"Continuous Improvement - A must to achieve a world class super for PNG workers,” says Nambawan Super

When the Mekere Government introduced the Superannuation General Provisions Act (the Act) in 2000, the umbrella legislation covering the operations of all super funds in Papua New Guinea, there was certainly no expectation that this law would be set in stone forever. 

Rather, as with all laws, the Government’s expectation would have been that as new industry, economic and market developments emerged over time, the Act would be reviewed and amended. Continuous improvement would be required to enhance the superannuation system and allow it to continue delivering appropriate benefits to members. 

The intention behind the original Act was to entrench prudent and responsible practices within the superannuation industry and other financial institutions, so as to protect the rights and entitlements of PNG workers. To this end a number of major reforms were introduced. 

Old Issues, New Solutions

By ROWAN CALLICK

As Papua New Guinea enter its 35th year as an independent country, its options—the risks and the opportunities—are looking surprisingly familiar.

It has, of course, as its leader, the most durable, cleverest politician whom the Pacific region has ever produced, in Prime Minister Sir Michael Somare. He has been prime minister for 16 of PNG’s 35 years.

Still, the succession remains uncertain—both the cause of instability within his own ranks and the wider political terrain and a tool through which he subtly maintains power.

Just as so often in PNG’s past, the country is entering an upbeat period on the crucial economic front, with growth expected to reach eight percent this year, well ahead of the rest of the islands region—except Vanuatu—on the back of the launch of the costly construction of ExxonMobil’s A$16.5 billion liquefied natural gas project.

PNG LNG - the topic of dicussion for the Grade 12 written expression exam

My 18-year-old nephew Shannon is sitting for an exam at Gordons High school today. He is one of thousands of Grade 12 students sitting for the written expression exam nationwide. The examination involves writing a 350-500 word essay on the PNG LNG project.

Last Thursday evening I sat with him and went through some of the publicity material that PNG LNG project had put out as well as the "work book" given to students to prepare them for the exam. There were about 10 articles in the work book for students to use as references for discussing 4 main topics. One of the articles was mine from this blogsite "PNG LNG milestone - holistic growth? (Friday March 9 2010)

Nambawan Super takes a stand on PNG LNG

 Below is what the Managing Director of Nambawan Super, Mr Leon Buskens has said in his column - From the MD's Desk - in the July newsletter Toktok Supa

High expectation’s surrounding the LNG Project are bringing PNG plenty of positive forecasts.  Money from the gas could double our economy and over the next four years we will see hundreds of construction jobs created.  All potentially good.  But we also need to think about the potential challenges and risks to our society and economy this influx of money may also bring.

Nambawan Super takes its responsibility of looking after your financial futures very seriously, so we are being proactive.  We want to make sure our people are not seduced by the temptations of instant cash or battered by high inflation, but have access to ways to preserve wealth for their for their long-term benefit and grow it for our future generations.  So we commissioned research to help us understand the impact of the LNG Project better and what it will mean to the investments your Fund makes.

Australian Government to help safeguard LNG fund

A legislative framework will be designed to safeguard the proposed LNG Sovereign Welfare Funds from political manipulation and pilfering, the Government said yesterday (according to Post-Courier Business News).

The Australian government will play a major role in helping PNG design a legal regime that would govern management of the fund, a spokesman of the Department of State Entreprises said in response to a series of questions from the media.

PNG seeks Australia's help to manage LNG Revenue

Source - Industry News

THE Papua New Guinea and Australian governments met in Melbourne at the weekend to discuss the establishment of Sovereign Wealth Funds to help manage revenue flows from the PNG LNG liquefied natural gas project.

The ministerial delegation discussed possible Australian assistance for the creation of a transparent governance regime covering taxes and dividends received by the PNG government from the project.

Besides creating “a transparent, robust legislative framework”, the Australian government has also agreed to co-opt a team of international economists to carry out economic modeling on the impact of the PNG LNG project.

Nambawan Super Invests in 'Ethics Symposium'

Nambawan Super has donated K10, 000.00 towards the staging of the “Ethics Symposium” at the Divine Word University in Madang later this year.

The donation was made at a ceremony attended by 72 Business, Management & Accounting students at the Madang campus.

This will be the fourth year for the symposium to be staged and is the first time such a large donation has been made towards assisting with the event.

Nambawan Super Managing Director, Mr Leon Buskens expressed the need for young people such as graduates from Divine Word University to be mindful of ethical issues as they embrace the challenges that will be brought on by multi-million kina projects like the PNG LNG, Ramu Nickel and the Pacific Marine Industrial Zone (PMIZ).

