Higher commodity prices the key to improving Papua New Guinea credit ratings, says Standard & Poor’s Global Ratings

By: Kevin McQuillan

High debt and deficit levels are the reasons why ratings agency Standard & Poor’s (S&P) has kept its Papua New Guinea country rating at B+/B, with a negative outlook. S&P Director, Craig Michaels, tells Business Advantage PNG that higher commodity prices are the key to lifting the rating.
Michaels, the Director of Sovereign and Public Finance Ratings, says the decision reflected the high levels of offshore debt and high government deficits.
‘These have been driven, directly or indirectly, by the large LNG project, and we thought those external and fiscal imbalances would unwind pretty quickly once the LNG project came on line,’ he told Business Advantage PNG.
‘But unfortunately, just as that happened, commodity prices globally fell very sharply.
‘So the revenues that were due to come on stream at that point have been coming in much more slowly and that’s why we have continued our negative outlook on PNG ratings.’

 
Forceful

Sovereign ratings are used as an indicator for setting a country’s base interest rate. They also have an effect on its ability to raise offshore financing, which the PNG government has been attempting.
PNG’s rating has been comparatively stable. S&P has maintained its B+/B rating for over five years, although it converted its outlook to negative in October 2015, when commodity prices began to weaken.
Michaels says the government has responded ‘forcefully’ to the revenue declines through savings decisions, and by targeting declining fiscal deficits to keep debt within its targets.
Overall spending between 2014-2016 fell by about 13 per cent over this period, with the result that the fiscal deficit narrowed to 4.4 per cent of GDP in 2016, from 6.9 per cent in 2013.

‘We project PNG’s general government net debt to remain comfortably below 30 per cent of GDP.’

‘Despite an election in mid-2017, we expect the deficit to narrow further this year to less than 3 per cent of GDP,’ he says.
‘On this basis, we project PNG’s general government net debt to remain comfortably below 30 per cent of GDP.’
Michaels warns, however, that if the government fails to continue to restrain spending adequately, or if growth in the nominal economy comes under even further downward pressure, net general government debt could rise above 30 per cent.

Fiscal-operations-of-government
PNG Government revenues, expenses and deficits/surplus – Source: Bank of PNG. 2017 Budget Papers

 
Debt financing

Michaels believes domestic banks and pension funds have nearly reached their limits for lending to the government, and that the central bank is acting as lender-of-last-resort when government bond auctions are undersubscribed.
‘The limited demand for government debt has led to a sharp rise in yields on government paper in recent years, and the government’s interest burden has risen significantly as a result.’

‘Michael says one of the key challenges for PNG’s overall growth prospects is the high level of crime.’

Gross external financing needs are currently at 80-90 per cent of current account receipts, and likely to remain at that level as ‘it appears the government is very committed to keeping debt within its own debt limits’.
Michaels laments that, despite some recent improvements, there are gaps in economic and external data, as well as a lack of transparency in public-sector accounting.

 

Growth

Michael says one of the key challenges for PNG’s overall growth prospects is the high level of crime, ‘which we think is a major deterrent for investment outside the resources sector’.

‘S&P could return the rating outlook to ‘stable’ from ‘negative’ if we become convinced that the high level of external debt and the pretty sizeable fiscal deficits will continue to decline in a reasonably quick way.’

He expects growth to be 3 per cent in 2017, up slightly from 2.6 per cent in 2016.
‘The medium-term economic outlook hinges on whether further large foreign-financed projects—such as the Papua LNG project—go ahead.’

 
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Michaels says S&P could return the rating outlook to ‘stable’ from ‘negative’ ‘if we become convinced that the high level of external debt and the pretty sizeable fiscal deficits will continue to decline in a reasonably quick way’.
‘And that will probably largely hinge on what happens with commodity prices.’

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Merger of Telikom PNG, PNG DataCo and bmobile may lead to lower costs, say analysts

11 Apr 2017 
by Kevin McQuillan 


IT analysts and industry insiders tell Business Advantage PNG that the Papua New Guinea Government’s decision to merge bmobile and PNG DataCo under a Telikom PNG renamed Kumul Telikom is likely to increase competition and innovation. But the move will not be without challenges.
The merger of bmobile and DataCo with Telikom PNG, outlined in our interview with Kumul Telikom Chairman Mahesh Patel last week, will realise cost savings and harness the synergies among the three telcos, according to Public Enterprises and State Investments Minister Charles Abel.
Local industry insiders appear generally optimistic about the move, with some caveats.

