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PNG Business News - October 30, 2020

Kua Says Resource Laws Need Revisions

Particular areas in the laws on resources projects should guarantee that the State, investors and the people benefit, said Petroleum Minister Kerengua Kua. According to Kua, the laws need to be reformed so that the government should not have to borrow to finance commercial projects. He mentioned that previously the state had given 100 per cent ownership to developers when it signed a project agreement, forfeiting its ownership. As a result, he is ready to see some changes in these laws, particularly in the fields of:Rising debt levelLosing ownership rights without any compensationHaving more revenues for the people “We want to reform the structure of mining and petroleum laws that underpin how the business is conducted and how we all can benefit out of it – the investors, people and the government,” Kua said. “Investors are more concerned about their rate of return. If they put in K1 billion, they want their profit to be better than over investment destinations. If they were to put money into PNG, we must give them confidence.”He continued, “So if we are to sell their resource, we have to give them a bigger benefit. We have to extend consultations to the investors and the people. Every time there is a mining or petroleum project when you sign a development agreement you forfeit the ownership of that resource. We need to remove borrowing to finance commercial projects in mining and petroleum. State ownership in minerals and petroleum will remain all the way to the point of sale. We will not transfer ownership on the signing of a gas agreement and mining development contract. All costs for the project must be financed by the project.”

Business

PNG Business News - October 30, 2020

NiuPower Supplies Power to Port Moresby

Following the opening of its gas plant outside Port Moresby recently, NiuPower, a joint venture between Kumul Petroleum Holdings and Oil Search Ltd. has been supplying power to the area since November, according to chief executive officer Michael Uiari.He said that power supply is enough in the city but more investments are needed for distribution and transmission. The Port Moresby power station provides up to 10megawatts of power and NiuPower funded the construction of a new transmission line from Gerehu Stage 6 to the Port Moresby power station.The line enables the power plant to fully dispatch its 58megawatt capacity and give off cheaper power. “There is sufficient generation. Transmission and distribution require investment,” he said. “Once transmission and distribution is fixed, things should be fine. NiuPower has been dispatching to the grid since November 2019. The transmission and distribution infrastructure requires investment as well, not just generation.”He added, “In the interim, we are working with PNG Power to provide black-start capability so we can start up the grid in the event of a total system failure, adjust some of our own settings to respond to an unstable grid in a way that does not cause a total system shutdown, understand what investment is required in transmission and distribution so we can jointly consider who is best placed to assist PNG Power and closely managing dispatch of electricity to the Port Moresby grid to ensure we achieve our respective targets.”

Business

PNG Business News - October 30, 2020

Toroama Says All Foreign Investments Must Abide By the Act

In response to business news making allegations against his past business work, Autonomous Bougainville Government President Ishmael Toroama says that any foreign investment is done according to the Bougainville Inward Investment Act 2014.“This act regulates all investment into Bougainville and parties wishing to bring investors into Bougainville must abide by the act,” he said. “While my past business dealings were done as a private citizen, I as the President of the Arob must set the record straight,” he said.He continued, “The Bougainville Sustainable Timber Resources Ltd was set up with the intent to bring in foreign investors to Bougainville to be involved in sustainable logging as well as alluvial gold projects. The proposed business model to be employed by the company is straightforward: identify a development project on Bougainville, identify a credible investor, liaise with the Autonomous Bougainville Government and progress the project. Everything would be done in compliance with the laws and regulations on Bougainville. Revenue in taxes would be earned by the ABG.”After consulting the Investment Promotion Authority and the Ombudsman Commission, his shares in the company have been brought to a third party in accordance with the law.“I want to put to rest rumours that I will not be entertaining cronyism and business partners to create a monopoly over Bougainville’s resources,” he said. “That was a bad precedent by the past government and my presidency will not be compromised by it.”