Catholic Bishops concerned over LNG impacts

By Oseah Philemon - Post Courier

The Catholic Bishops Conference of PNG has expressed concern about the possible environmental impact and social problems emanating from the LNG project.

In a detailed statement issued from Lae, the bishops said not much was known by the general public about the environmental impact of the project on the lives of the people.

The bishops stated that the LNG infrastructure included several large processing facilities and more than 700 km of pipeline from the Highlands to the coast and then along the seabed to a site near Port Moresby.

"Environmental issues would seem to be potentially great in a project of such magnitude. Most likely, these will be portrayed as minimal by the developer ExxonMobil and co-developers; Oil Search Ltd, a Papua New Guinea company; Santos; Nippon Oil and the PNG Government".

Papua New Guineans ecstatic about PNG LNG

Marija Stojkovic - PNG Industry News TEARS of joy marked the financial close ceremony for the $US15 billion PNG LNG project in New York last week, with the project poised to transform the Papua New Guinean landscape. Thumbs up in PNG Speaking at a gala dinner in New York last Thursday, PNG Prime Minister Michael Somare said the PNG LNG project was “a history-making, nation-changing, life-transforming project”. He said the hope and optimism created by the 6.6 million tonne per annum LNG project would transform the landscape of PNG forever. Last month, project operator ExxonMobil said it and its partners would proceed with full execution of the project after completing all financing agreements with lenders, which included export credit agencies and commercial sources. Somare said the common resolve between all partners had produced valuable fiscal security for the project and made it possible for a mutual agreement on taxation arrangements. “Our Ministerial Economic Committee and state bureaucrats outlined a broad tax structure that ensured that over the medium to long term, any major upside in oil and gas prices would be equitably shared by project participants and the PNG government,” he said. The PNG government has estimated the tax proceeds from the project will start about four years after production begins and will average about 5-7 billion kina ($A2-2.8 billion) each year for the life of the project. Somare said that ExxonMobil had provided a significant amount of co-financing and had gone “the extra mile” to ensure the development proceeded. He went on to say that he was instructing ministers to also “go that extra mile” in the coming four years to make the project come together as smoothly as possible. “Any delay in the project schedule would result in cost blow-outs that would hurt overall achievements and goals,” the prime minister said. “Having negotiated such a large loan, we will only be able to service this loan once LNG exports commence.” PNG LNG is scheduled to start producing 6.6MMtpa of LNG from 2014 and is expected to deliver more than 9 trillion cubic feet of gas over its 30-year life. Partners in the project are operator ExxonMobil (33.2%), Oil Search (29%), IPBC (16.6%), Santos (13.5%), Nippon Oil (4.7%), MRDC (2.8%) and Petromin (0.2%).

PNG LNG Miilestone - Holistic Growth??

Yet another historic milestone in PNG’s development was reached early this week with the Financial Close announcement by ExxonMobil, Esso Highlands & the PNG Government. The PNG LNG Project is the largest project by far that ExxonMobil, the world’s biggest oil and gas company, has undertaken as project operator. It also involves the largest ever project loan raised worldwide for any oil or gas project. This is an event that certainly puts PNG on the world map.

Those of you who have followed this project will appreciate that with financial close we now have certainty that the co-venturers in this project will be spending the equivalent of the PNG annual budget every year between now and project start up in 2014. This translates to an average daily expenditure of US$10 million. Local expenditures will rise to a peak of US$35 million a day at the height of project construction.

ExxonMobil anticipates that about 5,000 Papua New Guineaneans will be employed during the construction phase. Recruitment of these individuals has already commenced. In addition new training facilities are being completed at the Port Moresby Technical College along with a new facility at June, near the Hides gas-field in Southern Highlands. Both these institutions will train about 1,000 people annually to Australian standards.

Holistic Growth

But has anyone done a study on holistic growth for the people and infrastructure of this country??

The lessons learnt from other countries such as Nauru, where one upon a time it had the highest per capita income in the world and now is no longer a force in the South Pacific, are important. Also consider the case with our own Bougainville.

PM Congratulates PNG LNG Project on reaching Financial Close

The Prime Minister Sir Michael Somare today congratulated Esso Highlands Limited for successfully concluding financial arrangements that enables the US$15 billion PNG LNG Project to proceed to “full execution”.

The conclusion of sales and purchase agreements with four Asian LNG customers and the completion of financing arrangements represent a major milestone in the government’s ongoing efforts to build a vibrant economy.

Sir Michael said: “My government needs to work in partnership with ExxonMobil and build public sector capacity and better service delivery so that tight project schedules can be met so that we may receive dividends and company taxes sooner in our efforts to meet our development aspirations.

“Government projections suggest that company tax proceeds from this project will average around K5 billion to K7 billion annually during the 30-year life of the project.