Independent, Port Moresby-based IT specialist Russell Woruba, of Taragai Advisory, believes the restructure will reduce prices, and observes telcos now need to provide attractive bundled services in order to be competitive.

Carriers must offer enterprises and customers not only voice and data, but media content, ICT services, such as cloud options, as well as professional services, he tells Business Advantage PNG.

He notes, however, that to modernise Telikom to meet the current technological climate it may be necessary to involve outside partners who have the skill set and capital.

He also observes that Digicel PNG not only has market share but undisputed market power.


‘It is now digging into Telikom’s core fixed business through its service offerings.

‘By consolidating its assets, Telikom, DataCo and bmobile can compete effectively and create synergies for operational efficiency.’
Masalai Communications’ IT specialist, Emmanuel Narokobi, sounds a note of caution about the restructure.

‘There is a huge cultural shift that needs to take place internally within all the organisations,’ he told Business Advantage PNG.

‘Personally, from our work with them we have tried to push shared services across the various companies but they still do not recognise the strategic benefits of such exercises.’


Reduced duplication

The merger is supported by a recent report issued by Singapore-based BMI Research, a subsidiary of the global ratings agency Fitch.

‘The transferring of the country’s main fixed-line and gateway assets into one entity, DataCo—which will provide backbone services and international connectivity to operators—will be positive for the market,’ says to the report’s author, Telecommunications Analyst Vanessa d’Alancon.

After DataCo’s plans to upgrade and run the National Transmission Network are completed, expected this year, she says internet service providers (ISPs) and businesses in Papua New Guinea will have access to wholesale capacity.

This will provide a boost to bandwidth and encourage market competition. That competition, she says, should reduce prices over the medium-term for consumers.


More competition for Digicel?

‘Telikom has already begun rolling out 4G at discounted rates in 2017 to encourage take-up and will be in a stronger position to compete with Digicel,’ says d’Alancon.

She warns, however, that it will be difficult for Telikom to take market share from Digicel given that operator’s strong presence in the mobile market. Digicel has been successful in the market since 2007 and has brought mobile penetration in PNG from 1.6 per cent in 2006 to around 45.5 per cent in 2016.

That said, there are still many areas where internet services are unavailable and most rural areas only have 2G services, providing significant growth opportunities.


Digicel’s view

Digicel’s CEO, Brett Goschen, told Business Advantage PNG that Digicel fully supports an environment where all operators have access to all forms of wholesale transmission capacity.
‘We believe it is fundamental to growing and improving a competitive, open market: prices decrease, service offerings increase and the consumer benefits tremendously.

‘It is clear that the Government’s original communication model involving the transfer of transmission assets to DataCo would go some way toward achieving that.’

That said, Goschen says, however, he is not convinced the new structure will achieve the original intentions of government, namely ‘to create a competitive, open communication industry that augurs growth and value, whilst encouraging innovation’. From the limited public information provided, he noted the new merger does not appear to promote competitive outcomes to the benefit of the consumer, such as reducing the cost of accessibility.

http://www.businessadvantagepng.com/analysts-say-more-competition-will-result-from-restructure-of-telikom-dataco-and-bmobile-but-digicel-unconvinced/

SO WHAT’S THE ALTERNATIVE?

By: Douveri Henao

The past couple of days, we’ve seen politicians and commentators rushing to the public to remind us that they made these predictions years ago the economy was tanking. They read the signs, saw the writing on the wall and as prophets of old, we did not respond. All true. But the people of Papua New Guinea don’t want reminders, they want solutions and this is the disappointment for the past couple of days.  
The only agreed consensus is kick out the current government and all will be well. Lets entertain the notion, but then what? How do you improve the economy? How do you turn the tide around?  

I’m of the view that any new leadership will be constraint by 2 factors to make meaningful change in the state of the economy in which all governments of PNG suffered. These are the inability for political institutions to reform the age-old patrimonial system and the lack of diversity in political ideology. 

