PNG Government Protects Local Industries

By: Andrew A
4th December 2017

The PNG Government has take a bold stand in protecting the local industries with an increase in tax for competing products.

These ‘Protectionary Measures” by Government will ensure that the local industries will thrive and be abel to have an upper-hand in competing with similar products from overseas.

Similar protection is offered to local beef suppliers and other agriculture based companies operating in Papua New Guinea which are partly owned by locals.

The revived Ilimo Farm which has seen an investment of K128m will employ over 150 fulltime staff and produced 13 million litres of dairy products. The dairy farm will produce a range of products from milk, yogurt, ice cream and other dairy snacks.

A similar farm will be setup in Lae

 

============================================

The National

7th September 2017

THE Ilimo Dairy Farm in Central will cost about US$41 million (about K128m)  to complete, says National Planning Minister Richard Maru.
He recently visited the farm to see the progress.
The project is being developed by Innovative Agro Industry Ltd.
Ilimo Dairy Farm is located in the Kairuku-Hiri district of Central.
The shareholders equity partners of the project include IAI at 50 per cent, the government at 20 per cent and Central government owns 30 per cent.
Further financing, facilitated by IAI, is provided by Bank Leumi, of Israel. The farm is expected to create employment for more than 150 fulltime employees.
It is estimated that Papua New Guinea imports around 13 million litres of dairy products annually.
At full capacity, the Ilimo dairy farm will produce five million liters of dairy products annually, including fresh milk, flavoured milk, yogurts, icecream and other dairy snacks.
By replacing imports, the farm is expected to slash consumer prices by at least 40 per cent.
Maru was briefed about the construction phase, which is expected to be completed by November, with products on the shelves by next January.
The dairy cows have arrived from New Zealand and are at the facility.
“Putting cash into the people’s hard work is starting a programme of finalised inclusion,” he said.
“We need to engage our people now and stop the rhetoric of the inclusion slogan of ordinary hard working Papua New Guineans and inject much-needed cash into local economies.”
“llimo Dairy is scheduled to be completed within a short 12-month period, is yet another example of the government’s public-private partnership programme, which continues to create a wealth of opportunities for our people.
“We are helping our people to spend money locally while creating opportunities at the village level. In this particular partnership, IAI have proven once more that they are serious about developing the agriculture industry in Papua New Guinea.
“The government is deliberately investing in the dairy farm to reduce the importation of over K400 million in dairy products that Papua New Guinea imports
annually, which we can produce locally.
“Papua New Guinea will need a further three to four dairy farms of the same size as lllimo to produce enough volumes of dairy products to meet our needs.
“The government will be working with the Morobe provincial government to identify suitable land for the setting up of our second dairy farm in Lae depending on the success of the farm and processing plant at IIlimo.”

http://www.thenational.com.pg/ilimo-farm-ready-milk-opportunities-cut-imports-pleasing-says-minister-maru/

 

Advertisements

2018 National Budget – Economic & Development Policies

FOREWARD

It is my great pleasure to deliver the 2018 National Budget which is my first substantive budget as the Treasurer in the new O’Neill-Abel Government. The 2018 Budget marks the beginning of the new Medium Term Fiscal Strategy 2018-2022 that aims to confront the current set of challenging fiscal conditions with vigour, including the current subdued economic conditions and depressed revenue, strengthen the macroeconomic and fiscal fundamentals of the economy, and get the economy moving forward.

At the same time, the Budget will the Government’s social spending priorities and improve the opportunities for people and the standard of living for ordinary Papua New Guineans.

In recent years the PNG economy has endured a series of economic shocks following the rapid growth brought about by the commodity boom and the construction of the PNG LNG project. Commodity prices have fallen and remain relatively low and the severe drought in 2015 added to the difficulties.

A foreign exchange imbalance has developed which has further constrained economic growth, together with rising debt levels and domestic financing constraints. We have had to respond to these shocks by cutting discretionary spending, mostly from the capital budget, which has further suppressed economic conditions.

The shocks have had a much greater impact than initially anticipated and continue to have an adverse impact as we end 2017.

Total government revenue has collapsed as a share of the GDP from 20 per cent in 2012 to 13.4 per cent in 2016 and is expected to decline further to below 13 per cent by end-2017. This has resulted in larger than anticipated budget deficits and delayed the projected return to a balanced budget.

Furthermore, within the overall expenditure envelop, a number of categories have expanded, particularly personnel emoluments and interest costs. As part of its decisive and responsible management of the economy, when the lower economic growth rates were realised, the Government pursued fiscal consolidation with a significant reduction in expenditure over the past few years.

However, given the difficulty of even slowing the growth in these rigid categories of expenditure, especially against a backdrop of the continuation of subdued economic conditions, most of the burden of adjustment fell on the much-needed and productive capital expenditure Budget.

The 2018 Budget and medium-term strategies we have formulated will combat these adverse trends and get the economy moving forward again with some momentum. The strategy will pursue three parallel paths: (i) to halt the declining revenue trend then lift collections onto a higher sustained rising trend over the medium term; (ii) to reign back locked-in and less productive expenditure categories onto more sustainable paths to create space for a lift in more productive capital spending that will get the economy moving significantly forward again; and (iii) improve debt management and cost of financing and extinguishment of the foreign exchange imbalance.

