ADB: Private sector will foster economic growth

By MALUM NALU
Nurturing the private sector and improving public service is key to foster growth in Papua New Guinea’s economy over the next 10 years, according to a new report from the Asian Development Bank, The National reports.
The report, Diagnosing PNG’s Critical Development Constraints, was launched at the University of PNG last night.

National Planning and Monitoring secretary Dr Peter Kora, ADB country economist Aaron Batten and UPNG vice-chancellor Prof Ross Hynes with copies of the report at UPNG last night.-Nationalpic by MALUM NALU

It studies the dramatic improvements in the PNG economy over the last 10 years, during which time, benefits of economic growth have been small with mounting evidence of growing inequality and declining social indicators across many parts of the country.
ADB PNG country director Charles Andrews said the PNG economy had transformed over the last decade with stable government finances, private investment and high commodity prices boosting income and employment.
“However, for many citizens, the benefits of economic growth have been small with mounting evidence of growing inequality and declining social indicators across many parts of the country,” he said.
“PNG has one of the highest levels of income inequality in Asia and the Pacific.
“There is a huge geographical divide too, with 94% of PNG’s poor living in rural areas.
“Poor roads between farms and national and international markets, coupled with high cost of finance, have held back development in agricultural areas.
“Creating a more-favorable environment for private enterprises to flourish would encourage economic diversification and competition as reforms in the telecommunications, aviation and financial services sectors over the past 10 years unleashed widespread benefits for the PNG population.”
The report said the government should strive to improve the quality of public services such as transport, electricity and water systems.
“Better education and health services would improve the livelihood prospects for all Papua New Guineans, helping to provide the foundation for sustained economic growth,” Andrews said.
“Many of the recommendations outlined in the report are line with the government’s development programme, Vision 2050.”
Papua New Guinea joined ADB in 1971 and is ADB’s largest partner in the Pacific in terms of loans for public and private sector investment.

Brighter metals prospects for PNG

By OXFORD BUSINESS GROUP
A series of significant mineral finds in Papua New Guinea have highlighted the role exports are set to play in the nation’s economic future.
However, there have been calls from industry players and opposition officials asking the government to do more to ensure revenues stay in the country.
In mid-April, state-owned Petromin announced that it had found a 364-metre intersection of porphyry copper, molybdenum and gold mineralisation at its Ipi River prospect, located 50km north of its Tolukuma gold mine in Central province.
In the same month, Australia-based Indochine Mining announced that gold and silver finds at Mount Kare had underlined the “outstanding potential” of the project to become one of PNG’s next major mining operations.
Officials also revealed that Kula Gold’s Woodlark Island project, which has estimated reserves of 700,000 ounces, was on track to start producing in 2014.
Also in April, Nautilus Minerals of Australia announced that it had obtained a license from PNG to mine a site the size of 21 football fields under the sea.
The company hopes to develop and expand undersea mining to obtain copper, gold, silver and zinc from the seafloor.
These recent finds and progress underline the significant contribution metals are set to make to GDP in the coming years.
In 2010, activities directly attributed to mining comprised 21% of domestic revenues, while high global commodity prices are widely credited for GDP growth reaching 8.5% in 2011 and the predicted rate for this year.
“In 2012, real GDP is projected to grow at 8%, supported by a recovery in mining output,” the IMF wrote in February.
However, concerns over the environmental impacts of mining and foreign miners over-exploiting PNG’s resources have led to calls for the country to tighten its tax regime.
Observers have called for the country to emulate Australia’s controversial mining tax, which will levy 30% of the “super profits” from corporations mining iron ore and coal.
Meanwhile, critics point to the 10-year tax holidays currently in place for a number of mining projects in the country, including the Chinese-operated $1.4 billion Ramu nickel-cobalt project.

