In brief: PNGSDP divests assets, a new trade treaty with Australia and Bougainville to export copra oil

PNGSDP begins divesting assets, a new trade treaty with Australia and Bougainville prepares to export copra oil. Your weekly digest of the week’s business news.

World 02The chairman of PNG Sustainable Development Program (PNGSDP), Sir Mekere Morauta, has handed over millions of dollars worth of the company’s assets to mine-affected communities and to the government of Western Province. The mine area communities take control of almost A$6 million (K13 million) worth of housing in the Star Mountains town of Tabubil. PNGSDP’s 25% share in the Ok Tedi Development Foundation goes to more than 100,000 people living in 156 villages. The PNGSDP also gifted its 100% equity in utility Western Power to the Fly River Provincial Government so a new operation can be developed.

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Meanwhile, Sir Mekere says he has offered the PNG government a compromise over the Ok Tedi ownership dispute, which would protect the programme’s Long Term Fund. The PNG government has until 17 February to submit a response to papers filed in the Singapore Supreme Court last week by PNGSDP.

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PNG’s envoy to Australia, Charles Lepani, says he hopes a new trade treaty between the two countries will shift the balance of trade, currently in Australia’s favour. Lepani said the current trade flow was K12.9 billion (A$5 billion), of which K7.74 billion (A$3bn) goes to Australia and K5.16 billion to PNG.

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The PNG Government has reportedly decided to raise A$1.68 billion (K 3.84 billion) to pay off a bond it issued to Abu Dhabi in 2009 instead of giving up a strategic stake in oil and gas producer Oil Search, which owns a 29 percent stake in the $19 billion PNG LNG project. The five-year bond, issued to Abu Dhabi’s International Petroleum Investment Co (IPIC) at the height of the global financial crisis, was exchangeable for PNG’s stake in Oil Search in March 2014 at a strike price of A$8.55 a share. Oil Search shares last traded at A$8.09.

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Bougainville’s Prestine 101 Copra Mill is preparing to export its first shipment of crude oil to Asia and Europe. Consultant Joseph Watawi says 200 tonnes of crude oil has been produced for export. The first shipment of stockfeed from copra was exported to New Zealand last month.

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The Australia Papua New Guinea Business Council (APNGBC) says the requirement that visitors to PNG will need a visa before arrival will be detrimental to tourism. PNG branch president Phil Franklin has urged the PNG government to invest and develop its own online visa system and to also move to using electronic, biometric passports for its citizens.

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The commission of inquiry into Special Agricultural and Business Leases (or SABLs) in Papua New Guinea has recommended that an Australian-led company involved in obtaining leases over more than two million hectares of traditional land be investigated for criminal misconduct and conspiracy. In a report just made public, PNG-registered Queensland-led Independent Timbers and Stevedoring allegedly manipulated the lease approval process to obtain control over four SABLs.

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Alotau in Milne Bay Province is currently experiencing a mini-construction boom which is providing hundreds of thousands of kina in business earnings for local contractors.  The upsurge in the building and construction sector has been triggered by Governor Titus Philemon’s K20 million in Provincial Services Improvement Program funding for 2013 and  Planning and Monitoring Minister Charles Abel’s K10 million in District Services Improvement Program allocation.

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Woodside Petroleum executives have reportedly been talking to InterOil’s management team, which is headed by former Woodside chief, Michael Hession, about joining in the development of the Elk and Antelope gas fields. InterOil has agreed to sell a majority of the field to Total, but analysts believe Total would like sell down a portion of its shareholding. Oil Search has also expressed an interest in buying a share from Total.

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A double taxation agreement with New Zealand is now in force, bringing to 18 the number of such agreements that PNG has with other countries.

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Outgoing National Fisheries Authority (NFA) chief, Sylvester Pokajam, has warned the PNG government that the European Union is ‘looking for mistakes and one is political interference’. At his farewell ceremony, Pokajam urged NFA executives to keep the organisation away from political interference.

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The owner of the Fiji Fish Marketing Group, Graham Southwick, says 60% of the fishing boats now operating in the south-west Pacific need to stop for five years to allow the tuna population to regenerate. Southwick says the catch rate has fallen by 90% because of gross overfishing by government-subsidised fishing fleets.

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Lae business houses that have lost their assets to fires recently say the causes of the fires remain a mystery. Eight properties have been burnt in the last month, including those belonging to Datec, Pelgens Wholesale, Lae Industrial Parts and G4S Secure Solutions, Niugini Wholesale Drugs, and the entire Lae Brian Bell home centre.

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Trade, Commerce and Industry Richard Maru has set up an investigation into the operations of the South Sea Tuna Cannery project in Wewak, after allegations the Taiwanese cannery has not been paying dividends to the East Sepik Provincial Government since it came into operation in 2002.

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A small business backing youths from a notorious area in Port Moresby has been locked out of the shop, after the property manager alleged the owners had not paid their rent.  The owners of the Ricochet Café, which gives work to troubled youths, say they owe five days rent, and not the month’s rent demanded by the property manager.

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The second annual Leaders’ Summit has been held in Port Moresby this week. The summit brings together heads of government agencies to identify priorities and projects, and how they can be delivered during the next three to five years.

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Samoa’s largest employer, Yazaki Samoa, is facing an uncertain future, after Toyota this week announced it will no longer make cars in Australia after 2017. Yazaki Samoa supplies car parts to Toyota. It has already cut back on its working hours by one day a week in February. The company employs 800 in Apia.

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The South Pacific Tourism Organisation will hold its first South Pacific Tourism Exchange  in Auckland, New Zealand in May. More than 50 international buyers and 16 Pacific Island countries with their respective private sector operators are expected to attend.

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