Hargy Oil slams bad roads

Business, Normal

The National, Thursday July 18th, 2013


THE major factors for the survival and growth drawback of the oil palm industry in Papua New are roads and port facilities.  

Hargy Oil Palms Ltd general ganager Graham King said this in West New Britain yesterday.

“Good roads and ports would reduce our operating costs and improve profitability,” he said.

King said the smallholder oil palm roads in Bialla alone required an investment of K20 million.  

An additional K40 million would be needed to repair smallholder oil palm roads in Hoskins and Popondetta, he said.

This would enable the 3,633 smallholder farmers in Bialla to sell their oil palm fruit every fortnight year-round, he said.  

“Currently, many growers are unable to harvest because of the poor feeder roads.”

King said the Oil Palm Industry Corp had submitted a Public Investment Programme (PIP) proposal for funding next year, adding that government support for this project was needed to ensure small holders and Hargy Oil Palms could continue to grow and prosper.

He noted a recent report in The National newspaper that said the New Britain Highway was connected to East New Britain.

But King said the New Britain highway to Bialla had been neglected for the past 20 years.

He also said a temporary log bridge at the Ivule River between Kimbe and Bialla is being washed away every year during floods, thus affecting local business.

King said the bridge was damaged in February this year and has yet to be repaired, adding that all vehicles travelling between Kimbe and Bialla had to go through a wet crossing.

King said there was a great need for the roads to be repaired immediately to help oil palm growers in the province.

“Hargy Oil Palms is doing it tough in the current business environment,” he said.

King said with the appreciation of kina being expected next year when LNG project started, Hargy’s costs and profitability would be affected.

“The appreciation of kina does not impact our export volumes but it does significantly impact our costs and profitability,” he said.

King said that since Hargy exports in US dollars, when converted to PNG kina, the company would receive less for its exports.

He added that over the past five years, the company’s costs had increased by 30% in Kina terms, which results to 78% in US dollars.

King said last year when there was an appreciation of kina during the construction phase of the LNG project, Hargy exported 100,567 tonnes of palm oil.

“The company’s profit margin would have been at least 30% higher if the USD-kina exchange rate had been US$0.40 instead of US$0.49.”

He said the company expansions would be very limited if the exchange rate went back to US$0.49 or higher.