Business

PNG Business News - October 29, 2020

PPL: Blackouts Caused By Technical Challenges

The frequent blackouts in PNG are caused by technical challenges. This was revealed by PNG Power Limited Managing Director Flagon Bekker who said that the blackouts are attributed to the challenges of PNG Power’s (PPL’s) ageing infrastructure, in addition to an ongoing transition.He said, “PNG Power acknowledges that this is not an acceptable level of performance and we have been and will always continue to work hard to restore service as quickly and safely as possible. We also acknowledge that we are experiencing significant technical challenges across all power sector business units. As is well documented, they are mostly due to the challenge of our ageing infrastructure coupled with the transition as we work on targeted investment projects to improve the reliability and availability of the affected assets. Our focus since the return of service has been to follow our standard operating procedures and perform the required root cause analyses".He added, “PNG Power acknowledges we can always improve on the timely update on our progress or the status during the outage events and, while our focus is on restoration activities, we will endeavour to provide more timely updates during the event around the estimated return of service and associated key developments.”He also explained the Monday blackout in Port Moresby. He said, “The recent events over the last few hours (Monday night) were attributable to inadequate frequency regulation of the grid. This happens when the grid comes under pressure from a mismatch of load and supply. Typically, this can happen with ageing grid-related power quality support infrastructure. The emergency corrective actions commenced immediately and focus was on restoring system service, safely, as a matter of urgency. Upon completion of the activities, the system was finally restored to full service at 10.56 pm.”In addition, he said that PPL continues to review its performance and implement the necessary measures. “As an example, PNG Power intends to undertake a deeper review of its asset management practices in order to better balance decisions between short, medium, and long term actions as it relates to the age of the infrastructure, its remaining useful life and how best to manage the transition between the old and the new. This will be key to the maintenance practice improvements going forward. But, we want to be transparent on this – improvements of this type will take time,” he said.He added that although the improvements are not fast enough, rest assured that they are doing everything in their power to solve the problem. He added that PPL remains committed in its programs and will update when needed.

Business

PNG Business News - October 28, 2020

Air Niugini Resumes Operations to Hong Kong

In partnership with Cathay Pacific Airways, Air Niugini will resume its operations between Port Moresby and Hong Kong. In a statement, Air Niugini said that it will use it's Boeing 767 aircraft to operate its service. At the onset, flights will operate at least once a week every Wednesday. The code-sharing with Cathay Pacific, as well as with Air France, allows passengers to transfer flights in Hong Kong. According to Air Niugini chief executive officer Bruce Alabaster, Hong Kong is a major gateway and connecting hub for cargo and passengers.“Hong Kong-based Cathay Pacific is one of the largest and most respected airlines in Asia,” he said. “With Cathay Pacific’s global marketing reach and connections to destinations worldwide, we are confident that our Hong Kong service will become popular (for) travellers and freight shippers.”He added that Singapore is still closed to transit passengers. The Hong Kong flight would bring passengers to and from Port Moresby, including exports from PNG to the Asian markets. Eventually, he said that the number of flights would increase when “demand for international travel gradually recovers”.“Air Niugini continues to operate with strict health and safety measures in place including temperature-testing of all passengers and providing face masks and hand sanitisers to ensure your air travel is safe,” he said.

Business

PNG Business News - October 27, 2020

ICC Welcomes Proposed Amendments

In response to the announcement made by Investment Promotion Authority (IPA) managing director Clarence Host of the proposed amendments to the IPA Act (1992), the Independent Consumer and Competition Commission (ICCC) has welcomed these changes. According to ICCC commissioner and chief executive officer Paulus Ain, many businesses across the country are owned by foreign nationals. “Our people operating small to medium enterprises (SMEs) need to be protected and a review of the reserved business activity list included in the IPA Act is most welcome,” he said in a statement. “Over the years and as recently as during our price monitoring exercise that ICCC undertook during the state of emergency we found that many businesses that were meant for Papua New Guineans were in fact owned by foreigners. While I agree that there are operators who have been paying taxes and providing employment, there are still others who continue to break laws and engage in activities meant for Papua New Guineans.”Ain said that aside from consumer protection, they would be supporting amendments by the IPA to protect the welfare of the people from Papua New Guinea.

Business

PNG Business News - October 27, 2020

Lae Port Tidal Basin Second Phase Suspended

Because of the poor work quality, the second phase of the multi-million kina Lae Port Tidal Basin has been suspended. According to State Enterprises Minister Sasindra Muthuvel, they will now move on to the third phase. “The third phase has now being brought in as the second phase is said to be the Huon Industrial hub or the Lae Tidal hub,” he said. “They were supposed to have removed at least one or two meters of topsoil, instead the contract was prepared and even agreed by the contractors in such a way that they only backfilled the road where cars and vehicles can pass through living the rest of the area because they said it is like a swamp.”He said that the developer is in charge of building the warehouses or industries but the ports have said it was supposed to be a port standard and the area was supposed to be backfilled also. “I don’t know whether the contractors are taking the matter to any arbitration of work but it’s completely stalled and we are still waiting for them to respond on the technical queries,” Minister Muthuvel said. “This, however, is a Chinese Exim-funded project and has been suspended based on the quality of work and the difference in contractor’s actual eagerness only to fix the roads leading to the industrial development area.

