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PNG Business News - November 08, 2021

FX Liquidity Increases In Q3, According To BSP

According to Bank South Pacific Financial Group Ltd, foreign exchange (FX) liquidity has increased since the second quarter of the year, owing to robust commodities prices mixed with project-specific and donor foreign currency inflows (BSP). The PNG Kina has stayed constant versus the US dollar for the third consecutive quarter, according to the bank's Pacific Economic and Market Insights Q3 2021 Report, although FX reserves at the end of June increased by 7% quarter on quarter, owing to favourable inflow. According to the report, overall foreign exchange reserves were US$2.49 billion (about K8.5 billion) as of June 30.  In June, reserve balances rose 7% quarter over quarter, with positive inflows overcoming the Central Bank's monthly intervention of $50 million (about K171.6 million). While FX liquidity increased by 17% in September, BSP Group general manager for treasury Rohan George noted FX turnover increased by 18% during the previous six months, owing to robust commodity prices, particularly for oil, copper, palm oil, and coffee. “Firmer commodity prices, combined with increased project-specific and donor foreign currency inflows offset the lost FX market inflows from the closure of the Porgera gold mine,” he said. “Momentum in FX market turnover is likely to increase into year’s end. Outstanding FX orders have increased from low levels seen in June, and this is expected to continue in October and November with pre-Christmas import orders. “We expect large foreign currency inflows in late November and December to satisfy any foreign currency backlog. “And to manage reduced FX liquidity, businesses should place FX orders (with correct documentation), as soon as possible, ensure orders are cash-backed whilst awaiting execution, tax clearance certificates are current and reflect the expected FX order execution time,” George added. “It was also reported that the kina has been stable and unchanged against the US dollar for the past 11 months; however, the pullback in the AUD/USD (Australian dollars/US dollars), amid Coronavirus (Covid-19) related weakness in the Australian economy, strengthened the Kina/AUD, and the Australian dollar is expected to outperform into year’s end as the Australian economy opens up.”   Reference: The National (1 November 2021> “FX liquidity rising in Q3: BSP”

Finance

PNG Business News - October 04, 2021

Stock Exchange Rates To Be Eased

A new revised and market friendly transaction levy will be charged on all transactions on the PNG National Stock Exchange (PNGX). Robert Minak, executive chairman of Papua New Guinea's Securities Commission (SCPNG), made the announcement. “We have reviewed the existing levy rate of O.75 per cent and we believe that the quantum of that levy is too high and will disincentivise investors and therefore market activity. “After meaningful consultation with relevant industry stakeholders we concluded that it was necessary to significantly ease the rate,” Mr Minak said. “Levies are proposed as a way to raise government revenue. But levies can harm market quality by unnecessarily burdening the economy by distorting investor’s capital allocation in reducing trade volumes, increase volatility and adversely affect price discovery”. While weare required by law to retain a levy, its rate needs to reflect PNG’s current market conditions,” he added. SCPNG is required by section 44(1) of the Securities Commission Act 2015 (SCA) to maintain a levy and to pay a portion of it to the Capital Market Development Fund under section 429(a) of the Capital Market Act 2015 (CMA). As a result of the combined effect of such measures, the legislative trajectory anticipates that portions of the levies will eventually be transferred to the Capital Market Development Fund. SCPNG agrees that any taxes imposed under section 44(1) SCA should be used to promote market development rather than as a source of revenue for the government. The Capital Market Development Fund should be utilized for the levies of market development (CMDF). For the time being, SCPNG admits that all of the levies are tied to capital market growth in order to provide the market with every chance to expand. The Securities Commission has implemented meaningful governance control and transparency over the levy setting procedures, levy review mechanisms, and projected levies spending based on the findings of the review. In the next months, the governance infrastructure and administrative system will develop. They might include things like reporting on actual spending to industry and rebating taxes that haven't been spent. This newly updated rate will take effect two months after the gazettal is published. Any prior levies collected by a stockbroker or participating organization based on the now-revoked rate (0.75%) must be refunded to buyers or sellers within 14 days. “The reviewed rate is a significant decrease (96 per cent) from the rates presently in effect. “SCPNG hopes these changes will ease stakeholder concerns, maintain market quality and lead to restoring confidence in the market generally,” Minak said.   Reference: Post-Courier (1 October 2021). “Stock Exchange Rates To Be Eased”. 

