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Business

PNG Business News - February 09, 2021

Kumul Submarine Cable Network Will be Finished in Q3 2021

The construction of the Kumul Submarine Cable Network (KSCN) is to be finished in the third quarter of 2021.According to PNG DataCo managing director Paul Komboi, while the Coral Sea cable has been online since February 2020, the domestic part has been put on hold because of the COVID restrictions. Komboi said that the landing is already finished for system 1, system 3 while system 2 landing was completed in 2019.“The only outstanding work we have with KSCN is the Jayapura leg, which was put on hold due to the Covid-19 pandemic but we expect to complete work by the third quarter of this year,” he said.Komboi has verified that the Coral Sea fibre-optic Cable project is commissioned and finished as of February 2020 and is currently in use. All international traffic has been migrated to the Coral Seas cable.He said that the maintenance is the only work that needs to be done, adding that he is disappointed with places such as Popondetta which are unable to use the cable systems because of the lack of consistent power supply.Komboi said that one of the concerns is the location of the cables. He said, “For 2021, DataCo plans to commercialise the KSCN and try to use it to get people to take up capacity and also expand their network from landing stations out to where the activity sites and the main population is.”

Business

PNG Business News - February 04, 2021

Economy Could Rebound This Year with the Strength of Gold, Copper and LNG

With gold, copper and liquefied natural gas (LNG) expected to be strong, the economy could rebound this year.According to K92 Mining Inc chief executive officer John Lewins, this would be achievable if the impact of the COVID crisis is managed and that 2021 would still be a challenging year for many. He said that in early January, the cost of gold rallied briefly to US$1,960 per ounce (K7,072.10) before going back to US$1,840 an ounce (K6,639.12). For 2021, it is expected that gold price would be above US$2,000/oz (K7,216.43) caused by the monetary and fiscal stimulus in the US, the US dollar expected to be weak, inflation threats, and low-interest rates. Lewins said if the Wafi-Golpu project and the Papua LNG project were approved, they would have a very significant positive impact, plus the restart of the Porgera mine.“Other areas such as agriculture and fisheries should also perform well and hopefully demand increases as the major developing economies recover with the roll-out of the Covid-19 vaccine,” he said. “However, international tourism is unlikely to recover until 2022 at the earliest. So this will impact hotels, airlines and the like.”With the opening of these projects, Lewis said that there might be a shortage of skilled workers - which could have a negative impact on current operations. “This is something we seek to address by increasing our commitment to training,” he said.

Business

PNG Business News - February 04, 2021

Businesses Are Looking Forward to the Revival of the Economy

An official said that all businesses are looking forward to the growth of the economy. According to PNG Ports Corporation Ltd (PNGPCL) managing director Fego Kiniafa, their business was solely dependent on exporters and importers, and the availability of foreign exchange for trading to happen. “PNGPCL is hopeful that the economy registers a positive growth and we are ready to facilitate that growth through our network of ports,” he said. “All businesses are looking forward to the economy picking up as businesses adjust and learn to adopt and operate within the confines of the Covid-19 pandemic restrictions.”He, however, declined to reveal the annual turnover of the company.“In terms of the annual turnover, that is a confidential matter that can only be released with appropriate approval from the board and shareholders,” he said.Business experts noted that the economy was contracting. Economy experts have also appealed to the government to approve one of the multi-billion kina projects such as the Wafi-Golpu and the Papua LNG, and the reopening of the Porgera gold mine.

Business

PNG Business News - February 04, 2021

Masiu Wants ICT Sector in Order

In encouraging transparency within the government, the ICT sector and to comply with their policy and legislative measures, Information and Communication Technology Minister Timothy Masiu said that he wants his department organised. He said that to deliver ICT services that are cost-effective, reliable and affordable, his department must listen to the stakeholder and industry players for a better appreciation and understanding. He added that with his boards now in place, he is looking forward to working with players and stakeholders in the ICT industry, and looking at strategic directions. By launching its Corporate Plan (2020-2024), the department has enabled them to undergo a comprehensive structure and enables the department to be more responsive to the sector and to give areas in the field of data protection, digital government, information security, and data governance. “By 2021, we have two main mobile operators and that is Digicel PNG and a merger-in progress entity Bmobile/Telikom and a surge in the number of license applications,” Masiu said. “The time has come for us to focus on developing local digital content to showcase our unique cultures and traditions and identity as Papua New Guineans.”Masiu said that a functioning department is very important for clearer ICT Policy and legislative department, implementation oversight and currency, among others. More work has to be done, he said and is looking forward to doing more.