The international outlook is becoming more positive, commodity prices have started to trend higher and international capital, particularly into emerging markets, is starting to expand as investor’s appetite for risk improves. We need to be ready to capitalise on these more positive international developments. The APEC summit in 2018 will allow PNG to showcase its

readiness for enhanced capital and trade flows. The 2018 Budget will provide the platform for fixing our fiscal problems and then building optimism for growth and development.

The Government announced its intentions in a 100 Day Plan to kick start the Alotau Accord 2. The 25 policy actions of the Plan were specific interventions aimed at restoring fiscal discipline, addressing the foreign exchange imbalance, enhancing revenue, strengthening our economic base and improving governance and were reinforced in the 2017 Supplementary Budget. The 2017 Supplementary Budget and 2018 Budgets are Points 1 and 2 in this Plan.

The Accord also operationalises the longer term development plans based on Vision 2050 and StaRS. These will be articulated against specific indicators and sectoral interventions in the upcoming Medium Term Development Plan 3, according to the National Planning Act, 2016. There is a specific focus on reinvigorating growth through SMEs and the tourism and agricultural sectors that will underpin broad based and inclusive economic growth structures.

In the 2018 Budget the Government will establish in the commercial banks a dedicated SME fund of K100.0 million for concessional lending, and an agricultural commercialisation fund of up to K100.0 million. Furthermore, a number of key policies associated with the 2018 APEC agenda will be progressed, such as advancing financial inclusion through financial literacy programs, adopting digital financial services and spreading mobile banking capabilities.

Importantly, the Government will continue to invest in key national infrastructure programs in 2018, particularly, the Highlands Highway, coastal jetties, the missing link roads program, hydro and gas power generation stations, and the international submarine cable project. These are important transformational projects that will reduce the cost of doing business, improve market access for rural farmers, and improve and lower the cost of communications for businesses and consumers.

The Government’s key policy priorities and programs, such as the Services Improvement Program, tuition fee free and free health care programs will be maintained to ensure the board- based consumption and delivery of goods and services to our people.

The 2018 National Budget Expenditure envelope is set at K14,718.0 million against a revenue projection of K12,731.0 million. This translates into a fiscal deficit of K1,987.2 million, or 2.48 per cent of GDP. This is expected to maintain the total debt-to-GDP ratio at just above 32 per cent of GDP, which is well within the approved range of 30.0 per cent to 35.0 per cent of GDP prescribed in the Fiscal Responsibility Act (amended 2017).

The 2018 Budget is consistent with the stringent and prudent fiscal anchors established in the new MTFS 2018-22 which comprise:

  • Lifting the total revenue (excluding grants) to GDP ratio to 14.6 per cent in 2018 and to target 14.0 per cent by 2022;
  • reducing government expenditure from 18 per cent of GDP in 2018 to 16 per cent in 2022;
  • reducing the government debt to GDP ratio to 30 per cent by 2022 and ensuring the sustainability of the debt profile, including the shift towards external financing through budget support loans from the World Bank and ADB and through an inaugural US Dollar bond issuance program;
  • maintaining the non-resource primary fiscal balance on a trajectory that will achieve a zero annual average balance over the medium term (to 2025);
  • ensuring that Personnel Emolument costs are contained and brought down from 49 per cent of total non-resource revenue in 2017 to 31 per cent by 2022; and
  • ensuring that two-thirds of primary expenditure is allocated to key MTDP Enablers and that the public investment to GDP ratio is lifted from 4 per cent of GDP in 2017 to at least 6 per cent by 2022.

To fund the adjustment costs and lift the economic growth momentum, yet stay within the set medium term fiscal anchors, the 2018 Budget will focus decisively on revenue through the first ever Medium Term Revenue Strategy which has been developed with the International Monetary Fund.

The Strategy has had substantial input from the Government’s 2015 comprehensive Tax Review and recent technical assistance from an International Monetary Fund team. Some of the key initiatives to be implemented in 2018, include the establishment of a large taxpayers’ office to improve compliance and tax service, a number of tax measures to raise additional revenue and the announcement of the drafting of a new Tax Administration Act to modernise and simplify tax administration.

The Government is also introducing legislation per the 100 Day Plan compelling all statutory authorities and other government agencies collecting non-tax revenue under statute to remit the collection of those funds to the Consolidated Revenue Fund. The Government has also commenced the process of transferring trust fund balances and assets back into the Consolidated Revenue Fund and enhancing the dividend flows from state-owned enterprises.

Financing the 2018 Budget will be critical and much will depend on the portfolio shift towards lower-average cost external debt and this will be achieved by seeking highly concessional World Bank and ADB budget support funding that will be combined with a US Dollar commercial bond program. The portfolio shift will also: firstly, relieve pressure on the tight domestic security market allowing the development of the less risky, longer term domestic bond market; secondly, increase the level of credit to the private sector; and, finally facilitate the extinguishment of the foreign exchange imbalance.

There are important adjustments to the tariff regime and housekeeping tax legislation.