Bird view picture of Basamuk in Madang province, site of the Chinese-operated $1.4 billion Ramu nickel-cobalt project

The government has proposed legislative reforms to increase domestic involvement in mining projects, with Belden Namah, the deputy prime minister, saying in February that the Mining Act will be reviewed to increase landowner participation in mining projects.
However, Namah’s plans were met with a strong backlash from industry players and opposition officials.
In February, the IMF echoed these concerns, stating the resource sector could make a larger contribution to public revenues.
The fund recommended that the government strengthen its current means of revenue collection, reinforce the internal revenue and Customs services, streamline tax concessions and apply the additional profits tax to mining activities.
The government’s grip on mining revenues will come under more scrutiny as speculation grows over the potential of the Wafi-Golpu copper-gold project, which Marian van der Walt, the investor relations manager at South Africa-based Harmony Gold Mining, in March described as the “find of the century”.
Exploration has already discovered 27m ounces of gold and 9m tonnes of copper, and those numbers are expected to grow before commissioning in 2018, wrote PNGIndustryNews.
“We believe Wafi-Golpu is amongst, possibly, the top-10 copper-gold porphyries in the world at this stage,” van der Walt told the Mines and Money conference in Hong Kong on March 22.
For his part, Prime Minister Peter O’Neill stressed in March that the revenues from the Wafi-Golpu will, like those from the $15.7 billion Exxon-led PNG liquefied natural gas (LNG) project, be carefully managed by the country’s Sovereign Wealth Fund to ensure that they benefit development in infrastructure and education.
“By 2016, we expect our budget to be three times bigger due to the monies coming into the country, not only from our LNG but other major projects, including the proceeds from the Wafi gold (and copper) mine in Morobe, Yandera in Madang and Frieda mine in Sepik,” O’Neill said. “We will use these funds to pay for school fees for students who are attending our universities. “By then, the entire education system in the country will be free.”
However, speculation in April that Swiss-based mining company Xstrata was mulling withdrawal from the Frieda mine project – which is estimated to have more than 11 million tonnes of copper and 18 million ounces of gold – may prove to be a challenge for the government as it struggles to attract investors.
To address the multiple factors limiting investment in the mineral sector, observers say stronger political will is needed for resources-driven economic growth to translate into real development.
“Public sector weaknesses and the extent to which corruption has infected this sector will be a real challenge in capitalising on this opportunity,” said Ian Kemmish, Australia’s High Commissioner to PNG, in March.
“Political stability will also be very important.”

PNG affected as Australian foreign aid funding boost delayed till 2016

SYDNEY MORNING HERALD

Papua New Guinea will be among Australian aid recipients affected as foreign aid will be stripped of almost $3 billion with Labor breaking its pledge to spend more on overseas development.
Indonesia ranks as Australia's largest aid recipient at $578 million, with PNG, engulfed by political turmoil over recent months ahead of scheduled national elections, ranking second at $492 million.
The Australian government said despite meeting a 0.5% target for aid a year later, Australia was on track to have doubled overall spending on foreign development between 2007 and 2015.
It said Australian aid had supported an additional 120,000 school enrolments in the Pacific, across PNG, Solomon Islands and Vanuatu.
But it said serious challenges remained with 1.3 billion people living in extreme poverty in the region and around the world — with another 1.1 billion, many in Asia, who live just above the poverty line.
''We also provide aid because Australians find it unacceptable that people across the globe still live without sufficient income to lead a decent life, or to buy basic medicines or send their children to school.''
The government had promised to devote 0.5 per cent of Australia's gross national income to foreign aid by 2015 — raising total spending to potentially as much as $8 billion.
But that increase will now be delayed another year to 2016, despite Labor renewing the 2015 pledge at its national conference in December.
Deferring the target will save the government $447 million this financial year, with savings to almost double annually over the next three years to a total of $2.9 billion.
Fears of aid cuts in the run up to the budget had generated a vocal campaign by charity groups, including stark warnings children will die should Australia fail to meet its target.
But Treasurer Wayne Swan denied the government was balancing its books on the back of the world's poor and insisted Australia could be proud of what it would achieve in overseas development.
He rejected suggestions the cut marked a vote of no-confidence in the ability of Australia's overseas aid agency AusAID to deliver the extra money after heavy criticism in recent times over payments to consultants and wasteful spending.
He said reductions were being felt right across the public purse.
Australia will also lose 44 diplomats from the Foreign Affairs department but, as revealed by The Age in February, gain a new embassy in Senegal.
Foreign Affairs will be funded for a new consulate in Chengdu, China - announced by Prime Minister Julia Gillard in March - and around $72 million will be spent on private contractors to secure the Australian embassy in Iraq.
The government is yet to reveal which Australian city will host G20 leaders in 2014, but has devoted $370 million to the running costs and security for the summit.
In spite of a slower rate of spending, AusAID will continue to grow by $400 million to $5.2 billion overall, with 44 additional staff.
Private charities will get a $194 million slice of the budget, while most official aid continues to be focused on Asia and the Pacific, with around 30 per cent of aid money handed to international funds such as the World Bank and Asian Development Bank.
Some $154 million will be devoted to expanding Australia's ties with six United Nations agencies, including UN Women and the World Health Organisation, but no additional money has been allocated to the campaign to win a temporary seat on the UN Security Council ahead of a vote in October.
Burma stands to be rewarded for its political reforms in the past year with $11 million in extra aid for maternal health and education programs, while Fiji will also benefit from an additional $61 million.

