The Government believes resource projects can address PNG’s revenue decline, foreign exchange issues and costly utility prices.
Treasurer Charles Abel says this is the reason why the Government is intent on delivering big resource projects.
Speaking at the 2018 Final Budget Outcome briefing on Monday, Abel said the Government is working to address PNG’s foreign exchange issue through loans, like the US$500 million sovereign bond, and also by looking at resource projects like the Papua-LNG project.
The delivery of big resource projects will set the economic foundation to continue an upward trend of the K10 million revenue recorded in the 2018 Final Budget Outcome Report.
With that in mind, Abel said the Government is currently finalising the terms of the Papua-LNG Project, and the issues that are affecting the country will be covered in their negotiations.
“We use these projects now to address these issues as best as we can,” he said. “We keep as much foreign exchange in Papua New Guinea as we are able to according to our law, because we need foreign exchange.
“We can’t be exporting and everyone keeps the foreign exchange overseas. That’s not good for Papua New Guinea.
“After we sign project agreements, we wonder why the revenue doesn’t come through sometimes. This is because we haven’t structured the agreements in a way that caters for low oil price, high oil price – we are protected in different scenarios.”
The other reason why the government is eyeing major projects is because the country needs to retain a certain percentage of gas to use. Abel says there is no point in sending all our gas overseas and then import diesel.
“And then we want good and improved benefits for our provincial governments and landowners. If you’re going to take gas from Gulf Province, Gulf must have some kind of a benefit.”
Once the resource project starts, the Government anticipates the creation of jobs and infrastructure, among other benefits. Ultimately, these will boost PNG’s GDP growth in the years to come.
(PNG LNG filepic)