Papua New Guinea’s government is seeking K974 million from the Asian Development Bank, Australia to earn negligible royalties from its oil and gas assets, and Newcrest describes conditions as ‘tough’ in PNG. Your weekly digest of the latest business news.

The PNG government will be seeking a further US$300 million (K974 million) loan from the Asian Development Bank to support the budget, Treasury Minister Patrick Pruaitch has announced. Pruaitch said without restructuring and rebalancing the debt portfolio, the government’s ability to service its debt will deteriorate.

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Australia is likely to earn less than A$1 billion (K2.4 billion) from its oil and gas royalty scheme, the Petroleum Resource Rent Tax (PRRT), by 2020, according to Fairfax Media. Its analysis says Qatar, which will lose its crown as the world’s biggest LNG exporter to Australia in 2020, will receive A$26.6 billion (K63.8 billion) from its LNG sector in that year. Australian Taxation Office data shows the oil and gas industry had revenues of A$25 billion (K60 billion) last year. PNG’s first LNG project is expected to earn about K10 billion over the course of the project’s life for the National Government.

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Newcrest’s Peter Aitsi. Credit: PNG Chamber of Mines and Petroleum

Newcrest Country Manager Peter Aitsi has described conditions in PNG as ‘a bit tough at the moment,’ according to The National.  Aitsi reportedly said that operating in PNG requires a significant level of commitment and funding and ‘a level of resilience and understanding of the level of environment that we operate in, both culturally and politically.’ The chairman of Newcrest, Peter Hay, reportedly said Newcrest has invested more than K70 million in 14 projects since 2012 under the tax credit scheme.

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Prime Minister Peter O’Neill says work on extending the runway at the Madang airport and its terminal building will begin shortly and should be completed before the 2018 APEC meetings.

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Lae businesses are contributing to the cost of rehabilitating a key stretch of Milfordhaven Rd, at the start of the Highlands (Okuk) Highway. A shortage of government funds had resulted in planned works being deferred for at least two years. The road is the main access to the Lae Port for about 60 per cent of all imported and exported goods for PNG, according to Alan McLay, President of the Lae Chamber of Commerce and Industry, writing in the latest chamber newsletter.

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The ratings agency Moody’s says it will continue to rate Malaysian conglomerate Sime Darby, which owns of New Britain Palm Oil, as ‘negative’ until its debt is reduced by a further MYR 3.8 billion (K2.9 billion). ‘We expect that Sime Darby’s pro forma short-term debt/total debt ratio will improve to around 22 per cent from 28 per cent as of 30 June 2016, reducing refinancing risk,’ a Moody’s report says.

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Exploratory drilling on Woodlark Island. Credit: Kula Gold

Geopacific Resources will proceed with the second stage of its joint venture with Kula Gold in the Woodlark Island gold project, at a cost of K19 million.  Geopacific is aiming to achieve a target of 1.2 million ounces in the next two years. A statement by Kula said Geopacific is entitled to 5 per cent equity, which will be delivered in the form of shares in Kula’s PNG subsidiary, Woodlark Mining.

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And finally, leaked UK government papers suggest that leaving the EU and switching to World Trade Organisation (WTO) rules would cause Britain’s GDP to fall by up to 9.5 per cent compared with staying in the EU. The country’s receipts would fall by between £38 billion (K148 billion) and £66 billion (K257 billion) per year after 15 years, because of the smaller size of the economy.