PNG leader pledges to make most of resources

From Sydney Morning Herald

THE Papua New Guinean Prime Minister, Peter O'Neill, launched his election campaign last night, promising to use the country's multiplying natural resource wealth to improve education and health services, roads and provide greater protection against crime.
At a gathering of supporters in Port Moresby, Mr O'Neill pledged to extend free education up to year 12 by 2014, when a $15 billion liquefied natural gas project comes on stream, massively boosting government revenues.
In his short nine months in power since ousting former prime minister Sir Michael Somare in tense parliamentary manoeuvres, Mr O'Neill has already removed school fees up to year 10 and now seeks to emphasise his government's commitment to improving the lives of ordinary citizens.
He also promised to rebuild the country's near derelict system of public hospitals to provide free basic health service, and to rejuvenate the ageing and under-resourced police and defence services to ensure better public safety in PNG's crime-ridden towns.
Australia's assistant foreign affairs minister for the South Pacific, Richard Marles, said last week this was a particularly important election, since it would mark the change from Somare's 1975 generation of independence leaders at the same time as the biggest resources boom ever, setting Papua New Guinea's course for decades.
''There is a lot of excitement about changing the direction in which we are managing the affairs of our country,'' Mr O'Neill said. ''We understand that we have mismanaged our past opportunities. We are committed to making sure we don't make the same mistakes in the future.''
The election has now been set for June 23, after a move to delay it by six months was set aside

Read more: http://www.smh.com.au/world/png-leader-pledges-to-make-most-of-resources-20120420-1xcg1.html#ixzz1sedulaIE

The heartbreak of Daru

By MALUM NALU

These are pictures of  the forgotten backwater of Daru, Western province, which has been left to rot by the PNG government.
Need I say more?
Four years ago, I went to Daru to bury my late wife, Hula, and since then, nothing has changed in this 'Wild West' town of Daru.
For better or worse?
Let these pictures by DAVID WILLIAMS do the talking!

Daru hospital in decline

New Century store and hotel in Daru

Daru child labour

Daru deforestation

Daru foreshore

Daru market, but there is little cash in town

Daru 'refugee corner'

Daru 'refugee' kids

'Stone chairs' of Daru

Living on a boat on the mudflats of Daru

Real life in Daru

Nasfund: Don’t expect ‘something flash’

THE private sector worker’s superannuation fund, Nasfund, has told its contributors not to expect “something flash” in 2011, The National reports. There has been a downturn in business for the superannuation industry as a result of several factors, not the least of which is the appreciation in the value of the kina against most currencies driven by the LNG project.
Chief executive officer, Ian Tarutia said any interest credited to contributors would be in “single digit” figures.

Ian Tarutia...'don't expect something flash'

Nasfund is meeting its auditors this week and the full audit committee will meet on April 26 after which the financial results for 2011 will be announced.
Nasfund’s sister public sector workers’ fund, Nambawan Super earlier this month announced drastic cuts in profit from K263 million in 2010 to K24 million last year.
Tarutia attributed the downturn to a number of factors including the appreciation of the kina, to the property market peaking and a static shares market.
He also said that this was normal for investment cycle which fluctuated all the time.
Tarutia also said the financial results were late this year because the fund has had to sort out the controversial K125 million sovereign loan to the Kokopo district.
It is expected the balance sheet will also be adversely impacted by the loan.

PNG investments drop in value as kina rises

By FRANK SENGE KOLMA
Papua New Guinea investments overseas have dropped in value by as much as 20% as a result of appreciation in the kina, The National reports.

