The board of SD Guthrie, owner of New Britain Palm Oil Ltd., has agreed in principle to commence negotiations with the Government of Papua New Guinea on a long-term business partnership, including potential equity participation by the state in Ramu Agri Industries.
The agreement followed a special board meeting held in Kuala Lumpur during a visit by Minister for International Trade and Investment Richard Maru, who met SD Guthrie’s board and management to advance discussions on the state’s proposed acquisition of shares in Ramu Agri Industries.
Under the proposal, SD Guthrie would partner with the PNG government from this year as equity partners, alongside other domestic and international investors, to develop large-scale agricultural projects across the country.
“The State’s interest to buy into RAI is for us to use the company as a vehicle to invest and develop, initially, the vast Sepik Plains for cattle and palm oil development, sugar in Abau of central province, and coconut projects in the coastal regions. We want to invite our PNG investors like Nasfund, Nambawan Super and Pacific Balanced Fund to join us to buy into this very important and exciting agriculture company,” Maru said.
He said PNG remained heavily reliant on imports despite its agricultural potential.
“PNG is currently a net importer of beef meat and refined sugar when we should be producing enough for our domestic consumption and export. We are also an exporter of crude coconut oil and palm oil with limited processed coconut oil,” he said.
“As we reflect on our country’s economic development over the last 50 years, we have failed to unleash our full agriculture sector, and this had resulted in over a million youths of our country remaining unemployed, disengaged and disenfranchised, leading to so many problems in the country including the high crime rate,” Maru said.
“We are now determined to find a partner to grow all the cattle and sugar we need to replace imports and be net exporters and to grow our palm oil and coconut industries. We have millions of hectares of undeveloped land right across the country for large scale commercial agriculture development.”
The National Executive Council has approved in principle the government’s plan to partner SD Guthrie to invest in large-scale agricultural development, particularly in the upstream and downstream segments of the palm oil, sugar, cattle and coconut industries.
“Our Government has made a very conscious decision to partner SD Guthrie because it is a publicly listed company with over 100 years of experience, it is from a country that has a matured oil palm industry, and it brings to the table its expertise, capital and oil palm research capabilities that are unrivalled globally,” Maru said.
“We also understand that SD Guthrie has no more land available for expansion in Malaysia, except in PNG, hence, this partnership will be an excellent strategic fit for both PNG and SD Guthrie with long-term mutual benefits,” he said.
Maru also invited SD Guthrie to partner with the government and a Sri Lankan investor in downstream coconut processing and upstream plantation development. He urged the company to expand its corporate social responsibility programs in provinces and districts where it operates and to extend tax credit programs beyond West New Britain Province to areas such as Madang, Milne Bay and Oro.
The minister and his delegation, which included Madang Gov. Ramsey Pariwa, senior officials from the Department of International Trade and Investment and the Special Economic Zones Authority, also visited SD Guthrie operations during the trip.
“We were particularly impressed with their Research and Development (R&D), global network of downstream and sales and marketing operations in over 96 countries, their status and influence as the leading publicly listed oil palm company of Malaysia with the largest landbank, their very strong balance sheet and Triple B credit rating, and their recent decision to go into renewal energy to become a negative carbon footprint company with 100 percent RSPO certification of its total operations,” Maru said.
“This was a very insightful visit and we are convinced beyond any reasonable doubt that SD Guthrie would be the best possible partner for our Government to enter into a long-term partnership with to develop the agriculture sector of PNG in the next 50 years as part of the Reset Agenda of the Marape-Rosso Government,” he said.
The state is now awaiting a formal offer letter from SD Guthrie, expected on or before Jan. 21. A full feasibility study is scheduled to begin next month, with a team of scientists to conduct soil sampling and an aerial survey of the Sepik Plains.
“Whilst the feasibility studies will commence next month, the company made it very clear that in the State Project Agreement they will sign with the Independent State of Papua New Guinea, the Government has to commit to building an international wharf at Wewak, upgrading and sealing the roads into the Sepik Plains, specifically in the project area, proving key enablers like power, bridges, police and security services, and providing State land and mobilizing customary land for large scale agriculture development,” Maru said.
The delegation also paid a courtesy visit to the Malaysian Palm Oil Board headquarters to discuss Malaysia’s regulatory framework, research platforms and technology development initiatives relevant to PNG’s agricultural ambitions.