Finance

PNG Business News - October 04, 2021

Review will Fix FX Worries as well as Competition: Treasurer

The revision of the Central Banking Act, according to Treasurer Ian Ling-Stuckey, would address the shortage of foreign exchange and competition in the banking business. The public comment phase, he added, will begin in the next two weeks. “The independent advisory group for the review of the Central Banking Act 2000 is making good progress on how we can make BPNG and monetary policy work better for the people,” he said. “I encourage people to look at the issues paper and consider the important issues raised. “Public submissions are now coming in.” He said the review was vital. “The current legislation needs to be modernised,” he said. “Why is there still not enough competition in our banking sector? “The gap between what banks pay to depositors and charge to lenders is too high. “Too many of our people still do not have access to banking services. “Too many of our SMEs find it too hard to get loans. “The review is considering if we can do things better while maintaining the bank’s independence. “The lack of foreign exchange is the worst business problem in PNG, bigger than law and order, or lack of skilled labour, or bad infrastructure, according to businesses in the annual CEO survey. “Why is our kina now so difficult to convert to other currencies when it wasn’t an issue 10 years ago?” People were told that the PNG LNG project would prevent such problems, he added.   Reference: The National (24 September 2021). “Review will address forex woes, competition: Treasurer”. 

Finance

PNG Business News - October 04, 2021

Kina Bank to Introduce Global Forex Market to PNG

Following a collaboration between Kina Bank and Everest, an international internet solutions provider, Papua New Guineans will soon have access to a new platform for sending money overseas and trading in foreign currency. Customers will not require a Kina Bank account to use the platform, according to a Kina Bank statement. Kina bank chief executive officer Greg Pawson said: “We want to make banking simple and easy for all customers, no matter who they bank with. “It’s one of many digital and mobile banking services we provide. “An added bonus is that we are working with the Bank of PNG on the regulatory requirements to provide customers with their own digital identity, ushering in a more digital future for everyone,” Pawson said. Everest chief executive officer Bob Reid said: “We are thrilled to partner with Kina Bank to leapfrog antiquated means of moving money. “By customising elements of Everest’s global cloud bank platform, we remotely verify users’ identities digitally and empower them with encrypted accounts and digital transactions for easy, cost-effective money movement.” Customers will be able to self-register using an app or online using their passport as ID, thanks to Everest's biometric identity and virtual account creation capabilities. They wouldn't have to go to a branch or submit any paperwork. Customers may fund their digital wallets with their current online banking accounts and begin foreign currency operations once they have enrolled. Kina Bank and Everest both said that they were dedicated to offering competitive foreign exchange rates and minimal transaction costs to guarantee that their clients could conduct cross-border transactions. Kina was waiting for regulatory permission from the Bank of PNG before launching the service, which was scheduled to happen before the end of the year. The service is for everyone.    Reference: Papua New Guinea Today (25 September 2021). “Kina Bank to bring Global Forex Market to PNG”.

Finance

PNG Business News - August 30, 2021

PNGX and Securities Commission Sign MoU

Photo Credit: PNGX PNGX Markets Limited, Papua New Guinea's national stock exchange, and the Securities Commission of Papua New Guinea (SCPNG) have signed a Memorandum of Understanding on the preservation of an orderly market for listed securities. The Securities Commission may make public remarks regarding a listed business from time to time in the course of its duties and responsibilities that a reasonable person would anticipate to have a substantial impact on the price or value of the listed company's securities. Making such remarks during trading hours (10 a.m. to 4 p.m.) might jeopardize an orderly and fair market in such assets. The MoU intends to foster collaboration between the Securities Commission and the PNGX in order to support the effective performance of their respective duties and responsibilities, as well as the preservation of orderly and fair markets in Papua New Guinea. According to the MoU, the Securities Commission will avoid making public statements about a listed company that a reasonable person would expect to have a material effect on the price or value of a listed company's securities during trading hours, to the extent that it is reasonably practicable to do so. If it is not possible to avoid making such public remarks during market hours: Prior to issuing the relevant public statement, the SCPNG will inform PNGX;  PNGX will impose a trading stop on the relevant listed company's securities; and  SCPNG will provide PNGX with a copy of the relevant public statement for distribution to the market as soon as feasible. “It is fundamental that regulatory governance systems are established to ensure a fair and orderly market,” said Robert Salmon-Minak, acting executive chairman of the Securities Commission. “This MoU recognises and respects the differing but complementary roles of the Securities Commission and PNGX in achieving that outcome. “The capital market regulator in any country plays a critical function in the economy of that country,” said PNGX chairman, David Lawrence. We are pleased to be working with the Securities Commission to put in place processes that promote confidence in the PNG capital market.”   Reference: Post-Courier (27 August 2021). “Securities Commission, PNGX Sign Agreement”.

