Power play delays 2012 budget tabling

Business, Normal

The National, Monday 28th November 2011

THE 2012 national budget will not be handed down tomorrow.
It had been postponed by a week because of political power play and under-currents in light of the impending Dec 9 Supreme Court decision on the legitimacy of Peter O’Neill’s election as prime minister.
Former prime minister Sir Michael Somare, supported by his younger charges, was quietly consulting political parties of his former government to prepare themselves to get back the government in case the Supreme Court ruled in their favour.
“We are confident of a victory through the Supreme Court,” one insider said yesterday and “therefore, we are preparing ourselves to take back government.”
He could not give details but indicated there were meetings and consultations going among MPs on both sides of Parliament, resulting in the government adjourning Parliament to Dec 6 bypassing tomorrow’s planned presentation of the K10 billion money plan.
This was the second time for the budget to be deferred after it was delayed by a week from Nov 22, citing printing problems as the reason.
Among one of the major components of the national budget is a proposed appropriation of K900 million to meet the shortfall of the state share of costs the PNG LNG project.
Minister for Public Enterprises Sir Mekere Morauta said last week that the National Economic Council had approved a submission to raise the money in the domestic market.
“The shortfall has arisen because of decisions by the previous government and previous IPBC management when they borrowed A$1.68 billion for our share,” he said.
“The first was to borrow in Australian dollars when the LNG project equity required payment in US dollars, and the second was the bulk conversion of the Australian dollars into US dollars.
“If we do not raise the extra money, we risk having to sell some of our 19.4% share of the project at less than market value, and suffer lower revenue streams when the project begins producing gas.
“It is essential for PNG to meet its financial commitments to the project. It is an opportunity of a lifetime, and we need to grasp it with both hands.
“If we, as a nation, are to reap the full benefits, then we must make sure we are able to pay for the state’s full 16.6% direct interest and the 2.8% direct interest being bought on behalf of landowners.
“That is what the K900 million will be used for, plus some potential contingencies such as exchange rate movements.”
The K900 million would be raised relatively quickly on the domestic market, starting next month.
Studies have shown that there was excess liquidity in the economy and that potential investors are available.
Despite knowing of the shortfall for a number of years, former IPBC management did nothing about it.
The extra money was being raised now in readiness for project cash calls early next year.
The 2012 Appropriation Act of Parliament (2012 Budget) will authorise the raising of the K900 million.