Moody’s lowers Papua New Guinea rating outlook, Australians banned from Bougainville, and PNG to commence free trade talks with China. Your weekly digest of the latest business news.

Moody’s rating agency has affirmed PNG’s B1 foreign currency and local currency issuer ratings and lowered its rating outlook to ‘negative’ from ‘stable’.

Moody’s says the move is based on fiscal deterioration, a weakened external payments position and increased external vulnerability. It notes ‘the government has not formulated a policy response that would realign expenditures to conform to the planned glide path to a balanced budget by 2017’.

Moody’s rationale for affirming the B1 rating is based on the success in getting the PNG LNG Project up and running, and the prospect of more such developments.

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Foreign Minister Rimbink Pato has banned Australians from travelling to Bougainville, and urged Australia to review its plan to establish a diplomatic mission there. Pato described Australia’s move as “outrageous” and “mischievous”.

But Australian Foreign Minister Julie Bishop said she discussed the plan during a visit in December 2014. She added Australia’s High Commissioner to PNG had formally advised the PNG Government of the plan.

Australian Trade and Investment Minister, Andrew Robb, told Business Aadvantage PNG the timing of the announcement ‘maybe, could have been different, but we had a Budget and we were announcing these things around the world’. He said the ‘real issue was a communication problem’.

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Prime Minister Peter O’Neill

Prime Minister Peter O’Neill has told the 31st Australia–Papua New Guinea Business Forum in Lae this week that talks on a free trade agreement with China will commence next week. He also announced Indonesia will grant visas-on-arrival to PNG citizens within three months and he is hopeful the issue of visas-on-arrival with Australia will be resolved by year’s end.

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The PM also announced Air Niugini has reached a code-share agreement with national airline, Garuda Indonesia, which he expects will boost trade, and that an Investment Forum will be held in London on 16 June, sponsored by the British government.

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The head of the trade division of the Department of Trade, Commerce and Industry, Max Rai, says he hopes a national trade office ‘to co-ordinate policy’ will come to fruition within 18 months. He says at the moment trade policy and work is carried out by various government departments ‘and we have rivalries’.

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Morobe Governor Kelly Naru told the forum a 500-hectare Export Processing Zone is being established in Lae, which will free up land for more factories and businesses. He is also about to launch an export promotion office.

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Australian oil and gas company Santos Ltd says it is working on a potential deal that would give it a stake in the P’nyang gas field in Papua New Guinea, which is expected to be the focus of any expansion of the PNG LNG project. Santos is one of the key stakeholders in the PNG LNG project.

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BHP Billiton’s President of Petroleum, Tim Cutt.

BHP Billiton’s Head of Petroleum, Tim Cutt, predicts oil prices could soon spike higher because of a lack of new discoveries. Cutt says that on average during the past two decades the industry had been finding less than half the 30 billion-plus barrels a year that it currently consumes, meaning prices could begin to climb.

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The Health Department has revived the National Food and Sanitation Council, which will monitor food safety in shops.

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Oil and gas explorer Larus Energy Ltd has updated shareholders, saying it has achieved positive results from a seismic survey recently completed at the PPL326 licence in Papua New Guinea.

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bemobile-Vodafone’s CEO Sundar Ramamurthy says the company will have rolled out another 60 3G sites by the end of May. In Lae, 19 sites are being rolled out this week.

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The national government has partially lifted a ban on chicken products from Australia. The ban no longer applies to lean chicken meat, known as mechanically deboned meat (MDM) and mechanically separated meat (MSM), ‘which have become a staple and important source of protein’ for consumers, according to PNG Manufacturers Council CEO, Chey Scovell.

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The security service industry is now worth K883 million, according to the Registrar of Security Industries Authority, Paul Kingston Isari. He said the growth was caused by the insufficient manpower in most law enforcing agencies and the high population of 7.3 million people whose security needs could not be fully met by the current service providers.

There are more than 24,000 security guards employed by 462 licensed security companies nationwide.

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The Antelope 3 gas field. Courtesy: InterOil

InterOil has reported a first quarter loss of $US21.9 million (K60.5 million) compared to a net profit of US$318.6 (K857.4 million) for the same period last year. Most of the loss resulted from ‘expensing US$19.3million (K53.3 million) of seismic it had acquired over its extensive exploration portfolio during the quarter’.

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Cabinet has approved setting up a taskforce to implement the recommendations of the inquiry into the Special Agricultural Business Leases (SABL). Members are Lawrence Sause, Daniel Katakumb and Kutt Paonga, who will report to the Chief Secretary to Government, Sir Manasupe Zurenuoc.