Overall, the 2018 Budget is a forthright step towards strengthening the resilience of the PNG economy to withstand future economic shocks. It lays the groundwork for fiscal consolidation and it will reignite the economic growth momentum and boost optimism for the future. It will provide the platform to showcase the best of PNG to the world at the upcoming APEC summit.

It is “Time to pull our socks up and go for it”.
I commend the 2018 Budget to the Honourable Members and to the people of Papua New

Guinea.

……………………………………
HON. CHARLES ABEL, MP
DEPUTY PRIME MINISTER AND MINISTER FOR TREASURY

http://www.treasury.gov.pg/html/national_budget/2018.html

 

 

Is the 100 Days – 25 Point Plan Practical and Achievable ?

By Francis Hualupmomi



It appears that the government has admitted that there has to be a macroeconomic discipline in rescuing the current economic situation. And it has put forward a 100-Days 25-Point Plan economic rescue package for the country based on the Alotau Accord II. But is this package realistic and achievable? Therefore, this article seeks to respond to this question.
The Current Economic Situation

Source: ADB 2017 Outlook https://www.adb.org/countries/papua-new-guinea/economy



According to the Asian Development Bank Economic Outlook (2017), the PNG economy has slowed down to 2.0 percent compared to the last four years (see the figure above). But it is predicted to pick up again at 2.5 percent by 2017 driven by mining and agriculture. The slowdown in the economy has been attributed to low commodity prices. This has increased inflation and unemployment, decreased foreign reserves, and affected the national budget.

Macroeconomic Landscape
It appears that the economic approach undertaken by the government over the last four has been one of an Expansionary. At the fiscal policy level, it has been driving the economy with high spending and borrowing at the backdrop of a decade long economic growth. The rationale is simple – utilise the surplus to expand the economy through infrastructure development which will, in turn, stimulate the economy. As a result of this approach, the economy has experienced an infrastructure boom in the economy as has been so far.
At the monetary level, it has been responding to the fiscal policy to ensure that the economy remains stabilised. It is important to note that in a country like PNG, monetary policy approach responds to fiscal policy to ensure stability. In so doing, it controls exchange rate and interest rates which tend to influence inflationary (inflation) behaviour.
Unfortunately, this macroeconomic policy has been affected by an unfavourable condition. There are two related factors, apart from others, that affect this behaviour. First, is that our commodities have been hit hard by low prices in the global market, which we have no control over. As a result of this price fluctuation, the revenue sources have been affected to sustain the fiscal capacity (budget). Because PNG is a resource-dependent economy that relies heavily on mineral and petroleum sectors, a price fluctuation in the global market will directly affect the economy in terms of growth and development. That is one of the reasons why the budget has been cut in certain social and economic sectors.
The second factor is that while the expansionary approach has been good it has not been managed at a sustainable level. What it means is that as the commodity prices slowly began to pick up again there has been a steady increase in the spending and borrowing. The reason is that there is an expectation that price will pick up again as in normal business cycle and sustain the expansionary approach. The downside of it is that it is quite difficult to predict the price fluctuation due to the complex interaction of market forces. As a result of this fiscal behaviour, the budget spending and borrowing has increased the deficit. However, the budget deficit can be improved and incrementally restored to normalcy through a sustainable macroeconomic policy package. Therefore, the next part will discuss this.

The Viability of the New Macroeconomic Rescue Package
The new Deputy Prime Minister and Treasurer, Hon Charles Able, has realised the downside of the expansionary macroeconomic approach. And he has proposed a 100-Days economic package to rescue the economy from further sinking. In essence, this is a 25-Point Plan which has been widely consulted with the private sector and led by some of the senior ministers and economic advisors. While this package may seem unrealistic to some critical commentators, in my view, it is a workable and achievable one.
The 100-Days 25-Point Plan intervention is based on these key strategic economic priority areas:


• Maintain Fiscal Discipline and Boost Foreign Exchange; Growing Our Revenues;
• Strengthening Our Economic Base;
• Improving Our Governance Record, and;
• Acting Strategically
.
First, maintaining fiscal discipline and boost foreign through the growing of revenues. Given the issue of the fiscal problem, practically maintaining a fiscal discipline in a prudent manner will help boost the foreign exchange in many ways. That means controlling and spending behaviour as compared to previous years. And this must be balanced with growing revenues through multiple sources. Incoming revenues must be prudently managed in a sustainable way. What is collected should be spent on strategic priority areas that can bring in higher returns.
In addition, the tax cut will be a balanced strategy. This is because no new taxes will be imposed on ordinary people despite declining revenues. However, this can be recovered through those who avoid or and evade tax. The country has been missing out on the billion dollar extractive industries through tax. For instance, a lot of companies in the mining, petroleum and logging industries have been avoiding or exempted from tax. As result of this, billions of Kina have been going out of the country. These lost revenues could be recovered and help support the budget.
Secondly, strengthening of the economic base is an innovative plan to invest in economic areas that have been ignored. This implies that the economic base must be diversified to boost the economy by way of revenues sources and invested in a lot of baskets to cushion economic surprises. Apparently, the focus on agriculture is pragmatic going forward. It has been a neglected billion dollar sector. Therefore, it is hoped that this will incrementally support and sustain the budget. 
Moreover, while the plan sounds practical, the governance aspect of it is fundamentally critical. The government has been widely criticised by the public for governance issues. And this approach is a noble plan to improve its credibility and international standing. In so doing, it will help its approach in prudently governing and managing the economy. Because investor confidence attracts investment and helps build the economy. Political governance is the strategic driver of economic growth and development at this time and in the long run.
Finally, these plans must be pursued in a strategic way. Every decision requires calculated available options to maximise optimal outcome. The government has chosen the best strategy therefore, it is Directionally Correct.