PATRIMONIAL SYSTEM REFORM 
Respected thought leader in political science, Francis Fukuyama, makes the observation that patrimonial systems or in our case, wantok system, continues to undermine the ability for political institutions to grow into efficient organizations. Whereby meritocracy permits the best and brightest to formulate and execute public policy to the best of their abilities.  
The fiscal strategy of the current government has been underpin by the need to finance the patrimony. Over 12 billion kina has been given to sub national governments with limited capacity to absorb its use. While Waigani correctly claims its systems are able to deliver and execute projects of significance, no other government tier has the skills and resources. Therefore, this resource has largely fed the patrimony in an assortment of various schemes that have little impact to the constituency. 
There is also the bulging public service that is unsustainable and at most times, unproductive. It has cost the country 10 billion kina in this session of parliament. Public institutions have become villagers where CEOs have become chiefs and officers from there liking have become nobles and enemies have become commoners. So the nobles and the chief thrive on this healthy state bill to build there kingdoms and along the way, execute meaningful public policy.  
This Prime Minister and those before him have publically spoke of the rot that they have inherited in the public service. They have used various systems to mitigate patrimony and while some have been successful, many have not and its persistency undermines the fact that we need a different strategy.  
The key position is for the new leadership to work towards transitioning the current patrimonial political system to a robust merit based system not in the public service, but in the political system. Its ok to use wantoks, but use wantoks that know their stuff. Instill benchmarks to push productivity and inculcate a climate of vigorous science in building policy. This in turn can assist the public institutions to deliver the desired vision.  
THE NEED FOR DIVERSITY IN POLITICAL IDEOLOGY 

Every Prime Minister and current MPs as well as most political parties have subscribed for a strong socialist left leaning political platform. Big governments to bring social programmes to the masses, big governments to drive commerce, big governments to protect the community and big governments to bring jobs.  
While there is justification in this messianic approach due to market failures that undermine investment beyond Waigani and provincial capitals, it undermines other important players to participate in development. The efficiencies of the private sector and the enthusiasm of the civil society need to coexist and where possible, thrive.  
The new leadership needs to facilitate rather then participate and monopolize development. There are something’s that the public service and political systems isn’t built for and that limitation needs to be recognized.  
BEYOND 2017
We need political systems to be less emotional and more juiced up on the smarts. We need political systems to be more facilitative and less monopolistic.

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

 

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$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

 

Changing the AID game in PNG

By: The Garamut 

In what has been billed as a shock announcement carried by major news outlets across the Torres Strait, it’s been reported that PNG has formally asked Australia to consider and review how it distributes its annual $AU550 million aid package.
The request was put during the 25th PNG-Australia Ministerial Forum recently held in Madang with senior PNG ministers highlighting the government’s wish to see Australian aid managed directly through the PNG budget by 2020.
Citing internal policy documents including PNG’s Medium Term Development Plan, National Strategy for Responsible Sustainability Development Plan and the 2015 Development Cooperation Policy – which all signal changes in how the government wants to manage foreign development assistance – Minister for National Planning Charles Abel said:

“We want trade not aid. We just want them to come in and support the PNG Government system. They are channeling their aid, which is recognised in our budget, but it’s not really passing through our budget.

“We want you to continue the work, you helping us, but you have to make it more strategic and more visible and thicker, not thinly spread everywhere. All we are saying is we have established our government plans, we have our targets and we want you to come in and work through our plans.”