Finance

PNG Business News - August 30, 2021

BPNG: Headline Inflation to be About 4%

Photo Credit: UMM PNG The Bank of PNG (BPNG) expects headline inflation to be about 4% this year, down from 5.1 per cent in December of last year. The raw inflation amount provided by the consumer price index is known as headline inflation. Inflation in Papua New Guinea climbed from 2.9 per cent in 2019 to 5.1 per cent in December 2020, according to BPNG governor Loi Bakani. “This was because of the impact of the Coronavirus (Covid-19) pandemic with rising prices for seasonal products as the supply chain of some of these products went up and prices in medical services also increased,” he said. “We are lucky at the moment because inflation is not that high.” However, he said the rates did not reflect the real people faced every day. “This statistical indicator of what the movement of prices is over time, (and) does not tell you the real prices on the shelves, the markets, service fees,” Bakani said. “They are totally two different things.” He stated that the government continues to confront budgetary problems in 2020 as a result of poor tax collection and higher spending compared to 2019. Bakani attributed this year's economic rebound to the relaxation of lockdown measures, fiscal stimulus in key economies, vaccine rollouts in the second half of 2020, and new business models. However, he added, there are still concerns about the development of a new Covid-19 strain, the growing mortality toll, vaccine rollout pace, and the efficiency of different policy initiatives. He cautioned companies and individuals against lowering their guard.   Reference: The National (24 August 2021).”BPNG predicts headline inflation to be around 4pc”.

Finance

PNG Business News - August 23, 2021

PNG Stock Market Worth Over K120 Billion

Photo Credit: PNGX According to the PNG Securities Commission, the stock market in PNG is now worth over K120 billion. The PNG National Stock Exchange presently has 13 firms listed, according to acting executive chairman Robert Minak (PNGX). “The total market cap fluctuates around K120 billion,” he said. “The market tracks well and it’s steady all the time for those 13 companies despite the challenges posed by the Coronavirus. “Trading has been slow but steady.” Minak stated this after Zimcare Ltd HR Consultants presented the commission with a report on the organization's audit. The purpose of the audit was to verify that the commission took stock of its operations and that the appropriate personnel were carrying out their allocated duties. “They are elite corporations that have billions of kina,” Minak said. “They hire the best people in the world. “And for the securities commission to challenge or regulate them with people that are not qualified or skilled, is a joke. “We felt that it was fundamental that we get it right from the start. “So we had to hire Zimcare. “They (had done) the organisational structure for the securities commission so they know the commission (well). “We got them to come and fix up things that have gone wrong along the way.” Meanwhile, Minak said the country’s stock market could make money for the Government like other stock markets in the world. “The (PNG) Government does not have the money,” he said. “It gets it from the banks within or goes out and borrows. “The commission regulates an industry where the Government or anyone else can raise money from an alternative source. “In other countries, the securities commission makes money that contributes to the budget.”   Reference: Mauludu, Shirley. The National (13 August 2021). “Stock market worth K120bil”.

Finance

PNG Business News - July 26, 2021

Liquidity in the Foreign Exchange Market has Improved

FX market liquidity improved in the second quarter of 2021, with FX market turnover increasing by 19.7%. FX market liquidity increased in the June Quarter 2021, according to the BSP Pacific Economic & Market Insights Quarter 2 Report, with market turnover reaching 23.9 per cent in June and 19.7 per cent in the June Quarter 2021. “FX inflows for the 1st half of 2021 were up 1.8% from one year ago. Reduced foreign currency supplied to the market from Barrick was offset by firmer copper and palm oil prices, combined with increased project-specific and donor foreign currency inflows,” BSP Group General Manager - Treasury Rohan George commented. The Kina is expected to stay constant versus the US dollar, while the Kina/Australian dollar cross rate will benefit from a stable Australian dollar. George predicted that FX market turnover will decline in the September quarter, compared to the high levels observed in the middle of the year. “Outstanding FX orders reduced by 60% over the June quarter, due to strong foreign currency inflows, however as FX inflows taper in July, August outstanding FX orders build up again,” he added.    Reference: Loop (21 July 2021). “FX Liquidity Improves”.