In conclusion, the economy has been affected due to the changing economic conditions and governing approach. And this has been evident in the current economic situation the country is facing. But this can be arrested through a sustainable macroeconomic approach. Therefore, the 100-days 25-point plan package is a practical one and needs to be incrementally governed and managed in a strategic way.

Francis Hualupmomi is a PhD Student in Public Policy in the School of Government, Victoria University of Wellington. He is a Political Scientist in the area of political economy of energy security, geopolitics of resources, international security, and strategic policy. Views expressed here are his own. francishualupmomi270@gmail.com 

DEVELOPMENT IS ACCORDED TO POPULATION SIZE – O’NEILL

9th May 2017

Mr O’Neill said when his government came into office in 2012, one of his first meetings was with Governor Powes Parkop who put forward many of NCD’s expansion plans that were never implemented by the previous government.

Mr O’Neill said the previous government had so many expansion plans for city roads including basic services for its city residents, which never eventuated into tangible results.

However, everything changed due to the hosting of the SP Games in 2015, which became a game changer.

STH1
O’Neill cuts the ribbon to Officially Open the Sir Ruben Taureka Highway

Mr O’Neill PM described the project at the time to be three years behind schedule that had ailing infrastructure and could not even host an international event in the country. He said his government took a bold step and made a decision that was against all advice in cancelling the event.

He said it was an opportunity for the national government to deliver the infrastructure for a growing city like Port Moresby, which needed world-class facilities which overtime became a reality.

“Today you have stadiums you can be proud of that is comparable to stadiums anywhere in the world. You simply forget when you go and watch a rugby league match at PRL and forget where we came from. And you take it for granted that these some of the infrastructure weren’t even there a few years back. You forgot the hard decisions and hard ships we had to take in order for everyone to enjoy the facilities. Even our roads now are built to world class standards,” he said.

Mr O’Neill said people were complaining about the government spending too much money in Port Moresby and reminded everyone it was the government’s prerogative to plan and spend money that will bring much needed services to people, which was based on the size of the population in any given location.

“There is no other formula when you have a population like one million people living in Port Moresby city, offcourse you need to upgrade its infrastructure. I want to build a four – lane road in Pangia District but we only have 120,000 population there, so it does not make economic sense to build a four-lane highway there,” he said.

The Prime Minister said developments throughout the country concentrated on areas with the largest populations such as Lae, Mt Hagen and Kokopo.

“We fixed Lae city from a pot hole city to a cement city. We built a four-lane highway from Lae City to Nadzab. We are also building a four-lane highway from Kagamuga to Mt Hagen and onto Koltiga. We are also upgrading all the roads in Kokopo, its because of large portion of Papua New Guineans go and get services there.” he said.

Ela Beach gets timely Facelift

By: Jonny Andrews

I have been watching with interest the developments happening at Ela Beach.

It saddens me that most of the trees will be cut for this development but I am reminded that in order for something/someone to be remold they had to be broken into many many pieces.

Papua New Guinea is growing and with growth comes development. Development of infrastructure,  development of its tourism industry and development of its landscapes.

We continually compare ourselves to the Arab Nations but we must understand that, they reached that stage by starting off where we are right now. It was not an overnight miracle, it was a progressive development that changed their nation.

The Ela Beach Redevelopment it seems has 3 Contractors working on it.
1. Apec Haus and the Marina by OSL
2. Ela Beach Waterfront by CHEC
3. ?????  – this would be another company which will develop the area towards Koki

It is not only the Beachfront that is getting developed, the properties opposite the road would also see development. Currently, there is a plan to redevelop the IEA School, Ela beach hotel and properties inline with the whole development of Ela Beach.

This development of Ela Beach will join the Paga Hill Development and make it one of the biggest Development in the Pacific Region compared to other Pacific Island Nations.

Papua New Guinea is moving forward, it is time we also move our mindset and look forward to greater participation in our own land.

 


Port Moresby’s iconic beach to be modernized at a cost of K55 million. New developments to include APEC and a 4-lane highway
THE Hiri Moale Festival will be allocated space in the current redevelopment of the iconic Ela Beach in Port Moresby.

ela-main
Redevelopment of IEA in Ela Beach

This was made known by Member for Moresby South Justin Tkatchenko when he responded to questions on the redevelopment of the beach.

He added that the Motu-Koita Assembly, the voice piece of the Motu-Koitabu landowners of traditional Port Moresby, was in agreement of the redevelopment of the beach front which would bring in new jobs.

The annual three-day event, which culminates in the crowning of Miss Hiri Hanenamo, promotes the culture of the Motu coastal villagers

Mr Tkatchenko was also asked on the controversial issue of the land title which he fought to have extinguished after it was awarded to Awak Holdings Limited two years ago.

