Investments in Exploration Decrease
Investments on exploration in the extractive sector, especially the mining industry, have decreased in the past decade.
According to Chamber of Mines and Petroleum president Gerea Aopi during the outlining the significance of having policy statements in the budget at the Deloitte and Port Moresby Chamber of Commerce and Industry business budget breakfast, investments were reduced from a billion kina to just K200 million in 2020.
He added that without such policies, the government will find it difficult to drive growth, especially at a time when investors are looking for assurance and confidence.
“Without sensible policies on the resource sector, I think it’s going to be extremely difficult for the government to drive economic growth,” he said. “There has to be certainty also stability in terms of policies whether its fiscal policies, legal and what the investors really look at is certainty and we don’t want investors coming in not knowing what the rules are going to be.”
Mr Aopi said that the policy statements offer no word on matters such as changes to legislation - whether that be the GasAct, the Mining Act, or in the Organic Law on resource ownership.
“That creates a lot of uncertainty in terms of whether they are going to see capital developed into the economy,” he said. Exploration is the future for the industry resource sector because we need to replace our existing assets. Without having explorations this will not happen. Exploration can take up to 30 years before we see anything coming up. These are the investments we need to make. Because of the uncertainties makes it difficult.”
Furthermore, Mr Aopi said that the fiscal stability agreement expected to be finished by the end of the year will offer some clarity to the fiscal terms agreed and signed last April 2019. He added that hopefully, this will help move Papua LNG forward towards progress.
He said, “Industry does not object to the changes in policies as long as there is a dialogue and there is more consultation in terms of trying to point out what are the challenges and what can we do, we want growth and make a return for shareholders.”