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Decision To Discontinue Power Purchase Agreement "Unethical”
by PNG Business News - June 07, 2021
Photo Credit: Loop PNG - Patrick Pruaitch
PNG Power Ltd's decision to cancel a power purchase agreement (PPA) with PNG Biomass, which was signed six years ago, is immoral, according to Aitape-Lumi MP Patrick Pruaitch. He said that the biomass project was well-conceived and performed, and it would have benefited communities and landowners.
He claimed that PNG Power and the government delayed final project clearances. He said that terminating the PPA was immoral since it had allowed PNG Biomass to complete feasibility studies and begin planning and execution, including a sustainable tree farming initiative with local landowners, at a significant expense. Landowners utilized their first land rental payments from PNG Biomass three years ago to purchase a three-tonne truck, providing an economic stream for the local community, as a result of these commitments. Local farmers have been able to develop a thriving honey business employing native stingless bees, with additional large profits from "intercropping," thanks to technical aid from PNG Biomass.
According to Pruaitch, the Independent Consumer and Competition Commission authorized a US54c (K1.89) per kilowatt-hour reference pricing for the Ramu grid in August 2016 based on the PPA signed by PNG Power with PNG Biomass.
The National (3 June 2021). “MP says PPL’s decision to end deal was ‘unethical’”
PNG Business News - March 25, 2021
PNG Ports Corporation Records K83mil Profit
PNG Ports Corporation has reported a profit of K83 million for the full year of 2019. This permitted Kumul Consolidated Holdings (KCH) to receive a full-year dividend payment of K21 million, which was finalized yesterday with the presentation of K11.4 million to KCH as a second payment following the first part of K9.6 million paid in November. Chairman Kepas Wali said PNG Ports had had a challenging two years, with the Covid-19 impacting the majority of its business. “We saw a decline in shipment and cargo through our ports, but because management instituted certain stringent measures in management and costs, PNG Ports has been able to maintain a healthy bottom line,” he said. “Despite the Covid-19, we have been able to maintain the ports operationally. Management quickly introduced certain protocols at the ports when the pandemic hit to keep the ports operating. There wasn’t any stage that the ports were closed down. They (PNG Ports Corporation) were able to separate the operation of the ships from the shore so shipping continued and cargo was still transmitted through our shores.” Wali also explained that the dividend was based on a loan agreement they had with Bank South Pacific (BSP), which stipulated that only 25% of profits could be paid out as dividends. The dividend payment for 2019 was timely, according to KCH managing director Isikeli Taureka, since the money would be injected into other state-owned enterprises (SOEs) that were struggling during the Covid-19 period. “One of the things we appreciated is that apart from the major ports, most of the secondary ports around the country are at least recovering cost and breaking even.” The dividend payment was agreed by State Enterprise Minister William Duma. PNG Ports, according to Duma, has been a reliable performer over the years. He stated that the K21 million spent in 2019 was a good effort. “We need every toea and the K21 million is a lot of money and in times like these millions of kina makes a big difference,” he said. PNG Ports Corporation has also paid the government a total of K43 million in royalties.
PNG Business News - March 31, 2021
PNG Ports Explains Their Decision to Deal with Covid-19
COVID-19 had a major impact on Papua New Guinea's exports and port movement, but the PNG Ports Corporation had taken political decisions to handle the situation. In recent months, the world has seen and continues to see a significant shift in everyday lives, which has had significant implications for industry, commerce, and transportation. The pandemic's emergence altered both economic and trade forecasts for 2020. New predictions have reduced forecasts to negative 4.9 per cent, down from an estimate of 3.6 per cent increase in container trade worldwide in the fourth quarter of 2019 to 2.5 per cent in January 2020. PNG Ports chairman Kepas Wali clarified that the company's earnings were the result of tight cost-cutting steps and prudent decisions taken by management. Last year, he said, the closing of borders and prohibitions surrounding the COVID-19 pandemic struck PNG Ports hard, which is dependent on trade. Despite COVID-19, PNG Ports has continued to operate all of its ports. “When COVID-19 hit the country and the world, the management of PNG Ports worked quickly and instituted certain protocols and prevention measures just so we can maintain our ports operations,” he said. “The management’s quick response to the situation has made it possible for all ports to operate during the hit by the pandemic through until now.” He said the pandemic's consequences on the company were expensive, but PNG Ports is happy with the positive results obtained by their management's swift reaction and aims to continue this going forward.