This message is not new.
It is one that has been consistently presented to previous PNG-Australia Ministerial Forums and PM Peter O’Neil himself highlighted the issue when he addressed the National Press Club in 2012 – that is, PNG wants the way Australian aid is disbursed to be “re-aligned” with government processes and priorities.
The main concern here lies with the creation of a “parallel system” outside the scope of national budgetary, administrative, management and – importantly – maintenance processes whereby duplication of programs targeting similar outcomes exist.
This wastage of resources is compounded when some foreign development programs are discontinued leaving a delivered outcome, whether asset or service, in administrative limbo. It does not help when provincial governments are tasked with ownership of these outcomes on existing stretched budgets.
It is not unrealistic for the government to seek to funnel development cooperation resources toward helping achieve PNG’s development goals as enshrined in the constitution and supported by government policies.
This makes sense, however, presenting such a request can only be taken seriously if adequate and transparent due diligence on the utilization and application of development cooperation resources by the PNG government can be guaranteed.
A level of respect and trust in the bilateral relationship is needed here – and whether it currently exists to the depth required for the request to be granted is questionable.
Ironically, the very substance of PNG’s request that Australia respect PNG’s sovereignty in trying to direct where development assistance should be invested – a premise alluded to time and time again in the 2015 Development Cooperation Policy – flies in the face of a sovereign state’s fundamental responsibility to ensure that its most basic needs are fully met out of its own pocket and not subsidized by the goodwill of others.
And herein lies the challenge for PNG – for no matter how this government frames it, the move to ask Australia to direct fund the national budget by 2020 will be perceived by many as a money grab by a floundering state.
Indeed, news headlines in Australia have already pointed the conversation toward this context; and it follows hot on the heels of other stories reporting PNG’s struggle to meet its financial obligations.
Despite this, with each consecutive budget, total foreign aid decreases as a percentage of PNG’s annual budget. In addition, the OECD Development Cooperative Directorate estimates that Australian development assistance to PNG has undergone a 29 percent real-decline since 2009.
But, as a component of total aid received by PNG, Australian development assistance makes up 68% of all donor contributions. It is because of its proportion that PNG is interested in setting a precedent of how it wants all aid to be “re-aligned”.
With the chances of the current government being re-elected for another five year term in 2017’s National Election remaining high, the push for Australia to fall into line with PNG’s request will not be sidelined – it will only gather momentum.
https://garamut.wordpress.com/2017/03/11/changing-the-aid-game-in-png/

Australia’s ‘Boomerang’ Aid should be directed into PNG National Budget

By: Bernard Keane 



Who profits from our foreign aid?: the ‘technical assistance’ making business rich

Australia’s “boomerang aid” has been making corporate Australia very rich for years.

“Boomerang aid” is the name Michael Somare claims he invented to describe the propensity of Australian aid to PNG to end up back in Australia, courtesy of highly-paid Australian consultants and firms specialising in “technical assistance” in the delivery of aid projects. For a small number of firms, it has provided a taxpayer-funded path to massive success.

“Technical assistance” is a billion-dollar business funded by Australian taxpayers. This year, we will spend $4.3b on foreign aid. Under the Government’s commitment to increase foreign aid to 0.5% of Gross National Income, that is scheduled to rise to $8-9b in five years’ time.
Technical assistance over the last decade has accounted for 40-50% of the entire aid budget.
A small number of Australian firms have done very well from this:

* Coffey International, the Chatswood, Sydney-based “global professional services consultancy”, garnered over $300 million in contracts in calendar year 2009 alone, Ausaid records show;

* Cardno ACIL secured at least $270 million, as did GRM, “a leading international development management company”;

* Queensland companies GHD and JTA International, both reaped over $100 million.
Boomerang aid has long been a basis for criticism of AusAID and our entire foreign aid program, particularly in relation to PNG, our largest aid recipient. In 2003, Michael Somare suggested over 60% of Australian aid simply went to Australians or Australian companies.
That year, the Senate Foreign Affairs, Defence and Trade References Committee considered the issue as part of its report on Australia’s relationship with PNG and the Pacific, saying that the “most common concern raised with the Committee in relation to the delivery of aid was for the tendency for AusAID to use consultants, typically from Australia which lead to the perception of ‘boomerang aid’.” 
A number of submissions to the committee raised the issue, including those from the Business Council of PNG and from Oxfam Community Aid Abroad.
In response, AusAID rejected any criticism, declaring the “Australian aid program ensures that PNG citizens benefit from commercial opportunities, skills formation and capacity building.”
Papua New Guinea through its planning Minister Charles Abel recognized this gap in the Australian Aid and has proposed to negotiate the new AID Agreement.

“We would like to see a larger proportion of the budget actually going into hard, tangible, on-the-ground outcomes,” he said.

