Economy declining due to absence of major activities: Report

KINA Securities Ltd expects this year to be subdued for the country’s economy as key indicators point towards lower levels of activity in the absence of a major economic boost.
According to its 2019 annual report, project developers and the government were unable to reach an agreement on commercial terms and negotiations for the P’nyang gas project which saw a decline in investor confidence.
The Government had set a Jan 31 negotiating deadline for the development of the P’nyang gas project.
It was to be the third largest liquefied natural gas (LNG) project for the country, taking advantage of Papua New Guinea’s rich abundance of gas reserves and low-cost structures.
“Unfortunately the project developers and the government were unable to reach an agreement on commercial terms and negotiations ended unsuccessfully.
“This is an important reason for our economic view of the immediate future.
“This large scale LNG project would have seen multi-billion (US dollar) investment into PNG over a number of years and a ley driver of confidence which has fallen since the negotiations concluded unsuccessfully.
“There is an element of uncertainty as to whether the Papua LNG project will now go ahead.
“The best case alternative would be a redesign of what were to be shared facilities to support the P’nyang and Papua LNG, to allow only the Papua LNG to proceed.
“This will delay the development of Papua LNG however, the parties are reengaging to see if an acceptable solution can be found.”
The report noted that a reassuring fact was that the Government in the 2020 National Budget had not allowed for revenues from these gas projects in its revenue track.