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Mining, petroleum sectors play vital role in PNG's economy

Staff Reporter | 3:19 PM | |
THE mining and petroleum sector plays an important role in Papua New Guinea’s economy and represents a significant portion of the State’s asset holdings.

Treasurer Patrick Pruaitch in his 2015 budget speech recently said the Government recognises the importance of effectively managing these sectors in order to maximise benefits for the community and ensure resource revenues are fully utilised to assist in meeting the country’s development objectives.

The Aitape MP said: "PNG is on the verge of transforming natural resources management and 2015 will see a culmination of policy reforms to enhance management and investment frameworks.

"As is the case with State-owned enterprises (SOEs), mining and petroleum assets held by or on behalf of the State will be held within the Kumul structure, ensuring consistent application of best practice governance arrangements and focussing management expertise on these valuable assets.

"The Government will influence the ongoing management of these assets through articulated policies carefully setting out the State’s expectations," the National Alliance Party Leader said.

According to Treasurer Pruaitch, the policy shift is part of the national Government’s initiative to reform all SOEs under the Kumul Consolidation Agenda that will involve the implementation over 2015 of a structure for holding and managing state assets such as those currently held in the General Business Trust (GBT).

As a result of this agenda, the GBT will be replaced with a Kumul holding entity, and the Investment Public Business Corporation (IPBC) will cease to exist. Although the Kumul Consolidation Agenda has the potential to improve the management of the State’s assets, the design takes on even greater importance given the much broader scope of assets it will hold.

The greatest source of dividends to the Kumul Consolidated entity will 2015 Budget, come from the State’s equity in the PNG LNG project and the OK Tedi mine, both of which did not pay dividends to the GBT prior to 2014.

Future State equity investments and those that are currently being developed will be managed under the Kumul Consolidated entities. It is predicted that the Agenda will address the deficiencies of the current IPBC structure and will embrace good governance, transparency and efficiency.

Consequently, two companies directly involved in either mining and petroleum businesses or just petroleum are either on the losing or receiving end from the government decision.

They are Petromin PNG Holdings Limited (Petromin) who is in the brinks of loosing all its petroleum investments including Eda Oil assets and most likely to be affected should the mineral assets are transferred to the proposed Kumul Mining.

The other company that tends to benefit immensely is the National Petroleum Company of PNG (NPCP). All the petroleum assets from Petromin will be transferred to NPCP including the Eda Oil, State equity in the Elk-Antelope, Stanley Gas project and other petroleum projects State equity nomination.

Two reliable sources who are directly involved in the industry and the government circles have confirmed the working progress of assets transfer of petroleum assets from Petromin to NPCP.