Gas project 'enormous challenge'

BEING a massive project in a small economy, the PNG liquefied natural gas concern has become an enormous challenge.

And the usual trouble with a big resource project for a small economy is that if the revenue is not carefully managed, the project could end up giving very little to boost the domestic economy’s growth, Roger Donnelly, chief economist of EFIC said on Wednesday.

The International Monetary Fund (IMF) has estimated that the project would increase gross domestic product (GDP) by 15% to 20% and the national income by 6%.

Mr Donnelly was speaking in  Port Moresby during the economic outlook seminar.

The event is  part of a series of activities marking the Australia week 2010.

Also present was Bank of PNG Governor Loi Bakani and Australian High Commissioner to PNG Ian Kemish.

Mr Donnelly, who claimed to have been watching the changes in the PNG economy over a decade, said PNG’s record showed it did not have a good track record for growth despite having some of the biggest resource projects.

“Now, there is no reason in principle why resource wealth should keep you poor,” he said this as he acknowledged that the PNG Government was aware of those issues and responded with the medium-term fiscal strategy.

During his opening remarks, Mr Kemish called on the Australian government to keep attuned to the changes that were happening in PNG especially in line with the many resource projects.

He said the societies of both countries changed over time but while they evolved, it was important to maintain the relationship between them.

“This is a good time at the time when Australian businesses are showing interest for PNG particularly the State of Queensland … the contacts on both sides are also positive.”

Mr Kemish said Australia would support PNG and restated the A$500 million (K1,213 million) loan from EFIC announced last December towards the costs of the US$15 billion (K40 billion) LNG project.