“I did not agree with the way the title was handed to Awak Holdings via the Lands Department.” Awaks development plan had also entailed reclamation of the shorefront about 50 metres but it met with opposition from Mr Tkatchenko and traditional landowners.

09ak_trees_0
Ela Beach Redevelopment by China Harbour Construction

“The beach front comes under National Capital District Commission and it is State land, open space and recreational.”

He added that after the extinguishing of the land title, the title was publicly tendered by NCDC and awarded to Cardno and China Harbour Engineering Company for the roadworks.

The Ela Beach Foreshore Development Plan was unveiled in September last year.

In that plan the beach front will undergo two stages of development with stage one will see completion of APEC Haus to be constructed on NCDC’s sea park land. APEC Haus will be the venue for the Asia-Pacific Economic Co-operation Leaders’ Summit next year.

The second major development would be the construction of Ela Beach Road as a four-lane road to align with Healy Parade and Paga Point Ring Road; construction of about 300 car parks; and redevelopment of Ela Beach as per the unveiled master plan.

NCDC had dedicated its land being the former sea park jetty for the construction of APEC Haus. Post Courier /ONE P

 

—————————————————

$17 million road improvement, beach extension project in Port Moresby

By Benorah Hesehing

PORT MORESBY, Papua New Guinea (The National, Feb. 10, 2017)

Work will begin today to give Port Moresby’s iconic Ela Beach a K55 million [US$17 million] facelift.

 

NCD Governor Powes Parkop said the redevelopment project involved the construction of a two-lane road and an extension of the beach by another 100 metres.

“The work will begin tomorrow (today) and I am calling on the public for their understanding and cooperation,” Parkop told a media conference yesterday.

“There will be some disruptions for the earth work but we intend to keep the existing roads operational while the new lanes are being constructed.

Ela beach Road Map
Road Map for Ela Beach Redevelopment

“Some of the trees, shrubs and palms which provide shade would be removed to create way for construction.”

He added that the National Capital District Commission was doing all it could to retain the old trees. “We understood that the older trees were part of the Ela beach heritage and are working hard to save those, which can be saved,” Parkop said.

He said the people should not think about what they would lose, but what they would gain from the redevelopment project.

Ela-Beach-Marina-Development
Ela Beach Marina Hotel

Moresby South MP and Minister for Sports and National Events Justin Tkatchenko said the project was a “fantastic achievement for NCDC”.

“We can plant advanced trees within the landscaping for Ela Beach to ensure what is replaced is suitable or even better,” he said

Ela-Beach-Marina-Development-1
Ela Beach Marina with APEC Haus in the Middle

 

The complex business of PNG LNG market

By: Andrew A Arthur

After 200 shipments of LNG from Papua New Guinea and still we have not seen an profit nor have we seen any developments in Papua New Guinea!

This just one of the many comments by frustrated landowners and citizens in Papua New Guinea about the commercial viability of the PNG LNG.

Recent protests by landowners of Portion 152 for unpaid royalties also aired the same sentiments.

But why is there a delay on any inflows into the Government coffers and into the Government operating accounts to fund the national budget??

There are many answers to that but the root cause is how the agreement was structured and who gets what percentage and how did they fund their share percentages.

See below the share structure of the PNG LNG agreement;

  • Exxon Mobil (US) 33.201%
  • Oil Search (Aus) 29.003%
  • Santos (Aus) 13.532%
  • Nippon Oil Exploration (Japan) 4.680%
  • PNG Govt (NPC + Petromin) 16.779%
  • Landowner 2.805% 

Inorder to take up shares in the PNG LNG, you need to fund your percentage in those shares. PNG Government had to take an IPIC loan of over $1billion to fund its shares. All other parties would have done the same and taken out loans.

When the gas are sold, the parties start repaying their debt, these would equate to at least 3-7 years of loan repayments until they start to earn a profit from the sale of the gas.

It is estimated that by 2017, Papua New Guinea Government would be turning some profit in the 2nd quarter of the year when major loan repayments are done.

Papua New Guinea is on track to seeing huge profits from the sale of its LNG….

———————————-

Japan is major LNG buyer
By: Post Courier -1st March 2017
JAPAN is the largest buyer of liquefied natural gas in the region and is ready to share its experience of LNG and expand into the Asia-Pacific LNG market.
Yuki Sadamitsu from the Japanese Ministry of Economy, Trade and Industry, said Japan remains the largest buyer of LNG in the rapidly growing LNG market in Asia.
Mr Sadamitsu made these remarks in his keynote address yesterday at the Petroleum and Energy Summit at the Stanley Hotel in Port Moresby.


“Japan remains to be a large buyer of LNG for the foreseeable future.
“LNG demands will be larger than the government estimate.
“Japan is ready to collaborate with global, especially Asia-Pacific partners to develop and expand the LNG market.
“This of course, includes cooperation between the energy producing and the consuming countries,” he said.
Japan is a consumer of mixed energy sources such as fossil fuel, oil, coal, LNG and others and is looking at reforming its energy market.
“Japanese LNG market is under drastic reform of liberalisation,” Mr Sadamitsu added.

