New fisheries system to be in place

From January 2018, PNG will move from a system of selling discounted fishing days to domestic and foreign flagged fleets, to a system of providing a rebate to foreign fleets that process their fish in factories in PNG.

Prime Minister Peter O’Neill has announced, this new system rewards those companies who support development and employment in the national fisheries sector.

Effective January 1, the Government will end the discounts to fishing fees, which has grown to more than excess of US$100 million (K330 million) each year.

Based on current levels of processing, under the new rebate system it is anticipated that US$70 million (K235 million) in revenue will be generated in the tuna sector in 2018.

“When companies process their catch in Papua New Guinea, it not only creates jobs, particularly for female workers, but broadens the national economic base with increased downstream processing, and increases Government revenue,” PM O’Neill said.

“Fisheries and marine resources remain one of the most valuable in Papua New Guinea, and when properly managed, it is a renewable resource.

“Since independence we have had ambition to catch and process our own fish, and enhance development for our people.”

The PM says since the 1995 White Paper, PNG has attracted 6 foreign investments in tuna processing in Wewak, Lae and Madang.

“Each venture is subject to the terms of State agreements and with obligations for the companies to process their tuna catch in Papua New Guinea.

“In return, the State has given heavily discounted fishing licences to these companies to supply the fish required to their processing plants.

“In doing so, PNG has provided these companies with significant economic support to help the companies build economies of scale needed for successful processing.”

However, O’Neill says when they formed Government in 2012, they found a very different story, which has been confirmed by many independent reviews.

“The reality is that factories operating under this program, in almost all cases, typically run well below actual processing capacity.

“We have found that these companies operate their vessels independently of their processing facilities for financial and tax purposes, and this is inconsistent with the State agreements.

“The major economic support we give to their fishing vessels by way of discounting the value of the fishing days has not been transferred to the factories as intended.

“It is apparent that around 80 percent of caught fish is being processed in other countries, and this runs counter to the national tuna processing sector.”

O’Neill says the National Executive Council has approved the required changes to the way we sell our tuna vessel days in support of our 2018 budget.

“We are still facing a challenging global economy and these are important changes that will help our country.”

The Prime Minister noted that Cabinet has instructed the NFA and the NFA Board to immediately begin to implement these important changes.

The level of rebate is initially set at 30 percent above what the industry is claiming it costs additionally to process in PNG, because of the higher costs for utilities and labor.

The $400/mt rebate is only for the first 2 years to assist in industry with building any additional infrastructure it may require, including cold stores to hold inventory.

The level of rebate will be regularly and independently reviewed.


Press release