Business

PNG Business News - February 03, 2021

Japan Provides K1 Billion Loan to PNG

To finance its National Budget for 2021, repay its debts, and stabilise the economy, Japan has provided a K1 billion concessional loan to Papua New Guinea. Japan is also giving K32 Million grant for the PNG electrification partnership as agreed with the United States, Japan, New Zealand, and Australia. According to Japanese ambassador Kuniyuki Nakahara, the loan comes with a rate of 0.01 per cent a year for repayment of 15 years. “PNG can enjoy a grace period of four years and can begin to pay back the debt after its economy recovers,” he said. “This K1 billion is the largest ever since the start of Japan’s official development assistance to PNG. Since the beginning of 2020, the whole world has been suffering from the outbreak of the Covid-19. The world economy has also suffered and the PNG economy is no exception.”The economic growth of PNG is expected to drop by 3.3 percent in 2020. “Under such a situation, our bilateral relationship between Japan and PNG should remain solid,” he said. In an August visit last year, Japan foreign minister Motegi Toshimitsu asked his Government through the Jica Covid-19 crisis response emergency support loan to provide the loan to Papua New Guinea.

Business

PNG Business News - February 03, 2021

Marape: Technically-Skilled People Needed in Papua New Guinea

In launching the new Jiwaka provincial headquarters at Kurumul, Papua New Guinea Prime Minister Hon. James Marape has emphasized the need for technically-skilled people.PM Marape said that the government will be elevating and upgrading the Tombil Vocational Centre into a fully-fledged Technical Vocational Education Training (TVET) college.“Our country is developing and we need carpenters, mechanics, plumbers and others who can develop our province and country,” he said. “We don’t only need university graduates, but also technically-skilled people who are the real backbone of our country. Jiwaka, as a new province, needs people with such skills and a workforce base to develop. Therefore, we want those who completed grades 10 and 12 but could not make it into colleges, to enrol in those TVET programmes.”PM Marape also said that Grades 8, 10, and 12 school leavers should consider Flexible Open Distance Education (FODE) and continue their education.

Business

PNG Business News - February 03, 2021

The Internal Revenue Commission Unveils Work Plan for 2021

The Internal Revenue Commission (IRC) has unveiled its yearly work plan in Port Moresby.According to IRC Commissioner Sam Koim, the plan which outlines seven key strategic pillars contains a vision to transform the organisation into a modern, robust, and efficient tax administration by 2025. These seven key strategic pillars include data-driven, fostering voluntary compliance, making GST the number one revenue-earner, effective tax collection, digital transformation, building organisation agility, promoting integrity and preventing corruption. Koim said that among the challenges last year included huge uncollected tax debts and high rates of non-compliance. “Despite the challenges, we still managed to bring revenue on target,” he said. “We want to avoid projects that result in incremental progress or what I call repetitive fire-fighting solutions. However, we can change some things that can change everything. We want to rally the organisation around to drive change.”

Business

PNG Business News - February 03, 2021

Bekker: Power Outages in Port Moresby May End in March

The power outages in Port Moresby may end in March.This was according to PNG Power Limited managing director Flagon Bekker who said that they are working on the transformer at the Port Moresby grid because they couldn’t bring in a new one. He added that bringing in an expert for the tap changer may not be possible for this time. “We don’t have the person in the country to do that, hence, we opted to bring a consultant in to put it back in. Of course now when he comes in will sit in quarantine for two weeks but we were looking at an option to bring him in under a bubble so he goes to fix what he needs to do and leaves, “ he said. “But we didn’t do that but replaced the transformer. But that skillset isn’t actually in our organisational chart because it is so rare, as it’s a service that someone else can provide but there’s no one in the country that provides that service that’s why we have to bring it in.”Bekker said that presently, they are working with significant stakeholders such as the Treasury, IRC, and Finance to bring in a new transformer.“We believe that by the end of February or March we will be able to take the pressure off but we’re going to have a fragile system, like a chair with two legs,” he said.Given the static nature of transformers, Bekker said that they require little maintenance and can last up to 50 years. The longer they are used, he said, they need more maintenance and have a greater possibility of repair. “If a transformer fails in a system, it is detrimental to the overall supply of electricity,” he said. “It goes without saying that transformers for power systems are expensive. With more than 750 power transformers in Port Moresby ranging from K50,000 to K500,000 in cost, it’s difficult to prioritise which piece of equipment gets rehabilitated or replaced. PNG Power is working with donor agencies to improve the Port Moresby transmission and distribution system this year which will gradually improve our service to you in the next 5 years.”