Finance

PNG Business News - July 15, 2021

CEO Expresses Optimism in the Stock Market

According to firm chief executive officer Robin Fleming, interest in BSP Financial Group Ltd (BSP) shares on the Australian Securities Exchange (ASX) is strong, with the current bid price of AU$5 (K6.6). Fleming said there were some compliance obligations that shareholders needed to fulfill when BSP got listed on the ASX last month. Obtaining a tax clearance certificate is one of them since it is required to support the application to transfer shares from the PNGX to the ASX. Some of the stockholders had completed the move, according to Fleming. “A couple of our smaller shareholders have completed the migration to ASX and are in the process of completing their first trades, and BSP’s first transactions on the ASX,” Fleming said. “We are eagerly awaiting the settlement of the first sell and buy trades on ASX. “A larger shareholder is also going through their various approval processes. “Interest in BSP shares is positive and the bid price is AU$5 but it is only after the first trades are performed that the actual price will be determined and the price is expected to fluctuate in the first months of trade.” BSP has been listed on the PNGX since 2003, according to group chairman Sir Kostas Constantinou, who spoke at a virtual ringing of the bell event in Port Moresby last month to celebrate the company's registration on ASX. However, the board concluded last year that a listing on the ASX would benefit shareholders by providing them with access to a far more liquid market, as well as provide BSP with additional sources of cash to support any future growth.   Reference: Mauludu, Shirley. The National (12 July 2021). “Positive interest in shares: CEO”.

Finance

PNG Business News - May 18, 2021

Study: Measures May Brings More Pressure on Gov Finances

According to an S&P Global Rating research update, measures introduced in the battle against the Covid-19 are likely to bring more pressure on PNG's government finances. According to the study, the global pandemic has exacerbated PNG's systemic fiscal problems. “Much weaker revenues, coupled with larger recurrent expenditure, are a feature of the fiscal landscape,” it said. “Larger fiscal deficits and weak economic growth have propelled general government net debt, according to our calculations, to above 46.6 per cent of gross domestic product (GDP) in 2021. “We forecast it to reach around 47.5 per cent in 2024 due to delays to the government’s fiscal consolidation efforts because of fallout from the Covid-19. “It states that weaker tax revenues and dividends from State-owned corporations have substantially lowered revenue expectations since the start of the pandemic. “On the expenditure side, significant overruns were incurred from a public sector wage bill because of increased wages and additional staff numbers. “In response, the Government has cut capital expenditure, partially offsetting the weaker revenues. “But this does not address vulnerabilities linked to PNG’s narrow tax base and it will continue to weigh on future growth.” According to the study, the government started its staff-monitoring scheme with the International Monetary Fund in 2020, detailing its 20 institutional benchmarks. “The incumbent government’s focus is on fiscal consolidation and lowering debt,” it said. “We expect this focus to provide an anchor to the government’s economic and social reform agenda. “Carrying out the agenda has been difficult because disruptions caused by the global pandemic have delayed targets. We estimate the general government deficits to average 3.3 per cent of GDP between 2021 and 2024. “The 2020 fiscal deficit was higher than the Government had projected. “The economic slowdown and low commodity prices led to lower revenue collections. “Government expenditure, meanwhile, increased due to pandemic-related fiscal support. “To mitigate some of the revenue shortfalls, the Government applied for additional Covid-19 financing facilities established by multilateral development partners. “We expect multilateral and bilateral partner loans to finance fiscal deficits, with net debt increasing to about 46.6 per cent of GDP in 2021.” The government has included debt from state-owned enterprises (SOEs) in its debt calculation, which is higher than our normal concept of general government debt, according to the study. “A lack of disclosure means we are unable to separate the debt of SOEs from that of the general government,” it said. “The Government continues to increase its reliance on external borrowing, with its debt strategy targeting a 50:50 split between domestic and external financing. “Wider fiscal deficits in recent years have strained the ability of the domestic financial system to absorb large amounts of government debt, which is reflected in higher local interest rates. “PNG has diversified its funding base via drawdowns from a Credit Suisse, Asian Development Bank, and World Bank credit facilities budget support loan from Australia as well as its US$500 million (K1.7bil) sovereign bond issuance. “The Government has used some of these proceeds to retire short-term expensive domestic debt, lowering its average cost of debt domestically. “We anticipate interest payments to rise as debt stock increases to about 23 per cent of general government revenues by 2024. “PNG’s external position remains weak. “The country’s terms of trade volatility have subsided over the past few years. “External debt ballooned between 2010 and 2013 during the construction phase of a liquid natural gas project. “Large current account deficits – financed by a combination of external debt and foreign direct investment – averaged about 30 per cent of GDP. “The country’s external imbalances have contracted during the past few years, with LNG production since 2014 resulting in repayment of external liabilities. “Future LNG projects could exacerbate external imbalances again during the construction phase. “We project a moderation in current account surpluses in 2023-2024, rather than the double-digit current account deficits of 2010-2013. “We forecast net external debt to be about 124 per cent of current account receipts (CARs) in 2021.” PNG's net external debt stood at 370 per cent of CARs in 2012, according to the study update. “We consider PNG’s strong current account surpluses to overstate its external position,” the report said. “Project development agreements allow developers of mining projects to keep export receipts in offshore foreign currency accounts. “These US dollar revenues deflate our external ratios, presenting a stronger external picture than would otherwise be the case. “We expect net external debt to peak at about 250 per cent of CARs in 2024.” Foreign exchange reserves have been stable over the past 12 months, remaining at about US$2.3 billion (K7.97bil) as of June 2020, according to the study. “PNG held about US$4.4 billion (K15.26bil) in international reserves in 2011, declining to US$1.7 billion (K5.89bil) in 2017,” it said. “This has also resulted in an easing of the shortage in US dollars in PNG, helping to lower the value and shorten the clearing time of outstanding foreign exchange orders. “However, we believe PNG maintains extensive foreign-exchange restrictions. “This is symptomatic of a currency that persists above the market-clearing exchange rate. PNG’s exchange rate arrangements were “crawl-like”, according to the International Monetary Fund. “During the past few years, the PNG Kina has depreciated against the US dollar, falling around 15 per cent since 2015,” the report said. “More broadly, the Bank of PNG’s weak monetary policy flexibility is a rating constraint. “This weakness mainly reflects the limited transmission of monetary policy settings to the interest rates faced by borrowers, largely because of the high level of liquidity in the banking system. “PNG’s banking system is stable, with limited competition. “It relies heavily on deposit funding, which is supported by high levels of liquidity. It also has a small net external asset position and limited linkages to global markets. “That said, the country’s low-income levels and credit concentrations increase banking system risks. “Legal infrastructure and judicial system delays also pose challenges to enforcing creditor rights.”

