order and empowerment of our people.
“The continued investments in these areas is vital to our long-term development and improving the lives of our people.”
The Prime Minister said the devolution of authority to provinces and districts continues to be a core priority for the National Government.
“Our DSIPs and PSIPs are vital to achieving our development objective right around the country,” he said.
“For the first time in history, our government has been getting funds directly to our districts and provinces where our people live.
“People forget that under past governments, no such funding was given to districts and provinces.
“Our DSIP and PSIP policy has seen restoration and development of our district and provinces, and our government is committed to these two programs.”
Mr O’Neill said that in the Supplementary Budget, the government was not cutting DSIP and PSIP funds; “That is certainly not the intention of the government.
“Because we have only two months left in the fiscal year 2017, the government is providing K2 million for each district and province.
“The balance will be paid to the districts and provinces over the term of this parliament.
“These two programs are an integral part of our development agenda, and we have seen these programs deliver real change,” he said.
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