As part of Japan’s strategy for LNG market development, they are looking at three pillars which are tradability, infrastructure, and price discovery including market expansion to move forward.
“If you look globally, Asia is the most rapidly growing LNG market.
“Asia LNG import will almost double by 2030.
“We, the Japanese government and companies are ready to cooperate with Asian countries to share know-how of LNG and expand the Asia-Pacific LNG market.
“We will work on the LNG strategy for Asian countries this year,” Mr Sadamitsu said.

Papua New Guinea – A market to be exploited 

By: Jonny Andrews

The rich market of Papua New Guinea is open to exploitation by those who have the money!

Usually, these are foreign corporates that rides on our country’s weakness in protecting its people and even with the ignorance of most of our landowners.

The case of CRAM trying to take control of HPL even with only 15% shareholding is very interesting. Why is HPL an attractive company to control an owned?

Highlands Pacific Limited has been exploring minerals and gas in Papua New Guinea since the early 1960’s. They have once of the most comprehensive database of all mineral deposits in the country.

Get your hands on those database….you on your way to making millions and expoilting Papua New Guinea


Tussle over HPL’s future control

February 27,2017, 01:40 am

A RIFT has developed between Highlands Pacific Limited (HPL) and its shareholder, Chinese group Guangdong Rising Assets Management Co Ltd (GRAM), over the future control of the Papua New Guinea company.

HPL says it is a battle with potentially major ramifications for its multi-billion kina PNG projects, including Frieda River, Ramu Nickel and Star Mountains.

Last week, GRAM subsidiary PanAust, which owns a 14 percent stake in HPL, had demanded a meeting of HPL’s shareholders to remove four of the company’s five non-executive independent directors and replace them with three GRAM nominees.

timthumb

HPL argued the highly aggressive move would deliver GRAM control of the firm which was valued at about A$60 million (K146 million), without GRAM having paid anything to the other shareholders of the company that collectively hold 86 percent.

The move also would deliver GRAM essentially full, unassailable control of the giant US$6 billion (K19bn) Frieda River project in West Sepik Province. HPL and GRAM are joint venture partners in the project, with GRAM holding an 80 percent interest and HPL 20 percent.

HPL also holds an 8.56 percent interest in the Ramu Nickel project, as well as a major shareholding in the exciting Star Mountains exploration project.

HPL directors had opposed GRAM demands, stating that handing control of the Company to GRAM/PanAust would not be in the interests of its shareholders.

Chairman Ken MacDonald said the GRAM/PanAust proposal effectively amounted to a takeover of Highlands without offering to pay shareholders.

HPL managing director Craig Lennon said the future of Highlands was vitally important for the development of its projects, and could have serious economic implications for PNG.

“We want to see these projects, especially the Frieda River project, develop in a timely fashion, creating potentially enormous economic benefits for PNG by creating jobs, generating revenues for government and earning foreign exchange income,” he said.

“With Highlands remaining as an independent company, we have the best chance of achieving that outcome.”

The special meeting to consider the matter would be held in Port Moresby, and shareholders would vote on the proposals to remove four of the five non-executive independent directors including the chairman.

The two directors who GRAM is not trying to remove for now are the managing director Craig Lennon and Bart Philemon, the highly respected former treasury minister.

http://www.postcourier.com.pg/Stories/tussle-over-hpls-future-control/#.WLOLVxJ97Vp 

 

Trukai expanding investment in local rice production

By: Jonny Andrews

Competition is by far the greatest phenomenon that has happened to mankind!

Decades and decades of Rice Monopoly is about to go up in smoke when the Government puts in-place plans for Naima to grow rice in Papua New Guinea. What does Trukai do in this instance? Do they fight the Government? Do they cry wolf? They do what is the most logical thing to do and what the Government hoped they do.

Trukai now has expand their plans! They go into a 500-hectare rice plantation and want to invest more locally!

This the beauty of competition…..at the end of the day, you see investment coming into Agriculture sector and into Papua New Guinea. We need more local invest, more local employment and more of food security.

Well done Trukai!

——————————————————-

BY: Loop Business —14:07, February 22, 2017

This week Trukai Industries Limited is purchasing agricultural equipment for the establishment of the largest rice crop in PNG’s recent history.

 

With the cooperation of the Chingwam Rice Growers Cooperative, Trukai will be establishing a 500-hectare rice plantation near Rangiampum initially for a rain fed crop to be established in 2017.

This is in addition to the existing 80-hectare site already producing rice for the cooperative, under the management of Trukai’s rice development team.

This site will be progressively expanded possibly up to 1,500-2,000 hectares over a number of seasons, although this will be subject to relevant agreements and climatic and soil evaluations.

22pr_trukai_rice_production
Trukai Rice Field in Markham

This exciting step forward in domestic rice production comes ahead of further developments Trukai management are hoping to discuss with government, following submissions for large scale irrigated rice growing in a number of areas across PNG.

Proposals have been submitted to the Departments of Agriculture and Livestock, and the Department of Trade, Commerce and Investment, although responses from government have yet to be forthcoming.

Trukai Industries Limited’s CEO, Greg Worthington-Eyre said in a statement, “Trukai stands ready to assist the government of PNG in its domestic rice development, and this project with the Chingwam Cooperative is a major step forward in laying the groundwork for other projects.

