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Project Relies on Production of Low-Cost Power
by PNG Business News - February 22, 2021
If low-cost power can be produced, then the investment into the Ramu Two power project may proceed, said Prime Minister James Marape, who was responding to a report that a Chinese investor in the Ramu project had said that the government had nothing to do with this.
Marape added that the investment was part of the public-private partnership, where the Chinese government wants to invest in. The reports said that this investment would be priced at K6.94 billion (AU$2.6 billion) to be built by a Chinese hydropower company.
China’s Shenzhen Energy will finance, build, and operate this for 25 years before handing it over to PNG.
Marape said the Ramu project had been here for quite some time.
“State Enterprises Minister William Duma and the State-Owned Enterprises are handling that,” he said. “If the numbers are determined, the project will go ahead. If it’s not burdensome on PNG Power and if they produce low-cost power supply, then I don’t see any issue with it.”
If the numbers don’t stack up, then he said that the project might not proceed.
“It’s something that PNG Power will have a handle on at their level,” Marape said.
PNG Business News - December 09, 2020
Economist: Economy Will Be Weak in 2021
An economist said that in light of the pandemic, the economy will come off as weak next year. According to Westpac senior economist Justin Smirk, “We expect that there will be weak economic growth in 2021 following the after-shock and recovery of the Covid-19 on businesses and the economy with mining output also expected to be low. The medium-term recovery will be driven by non-resource sectors such as agriculture, fisheries and forestry, dependent on the return to production of Porgera mine.”However, Prime Minister James Marape said recently that a budget analysis done by an accounting firm said that the economy is set to rebound at 3.5 per cent next year. This is due to the recovery across most industries and improved global demand and consumption.“This will see growth rise to an estimated 10.6 per cent in nominal terms (which is an increase from an initial 7.4 per cent forecast in the 2021 Budget strategy paper) totalling K90.3 billion and is expected to increase in 2022 to reach an estimated growth at K99.4 billion,” Marape said. “The forecast increase of 10 per cent per annum in both 2021 and 2022 is the highest in PNG’s history and is larger than the growth from 2013 to 2015 when the PNG LNG project commenced production. Economic growth is projected to grow at a steady annual growth rate of 3.1 per cent over the medium term, in line with an estimated 3.7 per cent growth in the non-mining sector.”Marape said these figures represent a vote of confidence for the policies and programmes of the government.
PNG Business News - November 09, 2020
Cabinet Approves K10.2 million for COVID Research
Cabinet has approved K10.2 million in assisting COVID-19 research, including the development of research laboratories and the procurement of sampling of drugs.According to Prime Minister James Marape, the funds may also be used on the drug trials - if the Health Department approves. He said that this initiative was a “genuine pursuit by some of our own young scientists and doctors”.“Based on their research, they established a hypothesis that they can find a cure for the Covid-19,” he said. “I am not here to stop the ingenuity and brilliance of Papua New Guineans, hence, we offer our support but we will do it properly through a State-sanctioned process. All NEC documents eventually become public when associated documents to pronounce government programmes and policies are released.”In addition, Marape said that the money will be used for research and that organizations such as the University of Papua New Guinea, the Health Department and the PNG Institute of Medical Research will all be a part of it. He added that the bulk is for the re-building of the science faculty laboratories at the University PNG and is not intended for the company Niugini Biomed by scientists and doctors. “And if the medical and scientific community through peer review gives the okay, then the next phase of the work that will involve drug procurement and laboratory mix and trial will proceed,” he said.
PNG Business News - February 01, 2021
Exporters Should Take Advantage of Increased Prices
With the increased costs of minerals, Bank of PNG Governor Loi Bakani said that exporters should take advantage of these favourable costs at a time when the pandemic is still ravaging the country. “Mineral prices increased, with those for copper and nickel driven by a pick-up in growth in China,” he said. “Precious metal increased by 16.5 per cent, with the price of gold reflecting its role as a safe-haven investment during the Covid-19 pandemic and also due to global monetary easing.”In the latest report published by the World Bank last September, costs for non-energy and energy, and precious metals have risen. “Energy prices rose by 33.9 per cent, driven by cuts in crude oil production by members of the organisation of the petroleum exporting countries (Opec),” he said. “Non-energy prices increased by 9.6 per cent, with higher prices for most agricultural commodities, including cocoa, coffee, tea and palm oil. Given these unprecedented times, PNG exporters should capitalise on these favourable international prices. The country’s foreign exchange reserves are K9.31 billion as of Dec 24, 2020, an increase from K7.13 billion at the end of September. The increase was a reflection of loans and dividend payments, such as loans from the Australian government (US$100 million), Asian Development Bank (US$500 million) and dividend payments to the Government from Ok Tedi (US$113 million).”Against all major currencies, the daily kina exchange rate depreciated as of December 17, 2020.“The kina depreciated against the British pound sterling by 2.4 per cent, the euro by 2.2 per cent, and both Australian dollar and Japanese yen by 2 per cent,” Bakani said. “Against the US dollar, it depreciated by 0.6 per cent.”
