Country must migrate away from fiscal regime, says Mori

IT is time the country migrates away from the fiscal regime of how it benefits from the exportation of resources and gets into a production sharing agreement regime to maximise the benefits.
Commerce and Industry Minister Wera Mori told Parliament during grievance debate that the way forward for Papua New Guinea was to migrate out of the current fiscal regime governing how benefits from the export of the resources were captured.
“The way forward is for us in production sharing,” he said. “We don’t need to worry about how much and what we are going to put in, in terms of infrastructure because when we come into production sharing.
“We can forgo some of the benefits, and yet at the end, we get more from what we have been bargaining for under the current arrangements.
“My department is writing to mining companies, after going through a long consultation process and putting them on notice that we have to go into a production sharing on a 40-60 basis. They can go ahead and do what they want to do with mining the gold out of the ground but at the end of the day, it must be at their expense and we retain 40 per cent of that.”
Mori said a example, was that currently the country’s mines were producing 60 tons of gold, when Wafi-Golpu come on line, potentially one of the world largest gold and copper mine, production would increase by 80-90 tons.
“If we go on the basis of 40 per cent, it would give us 36 tons a year, so what is 36 tons multiplied by US$50 million (K169mil) that is about US$18 billion (K60bil),” he said.
“And what is US$18 billion when you converted to PNG Kina, and that is about K60 billion. That is on gold alone.”
Mori said he had learned that Papua New Guinea’s tax revenue from gold was low for the last two years which prompted him to push for a more equitable arrangement
“This kind of arrangement for the luluai and tultul must be done away with. Let’s go into production sharing, and MPs must support me when we bring the Bill to the floor,” he said.
Mori said the country’s Forex must be laid on a very storing solid goal bullion, these are tangible assets that is readily convertible to the US dollar on a daily basis.
“The time has come to bite the bullet, we may make decision which may not go down well with foreign investors but they must understand we need to start somewhere.”