Business

PNG Business News - October 27, 2020

Gure’s Agenda Involves Reviewing Outdated Labour Laws

Papua New Guinea’s Labour Laws are outdated and need reviewing. This, according to Labour and Industrial Minister Lekwa Gure, who said that these reforms are on top of his agenda.Among the laws that need reviewing include the Industrial Relations Act, the Employment Act, the Industrial Organisations Act and others that are now subject to a review by responsible State agencies.“Our labour laws are outdated and need to be revamped to suit our present times, give more protection to the workers as well as to take in the latest developments in international standards. This will be done by incorporating the latest ILO Conventions as we update the various pieces of legislation under which the Department of Labour and Industrial Relations carries out its work,” said Gure. “I am very pleased to announce that this important work is already captured in the work plan of the government’s SLOS Ministerial Committee which is headed by the Minister for Justice and Attorney General and I am assured that this work will be given priority. The new Industrial Relations Act will give rise to the establishment of an Industrial Relations Commission that among other powers can reinstate dismissed workers and award damages, which is timely because there is growing concern by labour trade unions on the prevalence of unfair dismissal cases.”He continued, “The new Industrial Organisations Act will safeguard the rights of the workers to join a registered industrial organisation like a trade union as accorded under Section 47 and 48 of the national Constitution of PNG and this right must not be denied by any employer. We have a vibrant democracy that gives cognizance to human rights and the workers have the right to belong to a trade union of their choice without being intimidated by their employers. “Under these arrangements, it is my view that collective bargaining becomes the norm for resolving issues between both parties and we are more than prepared to interface with both the trade unions and the employer organisations to facilitate the same. The new Workers Compensation Act will give rise to potential increases in compensation paid to workers when they suffer injury or death at the workplace. This is well overdue as these rates have not been reviewed for the last 26 years.”

Business

PNG Business News - October 24, 2020

Gabi: PNG Should Have Multilateral Trading Systems Across Countries

Papua New Guinea should have a strong team for negotiations at the World Trade Organization when it comes to the standards of the country in relation to trading with others. This is according to the National Institute of Standards and Industrial Technology (Nisit).Director-general Victor Gabi said that the multilateral trading systems among countries should be looked at. “What we are having in terms of trading negotiations is that countries have the upper hand in trading with us, so when you go through a free trade agreement with a number of countries, they seem to get the better of PNG because they bring in a lot of products,” he said. “They beat us with the trade numbers. For instance our bilateral trade with Australia; they kill us hands down with the number of products coming to us, we have very little going to them. And that’s because of issues with technical areas of trade and one of the key areas of trade is standards.”He added, “You can have something to sell but it’s the buyers’ choice, hence the features of your products need to meet some standards in order for them (buyers) to be able to buy your products. Whatever (businesses) that the people are doing, they must make standards important because, at the end of the day, their buyer is interested in that.”Gabi also highlighted how businesses should ask advice from Nisit regarding the quality of their products.

Business

PNG Business News - October 24, 2020

PNG Needs A Proper Standard Pathway

Papua New Guinea needs a proper standard pathway for companies. This is because businesses who trade internationally get blacklisted quite often because of safety and health breaches, according to Manufacturer’s council chief executive officer Chey Scovell, as not everyone understands standards. The problem, he said, that except for the major manufacturers, no one needs a global safety and food system because this comes off as stringent for smaller businesses. “To have accreditation you need to be able to go to a honey producer in the highlands for instance and go and talk to anybody in that factory and ask them about hygiene processes and stores and they have to answer the question,” he said. “If they don’t answer the question how do you know it goes clean from here to there.”Mr Scovell said that the challenge is still with low literacy levels which really don’t have any standards at hand. “Each thing is different, movement of people, services and goods and losing market access,” he said, “We don’t lose market access if we don’t have a standard for trade we can potentially lose market access if we don’t have recognised systems for certification particular around biosecurity products.”

