Economy. Papua New Guinea press review

Prime Minister of Papua New Guinea (PNG) Hon. James Marape has commended the Morobe provincial government for hosting the first Wafi-Golpu project meeting on positive negotiations for the development of the mine. The negotiations in Lae (Morobe Province) resulted in presentations done by key government departments and the State Negotiation Team on the mining update process to allow the mine to operate. As Mr. Marape stated, the first meeting was a preliminary discussion to get the views of the Morobe Province government, impacted district leaders and landowners on crucial approaches for the mine to recommence full operations. Prime Minister noted that the National Executive Council (NEC) is yet to approve the next course of negotiations for a forum to be held but thanked the PNG Minister for Mining Johnson Tuke and Morobe Province Governor Ginson Saonu for successfully hosting the discussions. Hon. James Marape said that every issues, points and views raised by Morobe Province government, impacted district members and landowners had been taken into consideration for the government to sift through and present in the next negotiations.

Morobe MPs and State ministers within the impacted districts, including Minister for National Planning and Monitoring Sam Basil (Bulolo), Minister for Lands and Physical Planning John Rosso (Lae) and Huon Gulf MP Ross Seymour all spoke on fair and equal distribution of benefits for their districts. PNG Prime Minister also assured the landowners and stakeholders that there were processes to follow in getting the mine to operate. [1]

In turn, Mineral Resource Authority (MRA) Managing Director Jerry Garry said that Special Mining Lease (SML) for the Wafi-Golpu mining project in Morobe will be given by the second week of September 2020. Mr. Garry also noted that priority should be given to resource owners. He said that Waffi-Golpi project was one of the biggest in the world and proper consultations have to be conducted in the presence of resource owners. According to the MRA Managing Director, the Wafi-Golpu project would require around US$2,85 billion (K9.6 million) to actually get the project off the ground. Wafi-Golpu project is ranked number one globally in terms of deposits of high-grade copper and gold. [2]

However, In the midst of Papua New Guinea’s state of emergency, there was a change at the top in one of the largest mining companies of the country, Ok Tedi Mining Limited (OTML). Muse Verrora was appointed Managing Director and CEO of OTML. He said that it was an honour and privilege for him to be appointed to this very important role to head a company that has been contributing significantly to the development of Papua New Guinea. According to Mr. Verrora, Ok Tedi has been a major contributor to the economy of PNG including providing foreign currency (USD) into the domestic market. The company has also contributed significantly to the social development of Papua New Guinea country when we consider the thousands of people that the mine continues to employ, the hundreds of young apprentices and graduates that OTML had trained. [3]

Porgera Mining and Allied Workers (PM&AWU) are calling on the PNG authorities to consider tax free redundancy for the 2700 employees of the Porgera Gold Mine who have been made redundant. On the 24th of June 2020, Barrick (Niugini) Limited (BNL) announced that it had been forced to end employment for the majority of its workers who will be retrenched over the coming weeks following the Government’s decision not to extend its Special Mining Lease. The retrenchment exercise will cost BNL more than K180 million.
the union executives communicated to resident and local mine employees that they will be requesting an audience with the Prime Minister and the Internal Revenue Commission (IRC) to consider tax exemptions on the redundancy payments. Most of the 116 expatriate employees have already been retrenched and 2650 citizens of Papua New Guinea will have their services terminated by the end of July 2020. The BNL license case is still pending before the court. [4]

PNG Air has refuted National Superannuation Fund’s (Nasfund) claim that the airline has not been performing well. Nasfund had described PNG Air as a non-performing, illiquid and non-yielding investment for the fund. The National Superannuation Fund holds 39,29% of the total shares on PNG Air issue and is the largest institutional investor in the airline. In turn, PNG Air Acting Chief Executive Anthony Pereira said that «this is totally incorrect» and also added that Nasfund is «basing on 2016 information and subsequent erroneous reports sent to the PNGX (PNG National Stock Exchange) markets for 2017 to 2019».

