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Kua: State Ready to Continue Talks
by PNG Business News - April 23, 2021
According to Petroleum Minister Kerenga Kua, the window for talks on the Twinza's Pasca A gas project is still open.
Mr Kua was referring to Twinza Oil Limited, saying that the current terms of the arrangement are not suitable for any investor and that the firm has asked its Pasca A project team to stand down.
Although he acknowledges Twinza's reservations about the Pasca A agreement being signed, he believes it is the government's prerogative to negotiate better terms.
In a letter to Twinza in February, the Minister said that “the Prime Minister’s policy directives come amid an impasse between the State Negotiating Team (SNT) and Twniza Oil Limited (TOL) in reaching a closure on the Gas Agreement”.
“He has further instructed me to direct the SNT to re-negotiate certain fiscal terms with TOL to achieve his policy directives and conclude a Gas Agreement signing on or before the 21st February 2021.”
According to the corporation, the state has requested a 6% Production Levy in order to sign the deal, which is 4% higher than the Production Levy that was agreed to as part of the substantive terms ('Agreed Terms') for Pasca A, signed by the State Negotiating Team and confirmed by Prime Minister James Marape on September 24, 2020.
The additional levy demanded, according to Twinza, would make the Pasca A Project unfinanceable for any investor.
Mr Kua, in response, said: “Until the signing takes place, the window for negotiation is still open. As Minister for Petroleum, it is imperative for me to seek the best outcome for PNG.
“I understand that Twinza negotiations have taken several months to reach this point and the company has invested heavily in time and resources. But given the uniqueness of the project related to other existing oil and gas projects in the country it would be negligent for the State not to demand more benefits from this deal.”
PNG Business News - April 29, 2021
Economist Says Government Giving Misleading Message to Foreign Investors
Negotiations between Twinza Oil Ltd and the Papua New Guinea government are likely to proceed, according to an economist, but refusing to change conditions at the last minute sends a disappointing message to international investors. Marcel Schroder, an economist with the Asian Development Bank's macroeconomic analysis division, was referring to the government's announcement, conveyed to the company on April 16, that a 6% output levy is now needed to sign the agreement for the Pasca A gas project offshore of Gulf. “This is four per cent higher than the production levy that was agreed as part of the comprehensive terms for Pasca A, negotiated by the State negotiating team and announced by Prime Minister James Marape last Sept 24,” he said. In general, according to Schroder, an investor will back out if the anticipated advantages of its outside alternatives outweighed the benefits of the project under discussion. “Outside options for the investor could be projects in other countries,” he said. “Outside options for the Government are leaving the resources in the ground. A new investor may come forward if they view it as financially beneficial.” Future investors will be worried, according to Schroder, that the government may want to renegotiate the deal after development has begun. “They might also be concerned about this happening in other future agreements,” he said. “Since any investor requires to be compensated for higher incurred risks, this can weaken the government’s bargaining position, and, thus, negatively affect its take in future projects. Economically, it was sensible of the negotiation team to ask for early revenues from the project. These can be used for financing development projects and they will aid macroeconomic stability.”
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PNG Business News - May 13, 2021
National Airport Corporation to Focus on Redevelopment Projects
The National Airports Corporation plans to devote more resources to the redevelopment projects at Kavieng, Tari, and Mendi airports as part of the Civil Aviation Growth Investment Program. With the exception of three airports, all airports under the CADIP program are on a budget, according to NAC acting managing director Rex Kiponge. Apart from Jackson Airport in Port Moresby, Kiponge claims that the majority of the country's airports are unable to handle the newly launched F100 aircraft. “The introduction of F100 aircraft has deteriorated the condition of runways in PNG. Under CADIP, fencing and runway length deficiencies will now meet the F100 and ICAO requirements. CADIP was implemented to meet the minimum PNG Civil Aviation Rules (CARS) and the International Civil Aviation Organisation (ICAO) standards and recommended practices in all the 22 airports in the country. “The F100 aircraft require a minimum runway length of 1900 metres –– only three airports meet this requirement.” The F100 will be able to land at 12 airports thanks to a CADIP runway length upgrade. Port Moresby is now the only province that meets the operating criteria for F100 planes. Standby control, security fencing, apron parking, runway, taxiway, and apron strength, and a runway length suitable for takeoff at maximum payload are all part of the 22 airport upgrades. Kiponge recently visited the three airports and expressed his satisfaction with the development. Contractors have already finished construction on the security fence at Kavieng Airport, and work on the runway extension is going well. Once the runway extension is complete, the contractors can begin work on the terminal. He mentioned that the runway extension at Tari Airport is complete, and contractors are currently working on the apron, which will be finished until the runway extension is completed. Owing to the contractors' inability to obtain materials for the runway at Mendi Airport, NAC has requested that they redo the runway before moving on to the other areas. “Despite whatever issues within NAC, I will ensure that all 22 NAC’s airports undergoing upgrading will be completed and I will put in a lot of efforts and focus to makes certain work is done well and completed,” Kiponge said.
PNG Business News - May 13, 2021
Govt to Focus on Downstream Processing
The government is putting a lot of effort into encouraging downstream production in the region. This was said by Prime Minister James Marape during a visit to Paradise Foods Company Limited. “We are focused on downstream processing as far as going forward is concerned –– instead of exporting raw products,” said Marape. “We want to go downstream to satisfy our local markets as well as export to economies around us.” PNG is fortunate, according to Marape, to have access to 60% of the world's gross domestic product (GDP) through the APEC network. “As well as, not just the APEC network, but in the vicinity of PNG’s accessibility to markets, we have over 4 billion people from the Pacific, Northern Asia, Western Asia and Northeast Asia put together. “So to satisfy our local markets in PNG for our 8 million-plus people, as well as the opportunity of exporting to markets closest to us like our neighbouring countries.” Marape has stated that he supports downstream production and marketing of PNG's natural resources both locally and internationally. “Today, I am privileged to visit an industry that has been at work since 1945, and I’d like to thank Paradise Foods Company Limited for doing a wonderful job and feeding our country.” Marape promised that the government will help the industry and market.
PNG Business News - May 13, 2021
Mayur Discusses Power Plant Project in Lae
Mayur Resources Ltd says it has formed an ongoing relationship with the State negotiation team to discuss and finalize a power purchase agreement (PPA) for its planned power plant in Lae, Morobe. The organization was waiting for the State negotiation team's makeup to be finalized and signed off, according to managing director Paul Mulder. After that, he said, the Enviro Energy Park (EEP) project's final discussions and negotiations will begin. Mayur's planned 52.5-megawatt EEP project is an advanced power plant that will produce more efficient and cheaper electricity than current solutions by combining conventional thermal energy (sourced from the company's wholly-owned Depot Creek project), solar, and biomass woodchip, while also supplying co-generated steam to nearby industrial users who were burning diesel for their steam needs. The EEP, which is near Lae, will also have steam as a by-product for local industrial uses, and potential dual fuel systems will allow for the use of diesel. “The energy park would balance the need for new environmentally friendly technologies and reliable energy,” Mulder said.