“Budgetary support will assist in programs and activities that the Government is trying to achieve and that alone will achieve a lot more positive outcomes than what’s going on at the moment,” 

Aid to be effective needs to be channeled into PNG’s national budget as opposed to being distributed by Australian Technical Assistance Team.

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Papua New Guinea asks Australia to fund health, education during ministerial forum

BY PAPUA NEW GUINEA CORRESPONDENT ERIC TLOZEK –THU MAR 09 11:19:03 EST 2017
Australia’s increasingly tricky relationship with Papua New Guinea could be about to get more difficult.


PNG’s Government has asked Australia to directly fund its health and education spending after it suffered a severe economic downturn and was forced to make major budget cuts.

PNG used the 25th ministerial forum between the two countries to ask Australia to shift its $500 million of annual aid away from narrowly-focused programs and into helping fund its health, education and infrastructure priorities.

Planning Minister Charles Abel said the shift was something that had been discussed for some time.

“The Papua New Guinea Government has sent a signal at this meeting of our desire to move by 2020 into a budget support arrangement where the program is channelled more directly through the PNG budget process,” he said.

Australia is the dominant contributor of aid to PNG, providing 68 per cent off its development assistance.

Mr Abel said that money could be having a bigger impact.

“We would like to see a larger proportion of the budget actually going into hard, tangible, on-the-ground outcomes,” he said.

PNG’s Major Events Minister Justin Tkatchenko said the request arose out of concerns about the effectiveness of Australia’s aid program and the amount of money that is spent on contractors and technical assistance.
“Budgetary support will assist in programs and activities that the Government is trying to achieve and that alone will achieve a lot more positive outcomes than what’s going on at the moment,” he said.

The request came as a surprise to the Australian ministerial delegation.

It also came after PNG suffered a major drop in revenue that forced its Government to slash spending, particularly to health services, but Mr Abel rejected suggestions it was linked to PNG’s cash shortage.

“It’s a policy-based directive that has come from a series of documents … it’s not a knee-jerk reaction,” he said.

Request catches Australian ministerial delegation off guard
Australia’s aid partnership with PNG is due to be renewed this year, so the Government was already evaluating the program.

But Foreign Minister Julie Bishop said Australia did not know PNG would make the request.

“That’s apparently a matter that’s been discussed within the PNG Government, it’s been raised with us today and we’ll consider it,” she said.

The change harks back to the way Australia used to deliver aid in PNG, by funding its budget directly.

But Australia stopped doing that in the early 1990s because of concerns about corruption and mismanagement.

Those concerns have not gone away.

Ms Bishop said any change to the aid program would need to meet Australia’s accountability standards.

We want to ensure that it’s transparent, that it’s value for money and it provides the kind of outcomes that will see economic development and prosperity here in PNG,” she said.

“And of course we must be answerable to the Australian taxpayer.”

The Government fears those taxpayers are becoming increasingly sceptical about the benefits of foreign aid.

Questions over how aid spending is getting to people who need it
The timing of the request, as PNG tries to weather a severe economic downturn, makes it even harder to sell.

Australia has given $5 billion in aid over the last decade, but has been changing its approach for the past few years.

The Australian Government, which has consolidated delivery of its programs into a Papua New Guinea Governance Facility, will be investing more in infrastructure and is seeking more partnerships with agencies like the World Bank and Asian Development Bank to deliver soft loans.

Such changes reflect a broader shift in aid spending, but also an attempt to make a bigger impact and force the PNG Government to comply with the strict standards for governance and program delivery required by multilateral agencies.

Australia also agreed to focus more on private-sector growth and trade, which would help protect and increase the $6.8 billion PNG-Australia trade relationship in the face of threats from China.

But the non-government organisations working in the aid sector have criticised that approach, saying PNG is a clear example of a place where economic growth has not delivered much benefit for disadvantaged people.

Despite 15 years of continuous growth, PNG still has one of the lowest levels of GDP per capita in the region.


Manus issues causing tension
It might not say so publicly, but the PNG Government has also been recently displaying frustration with Australia in other ways.

There has been tension over the Manus Island detention centre, particularly over the need to close it to comply with a PNG Supreme Court ruling.

