By GYNNIE KERO
The Papua LNG project is expected to deliver US$20 billion (about K66bil) in direct cash flow to the State, provincial government and landowners over a 25-year lifespan.
Deputy Prime Minister and Treasurer Charles Abel said this would be done through company tax, dividends, landowner royalties, provincial and local level government development levy for the State.
Abel described yesterday’s signing of the Papua LNG project Gas Agreement between the State and joint venture partners as another milestone for the country.
“It has a US$13 billion (K43bil) construction phase to deliver gas and oil through a conditioning plant, pipeline and two 2.75 million tonnes per annum trains, which will create 10,000 jobs over five years and boost local businesses and the economy,” he said.
“We have not had everything our way and made some compromises. But it represents a significant improvement on the PNG LNG project.
“Notably this agreement divides the net free cash flow 50/50 between PNG and the Total-led developers.”
Abel said the key terms of the agreement included:
- Company tax 30 per cent;
- Production levy 2 per cent (State);
- Royalty 2 per cent (landowners);
- Development levy 2 per cent (provincial governments and local level governments);
- Improved royalty and levy formula;
- Commercial carry financing for 75 per cent of State equity rights of 22.5 per cent;
- Additional profits tax;
- Minimum forex balance onshore of US$250 million (about K811);
- Domestic market gas obligation of 5 per cent at US$4.50 (about K14.60) fixed price.
Abel said compared to the first gas project, “this Agreement provides earlier, less risky flows to the State, reduces the States financing burden to buys its shares, and provides some gas for domestic use at a discounted and fixed price. There are strong provisions for third party access to infrastructure and national content.”
He said it would be “a massive boost to our economy in more ways than one”.