Kina Bank CEO, Greg Pawson, said this during the Prime Minister’s Back to Business Breakfast in Port Moresby on January 30th.
It was a fully packed event with the business community for the Prime Minister’s first major engagement for 2020.
In his speech, Pawson early on highlighted the major pressing issue viewed by the business sector; the delay in LNG project decisions and its potential impact.
Pawson said the delay will affect potential investment and hinder prospective growth.
"In addition to the delays, our concern is that the economics are changing rapidly as the LNG spot prices fall rapidly over 2019, in fact about 14 percent. We don’t think this is discussed much but we think it's an important factor to be aware of in the decision making, the fact that there may be a multi-year oversupply of LNG which could put PNG into a less favoured position in the future as buyers and developers of LNG Projects reassess their needs in such a challenging market environment,” said Pawson.
Pawson recognised the need for the State to get the best outcome from the projects but said business confidence is also being tested.
“Delays have undeniably affected business confidence in the country through the latter half of 2019. Businesses in resource adjacent industries and the supply chain have deferred CAPEX investment and employment intentions as decisions are eagerly awaited.
"Without the significant boost to the economy these resource projects provide, we think risks will remain to the downside and investments in and meaningful growth of the broader economy will continue to be delayed.”
In response, Prime Minister James Marape said the Government is negotiating deals that are fair for the country and will also have a positive effect on the business sector.
The Prime Minister said all he asks for is for project developers to pay their fair share in taxes as per the current laws in the country. He added there will not be any discussion on concessions.
“Our starting point will be our present law in the country. We’ve given concessions in Papua LNG, we’ve given concessions already in PNG LNG. The least the country demands now and ask is that you honour laws that we have in our land. Just pay what is our fair share in due, and we have an agreement," said the Marape.
Meanwhile, the Prime Minister pledged to have regular dialogue with the business community to foster more public-private partnership for the development of the country.
The Papua LNG Gas Agreement, which was signed in April 2019, is undergoing Front End Engineering Design (FEED).
The deadline for the Pnyang Gas Agreement is today.