Change regime for more benefits

THE PNG LNG Project and Papua LNG Project are major economic impact projects in Papua New Guinea.
The major issue with these two LNG projects is that the Government negotiators and politicians gave away significant tax concessions to the project developers at the expense of national interest, national goals and directive principles of the constitution.
The tax concessions given to the two projects have significantly reduced tax revenues for public spending and foreign exchange inflows to finance our import of goods and services from abroad for domestic production, distribution, sale, and consumption.
As a result, the Government is borrowing money to fund the national budget and support the demand for foreign exchange, which has resulted in a significant explosion in our national debt which is continuing at present.
The project partners led by ExxonMobil and Total want to integrate the PNG LNG Project, Papua LNG Project, P’nyang Project and future projects.
They claim that the project integration will reduce capital and operating costs, and improve the profitability of the projects.
However, the real reason is that they want to integrate all the three projects, deplete the gas resources at a faster rate and delay any tax payments due to the Government because of further increases in the project development costs.
Essentially, PNG will not be getting any tax revenues and foreign exchange from these projects for a significant period of time in the future.
The partners also claim that the Government has set uneconomical commercial terms for the P’nyang Project.
This claim is an illusion mainly because the project partners have overestimated the project development costs way above the industry standards and practices.
The real motivation for the cost overestimation is to force the Government to give the project significant tax concessions, the same tactic that ExxonMobil and Total applied to the PNG LNG Project and Papua LNG project.
Politicians and State negotiators should suspend the development of any new gas and mineral projects in PNG.
Change the current concession project regime to production sharing regime which will give the Government and landowners more control over the project development and resource ownership rights.
The shift to production sharing regime will enable, the Government, and landowners to derive maximum social and economic benefits, including tax revenues and foreign exchange, for the development of our country.
These benefits will also enable the Government to repay its massive debt, which will otherwise not happen without the change to the production sharing regime.

Concern citizen,
Pom