Nasfund property at Harbour City…the property market peaking has contributed to slump in profits.-Nationalpic by MALUM NALU

The PNG kina has appreciated against most currencies by 23% in 2011, resulting in a drop in value of overseas investments by the same percentage point.
The public officers’ superannuation fund, Nambawan Super reported this fact when announcing its financial results for the year ending December 31, 2011.
Nambawan Super reported that its investments overseas had contributed negatively to its end-of-year results as did domestic investments in blue-chip companies such as the Bank of South Pacific, which were open to regional competition.
As a result, the fund reported a dramatic drop in profit after tax for the year, dropping by a massive K239 million from K263 million in 2010 to a mere K24 million.
This was reflected in interest credited to members of only 2% compared to 10% the previous year.
The kina’s appreciation has been driven primarily by the liquefied natural gas project and the high demand for PNG exports including the forward sales.
The LNG project has also had similar inflationary effects right across the business and commercial spectrum including domestic prices of goods and services, salaries and the price for accommodation.
Nasfund’s chief executive officer, Ian Tarutia said yesterday the private sector workers’ fund had also been adversely affected and warned contributors not to expect anything “flash” for last year.
Appreciation in the kina is not solely responsible for the dips in performance, it would appear.
Both Nambawan Super and Nasfund report a slackening off in business on the domestic front as well.
A lot of domestic investment is in property and demand for both residential and commercial property had peaked, Tarutia said.
Investment in stock in blue-chip companies were also static as a result of the global economic downturn as well as the fact that most stocks in these companies were held by institutions so that is not much movement in large chunks of stock to be able to determine price movements, Taurutia said.
Nambawan Super’s public statement concurs in part with Taurutia in that “…domestic investments in Bank of South Pacific also contributed negatively”.
Nambawan Super did gain from its investment in Paradise Foods Ltd, South Pacific Brewery Ltd and government bonds, a fact which underlines its commitment to a “diversified portfolio of investments” as the “best long term strategy” to mitigate risks.

Exxon, Oil Search happy With Papua New Guinea gas find

By Ross Kelly
The lush jungles of Papua New Guinea are proving to be a fertile hunting ground for ExxonMobil and its Australian partner Oil Search.
The two have enjoyed more success from their exploration campaign up in the PNG highlands, which is being undertaken to support a possible expansion of the US$15.7 billion PNG LNG gas-export project down on the coast near Port Moresby.
The giant terminal is on track to ship LNG cargoes from its foundation stage comprising two LNG production units to customers in China, Japan and Taiwan in 2014.
An expansion to three production units could precede another string of multibillion dollar offtake deals that would improve the project’s economics substantially, especially since extra bits bolted onto existing LNG developments are always cheaper to build than the foundation stage.
All that’s needed is more gas and Exxon and Oil Search are coming up with the goods. In the latest development, Oil Search told the Australian Securities Exchange that what’s known as a “sidetrack well” to the recent P’nyang South-1 well has found the original gas zone extends about 200 meters deeper, indicating an increase in the total gas column to about 380 meters.
A gas column of that magnitude is big by any standards. What’s more, Oil Search said early testing such as seismic interpretation and structural mapping indicates their could be more gas further up the geological structure, indicating a potential vertical gas column in the P’nyang field of over 650 meters.
Given the company-transforming nature of PNG LNG to Oil Search, it’s not surprising its shares had jumped 4.6% in early trade in Sydney Friday. Shares in Santos, which has a minority stake in PNG LNG, tacked on 0.6% in a wider market down 0.1%.
James P. Bullen, an analyst at Merrill Lynch, reckons the Greater P’nyang area could hold over 3 trillion cubic feet of gas. It’s widely recognized in LNG circles that about 4 trillion feet is needed to support a single LNG processing unit, also known as a train.
Exxon and Oil Search still have more ground to test including the Trapia and Hides prospects, while Oil Search individually is sitting on vast untested acreage in the Gulf of Papua that could underpin a another LNG development in PNG.
Given the rate of discoveries so far, the idea of a fourth train at PNG LNG will be moving to the front of investors’ heads, regardless of what Oil Search may do with its Gulf of Papua assets.
Any expansion will have significant implications for the likes of Chevron, Shell and Woodside, which are mulling expansions to their LNG projects nearby in Australia that will have to compete with Exxon and partners for customers and funding.

Chamber: Lae road project in ‘limbo’

By MALUM NALU
Lae Chamber of Commerce and Industry has expressed great concern at the way the city’s roads are being constructed, despite more than K100 million being allocated for this purpose.
The six major contractors, despite being paid millions, had done a “half-baked job”, it says.