Botten: Oil Shares stock suffer

By MALUM NALU

Oil Search managing director Peter Botten admitted yesterday (Tuesday) that his company’s stocks had suffered on Monday as shares slumped on the Australian Stock Exchange, The National reports.
The good news is that Oil Share shares quickly rebounded from Monday.
Botten said that was a worldwide phenomenon, because of events in the US and Europe, that had made investors quite nervous.
“Unfortunately, when Europe sneezes, we catch the cold,” he said after the Oil Search annual general meeting at the Crowne Plaza in Port Moresby.

Botten addressing yesterday’s Oil Search annual general meeting at the Crowne Plaza in Port Moresby.-Nationalpic by MALUM NALU

“The only positive thing is that we didn’t go down that much.”
Australian shares traded deep in the red on Monday on the back of disappointing US jobs growth and European election results.
Even the local Port Moresby Stock Exchange (POMSOX) was not exempt as the nine dual-listed stocks – on both Australian Stock Exchange (ASX) and POMSOX - and all were in the red on the day.
The nine dual-listed stocks are Cue Resources, Coppermoly, Newcrest Mining, Oil Search, Highlands Pacific, New Guinea Energy, Steamships Trading, Marengo Mining, and Kina Petroleum.
Newcrest Mining and Oil Search showed the largest falls, Newcrest down 1.2% and Oil Search down 2.4% in Australian trading.
POMSOX general manager Geoff Mason said yesterday the movements of Monday did not follow through overnight with the US market down 29 points, which was much better than expected and most European markets closing up from last Friday’s falls.
“The Australian market is up just prior to the close so all in all, a better day then yesterday (Monday),” he said.
“Of the nine dual-listed stocks, there is little change on how they closed yesterday (Monday) except for Oil Search, which is up on the day, however, NCM is currently down 11 cents.”

Oil Search commits to PNG

By GYNNIE KERO
Oil Search Ltd remains committed to PNG despite considerable political uncertainty over the past year, according to chairman Brian Horwood, The National reports.
He told the company’s annual general meeting at Crowne Plaza in Port Moresby yesterday (Tuesday) that despite political instability and concerns within the banking and investment communities, neither the PNG LNG Project nor Oil Search operations were disrupted.

Oil Search shareholders listen attentively at yesterday’s annual general meeting at the Crowne Plaza in Port Moresby.-Nationalpic by MALUM NALU

“Ensuring the continued security and safety of our staff and contractors in the run up to the election remains the highest priority for Oil Search,” Horwood told shareholders.
“We are encouraged that the government has confirmed the election will proceed according to the original timetable.
“The country is already in a period of major social and economic change.
“This will increase further when the very significant revenues from the PNG LNG Project start to flow in 2014.
“We look forward to working with the incoming government, in particular, on establishing structures and processes to manage these very substantial benefits streams, in the best interests of the nation, and on ensuring consistency of fiscal terms, which is critical to ongoing investment.”
Horwood said apart from assisting Esso Highlands with the successful delivery of the PNG LNG project, Oil Search’s other key objectives were:
• To mature and find new gas reserves in the Highlands and PNG Gulf regions, to be used for both LNG expansion and other gas development opportunities; and

• To pursue in-field and near-field oil exploration and appraisal opportunities, based on a view that substantial oil remains to be discovered in our existing producing areas.

“During 2011, Oil Search and its partners agreed a comprehensive programme aimed at establishing additional gas resources in the Highlands region,” he said.
“This comprises exploration and appraisal drilling as well as further definition of the gas within existing oil and gas fields.
“…I am pleased to report that the campaign has started extremely well, with the recent discovery of a substantial gas accumulation at P’nyang South.
“Other aspects of our growth plan are also progressing well.
“We had considerable success in the near field exploration programme at Kutubu in 2011.
“Two exploration wells discovered oil and both are now in production.
“In the Gulf of Papua, a range of exciting prospects have been identified from our 3D seismic, with drilling activities targeted to commence at the end of 2012.”