Finance

PNG Business News - May 18, 2021

BSP Sign MoU for Digital Payment Solution

BSP Financial Group Limited (BSP) and the Department of Finance have signed a Memorandum of Understanding (MoU) to allow the government to raise non-tax revenue through a digital payment solution. This is the first such MoU with any government agency, according to BSP Group CEO Robin Fleming. “These payment gateway modes would appropriately suit different paying sectors of the population of which some are rural-based suited with mobile payment mode and Kiosk which would be made available in all-cash offices and popular and common public access points, while online will suit city residents and overseas paying clients,” Fleming said. This Digital Payment Solution will be used to pay for non-tax costs such as police clearance, warrants, bails, visas and renewals, property leases, resettlement facilities fees and job permits, coal and petroleum discovery licenses, petroleum production and production licenses, among other domestic recurring fees and charges.  The Payment Solution, according to BSP General Manager Digital Nuni Kulu, would allow for direct payment tracing, expand the government's payment scope across the world, save time and money while improving consumer engagement and government service delivery. “The Department of Finance’s Website Portal is custom-made to capture a wide range of government services, boosting revenue generation and drive cashless transactions through online payments,” Kulu added. Dr. Ken Ngangan, the Finance Secretary, stated that the payment solution would result in the timely recovery of non-tax revenue and would boost the government's revenue collection activities in order to fulfill the government's budget needs.

Finance

PNG Business News - May 10, 2021

PNG Kina Continues to Fall Against US Dollar

The PNG Kina is expected to continue falling against the US dollar. The Kina traded steady in the first quarter of 2021, according to the BSP's Pacific and Economic Market Insight survey, thus depreciating 2.4 per cent year on year against the US dollar, from 0.2920 to 0.2850. Rohan George, BSP Group General Manager – Treasury, said, “The US Dollar rallied against most currencies, as higher than expected economic and employment growth created inflationary concerns and fueled speculation that the US Federal Reserve would tighten monetary policy earlier than markets had initially expected.” Business liquidity dwindled in the first quarter of 2021, with market volatility down 8.3% in March and 5.2 per cent for the quarter. Despite strengthening signs in the global economy, George predicted that foreign exchange market turnover would remain sluggish in April and May, with decreased foreign exchange inflows in April. This follows the two-week closing of the OTML COVID-19 phase alignment and Barrick's lack of foreign currency supply to the industry. He predicts an uptick in half-yearly and end-of-quarter flows next month, as well as a reduction in pending foreign exchange order bottleneck problems. “To manage reduced FX liquidity, businesses should place FX orders (with correct paperwork), as soon as possible, ensuring orders are cash-backed while awaiting execution, and that tax clearance certificates are current and reflect the expected FX order execution time.” BSP Group CEO Robin Fleming agreed, saying, “The Government’s commitment to recommission operations of Porgera mine is a positive move that will also bring foreign exchange into the country and boost local and domestic economic activity.”

