Tag Archives: Trade

Commodity Boards warned

 

23rd November 2017.

Commodity Boards in PNG have been warned to perform or else will not receive funding from 2019 onward.

 

Planning and Monitoring Minister, Richard Maru, issued the warning on Wednesday during the inaugural National Agriculture Summit.

 

Maru said he wanted to see a high performance culture as well as good governance practise instilled in all commodity boards.

 

He said millions of kina had been squandered by some commodity boards despite continuous government funding over the years.

 

Minister Maru said under his watch, any commodity board that does not perform well and is not accountable for the funds it uses will not receive any further funding after 2018.

 

“We must overhaul the boards. And we will only support that boards that perform deliver value, have a good corporate governance structure, and can show us the funds are managed well.

 

“Only performers will continue to receive government funding.

 

“If we are funding you and your industry is declining in output and production we have a problem. We should get that resource from you and give it to another sector that’s performing,” said Maru.

-Author: Cedric Patjole

-Via Loop PNG.-

Qatar’s Broadening Economic Base Offers Opportunities for PNG

 

The Prime Minister, Hon. Peter O’Neill CMG MP, has concluded a series of high level meetings with Government Officials in the State of Qatar, from which he anticipates will come greater technical co-operation and investment from a country that has transitioned into the LNG market as is the current experience of Papua New Guinea.

 

Following meetings with Qatar’s Prime Minister, Finance Minister and other senior Government Officials, while on his return from the APEC Summit in Viet Nam, Prime Minister O’Neill said the key outcome of the visit is a further demonstration of the urgent need for Papua New Guinea to properly diversify the Nation’s economic base.

 

“We have been talking about diversifying our economy to maximise gains for some time, and now is the time to act so we can build our key sectors into the future,” the Prime Minister said at the meetings in Doha.

 

“There is great potential for creating thousands of new jobs, establishing new skills and stimulating small business.

 

“From humble beginnings, Qatar has diversified its economic base better than most resource-focused economies around the world.

 

“While oil and gas remain the cornerstone of its economy, Qatar has made inroads into downstream processing and other energy related fields.

 

“Qatar has also leveraged its resources boom to expand the tourism sector, and made substantial investment in agriculture around the world.

 

“The perspective from our engagement in Qatar is clear, that we have to not only get the most from expanding our LNG production, but we have to utilise these gains to diversify production and jobs in our economy.”

 

The Prime Minister said following the visit this week, a delegation from Kumul Consolidated Holdings, as well as other Government agencies and private sector representatives, will meet with officials in Qatar.

 

“The Qatar Prime Minister and I have agreed that we will bring together a joint forum to look at capacity building and investment opportunities between Papua New Guinea and Qatar.

 

“As an emerging economy, Papua New Guinea must take advantage of new opportunities to expand the economy. Importantly we must move beyond the boom-and-bust cycles that comes with dependency on global energy prices.

 

“In doing so we will draw on the experience and capacity building opportunities from countries like Qatar, and our other partners around the world.

 

“I look forward to tangible outcomes from the discussions that have taken place over the past two days, and delivering additional policy initiatives to work with the private sector.

 

“I thank the Prime Minister of Qatar, Ahmed Bin Jassim Bin Mohammed Al-Thani, for his invitation for Papua New Guinea to undertake an Official Visit to his country.”

 

Photo: Papua New Guinea’s Prime Minister, Peter O’Neill, meeting with Qatar Prime Minister, Ahmed Bin Jassim Bin Mohammed Al-Thani, meeting in Doha on Tuesday.

-Press-

PNG’s Self-Sufficiency Drive Offers Openings For Agri-Industry

 
 
 
October 31, 2017
Via: Post-Courier
 
 
After being returned to office following the National Elections in Papua New Guinea earlier this year, the government of Prime Minister Peter O’Neill has stepped up its drive to improve food sustainability and reduce foreign exchange outflows.
 
The administration’s focus on import replacement and food self-sufficiency should create opportunities for the food processing industry, in particular, encouraging investment in downstream capacity.
 