People within the PNG Government say they are frustrated about the impact of the centre on PNG’s reputation, the political risk to the current Government, and the social issues that the day release of detainees has created on Manus Island.

That frustration has been accentuated by a delay in Australia delivering a promised $200 million redevelopment of the Angau hospital in Lae, which was agreed upon as part of the Manus Island deal.

Detainees at Manus Asylum Seekers Detention Center

Australia argues the delay is due to the PNG Government withdrawing its promised contribution, but PNG said it told Australia two years ago to just “get it done”.

Recent allegations that the medical company that runs the clinic at the Manus Island detention centre failed to obtain proper registration and breached a raft of other PNG laws — something strongly rejected by the company — could be seen as PNG putting further pressure on Australia to hasten the centre’s closure.

There has been no shortage of people noting the detrimental effect of the Manus Island deal on Australia’s ability to negotiate with PNG, but with the urgency increasing to close the centre by October, PNG could be looking to squeeze even more benefit out of its relationship with Australia at this time.

That has left Australia with a problem for both its aid program and its diplomatic relationship with the most populous and arguably most influential country in the western Pacific.

Kumul Telikom Holdings – Right Stepping stone for Papua New Guinea

By: Jonny Andrews

Telecommunications is the ‘Heart-beat’ of every thriving economy!

How does one disrupt and conquer a nation? They simply break down the communication between all important Government utilities and department. Put them into a state of confusion and slowly conquer and take control.

Sound familiar???

The advised Papua New Guinea has been getting in the past of ensuring competition and to separate the Telecommunication entity has been flawed! It has resulted in the State communications entity competing against itself and ensuring that the real competitor succeeds!

The birth of Kumul Telikom Holdings is the realization that we have lost the plot and the need to get back on track is imminent! Kumul Telikom Holdings is the ‘Stepping Stone’ on improving the Telecommunication system in the country. 

It provides for a SINGLE Board that ensures the DataCo, BMobile and Telikom Management works effectively, do no compete against each other and provides a roadmap that actually provides greater benefit to the country.

Well done PNG Government!


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Consolidation of SOEs right move: Barker

March 6, 2017The NationalMain Stories

 Article Views: 169

The recent consolidation of telecommunication State-owned enterprises under Kumul Telikom Holdings “is the right way forward”, according to Institute of National Affairs executive director Paul Barker.

Barker, pictured, told The National that this arrangement would be ideal if complemented with effective management that resulted in enhanced competition in the sector for the benefit of businesses and rural areas.

“Consolidation of the domestic network and linking the key gaps, notably the Northern network with the Hides-Port Moresby link, while rationalising the multitude of State-owned entities, is the right way forward, so long as the best professional board and capable, innovative but prudent management is in place,” he said.

“Operations also be accountable and transparent.

“Real rather than superficial competition is needed, but it’s not logical for that competition to be between ill-resourced State-owned entities but between a stronger, single telecommunications State-owned entity and the other players.

“Consideration of selling off or part sale of the State-owned entity may be considered to increase capitalisation and capacity but the State retains an important role in this space as regulator, encouraging and requiring competition, and ensuring priority services reach the wider communities of PNG, as well as enabling businesses across the country to function, including in rural areas.”

Barker highlighted the need to upgrade Government-owned telecommunication infrastructure with possible adjustments to increase bandwidth from submarine cables.
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MINISTER ABEL CLARIFIES THE KUMUL CONSOLIDATION AGENDA
Wednesday February 22, 2017 –Minister for National Planning, and Acting Minister for Public Enterprises and State Investments   Hon. Charles Abel today called a media conference to clarify the Government’s main policy priorities through the Kumul Consolidation Agenda.