“Before we get to the stage when LNG exports will commence much work needs to be done in various parts of the country to successfully build and commission this vast project.”

BANK LENDING RATES EXPECTED TO DECLINE

By Sheila Lasibori - The National

The Indicator lending rate (ILR) set by commercial banks is bound to decrease as the Central Bank will keep the kina facility rate (KFR) at 7% this month.

With Bank of PNG's KFR at a low of 7%. the next immediate action is that the banks and licensed deposit-taking institutions will reduce their lending rates.

According to BPNG's recent statistics, when the KFR is low, the inflationary pressures continue to decline.

BPNG will ease its monetary policy similar to that of last month when the KFR was also at 7% after a reduction by 1% from 8%. KFR is a rate set by the Central Bank and is a measure of control of its monetary policy.

There is hope that the inflationary pressure might continue to decrease.

However, the construction phase of the ExxonMobil - led PNG liquefied natural gas project and other activities in the country might give rise to imported inflation.

PNG LNG AGREEMENT HAS BEEN SIGNED

Papua New Guinea has experienced nothing like it before. The excitement for the commencement of Papua New Guinea’s single largest project, the Liquefied Natural Gas (LNG) project, is infectious. From the mountains to the islands, from the east to the west, the buzz is deafening. There is certainly positive anticipation in the air albeit the ink on the project agreement has barely dried.

Thanks to the many landowners who one by one, like dominoes in a pack, signed up to allow the final agreement between the project developers Exxon Mobile (Esso Highlands) and the Government to take place and the license to be granted.

The plan to pipe gas from PNG's Highlands to Port Moresby for export to Asia is predicted to double the country's gross domestic product and create thousands of jobs. It is expected to deliver 6.6 million tonnes of gas a year bringing in huge amounts of revenue for the PNG Government and affected land owners.

LNG hedging on Australian aid for Governance, Transparency

From Industry News Newsletter

GOOD governance and transparency is at the core of Papua New Guinea’s discussions with Australia on aid for developing the PNG LNG project.

“We have held official and ministerial-level discussions on Australian assistance for development of a robust and transparent governance regime covering taxes and dividends from LNG received by the PNG government,” PNG Minister for Public Enterprises Arthur Somare said.

Somare, National Planning and Development Minister Paul Tiensten and Public Services Minister Peter O’Neill had met their Australian counterparts in Canberra last month for talks on the Australian government’s Export Finance Insurance Corporation providing loan finance for PNG LNG in the form of tied concessional loans to purchase Australian goods and services.

Australia had sought reassurances on the commercial risks of the PNG project and was seeking clarity on its potential to transform the PNG economy and the bilateral relations between the two nations.

Somare also noted the National Executive Council would consider establishing a sovereign wealth fund as a sustainable long-term vehicle for the 19.4% the PNG government held in the liquefied natural gas project through the Independent Public Business Corporation.

“With the help of Australian government experts, the PNG Parliament will be able to enact sovereign wealth fund legislation that will determine optimum use of LNG project dividends with an eye to maximising infrastructure spending through the development budget.”

Australian technical experts are also helping the PNG Ministry for National Planning and Development with economic modelling that will provide guidelines for the ideal use of government revenues from LNG, resource tax administration, implementation of a revenue stabilisation funds, creation of a sovereign wealth fund and other relevant areas.

Australia is also offering to support training and skills development to complement ExxonMobil’s plans for the Port Moresby Technical college by helping the college management administer the facilities.

Somare said major revenues from PNG LNG will begin to flow in 2015-16 and the current government wanted to make sure the government of that time would use the funds to improve infrastructure and service delivery through the nation.

“I believe this is the first time in our history that a PNG government has sought to have in place specific governance regimes to cover a major resource development.

“These measures will minimise corruption and ensure that the additional $US50 billion in taxes and dividends that will flow to the PNG government over a 20-year period will transform every aspect of life in PNG.”

Somare added that PNG was also holding discussions with the World Bank on the best ways to avoid the so-called “Dutch Disease” where a sharp upsurge in resource revenues can negatively impact on other segments of the economy.

Meanwhile, PNG’s National Superannuation Fund (Nasfund) said an independent and accountable sovereign wealth fund was essential to ensure part of the revenue from PNG LNG and other resource projects was preserved for future generations.

It said PNG remained largely unprepared for the proceeds of such enormous resource generated revenues pointing to a public sector that was unable to deliver basic services and infrastructure even with the 3-4 billion kina ($A1.2-1.6 billion) locked in a government trust account.

Nasfund said that by collecting part of the tax revenue stream from a project and investing it for future generations, a sovereign fund would, over time, reduce reliance on natural resources.