The government plans to place investment funds, to be dispersed through the Supplementary Budget, with the state-owned agriculture investment company, Kumul Agriculture, which can then partner with local and international investors.
Richard Maru, Minister for National Planning and Monitoring, told local media in September that the entity is soon expected to start receiving funds to invest in the sector.
 
According to local media, the plan to establish a state-owned investment vehicle for agriculture was first mentioned in 2015.
 
Government to mobilise investment funds, target agriculture. In particular, the government is looking to curb the island nation’s sizeable food import bill – reported to be as high as PGK4bn ($1.3bn) per year – by expanding the agriculture sector.
While PNG is self-sufficient in many fresh or semi-processed foodstuffs – rice being the key exception – it has to import much of its processed food, both for human consumption and livestock feed.
Speaking to local media at the end of August, Charles Abel, DeputyPrime Minister and Treasurer, said that the rice import bill was the second-highest consumer of foreign exchange in PNG, after the fuel import bill.
Loi Bakani, governor of the Bank of PNG, also highlighted import costs as being a top concern.
“In particular, I am concerned about food imports, because it constitutes the highest demand for foreign exchange and it is not matched by any foreign exchange revenue from food exports,” he told an investment conference in Sydney, Australia, in mid-September.
 
Courting downstream agriculture investment to generate export potential
In addition to boosting primary production, PNG is seeking investors in downstream value-added processing, which could create export potential.
Palm oil and coffee, among others, have been cited as examples, with processed goods both easier to freight than fresh, and able to generate far higher returns.
“We have water and very fertile land,” Mr Maru told local media in mid-September.
“What we have to do now is to mobilise the land, and then find investors who have the technology and the capital to partner (with) us to start investment in commercial agriculture in a very significant way.”
 
Recent investment in value-added growth areas. The agro-processing industry is already seeing an increase in investments that should help reduce the food import bill and improve sustainability.
Agri-business firm, Innovative Agro Industries, is currently developing a K130m ($40.6m) dairy farm and processing facility outside Port Moresby, with production set to begin in November. When fully operational next year, the 5m-litre annual output from the plant is expected to cut up to K400m ($124.7m), or 10%, from PNG’s import bill.
An even larger investment is taking shape in West Sepik Province, around 30km from the Indonesian border. Chinese investors signed a memorandum of understanding last December with the PNG Government to develop a $3.8bn industrial park. Along with an industrial hub for processing steel and cement, the project – described as a long-term venture – features a processing cluster focused on fish, cassava, tropical spices and timber.
Fish is an area where PNG has significant potential for value-added processing. The country’s 2.5m-sq-km exclusive economic zone is home to roughly 18% of the global tuna supply, according to a 2013 report by Pacific Tuna Forum, and an estimated 750,000 tons of the fish is caught each year in PNG waters.
While this represents a raw value of around $1.5bn, most of the value creation occurs during processing, which takes place offshore. Countries such as the Philippines and China generated an estimated K30bn ($9.4bn) in added value by processing raw tuna exports from PNG, the Manufacturers Council of PNG reported.
 
Agro-processing agenda part of broader bid to industrialise
Promoting value-added agriculture forms part of a broader national effort to increase industrial capacity in PNG.
Speaking at a recent conference on financial inclusion and innovation, Wera Mori, the Minister of Commerce and Industry, said the government aimed to restructure the economy so that 70% of gross domestic product (GDP) was generated by sectors such as manufacturing, agriculture, fisheries and forestry, with the latter three all having strong downstream potential.
To help achieve this goal, Mr Mori said the government would move to improve access to credit, introduce regulatory and supervisory reforms, and further promote micro-, small and medium-sized enterprises.

Kerowagi To Have New Airstrip

October 18, 2017

 

Source: Post-Courier

 

BY LYNETTE KIL 

The people of Kerowagi district in Chimbu Province will soon have access to a new airstrip after more than 70 years.

The last flight out of Kerowagi was in 1935 by an airplane run by the Lutheran Church.

Local MP and Vice Minister for Mining Bari Palma initiated the airstrip project as one of the major impact projects for the district.

“This project will become the major catalyst for the creation of a local based economy that will benefit the people in a big way.

