In brief: Ratings agency warning on debt and other business news

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Moody’s warns debt could prompt downgrade, tax review committee considers capital gains tax and an EU warning to curb illegal fishing in Papua New Guinea. Your weekly digest of the latest business news.

InBrief02Global rating’s agency, Moody’s, has warned PNG faces a possible downgrade because of growing government debt, despite the ‘transformative’ income from LNG gas sales. It added it the government’s takeover of the Ok Tedi mine last year ‘has raised concerns regarding the risk of expropriation’. But it has confirmed PNG’s B1 rating and stable outlook.

Prime Minister Peter O’Neill has defended the increased borrowing, saying it was needed to ‘bring forward vital services’ such as free education, highways and roads.

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The Tax Review Committee is looking at a capital gains tax to broaden the tax base. Sir Nagora Bogan says the tax may also apply to shares.

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Sir Henry Chow

Sir Henry Chow

Only a fraction of the natural gas export projects being developed around the globe will become reality, as high costs and weakening gas prices torpedo those that until recently promised huge returns on investment, says Royal Dutch Shell’s director of projects and technology, Matthias Bichsel.

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The European Union has warned the Philippines and Papua New Guinea that they will face an import ban if they do not curb illegal fishing.

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The Chairman of the National Research Institute, Sir Henry Chow, says the Sovereign Wealth Fund must be set up as a priority, to manage the LNG income, adding the next few years will be critical for PNG development.

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Air Niugini is seeking a 10 percent staff reduction over the next 12 months—about 250 staff—through redundancies, as a result of the completion of the construction of the PNG LNG plant. 

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The European Union is providing about $US70,000 to boost production of virgin coconut oil in East New Britain by Amruqa, to upgrade its virgin coconut oil processing facility.

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With the right investment climate, PNG could be self-sufficient in beef production within 15 years, according to New Britain Palm Oil’s CEO, Nick Thompson.

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Santos' David Knox

Santos’ David Knox

Urbanisation in Asia will see energy demand surpassing the rest of the world by 2030, according to Santos’ CEO David Knox. He has also cast doubt on whether the US will supplant LNG supplies from PNG or Australia, and says Russian LNG sales to China will meet only 6% of China’s needs by 2030.

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The world’s top 40 mining companies have seen profits by plunge by 72% in the last 12 months to A$20 billion, the lowest level in a decade, according to PwC‘s latest annual report. The companies include BHP Billiton, Fortescue Metals, Newcrest Mining and Rio Tinto.

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Oil Search expects production this year to increase by three million barrels of oil equivalent (mmboe) to between 17-20 million mmboe. It addes operating costs will fall from US$21-26 per barrel to US$18-22 per barrel.

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Indochine Mining has raised $A3.1 million to advance talks with potential partners to develop its ‘flagship high-grade Mt Kare gold project’.

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tipng_corruption_walkHundreds of residents and business houses took part in last Sunday’s walk against corruption in Port Moresby, Lihir and Lae, organised by Transparency International.

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A joint venture between the Autonomous Bougainville Government and Lae Biscuit Co founder, Sir Henry Chow, will see a ship, the MV Chebu, carrying up to 370 passengers between Buka, Rabaul, Kimbe and Lae. 
Another smaller ship will carry passengers and cargo to the West Coast and the Atolls.

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The Chief Trade Advisor to the Pacific Forum says they could be in a position to conclude the PACER PLUS trade deal with Australia and New Zealand by the end of next year.

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The president of Tonga’s Chamber of Commerce, Aloma Johansson  admits some disquiet over the number of retail outlets operated by Chinese in the capital, Nuku’alofa, but that the real friction is generated by conditions attached to China’s development funding.

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Gold Ridge mine site. Credit: St Barbara.

Gold Ridge mine site. Credit: St Barbara.

The Solomon Islands Government has agreed to allow St Barbara personnel to return to the Gold Ridge mine, to assess the damage from flooding in April and carry out site works.

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Journalism schools in the Pacific have been urged to improve business and finance courses, because reporters lack specific skills when they finish their degrees.