Business

PNG Business News - February 01, 2021

EU, PIFS Sign Agreement To Boost Trade

To improve the trade capacity of Pacific countries, the Pacific Island Forum Secretariat (PIFS) and the European Union (EU) have signed a project titled “Strengthening Pacific Intra-Regional and International Trade (SPIRIT)”. The project is set to cost EUR 5.75 million.Aimed at increasing and boosting intra-regional and international trade through strengthening institutional and technical capacity in the region, the project facilitates the implementation of trade agreements, especially the Economic Partnership Agreement (EPA) and of the Pacific’s Aid-for-Trade Strategy 2020-2025. SPIRIT also contributes to the development of a statistical monitoring framework that leads to greater economic integration.In her remarks, Pacific Islands Forum Secretary-General, Dame Meg Taylor said, “The implementation of SPIRIT will ease trade challenges faced by the Pacific ACP countries and focus on creating opportunities to trade regionally and internationally. Most importantly, it will strengthen the capacities of trade departments in the region through the provision of a technical position at the sub-regional level in each of the three sub-regions in the Pacific.”To further boost this trade agreement and improve the implementation of these policies, three long-term trade advisers will be deployed in the sub-regions of Melanesia (which includes Timor-Leste), Polynesia, and Micronesia. They are also responsible for capacity-building and training measures to the Pacific countries. The Ambassador of the European Union for the Pacific, Sujiro Seam said, “The European Union is not only a development partner for the Pacific, it is also the best success story of regional trade and economic integration following the Second World War. With a market of 500 million consumers, the European Union is a business partner for the Pacific. This SPIRIT project comes at the right time, to alleviate the catastrophic impact of the COVID-19 pandemic on the Pacific economies, build value and growth in the region and take advantage of the business opportunities offered in the European market.”The countries that benefit from this agreement are the following: Palau, Republic of Marshall Islands (RMI), Cook Islands, Solomon Islands, Papua New Guinea, Federated States of Micronesia, Kiribati, Fiji, Timor-Leste, Niue, Vanuatu, Tonga, and Samoa.

Business

PNG Business News - February 01, 2021

COVID Continues to Impact Businesses

In a recent survey conducted by the Pacific Trade Invest network, it has revealed that the pandemic continues to impact small businesses. Newly appointed Trade Commissioner of the Pacific Trade Invest New Zealand office, Glynis Miller said that “the results are not surprising as they do reflect real challenges faced by a large majority of SMEs.”According to the data, the conditions for SME's have improved a bit - from 89% in December to 84% reporting a negative impact. The confidence levels of these businesses have dropped a bit - with 75% reporting that they will survive the pandemic, compared to 78% during the same period last month. This has been the lowest it has been since the firm has been tracking SMEs last April 2020. According to the survey respondents, some of the technical assistance that they need are financial support, business diversification, and access to new markets. The January report said that the top barrier for female-led businesses was a lack of cash flow with 41% reporting barriers as compared with the 15% in male-led businesses. “When the accumulated data is reviewed month on end, we note the consistent pinch points faced by SMEs – the tough decisions are taken to reduce operational costs, reduce working hours and diversify their services or products,” he said. “That said, within the data collected, there is evidence of businesses having performed exceptionally well throughout COVID-19 where production and export levels have increased substantially compared to the same period last year.”Aside from these challenges, the pandemic has brought many opportunities too. Pacific Trade Invest New Zealand along with offices in China and Australia looks at the findings of the Pacific Business Monitor report to support programmes where sectors need specific assistance.