“I’ve got bigger plans for the district. All I want is total cooperation from the landowners whose land will be affected by projects,” Mr Palma said.

“If we want more developments we need to free up land and allow contractors to mobilise their equipment and freely engage in the contracts awarded to them.” He said landownership issues have always remained a major hindrance to development.

The first phase of the 1.4km runway clearing has been completed last week and this week, the local contractor Kaiaworks Engineering Limited is into the second phase with gravelling and compacting.

Mr Palma said there are plans in place to open up the airstrip for both Simbu and neighboring Jiwaka provinces adding that would encourage business opportunities to thrive in the region.

“As part of my long term vision, I wish to open up Kerowagi as a central highlands economic hub by which the airstrip is seen as a focal point for all economic activities,” he said.

“There’s a MOU already in place with the Outback Aviation in Australia. The company will take Kerowaghi as its central area of business and further improvements will be done to the airstrip to make it reach the national standards to serve the people well.”

First Secretary David Dom and other support officers including Thomas Kela, Joseph Wamil and Kagl Kua said the project on the ground is within scope and well coordinated to meet the deadline requirements.

They said the people of Kerowaghi highly commended the MP for initiating such an impact project that will be of benefit to the general populace.

Meanwhile, the Kundiawa airport is currently not in use despite major rehabilitation work done by the National Airports Corporation (NAC).

Proposed policy to declare revenue

Source: Loop PNG

9th October 2017.

 

The Department of Mineral Policy and Geohazards Management (DMPGH) says it is working to introduce a policy for stakeholders in the mining industry to declare any revenue received or made from mining projects.

 

Secretary Harry Kore told Loop PNG that the policy idea came about during consultations for the Revised Mining Act.

 

He said while there are reports of mining revenue generated, a lot of locals impacted by mining activities claim to not see any tangible results.

 

Kore said the policy will ensure stakeholders such as provincial governments, authorities such as the Mineral Resources Authority (MRA), Mineral Resources Development Cooperation (MRDC), as well as landowner association chairmen and landowner company CEOs declare revenue received for the benefit of all.

 

“You fail to do that and you will be held accountable and you will be penalised under the law. So it becomes a practise. Every quarter they just declare their interest. We know that so much money goes to our landowners but whether it trickles down to the peoples is another thing,” said Kore.

 

The policy idea is similar to a draft legislation currently being drawn up by the PNG Extractive Industry Transparency Initiative to make mandatory all revenue from the mineral, petroleum and gas sectors to be fully disclosed as per good governance standards.

 

Kore said they are yet to have formal discussions regarding the policy idea however, there is cooperation and the policy complements that of the work the EITI is undertaking.

 

Secretary Kore added that one of the agendas of the policy is to ensure there is sustainability in how revenue is invested back in the country.

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.

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.

Govt To Unwind LNG Revenue Conditions

 

 

BY MATTHEW VARI

 

Prime Minister Peter O’Neill says his government is in the process to relook at agreements to see foreign revenues from gas sales that find their way into the country.
Responding to the foreign currency woes currently faced, he said with the continuous sale of LNG, a precursor for foreign currency inflows – the agreement signed by past governments were designed unfairly for the country to keep the funds overseas. Mr O’Neill said this when East Sepik Governor Allan Bird asked why the sale of a shipment of gas at US$50 million, every three days, could not alleviate the forex issue.

 
“They have allowed exporters and proponent, developers to park all these revenues overseas. While we are making the exports they have been allowing them to park the money overseas and the money is not coming back into the country.”

 
“That is the reason why we are not receiving enough foreign currency even though we are making the exports,” Mr O’Neill said.

 
“Agreements have been designed very unfairly for Papua New Guinea. There have been of course smart economists in the past always thought that the fear of the Dutch disease, what they call that there is too much foreign currency in the economy.”

 
He said this fear has resulted in the parking of funds outside of the country through the agreements signed by the previous regime that took the lead in the LNG negotiations.
“We are trying to unwind that, talking to some of the project developers that they must bring in foreign currency that is rightfully Papua New Guinea’s back into the country.”

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.

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