Uncertainty Over Papua LNG To Go-Ahead: Kina Securities Limited
In its external market conditions assessment, Kina Securities Limited (KSL) reports an air of uncertainty regarding the proceeding of Papua LNG project citing P’Nyang’s no deal outcome a key to the sentiment.
This was in its 2019 Annual report released last week Friday on the PNG National Stock Exchange.
“This is an important reason for our economic view of the immediate future. “This large scale LNG project would have seen multi USD billion investments into PNG over a number of years and was a key driver of confidence – which has fallen since the negotiations, concluded unsuccessfully.
“There is an element of uncertainty as to whether the Papua LNG project (which is the second leg of the overall LNG project) will now go ahead.
It added the best case alternative would be a redesign of what were to be shared facilities to support P’Nyang and Papua LNG, to allow only the Papua LNG project to proceed.
“This will delay the development of Papua LNG, however the parties are reengaging to see if an acceptable solution can be found. The assessment, however, stated a reassuring fact is that in the 2020 National Budget, the government had not allowed for revenues from these gas projects in its revenue track so there will not be additional fiscal downside from the project not proceeding.
“Notwithstanding this, the difficulties experienced by the economy and business in general will not be helped by this development.
“We expect that the short to medium term outlook will be a period of ongoing reform and adjustment as the government puts in place initiatives to reduce the fiscal deficit over time, while simultaneously building on foundational work in areas such as infrastructure spending and value added processing to build the manufacturing base of the country.
“Priority outcomes for government spending in 2020 include rightsizing the public service and laying the groundwork for future infrastructure investments in economic corridors,” it added.