According to PNG Air Acting Chief Executive, the Australian accounting firm would «review and submit their views on major erroneous accounting entries that were detected and done between 2017 and 2019», and PNG Air is PNG Air is not a loss but a profitable company. «We also need to mention that had we not made profits, we would not have been in a position to have a cumulative amount of K88.8 million that we paid via remittances to our aircraft lessors and ATR [aircraft manufacturers and parts] for deposits to be held for such things as aircraft maintenance reserves, rental deposits, pre-delivery payments for new aircraft and deposits for aircraft spare parts […] Since 2016, PNG Air did not borrow extra, nor did we get any further funding from shareholders, nor did we get any grants for us to have achieved what we achieved,» Mr. Pereira said. [5]

In turn, People’s National Congress (PNC) Party Deputy Leader [PNC Leader is Peter O’Neil] Richard Maru has warned that national carrier Air Niugini, PNG Air, and other third-level airlines may be facing bankruptcy in the next 12 months. « This will happen unless there are significant cost-cutting measures, including the government going to their rescue, » Mr. Maru said. On the 12th of June 2020 Minister for Public Enterprises and State Investments Sasindran Muthuvel proposed that the government should provide a relief package of K300 million for Air Niugini because the airline was «currently facing liquidity issues and is in dire need for more capital injection and support to mitigate the economic slowdown», and Mr. Maru stated: «Alarmingly, at this critical time when Air Niugini desperately needs a K300 million bailout, the government appears to be facilitating a deal for Air Niugini to buy out Nasfund’s shares in PNG Air […] This is at a time when PNG Air is about to go bankrupt», and also added that Air Niugini would likely take over existing routes anyway. [6-7]

The United Nation (UN) conducted a survey in May covering 3000 small to medium enterprises (SMEs) across all 89 districts and 22 provinces of Papua New Guinea. The survey shows that 75% of them were adversely affected by COVID-19. According to UN resident coordinator Gianluca Rampolla, more than 82% of firms that sourced their production materials locally experienced a halt in production. «It is, without a doubt, a very trying time as businesses struggle with the socio-economic impact of the COVID-19, in PNG and all over the world […] the hallmark of a vibrant and healthy economy should be one that can sustain and take care of the wellbeing of its citizens during times of an emergency […] the solidarity that Papua New Guineans have displayed to each other is once again a beautiful story to tell the world, » said UN resident coordinator. Mr. Rampolla also acknowledges the PNG Government’s vision on economic diversification in PNG and efforts to promote an enabling environment for MSMEs and a growth that was more inclusive and equitable. [8]

At the same time, Kumul Telikom Holdings Ltd (KTHL) Acting Chairman Reuben Kautu announced that the merger of BMobile and Telikom into a single retail operator is expected to be completed by December or early next year. Mr. Kautu noted that the National Executive Council (NEC) had approved the merger as part of KTHL’s reform agenda. However, he said legal, corporate governance, technical and commercial areas were yet to be completed. The merger of BMobile and Telikom commenced in 2018. [9]

[1] https://postcourier.com.pg/pm-commends-morobe-for-first-wafi-meeting/
[2] https://www.thenational.com.pg/wafi-golpu-to-get-mining-lease-in-sept/
[3] https://www.businessadvantagepng.com/ok-tedi-mining-to-be-a-model-miner-says-new-ceo/
[4] https://postcourier.com.pg/porgera-workers-call-for-tax-exemption-on-redundancy-entitlements/
[5] https://www.thenational.com.pg/png-air-refutes-nasfunds-claim/
[6] https://postcourier.com.pg/airlines-in-png-facing-bankruptcy-says-maru/
[7] https://news.pngfacts.com/2020/06/maru-calls-on-png-pm-marape-to-explain.html
[8] https://www.thenational.com.pg/covid-19-affects-smes/
[9] https://www.thenational.com.pg/issues-emerging-in-merger-process/