The downturn in the Papua New Guinea economy has presented challenges for Avenell Engineering Systems (AES). But Managing Director Dominic Avenell tells Business Advantage PNG that the company has adapted well. AES is, he says, strengthening its capabilities and preparing for the next upturn.

The AES-owned Ravuvu business park. Source: Business Advantage PNG

Avenell says the business, which is described as ‘diversified and vertically integrated’, is broken into two main sections.

‘On the construction side of the business, it has been steady,’ he says. We continue to get the small to medium (jobs).

Ravuvu

‘On the supply base (the Ravuvu industrial park, port and multi-residential estate), things are different. It is growing; doing well. Our tenants are mainly the oil and gas service providers. The work that they are doing is steady; they seem to be fairly busy.’

Avenell says activity at the Ravuvu port is increasing. ‘It has got more business. That is probably a result of PNG Ports moving across [to neighbouring Motukea Island]. We have a really good relationship with PNG Ports and I think that is because we don’t compete. They are doing the liner stuff, the big stuff.

‘I think there is still a bit of congestion and the bigger guys get preference, the bigger liner services, which is a fair call. So, the smaller coastal guys are looking at their options and we have been able to pick up a bit there.’

Avenell adds that AES is clearing more areas at Ravuvu for warehouses and ‘lay downs’.

The trifecta

Economic downturns are not new in PNG, but Avenell says the latest has been more widespread.

‘You have got the mineral mining sector, oil and gas and the agriculture: they are the three drivers. They have all taken a hit at once.

‘You have had a drought, the El Niño, which whacked the agriculture guys. The mining guys aren’t setting any records, and oil prices have dipped and everyone is a little bit shy to invest. I don’t think that has ever happened as a trifecta. It has always been two backing another up.

One focus will be on improving the civil side of the business.

‘People need to tighten their belt. Some are doing it tougher than others but it will come good. If the second LNG project kicks in, that will change everything. Everyone knows that.’

Strategic positioning

Avenell says the strategy is to prepare the company for the next economic upturn. One focus will be on improving the civil side of the business by strengthening the company’s capabilities.

‘It is a natural progression.’

‘I think that we have matured as a company, so going into the second LNG project we don’t have to be the sub-contractor, we can be the managing contractor. I look back at the scope of works we are doing and we could certainly gear up at that level.

‘I think it is a natural progression. Obviously, the first LNG project boosted our company and our capabilities. Over the years we have got some really good, clever people.’