COVID-19, Porgera and politics may have monopolised the attention of the media, but 2020 brought many other challenges, unexpected changes and triumphs for business. Here’s how Business Advantage PNG reported on this extraordinary year.

Prime Minister Marape and Pandemic Controller David Manning announce Port Moresby’s second ‘lockdown’. Credit: Prime Minister Office NEC via Facebook

The Government announced in January a new round log export tax levy set at 59 per cent (an increase of 32.5 per cent) and, immediately, the Forestry Industry Associations raised concerns.

Minister for Petroleum Kerenga Kua announced 31 January as the deadline for reaching a satisfactory negotiation between the National Government and global oil and gas company ExxonMobil over the P’nyang project in Western Province.

The year didn’t start off on the right foot for the Wafi-Golpu project. The joint venture between Newcrest Mining and Harmony Gold said goodbye to 37 employees because the discussions between the State and Wafi-Golpu’s representatives to progress the project went stagnant.

The government introduced a single-use plastic bag ban, which caused confusion for local businesses. The deadline was 31 January but it was extended to 16 March.

On 12 January, China shared the genetic sequence of COVID-19 and the first confirmed case of COVID outside China was recorded in Thailand.

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Prime Minister James Marape announced in February a halt to negotiations between ExxonMobil and the State over P’nyang. The Prime Minister said that although the terms proposed to ExxonMobil were fair ‘our proposals were rejected as these companies tried to extract even more profit for themselves.’ A statement from ExxonMobil expressed disappointment at not being able to reach an agreement.

The Prime Minister also announced that the Papua LNG project would continue regardless of the outcome negotiations for P’nyang.

And in some much needed news for the Wafi-Golpu project, the National Court in Lae dismissed the legal battle between the National Government and the Governor of Morobe over its Memorandum of Understanding, which in turned allowed discussions between all parties to recommence.

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In March, as COVID-19 sent most of Europe into lockdown, PNG announced a ban on visitors from Italy, Iran, South Korea, Japan and mainland China to help to stop the spread of the virus. PNG also put in place a 60-day ban on official overseas travel by public officials and cruise ships coming to PNG.

But despite attempts to guarantee PNG stayed COVID free, the first confirmed case of coronavirus was detected on 20 March. The country was shut down for 14 days and a state of emergency declared.

After a joint supervisory board meeting between PNG and Bougainville, PNG confirmed that the State’s 36.4 per cent share in Bougainville Copper Ltd would be transferred to Bougainville Mining, controlled by the Autonomous Bougainville Government and landowners.

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In April, measures to stop the spread of the African swine fever in the Highlands were introduced.

The COVID-19 international crisis and the lockdown put pressure on PNG’s Treasurer, Ian Ling-Stuckey, who said PNG ‘has not had an economic crisis of such complexity or magnitude since World War 2.’ In response to the crisis, there was a stimulus package that drew on ‘friendly foreign support’.

East New Britain province was locked for 21 days after a case of COVID-19 was confirmed.

On 27 April, the Government announced that it would not renew the existing Porgera’s Special Mining Lease. Porgera monopolised the headlines and the case headed for the National Court of Justice after Barrick (Niugini) Limited applied for legal proceedings. The Waigani Court ordered to the National Government and Barrick Niugini to work together ‘to ensure that the environment, the integrity of the mine and its land and the rights and interests of the landowners are not compromised.’

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In May, Treasury launched the COVID-19 bond to raise over K1 billion to help protect PNG against the worse economic effects of the coronavirus.

Business Advantage PNG held the first of its ongoing series of online business briefings on 21 May. KPMG PNG’s Director Advisory Services Wayne Osterberg and Mahesh Patel, Founder and CEO of CPL Group, discussed the challenge of managing business during the COVID-19 crisis.

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Prime Minister James Marape [right] celebrates the launch of the Coral Sea Cable Project with Australian High Commissioner Jon Philp. Credit: RNZ

The Coral Sea Cable was officially launched in June in Port Moresby.

Prime Minister Marape said that there would be changes to the Oil and Gas Act, the new Oil and Gas (Amendment) Bill 2020 to help guarantee a greater ‘share of revenue’ in future resources projects.

PNG ended the state of emergency on 16 June saying it was time to return to a new normal.

To support a rise in ecommerce, PNG committed to the introduction of the Electronic Transaction Act.

And as the government seemed to start looking for a new operator for the Porgera mine, Barrick started laying off mine workers.

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In July, the World Bank said it expected Papua New Guinea’s real GDP growth to decline by about four percentage points for 2020. The International Monetary Fund forecast that Papua New Guinea’s government debt was set to rise to over 40 per cent of GDP due of the COVID-19 crisis.

Prime Minister Marape and Barrick Gold offered two competing visions for the reopening of the Porgera gold mine, with the dispute being taken to the courts and the International Centre for Settlement of Investment Disputes.