Western province is next frontier of LNG exploration

By MALUM NALU
Western province could soon become the next frontier of PNG LNG project expansion following on from the Southern Highlands, according to New Guinea Energy (NGE) Ltd executive chairman Michael Arnett, The National reports.
Western province is already becoming a multi-million dollar oil and gas exploration ground for companies such as NGE, Talisman Energy Inc, Mitsubishi Corporation, Esso PNG Exploration Ltd and Oil Search.
Last October, PNG Authorities extended the licence period and exploration programmes the NGE’s 50%-owned PPL 268 and PPL 269 with Talisman and the two companies are now committed to a minimum expenditure of US$55.69 million on the licences over the next five years.
On February 23, 2012, Talisman announced that it had entered into a strategic joint venture with Mitsubishi Corporation, worth US5.18 million to aggregate natural gas in the Western province with a view to potential LNG export of approximately three million metric tonnes per annum.
On March 7, 2012, NGE announced the sale of its interest in PPL 277 to Esso PNG Exploration Ltd (Esso) and Oil Search (PNG) Ltd, involving an aggregate cash payment of US$35 million, plus an ongoing royalty on future production, subject to certain conditions.
Arnett told the company’s annual general meeting in Sydney on Tuesday that the recent announcement of the P’nyang South Appraisal well, indicating a potential vertical gas column of over 650 metres, was particularly significant to all Western province explorers.
“This discovery alone could potentially justify the P’nyang field becoming a cornerstone of the PNG LNG project expansion,” Arnett said.
“This could provide Western Province gas discoveries with two export routes: PNG LNG or via the infrastructure that may be built for Talisman’s previously-announced gas aggregation strategy.
“The oil industry as a whole benefits from successful drilling in the Western province as each gas discovery adds to the critical mass necessary to justify oil and gas processing and export infrastructure.
“In that light NGE, was very pleased to hear of the results of the Stanley, Ubuntu, Elevala and Ketu Appraisal wells in the Western province over the last 12 months.
“We believe that 2012 will continue to be a significant year in the company’s history in terms of activity across all the licences.”
Arnett said with two seismic programmes already completed on petroleum prospecting license (PPL) 265 and PPL 266, another planned for PPL 268 in the third quarter of the year, and a third exploration well, this time in PPL 265 anticipated for the fourth quarter of the year, a busy year was forecast.

Ramu Sugar ignites fire to set production rolling

Ramu Agri Industries Ltd (RAIL) yesterday (Monday) lit the fires in its sugar factory boilers, signalling the end of the six-month maintenance season and the beginning of the 2012 sugar cane harvest season, The National reports.

Long-serving employee of 30 years, Buti Sakama Lights up Boiler 2.

With the boilers now lit, a traditional ceremony practised each year, Ramu Sugar production starts today, Tuesday, May 15, 2012
The ceremony was witnessed by management and sugar factory staff alike, marking the culmination of much hard work on everyone’s part and as always a proud moment for all involved.
Head of technical services, Tom Hare thanked all staff for collaborating well with management in ensuring the boilers and the factory had been made ready for the coming season.
He said the task of preparing for production was always a busy period for everyone and the tireless effort that went into ensuring that the factory was ready reflected the commitment of each and every staff member.
General manager Jamie Graham told factory staff: “Without your collaboration and team work, none of this would be possible.
“It is as a result of your hard work and effort that we have come to this day again.”
Yesterday was a special day for Buti Sakama, who has been with the company for the last 30 years.
He is a long-serving employee with the factory department.
Sakama started with Ramu Sugar Ltd in 1982 at the very beginning of the sugar factory operations and worked his way up to the position of boiler supervisor, from which he will retire at the end of 2012.
Graham and Sakama were then given the privilege to each light a boiler to ceremonially announce the upcoming harvest season.


RAIL general manager Jamie Graham lights up Boiler 1.-Pictures courtesy of RAIL

A blessing was bestowed upon the staff and the company for a bountiful harvest by Pastor Angap Moses.