Business

PNG Business News - February 01, 2021

Bekker: Invest Or Live With Power Outages

In dealing with the power outages, PNG Power Ltd managing director Flagon Bekker said to either live with these blackouts or invest “hundreds of millions of (US) dollars”. “I personally believe the people of PNG are going to need to choose: start investing in the power system or live with blackouts that will get worse and worse,” he said. “There is no easy answer here.”The hundreds of million may sound like a lot, but he said, “but we can do this as a business, without additional cost to the taxpayers if the PPL is allowed to reform”.He added, “If we can become more of a commercially-driven business with less social responsibilities (for example) not related to making, transmitting, distributing and selling electricity, it will help.”He proposed that consumers should also pay their bills on time - every month. “We can then use this money for equipment and projects we need to refurbish, repair and rebuild our power system, networks and technologies,” he said. “Without cash in the bank, we simply cannot buy spare parts or stock emergency items, or do planned maintenance.”Bekker who is just two months into his position said that the government was lagging in the plans of the country, and had a hard time securing funds. “We understand that. We are working with the (departments of) Treasury, Finance to find a way to fund the working capital and capital investment needed to make the grid work better for our customers,” he said. “We are going to need to work together, prioritise this most essential of essential services for the future of our children. That is the way to look at it, I think.”He added that PNG Power was not spending enough on the maintenance of its assets because of the issues with cash flow. “The demand comes from many sources including social costs that a normal business (in the commercial space) does not have to carry,” he said. “This is also partly due to our structure which we are addressing in our Refocus Initiative, (and) to funding shortfalls. We are working on options to bring capital into the business. We are reviewing all options to do this but always based on the best value for the people of Papua New Guinea.”

Business

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.”

Business

PNG Business News - February 01, 2021

Manufacturers Not Meeting Standards

While many new manufacturing entrants haven't met the required industry standards which can be a setback for the industry, Manufacturers Council of PNG chief executive officer Chey Scovell believed that the industry may recover this year. According to him, many entrants lack The Hazard Analysis and Critical Control Points (HACCP) equivalents which is a food safety system, designed to control the production processes. He added that unlike now, five or six years ago, 99 per cent of all manufacturers in PNG were making products safe. “The functions of approvals and licensing are the responsibility of provincial and local level governments,” he said. “But it’s clear that there is a lack of competence and likely an abundance of inducement going on. Certainly, we have put our hands up to do it in partnership with the government, but to date, it’s fallen on deaf ears.”He also noted that the Department of Health has failed to maintain the National Food Sanitation Council board. “It’s unacceptable and this needs to be the starting point.,” he said. “The lack of governance needs to be addressed, and it requires merit-based not political appointees without the necessary knowledge and experience.”

Business

PNG Business News - January 27, 2021

State-Owned Entities Valued at K10 Billion

Compared with the revenue of K2.86 billion generated yearly, state-owned entities (SOEs) are valued at around K10 billion.According to Isikeli Taureka, the managing director of Kumul Consolidated Holdings Ltd, this amount shows that SOEs are not doing well in coming up with revenues. “Our value of the portfolio is K4.4 billion and in terms of dividends last year we received about K95.8 million,” Taureka said. “K2.86 billion is the actual revenue.”Among the major revenue earners were the following: PNG Power, Telikom, Air Niugini, and Ports PNG, although only Air Niugini was badly affected by the pandemic and the others were not.

Business

PNG Business News - January 27, 2021

PNG Power and Other Shareholders Reviewing Their Options

To bring capital into the business, PNG Power Limited, along with Kumul Consolidated Holdings and other shareholders, are reviewing all their options. Managing director Flagon Bekker said that this will be based on the cost of capital and getting the best deals available.“It will allow the broadening and deepening of the PNG financial sector, showing that it is becoming more sophisticated and more in line with how other regional countries’ developed their sectors,” he said.In the next few months, Mr Bekker said they will improve the dispatch of the Dirio power plant.“A normal practice in power station development to manage disruption to the Grid and in line with customer connection rate, substations is critical. In the interim we do not have a shortage of power for the POM Grid,” he said. “Substations are the nodes that allow customers to connect to power sources. They are integral and critical to the future of economic growth in Port Moresby as they are across all our cities, towns and villages. Investing in infrastructure is made against the background of a balanced business case in the context of our commitment to Vision 2030. We will build out substations in the most optimal order, aligned with our commitments to the connection of customers.”Meanwhile, Niupower chief executive officer Michael Uiari said they are also in talks with PPL management on ways where capital can be realized to restore the reliability for customers. “At least 2 of the IPPs in Port Moresby along with our local financial institutions are key to realising this capital for PPL, without further burdening our Government,” he said. “There is broad alignment amongst these stakeholders on this objective. We hope to progress discussions in February, mindful that PPL’s needs are immediate.”Former KCH chairman Peter Aitsi said that it is also important that they should pay for their long-outstanding bills, and to put in much-needed funds back into PPL. This will be used for upgrading and repair of the infrastructure. “The appointment of a new CEO by the Board of PNG Power is a positive step forward and will require the ongoing support of all stakeholders in order for us to see long term change and improvements in services to customers,” he said.

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