Whilst we wait for the government to respond to our proposals, we are simply getting on with it, and are very excited about building a strong local rice industry.”

Worthington-Eyre went on to add, “The establishment of the large scale site at Rangiampum will be supplemented with a further 100-hectare site closer to our Erap facility, where our rice seed generation plantation is being redeveloped.”

In April and May this year, Trukai will be installing a hulling mill in Lae to facilitate the processing of locally grown rice, and this represents a significant investment and commitment for Trukai.

trukai01
Workers checking the quality of rice

The first rice to be processed at this mill will be the rice from the Chingwam Cooperative.

Worthington-Eyre concluded, “The rice growing at Rangiampum is expected to be harvested in April this year, and will be transported to Lae for milling and blending.

“Our rice, PNG’s favourite brand since 1970 (before federation) will contain rice grown in PNG.

“This is great news as not only will we be including locally grown rice in our products, food security gets a major boost as well and, more importantly, this puts money into the rural sector for use of land that would normally remain idle.”

http://www.looppng.com/business/trukai-expanding-investment-local-rice-production-52957

Should Papua New Guinea consider pumped storage hydropower for its power outages

by: Jonny Andrew

The continuous power outages in and around Papua New Guinea and most especially in Port Moresby and Lae calls for an out-of-the-box approach in power generation. The concept of Pumped storage hydropower in Australia should serve as a lesson worth considering.

Pumped hydroelectric storage facilities store energy in the form of water in an upper reservoir, pumped from another reservoir at a lower elevation. During periods of high electricity demand, power is generated by releasing the stored water through turbines in the same manner as a conventional hydropower station. During periods of low demand (usually nights or weekends when electricity is also lower cost), the upper reservoir is recharged by using lower-cost electricity from the grid to pump the water back to the upper reservoir.

Reversible pump-turbine/motor-generator assemblies can act as both pumps and turbines. Pumped storage stations are unlike traditional hydroelectric stations in that they are a net consumer of electricity, due to hydraulic and electrical losses incurred in the cycle of pumping from lower to upper reservoirs. However, these plants are typically highly efficient (round-trip efficiencies reaching greater than 80%) and can prove very beneficial in terms of balancing load within the overall power system. Pumped-storage facilities can be very economical due to peak tand off-peak price differentials and their potential to provide critical ancillary grid services.

Papua New Guinea should seriously consider Pumped Storage Hydropower to sustain and supplement the current hydro power stations

——————————
Author – Nick West 
22nd February 2017

OVERCOMING THE BARRIERS TO PUMPED STORAGE HYDROPOWER

With energy reliability a hot topic in Australia, eyes are now turning to pumped storage hydropower… but what has been holding it back?
There are only three pumped storage hydropower projects in Australia, with the most recent completed more than thirty years ago. This is despite the ability of pumped storage hydropower projects to provide the large-scale storage that would complement increasing levels of renewable energy. Why is this, and what are the barriers to developing more Australian pumped storage hydropower projects?

Around the world, pumped storage hydropower projects make up the vast majority of grid energy storage and have traditionally been used by energy utilities to supply additional power to a grid during times of highest demand.

As part of a portfolio of power stations, a utility might operate a pumped storage project infrequently only, if the cost of pumping the water back to the upper storage exceeds the revenue that can be generated from its release.

overcoming-the-barriers-to-pumped-storage-hydropower-680x350

The main issue facing developers trying to prove the viability of a new pumped storage project is that a sufficient price differential is required to pay for the pumping and to account for the efficiency losses in transmission, pumping and generation. The generation price needs to be sufficiently higher than the pumping price just to repay the variable pumping costs. To repay the heavy capital investment, a margin is required over and above the break-even cost of pumping. This is particularly true where proposed developments are ‘stand-alone’ and cannot be optimised as part of a corporate generation portfolio.

In recent years, electricity price spikes have been irregular with few occurrences each year. Due to the significant capital costs, a pumped storage scheme would require a certain number of pumping/generation cycles at high or maximum pricing to pay a return on investment. These price spikes are unpredictable, so building a business case around these events is risky.

Historically, the daily fluctuation of power prices has not been sufficient or regular enough to attract pumped storage developers. This is beginning to change with increasing penetration of renewable energy leading to an increase in both low and high price periods. More frequent, sustained periods of hot weather (as predicted by climate change models) will also drive up demand for power and therefore the market price.

In the last few months, volatility has greatly increased, creating a greater differential between baseload and peak pricing. This will increase the viability of pumped storage schemes, although the unpredictability and challenges of financing capital intensive assets will remain.

But, even when the economics are right, there are still some other barriers that proponents of pumped storage projects need to overcome:

FINDING THE RIGHT SITE

Pumped storage projects require significant capital for development. Minimising the cost of construction and operation is key to the successful development of a project. Choosing the right location is a matter of identifying a site with ideal topography, a source of water and good proximity to and location within the transmission network.

A wealth of information is available that is relevant to identifying potential pumped storage hydropower sites. Concept studies for pumped storage hydropower sites can screen potential sites quickly and offer developers greater insight into possible opportunities.