Port Moresby was placed in ‘lockdown’ for two weeks in a bid to stop community transmission after an increase in the number of daily infections.

Oil Search announced structural changes and shrank its employee base.

Prime Minister Marape launched the Government’s Connect PNG, a plan for national transport infrastructure.

Connect #PNG project seeks to distil the 20-year National Road Network Strategy into a series of five-year projects that will result in a more connected island nation.

The ambitious project would mean that you will be able to drive between #Lae and #PortMoresby.#ConnectPNG

— Melanesian Spearhead Group of Economies (@MEconomies) October 1, 2020

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OTML has said that it will reopen operations in mid-September. Credit: OTML/Linkedin

In August, Ok Tedi Mining Ltd (OTML) announced the temporary closure of PNG’s largest mine, in Western Province, when seven cases were reported at its copper mine on one day. Newcrest Mining also reported a first case of COVID-19 at its Lihir Island gold mine in New Ireland Province, although the mine’s operations were not affected.

The PNG government granted a 20-year mining lease to Mayur Resources’ US$350 million (K1.125 billion) Central Cement and Lime Project in Papua New Guinea’s Central Province. The government also moved to effectively take over the Porgera gold mine in Enga Province by issuing a Special Mining Lease to state-owned mining company, Kumul Minerals Holdings.

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In September, Prime Minister, James Marape insisted that the country’s proposed LNG projects, Papua LNG and P’nyang, will be dealt with as separate projects as part of his government’s wide-ranging changes to negotiating resources projects . The government also proposed moving to production sharing agreements with future resource projects.

With the Mid-year Economic and Fiscal Outlook predicting government debt would rise to 55 per cent of GDP, the government announced a supplementary budget to address numerous fiscal challenges. There were also moves by the central bank to print money to fund budget shortfalls.

Two of the region’s largest infrastructure investment funds – the Asian Development Bank and the new Australian Infrastructure Finance Facility for the Pacific – announced major support for road and electricity projects.

A government statement was released saying that an in-principle agreement had been reached ‘to move forward’ on Twinza’s Pasca A offshore gas condensate field – PNG’s first offshore gas project – although Twinza indicated that there was still some negotiating to be done.

September also saw the launch of a new consumer lifestyle magazine in PNG, PNG Now.

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In October, Prime Minister announced a major cabinet reshuffle. A World Bank report predicted that for 2021 PNG’s GDP is likely to rebound by 3.2 per cent, although it also provided a ‘low case’ of 0.6 per cent. In the September Monetary Policy statement, the Governor of the Bank of Papua New Guinea, Loi Bakani, forecast GDP to decline by four per cent in 2020 but rebound by over two per cent in 2021.

Prime Minister James Marape and Barricks Mark Bristow. Credit: Porgera Joint Venture

In a surprise development, the PNG Government and developer Barrick Niugini made a joint statement that BNL [Barrick Niugini Limited] would retain operatorship of the mine, which would be opened ‘sooner rather than later.’ In a related shock, Peter Graham, the Chairman of Kumul Minerals Holdings, the recipient of a new Special Mining Lease for the mine, resigned.

The first half of the Papua New Guinea Government’s promised K200 million funding for small and medium-sized enterprises was handed over to Bank South Pacific, to be used for subsidised business loans.

The Business Council of PNG estimated that 62 per cent of businesses are expecting to pay less tax, which would have a ‘big impact’ on government revenue. The BCPNG said the government’s stimulus package has been seen as ‘disappointing’ with their research showing only one per cent had benefited, 68 per cent not benefiting in any way, and 31 per cent saying they were not aware of any impact.

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In November, Horizon Oil announced that it was pulling out of PNG and selling its assets to its co-venturer, Arran Energy.

In Parliament, MPs and up to 12 Ministers, including Deputy Prime Minister Sam Basil, moved to the Opposition benches. The move, which was followed by a successful vote to adjourn Parliament until 1 December, placed the government led by Prime Minister James Marape in jeopardy.

The adjournment, however, was ruled illegal by Speaker Job Pomat and Parliament sat briefly and unexpectedly to pass the 2021 National Budget legislation. The Treasurer Ian Ling-Stuckey described the economic context for Papua New Guinea’s 2021 National Budget as ‘the most challenging in the nation’s history’.

The Business Council of Papua New Guinea said tourism, manufacturing, retail and agriculture should be the main targets for further government support.

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In December, Kina Bank consolidated its position as PNG’s second largest bank by reaching an agreement to acquire the assets of Westpac in PNG and Fiji. The deal will increase Kina’s PNG customer base from 165,000 to 523,255.

A high-level delegation from France’s Total went to PNG to discuss the Papua LNG project. Prime Minister Marape said that representatives from ExxonMobil and Oil Search were to join the discussions.