Lae's new-look concrete roads as pictured along Markham Road…the entire K100 million project is now in limbo.-Picture by MALUM NALU

Chamber president Alan McLay gave this blunt assessment when asked by The National to comment on the state of Lae roads
“The Lae city roads rehabilitation project sits in limbo,” he said.
“For the last 16 months, we have seen six contracting companies complete a large number of the busiest roads in the city, mostly with concrete.
“This is great and has seen the city return to have a steady flow of traffic again, for the first time for years.
“The problem is that these contractors have only completed about 60 % of the jobs that they were contracted to do – 40% remains unfinished, most with gaping holes where the roads have been prepared for concreting but left unfinished as the project has run out of funds.”
McLay said when the new government took last August, it commissioned an investigation into the road project.
He said the investigation came up with many irregularities, including the fact that the finances had been poorly managed, leading to a significant overspending on the project.
“Hence, there is no money to pay contractors for the work they have already done, let alone the work that is required to finish off the contracts,” McLay said.
“The problem as always when dealing with Lae roads, is that the rainy season is now upon us.
“The sections that have been prepared for concreting will deteriorate rapidly, so that when funds are found to finish the road works off, the work will have to start from scratch again.
“In the meantime the free flowing traffic will slow down to a snail’s pace once again as the uncompleted sections break up.”
McLay said the Morobe provincial government continued to believe that the roads project was the answer to the city’s problems.
“The Morobe provincial government - in the mistaken belief that the Lae roads project will fix up all the Lae roads - budgeted insufficiently for the maintenance needs of the ‘other’ Lae roads,” he said.
“Many of these roads have already been under stress after having been used as alternate routes when the concrete roads have been constructed.
“Without maintenance these roads will collapse.”

'Crisis' in Port Moresby affects business

By MALUM NALU
Port Moresby Chamber of Commerce and Industry says there is a crisis in the city which is greatly affecting business in the city.
Chamber president Ron Seddon made an urgent appeal to parties to sort out the current uncertainty and unease in the capital, which he said had left businesses and their staff “nervous, feeling frustrated and threatened by the current situation” .
“Those causing this nervousness need to realise they are adversely affecting the lives of ordinary Papua New Guineans to a significant extent, where it hurts: in their pockets,” he said.
“The prices of goods and services to the average family will inevitably rise as the cost of doing business is forced up by the loss of days of trading and having to fill gaps left by staff who cannot or are too scared to get to work.
“We should call this ‘self-induced inflation’ by the people and leaders of Papua New Guinea.
“Couple this with the fact that it is already expensive to do business in our country along with significant upward pressure on costs - which is never properly reflected by the inadequate measurement of CPI - and we have an extremely worrying scenario developing.
“Businesses cannot operate properly, costs rise.
“Staff cannot perform, costs rise.
“Public servants take advantage of the ‘unrest’ to close office, causing more delays, costs rise.”
Seddon said this week, while business got on with the job at hand as best they could, it was noticeable Customs, “already a source of costly delays for business”, and the Labour Department closed up shop because of the “unrest”.
“There was no ‘unrest’ in the CBD,” he said.
“Not even a size 7 earthquake on the Richter Scale stopped most businesses from operating.
“Crumbling infrastructure such as our roads and the severed freeway means it takes longer to get jobs done, costs rise.
“We urge NCDC to ramp up work to 24/7 to fix the freeway and not just accept that the one lane quick fix is sufficient.

“The freeway issue is a crisis: get it fixed!”.-Picture by MALUM NALU

“At peak hours, traffic going into town at peak hours is backed up to Waigani Drive in both lanes
“Some trucking companies are now only delivering at night as it takes too long to make a delivery during the day.
“Once again costs go up.
“With some container storage moved to 8-Mile, truck cartage rates have risen considerably.
“Business is grinding to a halt and authorities are taking almost a lackadaisical approach to fixing the problem.
“The freeway issue is a crisis: get it fixed!”
Seddon said there was a crisis in confidence which was only exacerbated when “our politicised and factionalised police are sorting out internal issues and not attending to the needs of the city residents”.
“The police commissioner initially admitted he was powerless to do anything about the political issues.
“We are, however, pleased to see firm action at last with the arrest of five policemen on assault charges and the announcement that the riot squads will be sent packing from our city and back to the Highlands.”