Abel: Production levy improving cash flow

DEPUTY Prime Minister and Treasurer Charles Abel says the Papua Liquefied Natural Gas (LNG) project has delivered a series of substantive improvement over the first gas agreement.
He said last Friday that the new production levy ensured there was a more and earlier cash flow to the state.
Abel said the improved formula to calculate levies and royalties, and the improved tax treatment for royalties’ meant there was more and less risky cash flows to the state.
He said the improvements in levies, tax and royalties has placed the state’s share of the free cash flow from the project at over 50 per cent.
The project includes commercially competitive financing for the state’s buy-in which reduces its financial exposure and risk.
“There is a domestic obligation that requires the project to provide up to five per cent of the gas produced for local use at a fair fixed price, which will greatly support energy generation needs,” he said.
“The improved and simpler additional profits tax means that if the project earns more than expected then the state earns a greater share of the extra money.
“Landowners will have the same option to purchase into the state’s equity share in Papua LNG as they did under the PNG LNG arrangements.
Meanwhile, in recognition of the country’s progress in resource management and commitment to transparency, Abel was nominated in March to represent the South East Asia region on the international board of the extractive and industries transparency initiative (EITI) for 2019 to 2022.