Warning over oil, gas prices

Business, Normal

The National, Thursday June 11th, 2015

 THE PNG Government revenues are going to be billions of kina lower given drop in global energy and oil prices, a research fellow says.

Matthew Dornan, a research fellow with the Development Policy Centre at the Australia National University, said this would create a major budgetary crisis for the Government.

He said a certain commercial decision made by the Government had inflamed the crisis. 

“… a risky strategy and actually it had backfired because the price of LNG along with price of oil has plummeted,” Dornan said.   

However, he praised the O’Neill Government for the priority given to infrastructure development and urged  more spending on road maintenance. A lot of my work has been on infrastructure development. I’m particularly interested in road maintenance in PNG. I saw that O’Neill’s budget for infrastructure and road development was very positive last year and 2013. 

“So it (government) ramped up spending on road maintenance which is exactly what is needed in PNG. 

“Road maintenance is being underfunded since independence, and that’s why the road system is how they are,” Dornan said. 

“This year it seems that there is a 44 per cent decline in road maintenance spending and going forward maybe even less. 

“At the same time, the Government is investing in new road development in Lae and Port Moresby, yes that is important but maintenance should take priority because it’s cheaper to maintain a road than to build a new one.” 

Dornan commended the Government for setting up the Sovereign Wealth Fund. 

He said revenue from resource projects such as PNG LNG should be set aside for the future.