PNG Business News - March 19, 2021
Power Plant Site Cleared in Markham Valley
PNG Biomass is Oil Search’s renewable energy and sustainable tree farming business. The project is still subject to a final investment decision by Oil Search, now planned to take place in the second half of the year. The formal ‘go-ahead' has been postponed several times due to a lengthy process with the PNG government to fulfil their promises to move the project forward. Oil Search will shift the project rapidly into construction once the PNG government addresses the final outstanding issues, adding 30 megawatts of renewable, affordable, and clean energy to the Ramu grid and Lae businesses. Michael Henson, Project Director of PNG Biomass, said, “We designed PNG Biomass with a two-fold purpose; we will power the Ramu Grid with low-emission renewable energy, and to do that we use an inclusive economic growth model to empower communities to maximise benefits for them. The value we create with PNG Biomass is shared between landowners, communities, women, youth, future generations, local and regional businesses, provincial and national government, and Oil Search. This is a great example of creating shared value. This project is equally a sustainable investment for Oil Search in the energy transition and investment in the people and prosperity of PNG.” Henson said that it is now time to realise the benefits of this project. “Over the last year, we have expanded our tree farm to 3,000 hectares. We signed the long-term lease with the landowners of the power plant land and just finished clearing the power plant site, we are ready to commence construction. In the next few months, boreholes will be drilled to supply water to the power plant. We just need the Government to deliver on its commitments to move this project forward,” stated Henson. He added, “Landowners of the Ganef community were glad to see us clear the site, but they are getting restless. They have committed their land to build the power plant, but construction has not commenced yet. We reach out to them daily to provide information and explain the delays, but it is difficult to explain the bureaucracy and politics in PNG. Fortunately, we have a great working relationship with our communities. The Ganef landowners are thankful for the borehole we drilled in their community. We also installed a solar pump and water tank so they now have a fresh water supply.”
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PNG Business News - June 15, 2021
PNG Vanilla Company Partners Expo2020 Team
Dr. Nancy Irwin (left) with the Deputy Commissioner General for Expo2020 and Head of the PNG Expo2020 Secretariat, Mrs. Jacinta Warakai-Manua began the partnership to tell the PNG Vanilla story in Dubai, by exchanging ideas in Port Moresby last week. A vanilla production and export company is partnering with the PNG Expo2020 Team to promote their products in the Dubai World Exposition that starts in October this year. KAMAPIM, a company working with landowners in the Madang and Morobe Provinces produces top quality vanilla beans and is already exporting to the EU market. The Managing Director of the company Dr. Nancy Irwin, met with the PNG Commissioner General to Expo2020 Ambassador Joshua Kalinoe and his Deputy Mrs. Jacinta Warakai-Manua in Port Moresby last week to firm up the arrangements. Dr. Irwin said Kamapim (pidgin for develop and to improve) concentrates its efforts in producing the best quality bean for the international market through quality assurance production methods. “PNG farmers can grow anything, they have instinctive ability to grow well any crops. When I first started the project, the quality of the beans were poor, full of fungus due to lack of processing knowledge. We saw huge potential of the organically grown beans and started working with landowners through a cooperative production and marketing structure to improve quality” “The company provide extension services to farmers and buy the beans directly, ensuring farmers are paid a fair price for their efforts”, she said. Dr Irwin said the beans are tested internationally and are consistently classed as the top-quality A grade level. “While PNG has a good perception of growing environment friendly organic vanilla beans, the challenge is for the relevant Government authorities to work with farmers to improve quality. I believe the cooperative production methods applied by our company, Kamapim, could be used nationally as one of the models to improve quality for the export market as well as to maximize revenue gain for farmers”, Dr. Irwin said. She said the company is looking forward to partnering with the PNG Expo2020 Team to tell the PNG story and to connect with niche importers in Dubai and the Arab world in general. Dr. Irwin said the company would promote its products in specially branded PNG Expo2020 containers to create visibility for the country as well as to preserve quality at the company’s cost.