Business

PNG Business News - October 24, 2020

Australian Government Makes Contributions to the ODA

In 2020-2021, Australia will make contributions to the official development assistance (ODA) in the amount of K3.5 billion ($1.44 billion). The Australian High Commission said that this is an increase from $1,381.4 billion (approximately $1.4 billion) in 2019-20, adding that Australia will provide the same levels of ODA compared to the previous year.According to the Commission, the funding will go to the Australian projects such as strengthening health security, laying economic foundations and ensuring stabilityPlus, the Australian government has also established the Pacific Covid-19 Recovery Fund that helps the Pacific and Timor-Leste to bring funding to the most critical areas. The fund will build on existing bilateral partnerships, investment, and implementing initiatives by the PacificStep-Up. In addition, the Australian government claims that this fund - $23.2 million over three years - will go to make sure that the vaccine is available to all when the vaccines become available. This support may include all support and building to develop policies of immunisation and roll-out of the vaccines when available. This is also on top of the $80 million contributions to the Gavi COVAX Facility Advance Market Commitment as the Minister for Foreign Affairs Marise Payne has declared.

Business

PNG Business News - October 24, 2020

Connect PNG Policy 2020-2040 Constructs Billion-Worth of Road Projects

Developed under the Marape government, the Department of Works Connect PNG Policy 2020-2040 guides the development of vital road links in the country which aims to connect communities across PNG for an increase to untapped economic potential, especially for SMEs and agriculture. This project highlights road transport as the dominant road in the PNG and as part of the vision 2050, apart from electricity airport development, energy and power supply. It is part of the government’s response in alleviating the road problem in PNG and will construct, repair and rehabilitate a total length of 4,200km of standard 2 lane economic highways and 16,000km of provincial and district main backbone highway. at a price of K20 billion in a span of five years.The first five years will upgrade, rehabilitate, and maintain existing roads with a length of 2,000km and construction of new missing links at 1,300km and connecting provincial district roads at 5,000km. All these at an estimated cost of K5 billion. The construction works include:K2 billion worth of contracts for the national highways sub-national roadsNew tenders pried at K1.44 billion of projects covering 554km on the core road networkNew tenders worth K300 million and year rolling contracts that cover 5,000km major district and provincial roadsOngoing new tenders equal to K7.5 billion or K1.5 billion a yearThe budget, however, can only afford K500 to K700 million a year as compared to the spending of K1.5 billion a year - which may create a shortfall of K1 billion generated through foreign governments such as trade partners in China and Australia.

Business

PNG Business News - October 21, 2020

Tarutia: Banking Is The Next Step

According to Nasfund Contributors Savings and Loans (NCSL) Chairman Ian Tarutia, banking is its next step. He said that he is currently gathering requirements to see how they could venture into that next step, adding that Papua New Guinea had only four commercial banks providing opportunities for other operators. “We have actually engaged a feasibility study and we are doing that now,” Tarutia said. “This is to help guide us to see the steps that will be taken and what it would be like if we are going to go into that banking arena because there are a number of things that you need to fulfill as requirements. Things like adequate capital base, infrastructure spread and all requirements that go with a bank. So once we get to that stage, we will have a clearer picture but in terms of the intent, we believe we can do more than what the savings and loans legislation is allowing us to do. Hence our push to get into that arena.”He added, “We have got membership growth and our governance overlay and just the infrastructure that we have at the moment is helping us get there so step by step. At this point in time, we need to have a clear indication of what we need to do to help us get into the banking sector.”Tarutia remarked that no loan and savings society had not acquired a banking license yet and NCSL was looking for ways to make this grow. “We can take a specific step or targeted approach or we can be a bank for all and provide everything and these are the questions that we have asked ourselves and we are getting answers by engaging outside expertise and possibly by 2021, we will have an indication of where to go,” he said.