NEGOTIATING ACCESS TO APPROPRIATE SITES FOR PUMPED STORAGE

While a pumped storage project generally has a significantly smaller footprint than a traditional hydropower project, the features of natural topography that are ideal for pumped storage – high, steep hillsides or cliffs – tend also to be places of great natural beauty and are often designated as reserves, are expensive private land, or have high environmental or social value.

State governments can assist here through streamlined planning and approvals processes for infrastructure developments. This can make sure that the challenges of developing sites do not become insurmountable for developers.

PERCEIVED ENVIRONMENTAL IMPACTS

Pumped storage projects can occupy many square kilometres and also require transmission lines to connect to the electricity market. Like traditional hydropower projects, pumped storage projects need to attend to environmental issues associated with the project. Environmental impacts for pumped storage projects are assessed in the same manner as for all infrastructure developments.

If the impacts of a project can be mitigated to the satisfaction of the relevant regulatory body and international Standards (such as the International Hydropower Association and International Finance Corporation), a pumped storage hydropower project should face no greater hurdle than any other infrastructure project in this respect.

A pumped storage project may also have to deal with the perception that it uses carbon-intensive thermal power to pump water during the pumping cycle. This may be true unless there is a surplus of renewable energy available, in which case the pumped storage project could be seen to be using this excess renewable energy for pumping. As renewable energy penetration grows, the opportunities for storing surplus renewable energy will increase.

AN UNFAVOURABLE REGULATORY FRAMEWORK

Inconsistent and uncertain policy positions of the major political parties at both federal and state levels reduce confidence in the energy industry, which deters investment. With debate raging over energy security, a bipartisan view on energy policy, which transcends party politics and the electoral cycle, is urgently needed.

Existing mechanisms are in place to support the renewable energy industry. The Renewable Energy Target (RET) promotes investment in renewable energy projects; however, pumped storage is specifically excluded from the RET where the energy used for pumping exceeds the energy generated. Current policy would have to be amended or complementary legislation enacted in order to reward large-scale storage for the service it provides.

Such changes could include market mechanisms for large-scale storage that could offer incentives for providing inertia and ancillary services from storage at times of peak demand as well as power. Another possible change could be to ensure that large-scale storage asset owners are not penalised under the RET for energy used in the pumping process. This would encourage the development of energy storage as a complement to the growth of renewable energy.

HIGH COST OF DEVELOPMENT ACTIVITIES

The long lead times and high development costs of pumped storage projects are major deterrents to developers. Projects generally take more than 4 to 5 years from the point of conception to ‘power on’, and require millions of dollars of capital for development and hundreds of millions for construction. In other words, when funding is first committed, it may not see a return for five years or more. In an effort to overcome this barrier, the Clean Energy Finance Corporation (CEFC) has committed $20 million to finance the accelerated development of flexible capacity and large-scale storage projects.

With an increasing interest and emphasis on storage in a power system that is becoming increasingly unreliable (e.g. load shedding in South Australia and lack of reserve events in New South Wales), and with finance from the CEFC for large-scale storage, the barriers to pumped storage development are gradually diminishing. This action can’t come soon enough for residents suffering through blackouts on days over 40°C.

Court approves ExxonMobil buyout of InterOil’s assets in Elk-Antelope gas fields

BY: Cedric Patjole – 15:00, February 21, 2017

ExxonMobil will by the end of this week takeover InterOil after the commercial arrangement between the two companies, worth more than K6 billion, was approved yesterday.

ExxonMobil will now own InterOil’s assets in the undeveloped Elk-Antelope gas fields, in the Gulf Province, and exploration licenses covering about 16,000sqkm.

In a statement today, InterOil announced that the Supreme Court of Yukon in Canada, granted a final order approving the arrangement between InterOil and ExxonMobil.

In November 2016 the Yukon Supreme Court had initially upheld an appeal by InterOil founder, Phil Mulacek, against an original takeover offer.

Last week InterOil shareholders overwhelmingly approved a revised transaction agreement with Exxon Mobil with more than 91 per cent of  votes cast in favour.

Previously 80 per cent of shareholders voted to approve the original transaction  at a Special Meeting on September 21, 2016.

21cpinteroil

According to the amended agreement Exxon Mobil lifted the maximum price payable for InterOil by about 10 per cent to US$78.94 (K236) per share.

The offer was structured as a US$45 (K135) per share flat cash payment, plus an extra US$7.07 (K21) per share for each trillion cubic feet (tcf) of gas certified as being held in Elk-Antelope.

Under the approved arrangement, ExxonMobil now becomes a Joint Venture in the Papua LNG Project, operated by Total SA, and the PNG Government, with expected first gas in the early 2020s.

The Papua LNG will be supported by the Elk-Antelope gas field, located in the Eastern Papuan Basin.

ExxonMobil now has a commanding position in the basin with a record of five successful discoveries originally by InterOil – Triceratops, Elk, Antelope, Raptor and Bobcat.

This afternoon, an ExxonMobil spokesperson informed Loop PNG that “the acquisition of InterOil as envisioned in the amended agreement continues to represent a significant value to the government and people of Papua New Guinea, as well as to InterOil shareholders.  ExxonMobil looks forward to closing the transaction in accordance with the Plan of Arrangement.”

Pictures credit: http://www.offshorepost.com/