30 AUGUST 2019

MEDIA STATEMENT

Opposition Leader Patrick Pruaitch has appealed to Prime Minister James Marape to keep his promise to honour agreements signed by previous governments and to give the green light for the US$13 billion Papua LNG project.

“Abrogation of the Papua LNG agreement signed in April will jeopardise prospects for PNG’s economic recovery and perpetuate the O’Neill Government legacy of falling wages and employment levels,” Mr Pruaitch said.

Petroleum Minister Kerenga Kua and Prime Minister James Marape have been critical of the Papua LNG deal signed by the O’Neill Government, but neither has publicly spelled out exactly what they want to change, Mr Pruaitch said.

Mr Pruaitch said: “It was officially announced, prior to the secret talks in Singapore, that Cabinet had approved the previously signed Papua gas agreement and that some minor issues could be sorted out in about a fortnight. That was four weeks ago.

“The question has to be raised whether the Prime Minister now intends to renege on his earlier promise that agreements signed by former governments would be honoured and whether, despite prior Cabinet approval, this government will not honour the Papua LNG Gas Agreement.

“The end result of these actions will be a perpetuation of the economic malaise facing this country. Thousands more workers will lose their jobs and falling wages will be a reality for many thousands of workers, as it has in recent years.”

Mr Pruaitch said it was clear that the Papua LNG agreement is an improvement on the landmark PNG LNG Project agreement:

  • Through the addition of a 2% production levy that will flow to the National Government as soon as exports commence; 
  • Through a more satisfactory calculation of the royalty rate; and 
  • The Domestic Market Obligation, which will see 5% of gas from Elk-Antelope allocated for domestic use.
  • At this stage it appears that the Additional Profits Tax requirement for the PNG LNG Project is superior to the APT terms for Papua LNG, but this will need to be clarified. It is understood the Prime Minister and Petroleum Minister have not raised this issue in the current impasse.

The Opposition Leader said the PNG LNG Project involved a very good agreement by the former Somare Government and he was confident Papua LNG would be just as beneficial, especially since landowner issues and royalty payments will be resolved before commencement of production.

Mr Pruaitch warned that cancellation of the Papua LNG agreement could have very damaging consequences for the PNG economy and the government, which is struggling with cash flow issues.

He said: “We have agreed that one of our prominent Members of Parliament will work as Treasurer in the Marape Government. I appeal today to Prime Minister Marape to fully support the Treasurer, Hon. Ian Ling-Stuckey, in his efforts to restore PNG’s growth potential. Derailing Papua LNG will make this task extremely difficult, if not impossible.

“Early works connected with Papua LNG and the Wafi-Golpu copper-gold project in Morobe were the main reasons for optimism that the 0.6% economic contraction in 2018 could be turned around to growth in excess of 4% this year.

“The actions could act as a signal to major international investors to avoid this country. We are treading a very dangerous path.”

Mr Pruaitch said he would also like to mention that Papua LNG would spark unprecedented growth and opportunities in Gulf Province, where people have been suffering for decades from lack of proper infrastructure and public services. “Cancellation of the Papua LNG project would almost certainly cause economic growth to fall below the population growth rate and contribute to declining living standards. This is not an outcome any Papua New Guinean would like to see at this stage on the eve of the nation’s 44th anniversary of independence.”