PNG Business News - June 15, 2021
PNGEITI Praises Open Dialogue to Reopen Porgera Mine
The PNG Extractive Industries Transparency Initiative (PNGEITI) has praised the open stakeholder dialogue culminating in reaching consensus to re-open the Pogera Mine in Enga. Parties in April this year sanctioned a “Framework Agreement for the New Pogera Project” which spells out the roadmap to reopen the mine. Mark Bristow, CEO and President of Barrick Gold last week explained key elements of “Framework Agreement for the New Pogera Project” at a public forum at the Piam Oval in Pogera witnessed by PNG Prime Minister James Marape, landowners and other leaders. In the new agreement, PNG stakeholders will together own a 51 % equity stake in the mine while Barrick Niguini Limited (BNL), a joint venture company in which Barrick and Zijin Mining Group each own 50% will hold 49 %. BNL will remain the mine operator. At the end of the first ten year period, the PNG stakeholders will have the option to purchase BNL’s 49 % PNGEITI Head of Secretariat Lucas Alkan remarked that the open discussion throughout the negotiation process on the part of the mine operating lead, Government and landowners has culminated in this agreement signed happily by all parties. “We at the PNGEITI congratulate the Government and the project lead Barrick Gold and other stakeholders for reaching a consensus decision to reopen the mine. “Pogera has been an economic powerhouse for many years and people in the country have been waiting for the outcome. “We commend the Prime Minister, the President and CEO of Barrick Gold Mr. Mark Bristow for the leadership in ensuring that the negotiations were done in the transparent and open manner. “PNG Extractive Industries Transparency highly encourages such openness in the negotiating process for resources benefits and importantly the responsibilities that each stakeholder must take on to ensure smooth flow of proceeds. “We look forward to working with the Government and the project operator in the areas of transparency and accountability to help derive best value for all stakeholders. PNGEITI commitment to reporting on developments in the mining and petroleum space is becoming stronger with new reporting dimensions taking shape as we making progress in promoting transparency and accountability in the PNG mining and petroleum industry” Mr. Alkan said.
PNG Business News - June 14, 2021
BPNG Goes For Review
Treasurer Ian Ling-Stuckey has revealed the terms of reference for a review of the Bank of PNG, as well as the members of the review panel. Former Chief Secretary Robert Igara will lead the study, which was planned in the Supplementary Budget for 2020. Former central bank governor Sir Wilson Kamit and Australian professor Dr Stephen Howes are the two members. “These very eminent people, all of whom have detailed experience of the PNG financial system and reform, will be working to a term of reference approved recently by the NEC,” Ling-Stuckey said. “It is the first review of the central bank and the Central Banking Act 2002 since Sir Mekere Morauta’s financial system reforms when he was prime minister from 1999 to 2002. “Much has changed since then, and the effects of the coronavirus pandemic, along with substantial technological advances, have made the need for a review even more urgent. “The aim is to modernise the bank and the legislation in line with international developments, and make it more responsive to prevailing circumstances while preserving its independence.” The study is scheduled to be finished in time for Parliament's November session. “An independent advisory group was also established by the late Sir Mekere when looking at the changes that led to the Central Banking Act 2000,” he said. “Igara, currently the University of Papua New Guinea chancellor, was chief secretary at the time, and Sir Wilson was the governor of the Central Bank. “Prof Howes, head of the Development Policy Centre at the Australian National University, has long been involved in PNG research and advice and consultation, particularly in relation to national development.” Reference: The National (8 June 2021). “BPNG going for review”.