National interest worries Bakani

The National Business

STATE negotiating teams (SNTs) involved in major projects have not fully pursued the national interest for all project development agreements (PDA) over the years, says the Bank of PNG.
According to BPNG Monetary Policy Statement approved by Governor Loi Bakani, the SNTs with the support of technical expertise should effectively negotiate for national interest with the developers after wide public consultation and input.
“The existing legislations and policies regarding development of the extractive industry do not clearly provide for national interest that is anchored in the national goals and directive principles under Section 25 of the national Constitution, to guide the Government in negotiating better terms of the project development agreements ,” he said.
“With the proposed development of the Papua LNG and others in the future, the Government is obliged to negotiate mutually-beneficial tax concessions and other benefits.”
The bank encouraged the Government to improve its capacity and governance framework, and financial policies as per the medium-term revenue strategy (2018 – 2022).
This includes:

  • Introducing capital gains tax on real property, including mining and petroleum licences;
  • reforming the current extractive industries’ fiscal regime;
  • reviewing tax initiatives;
  • domestic market obligation to secure gas for domestic use; and
  • Third-party access to allow development of other resources

Bakani said BPNG had serious concerns about the broad exemptions and concessions given
to the PNG LNG project, pertaining to taxes, exchange control
and foreign currency provisions
as well as the confidentiality clause.
“These provisions under the PNG LNG gas agreement rendered the Bank of PNG ineffective in the enforcement of certain provisions of the exchange control regulation,” he said.
“Consequently, the Papua New Guinea economy has missed out on foreign exchange inflows, tax inflows, tax receipts and other matters of national interest.
“The Government must not repeat this for the Papua LNG project and other future projects.”