Government yet to negotiate for construction of P’nyang

The Government is yet to negotiate new fiscal terms with ExxonMobil for the construction of the P’nyang gas development.

Treasurer Patrick Pruaitch said the construction might start in 2018 or 2019.

Speaking at the 14th Mining Conference in Sydney this morning, Pruaitch said: “With the benefit of hindsight, I assure you we would have done things differently if we had known commodity prices were primed to fall. Instead we went for expansionary budgets.”

He said PNG’s total borrowings would have been far less in 2014 and 2015 when the government accounted for almost half the total debt raised during this five-year term.

“Further, the Government was unlikely to have borrowed and spent A$1.2 billion, or around K3 billion, to purchase a 10% stake in Oil Search.

“No one was anticipating that Oil Search shares would fall from the A$8.20 purchase price to levels below A$7 a share, after earlier rising well above A$9.

However, Pruaitch assured delegates at the conference that the government is quite capable of living with that situation.

“PNG’s public finances remain in sound shape even though Government spending could remain tight for the remainder of this decade.

“On current plans the Government anticipates ending its expansionary fiscal policy by 2020 with a target to attain a balanced budget the following year by keeping a tight rein on budget expenditures.”



Freddy Mou