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NASFUND Releases Audited 2020 Results
by PNG Business News - March 23, 2021
The National Superannuation Fund Limited (Nasfund) is delighted to release its full-year 2020 findings.
The audited results for the year ended December 31, 2020, as reviewed by the Board at its meeting, included a Net Profit of K222.9 million and a Net Asset Value of K5.57 billion.
Following these findings, the Nasfund Board of Directors approved a 4.5 per cent interest-crediting rate for the 2020 Financial Year, amounting to over K235 million, which has already been credited to members' accounts.
On behalf of the Board, Chairman Charles Vee indicated that the findings reflected the Fund's most difficult year to date, especially in light of the weakened economy and the effects of the COVID-19 pandemic.
“In response to these headwinds, I am pleased that the Fund has demonstrated once again strong resilience and exceeded its budgeted cash profit after tax of K266 million by K15 million due to tight control on operating expenses and lower tax costs,” he said. “The pandemic and other external factors beyond our control adversely impacted the economy which resulted in valuation losses of K155 million across our property and equities investments, including K38 million in additional provisions to comply with international accounting standards (IFRS 9), which was partially offset by foreign exchange gain of K97 million due to the Kina depreciating against other currencies. This resulted in an overall net valuation loss of K58 million which represents an additional 1.10 per cent crediting rate, members have missed out on. While the crediting rate of 4.5% has been achieved for our members, we remind members again of the benefit of locking away savings over a long period. The value of a member’s savings grows significantly through the effect of compound interest and additional contributions. I am pleased to inform our members that we continue to meet our investment target of achieving returns above CPI over a rolling five year period which on average is 5.7 per cent compared to CPI average of 5.4 per cent over the same time. Additionally, over the last five years, Nasfund has paid over K1.27 billion in interest to members and paid out K2.18 billion in superannuation entitlements to its members. We remind members that your long term Nasfund savings does have its benefits to ensure a comfortable retirement after active employment.”
Other highlights for 2020 include:
- Contribution receipts increased by 2%, totalling K575 million.
- The membership base has grown by 3% to 604,587 contributors.
- The number of employers has increased by 7% to 2,576.
- Superannuation withdrawals increased by 22% to K469 million, compared to K384 million in the budget.
- The launch of a new logo.
- The opening of a new Member Services Center in Waigani, NCD, with plans to expand to Lae.
- Hagen and Goroka headquarters are being refurbished.
- A Memorandum of Understanding was signed with the Provincial Government of East Sepik to provide superannuation services to cocoa and vanilla farmers.
- The third Employer Awards Evening was a huge success.
“In 2021, we are continuing our focus on enhancing our member services, including housing developments while actively seeking to grow our membership and new investment opportunities,” Vee said. “I would like to acknowledge the commitment of our CEO Ian Tarutia, the management team and staff for their hard work and support in delivering commendable results in 2020.”
CEO Ian Tarutia said, “During this period of uncertainty, a lot of our employers had to take drastic action to keep afloat. Labour shedding and workforce rationalizing were initiatives taken by employers to remain operational during the COVID State of Emergency imposed last year. Additionally, fall in Oil Prices and the closure of Porgera Mine impacted companies like Oilsearch and Barrick Joint Venture and resulted in a large number of employees being laid off. As a consequence, while this placed pressure on our member services due to the increased volume of applications and enquiries, I am pleased to inform you that we paid all clean applications as and when they became due. On this note I commend our staff for their professionalism and empathy to meet member demands, during these trying times. I also acknowledge those members opting to not withdraw all their savings, managing themselves through other means and retaining a portion for their future benefit.”
Tarutia also warned that, while withdrawals in 2020 were well managed, if Porgera is not opened in the near future and other major resource projects are not launched to stimulate the economy, more job losses will occur, and we may see a surge in withdrawals this year that exceeds what we paid in 2020.
He added, “COVID-19 prevention and containment requires distancing from one another. This is a problem for our members as a majority do not have their own homes and live with extended family. Secondly, we are already experiencing the inadequacies of our current health system, as COVID-19 transmission rates escalate throughout the country. We already know how to grow members wealth, we have been doing this successfully since 2000 through late Sir Mekere’s superannuation reforms. Now it is timely to look at how we can assist members with quality homes they can afford. Not just release some of their retirement savings for housing, but provide a whole house, land package. The target audience will be first home buyers only. We should also be looking at investments in the health sector to look after members and their families when they are ill. A lot of our members are dying from preventable diseases. What is the point of saving for retirement when their health cannot be looked after?”
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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.”