Business

PNG Business News - October 21, 2020

The Ramu 2 Hydro Power Project Is One of the Biggest Projects to Date, says Tuke

Launched in 2015, the Ramu 2 hydropower project is one of the biggest impact projects for both the people of the Eastern Highlands and Morobe provinces. This, according to Mining Minister and Kainantu MP Johnson Tuke.He said, “Ramu 2 is a power project which the government has done its feasibility studies with a decision made by the National Executive Council, but the hold-up is with the PNG Power Limited (PPL) to endorse the Power Purchase Agreement (PPA). If endorsed, it will be the second biggest impact project in the Eastern Highlands apart from Ramu 1. It will provide vital economic flow, job opportunities, allowing the people of the Eastern Highlands province to benefit. The Kainantu people have given their land for the country’s development, Ramu 1 and if it’s the government’s intention to give an impact project for the people of Eastern Highlands.”Mr Tuke added that Ramu 2 should be given consideration as the project benefits both the Eastern Highlands and Morobe. He said that he has given the benefits of supplying power to all mining operations to PPL but as time passed by, PPL has proven to be unreliable and the mining companies have established their own power. He added that the project can add value to existing mines and other new projects. “The Mining Ministry has issued the first writ of refusal to PNG Power Limited, if incapable of providing power to mines then the mining companies will look for alternatives to settle for,” he said.The Ministry of State Enterprise, meanwhile, said in Parliament that the government doesn’t want to rush the K3.5 billion power project as this can affect PPL. Minister for State Enterprise Sansindran Muthuvel said that this Ramu 2 is one of the biggest projects to date and that it can allocate 180-megawatt power.He added that this project depends on other situations such as that the PNG Power doesn’t have the capability to buy 180-megawatt power. In the contract, they seek to take up the pay component of a minimum of 130-megawatt power and so, the project is subjected to a power sale agreement.

Business

PNG Business News - October 20, 2020

Groups Stress the Importance of Dialogues Between Sectors

PNG Chamber of Mines and Petroleum Vice President Richard Kassman together with local representatives from Deloitte, the Business Council of PNG and the Institute of National Affairs stressed the importance of Papua New Guinea’s resources sector to the economy and community following the call on the government to review its proposed Organic Law into an agreement for the petroleum and mining sectors. Deloitte highlighted statistics from an economic review that the PNG resources sector is at 23.9 per cent of government revenue, higher than previous figures. This revenue has come from sources such as salaries and wages tax, corporate tax, and dividend contributions, as well as indirect sources. Deloitte Director of Tax and Business Services Maygen Turliu said that this revenue allows the government to offer more extensive support to provinces and communities around the nation, and calls the government to undertake a robust consultation. “Given the significance of this contribution, and of the industry to the financial position of the PNG Government and country, it is essential the Government provides the industry with a clear consultation framework as complex employment and industry structure reforms are discussed,” she said. “Tax reforms don’t have to be something very big. You can tweak the current system so it fits both parties. You don’t need to do a totally new thing that could disrupt business, particularly with COVID-19 in place.”She added, "Consultation is key for businesses in PNG. The Government should be giving more access for open discussion on proposed reforms and allowing businesses to work with them to inform these reforms as they're being developed.”Meanwhile, Executive Director of national independent think tank organisation, the Institute of National Affairs, Paul Barker, said this pandemic has brought to light the need for collaboration and certainty between the resource sector and the government. “Now is the time to stimulate greater activity in this essential sector to our economy by creating a secure environment that provides investors with the confidence to act,” he said. This will deliver Government much greater volumes of direct and indirect revenue, and do it much more quickly, than looking to nationalise the operation of this critical sector. At this point in time, as a nation, we should be looking to expand the size of the resources sector rather than doing anything that risks reducing it. This will only be achieved by creating an environment where the Government is working alongside the industry and providing the necessary financial assurance required to stimulate activity across the industry and its investors.”Furthermore, Steamships Trading Company General Manager for Corporate Affairs David Toua stated that stability is an important factor in making a triumphant business recovery. He further cautioned the government not to risk revenue loss through the misinformed resource to the business sector. “Businesses around the country rely on the resources sector to help create demand for their services,” he said. “Putting the resources sector at risk jeopardises the livelihoods of a huge number of PNG business owners, as well as their employees – a move that would simply exacerbate the uncertainty of a looming recession in our nation.”Mr Kassman repeated the willingness of the parties to discuss the matter at hand. “The concerns that we as a sector express are not anti-Government. Time and time again we hear the views some of us as Papua New Guineans have are either anti-government, antinationalistic or unpatriotic, and that is far from the truth,” he said. “What’s important is that we want to contribute to an effective discourse, so our leaders are well informed in order to make good decisions for the future of our country.”

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