National Research Institute economics policy research programme leader Dr Osborne Sanida said yesterday the LNG project had been the cornerstone of previous budgets and “digging into the numbers in the mid-year economic and financial outlook, it is clear that the large inflow of revenue predicted for 2015 almost entirely comes from mining, oil and LNG”.
“Losses in revenue from oil and from Ok Tedi are due to reduced production and low commodity prices. However, what is not explained is where the LNG money is,” he said in response to the Treasury’s mid-year economic and financial outlook report which highlighted difficulties, including a cash-flow problem.
“The total mining and petroleum revenue is forecast to be K400 million in 2015. Given that exports of LNG are expected to be about K14 billion in 2015, Treasury needs to explain where the money is, that PNG is getting out of this.
“There are no dividends from LNG from the Government’s ownership in LNG that are accounted for in the outlook (treasury report).”
Sanida said the problem was almost certainly one of revenue-timing, because “in the past couple of months, and in fact years, there has been high spending in anticipation of revenues that were to be driven by the LNG project”.
“However, the revenues have not come in fast enough, hence, there is uncertainty. With this uncertainty in timing, Treasury has found itself in cash flow difficulties while it waits for the revenues to flow.”
He reminded that last year, NRI had warned against forward spending in light of the controversial K3 billion UBS loan.
“By not being upfront and transparent about the LNG revenues (in the report), Treasury is portraying the fiscal situation as being dire, when we believe this is not the reality,” he said.