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PNG Business News - April 08, 2021
Price of Oil Recovers in Spite of COVID
According to Oil Search, oil prices have risen steadily in recent months from the initial effect of the Covid-19 last year, when prices ranged about US$43 (K150) per barrel of oil (bbl), to levels above US$60/bbl (K210) since February this year. In response to questions, a group spokesperson said,“ To date, there has been no impact to production in our Oil Search operations in PNG as a result of the recent surge in the Covid-19 cases. The increase in confirmed Covid-19 cases in PNG has prompted Oil Search to enact its crisis and emergency management plans. The health and safety of our employees remain the company’s highest priority and teams have been assembled in PNG and Sydney to deploy additional support to protect our people and to ensure the safety and reliability of our operations. At our PNG field locations, we continue to operate under precautionary protocols established in 2020, which includes redeployment of non-essential personnel, restriction of access and travel to field locations and implementation of strict preventative measures and quarantine zones.” He added, “We have enacted additional risk mitigation measures include establishing ‘cocoons’ for our field teams and extending the quarantine period for employees and contractors. To date, there has not been a single positive case recorded in our operating sites outside of quarantine. We have also conducted more than 7,500 Covid-19 tests at our medical clinics and quarantine facilities in PNG. Beyond the safety of our own people and assets, Oil Search stands ready to work with relevant Government and health authorities to assist in PNG’s overall response to the Covid-19. This includes the dissemination of accurate information around the Covid-19 and vaccinations, supporting provincial health authorities to implement an effective vaccination programme, and providing logistics and cold chain support where required and as directed by the Government.”
PNG Business News - April 08, 2021
Lae Chamber Welcomes Green Energy
The Lae Chamber of Commerce and Industry (LCCI) said it welcomes any power plan that is long-term, environmentally friendly and creates jobs in the delivery of efficient, low-cost electricity in Lae and Morobe. President John Byrne referred to concerns regarding the PNG Biomass project in the province's Markham Valley when he said, “PNG Biomass has provided a solution which ticks most of these boxes, whether it fits the plan of PPL (PNG Power Ltd) is a decision beyond our scope. The recent Ramu 2 announcement is another such solution. Our people of Lae, Morobe, and PNG, not only expect but deserve, reliable, constant and cost-effective power solutions.” According to Byrne, the Lae business group praised the Lae PPL team for their commitment, hard work, and communication in maintaining an ageing and insecure grid infrastructure operational. He said many companies that had short or long-term contracts with the government were failing because of the long-standing outstanding Government bills owing to them. “The quantum of debt is not specified but very large and this added to the impact of the Covid-19, resource debates and a lack of forex is taking a toll on the business houses.,” he said.
PNG Business News - April 08, 2021
Businesses Concerned Regarding Government Debts
With the outstanding amount of government debt owed to the sector, pending landowner fees, and rising law and order woes, businesses are concerned about 2022. According to Chey Scovell, chief executive officer of the PNG Manufacturers Board, conversations within the business community revealed that the government owed companies more than K2 billion. “I don’t have an updated list, but from general conversations with business and what is being raised with the various chambers, it would exceed K2 billion,” he said. “We hear that contractors for the Department of Works have claims for this amount alone, so the number could be as high as K3 billion. No doubt they may have paid some, technically a K1 payment would be paying at least some. The Budget hasn’t been able to be implemented properly at all. Recurrent expenditure, monthly bills for things like water, power, security, rent, are not being paid in full or in many cases at all. We’ve suggested that the Government put up an online portal/list, for all creditors to register for the Government to show full or progressive payments.” Scovell compared what the government was doing to the private community to what would happen if everybody started paying taxes for one to five years but continued to use government programs. “They wouldn’t be able to survive, so how is it that they expect businesses to carry on?” he said. “It is also a bit of a cop-out that Treasury is taking a long time and in many instances taking extensive reviews of claims to see if they will pay them and by how much.” Scovell argued that the government was required to behave in good faith and to set a precedent, but that forcing or intimidating companies to make substantial reductions in compensation due for goods and services rendered was bad form. “We note there are many dodgy claims, but there seems to be little evidence that hires car firms, public works contractors and catering firms (reported as problematic areas) are having the same scrutiny,” he said. “BOC Gas waited years to be paid for medical gases such as oxygen supplied to PMGH (Port Moresby General Hospital), it was reviewed twice that I know of and not paid. The other item of note is that debt carried is a growing debt. The older it gets the more it has cost the businesses.” He added, “Also, our currency has been depreciating, many businesses based their fees on the foreign exchange rates at that time, some even had loans Just like our tax penalties, the longer they are overdue, the higher they should become. This Government isn’t doing to others as it does for itself. We still have micro, small and medium enterprises that have suffered duress due to non-payment of bills going all the way back to our 40th Independence, same goes for the 2015 Pacific Games, we hear from the regional chambers that there are many outstanding claims for the past two elections. Again, if we had a publicly available list, the Government wouldn’t be able to hide behind confusion and people could whistleblow on dubious claims.”