Minister Abel stated:

* At the outset, our focus should be on ensuring that all relevant boards and MDs/CEOs of the SOEs are in place and addressing all operational issues;

* The government’s overarching objective is to progress the social and economic well-being of the citizens of Papua New Guinea;

* This includes promoting an efficient enabling environment (policies, regulations and legislations) for private sector as the primary generator of wealth and job creation to flourish;

* Government generally only intervenes in the private sector as an active participant when private capital or entities will not and the particular service is vital or strategic;

* The Kumul Consolidation Agenda is intended to improve synergy, coordination and efficiency to the National Government’s participation in commercial activities;

* This includes the aggregating of related Government companies in different sectors such as Telecommunication, energy, agriculture, etc;

* The Department of Public Enterprises is to provide policy development and oversight in concert with the Minister and Cabinet. It is not to get involved in project development. Any such projects are to be handed over to the relevant subsidiary companies or ceased;

* KCH is to oversee the implementation of government policy through the respective subsidiary companies including the most appropriate corporate structuring in relation to the non-mining & petroleum related majority owned government companies;

* This government policy includes capital structuring to involve private capital and management as much as possible;

* KCH should cease developing numerous business projects and only get involved in project development for large scale strategic capital projects on behalf of the sector specific subsidiaries;

* All government companies should generate an adequate return of capital; and

* All government companies should be restructured in order to free up resources and introduce efficiency into the economy unless there is a particular strategic interest or private capital cannot be attracted.

In closing Minister Abel said that KCH needs to regroup and refocus on the job ahead and he was confident that it has a solid foundation of sound corporate governance that would expose and address weaknesses, and identify opportunities if and when they arose.

“I have assumed the role of caretaker Minister of this important Ministry with only two months before the National Elections.”

“In that short period of time I intend to create focus and clarity, and highlight the synergy between National Planning and the three entities – Kumul Consolidated Holdings, Kumul Minerals and Kumul Petroleum.”
Sources:

http://www.thenational.com.pg/consolidation-soes-right-move-barker/

http://www.kch.com.pg/minister-clarifies-consolidation/

Woman candidates take Parliament training

By: Roslyn Peter

Parliamentary training for woman candidates interested in contesting the PNG NGE 2017 is a great idea and gives an insight for our woman. This is a concept that would ease the elected woman into her seat in Parliament.

But one thing that should be continuously taught throughout the Parliament is ‘Financial Management, Ethics and Responsibility’

What we have seen time and time is mismanagement of finance and the lack of leadership responsibilities in our elected leaders.

Good leaders are easily lead astray when given power and when put under pressure from their colleagues. This makes their job of governing their electorate much much difficult.

Our mama dated leaders need constant and effective training to help them in their electorates and also help them with their responsibilities.

Getting financial training and management training should be the TOP priority for intending candidates and not just for our woman ..
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By: Post Courier
FIFTY women candidates who intend to run for the 2017 National Election have been selected to participate in a week of training on parliamentary processes.
In a highly competitive process, participants from 22 provinces were selected from more than 200 applicants and will be trained on critical national policy issues, parliamentary processes and campaign strategies from March 6-13 this year in Port Moresby.
The United Nations Development Program (UNDP) PNG acting resident representative, Ms Tracy Vienings said UNDP was proud to be supporting the Practice Parliament for the second time in Papua New Guinea.
“We believe it is important to ensure that PNG women have the opportunity and ability to actively participate in politics.
“With only three women MPs out of 111 in Papua New Guinea’s current parliament, women continue to be under-represented as political leaders and elected officials,” she said. 

Highly qualified candidates from doctors to village women and women from other sectors of the community applied for PNG Practice Parliament for Women training, highlighting just how many women are keen to represent PNG and be active in political life.


The program aims to empower intending candidates to prepare themselves in the lead up to upcoming national elections in April 2017.
The program, organised by the UNDP in coordination with the Office of Integrity of Political Parties, National Parliament and Department of Community Development and religion, will culminate with a practice session in the Parliament chamber on March 13.

According to Ms Vienings, this training will develop women candidate’s skills not only in campaigning for elections, but also in engaging with policy issues that are critical to PNG’s future.
“That is the role of an MP, and we want to help women prepare to become elected representatives,” she said.
The 50 participants were selected by a screening committee, and were also cross-checked with the Electoral Commission to ensure each participant filled in a Form 29 to contest the 2017 elections.
The final list of participants is available below and on the Facebook page: “PNG Practice Parliament for Women 2017 <https://www.facebook.com/PNGPracticeParl2017/&gt; .
http://www.postcourier.com.pg/Stories/women-candidates-take-parlt-training/#.WLcwQ8vXef1

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….

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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.

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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