Finance

PNG Business News - April 12, 2021

Kina Depreciates Against All Major Currencies - Except the Yen

According to the Bank of PNG (BPNG), the average regular kina exchange rate has depreciated against all major currencies except the Japanese yen as of March 8.  The kina depreciated by 8.1 per cent against the Australian dollar, 7.5 per cent against the British pound sterling, 2.8 per cent against the Euro, and 0.9 per cent against the US dollar, according to BPNG's quarterly economic bulletin for the September 2020 quarter. It appreciated by 1.3 per cent against the Japanese yen. BPNG Governor Loi Bakani said the country's foreign exchange reserves were K9.5 billion (US$2.7 billion) at the end of December. “As of March 5, 2021, the level of foreign exchange reserves decreased to K8.46 billion (US$2.41 billion), reflecting debt service payments for the Government and intervention by the Central Bank in the foreign exchange market,” he said. Meanwhile, the global economy shows signs of improvement in the December quarter of last year, according to reports. However, the second phase of the Covid-19 pandemic, which included a new virus, began to hit major economies, delaying recovery. “As a result, most countries have not completely opened up their borders to the movement of people,” he said. “The development and trial of Covid-19 vaccines that continued into the last quarter of 2020 provided some level of confidence for the global market and the world economy. In its January world economic outlook (WEO) update, the International Monetary Fund, projected the world economy to contract by 3.5 per cent in 2020 from its earlier projection of a decline of 4.4 per cent in the October WEO. For 2021, recovery has been upgraded with a growth rate of 5.5 per cent, reflecting the trial and introduction of Covid-19 vaccines.”

Finance

PNG Business News - March 22, 2021

Fleming: Trade is Important for Forex

The availability of foreign currency is crucial for promoting trade and enabling companies to continue importing goods for consumer consumption. It's also essential for investors to know that returns on capital investments can be repatriated if and when enough foreign currency is available in the country, according to Bank South Pacific CEO Robin Fleming. When asked if there is a continuing foreign currency shortage in the country, he said that while foreign currency issues are likely to continue for another two to three years, the prospects for a rebalancing of foreign currency supply and demand are optimistic once construction work on the Papua LNG begins. “Businesses have conditioned themselves to not being able to access foreign currency in a timely manner.,” he said. “But in doing so they have in certain instances forgone growth opportunities and put aside larger investments that would have assisted grow their business.” While reflecting on the rise in COVID-19 cases, Fleming noted that many companies will be worried about the growing number of positive cases. In response to a query about the BSP status, he claimed that their regional businesses have had to deal with the effects of COVID in each of their countries, with travel restrictions affecting their tourist-related industries. In what he described as a difficult year, he said most people did reasonably well. “Our focus in 2021 is to bring our new banking system online in Vanuatu and PNG in 2021 and other countries thereafter,” Fleming said.

Finance

PNG Business News - March 11, 2021

Puma Energy Concerned About Shortage of Forex

Puma Energy PNG Ltd is concerned about a shortage of foreign currency (forex) to import crude oil in a timely manner, according to country manager and director Hulala Tokome. The business paid for its crude supplies when forex was available on the market, he said.  Tokome added that the availability of forex had influenced the crude oil purchase schedule, also commenting on oil prices, citing Platts as a source. According to Tokome, oil prices for February have been steadily rising. Platts is a source of benchmark price assessments in the physical energy markets and a provider of energy and metal knowledge. “Hence, we will have an increase in prices for March as the Independent Consumer and Competition Commission (ICCC) pricing structure is based on Mean of Platts (MOP) Singapore prices for the prior month,” Tokome said. “There is a one month lag on pricing effect. “All eyes will be on the Opec (Organisation of petroleum exporting countries) meeting. Their decision to increase crude oil production or not will determine which direction prices will go. There is strong market optimism around global demand returning on the back of vaccine rollouts.” Many countries have begun to announce plans to phase out lockdowns, he said, and the warmer weather could help support demand. “With this, prices should continue to trend upwards,” Tokome said. Brent rates are currently at US$64/bbl (K220.95/barrel of oil), according to Tokome.

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