Call for government to lower interest rates, inflation rises and Air Niugini reduces fuel surcharge. Your weekly digest of the latest business news.

Nambawan Super Chief Investment Officer Michael Block has called for government intervention to bring interest rates down, saying they are a major hurdle for investment. He says with 10-year bonds earning about 12%, rising to 16% for 17-year bonds, it makes it very, very hard for other investments to compete.

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Quarterly inflation in PNG climbed to 5.2% in the second quarter of 2014, up from 3.7% in the first quarter, according to the ANZ’s Pacific Monthly Update bulletin. Health and housing drove the increase while communication and education costs contracted. The new retail price index has declined to 1.0% in July, from 4.0% in June, signalling that inflation may have stabilised.

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Air Niugini CEO Simon Foo says domestic passengers will save up to K15 per sector, after a reduction in fuel surcharge for both domestic and international routes. The decrease follows a reduction in world fuel prices and the current exchange rate.

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PM Peter O’Neill with the World Bank’s Axel van Trotsenburg.

The World Bank could provide PNG with up to US$175 million (K433 million) over the next two years, after a review of the relationship, including lending, technical assistance and analytical advice. World Bank Vice President Axel van Trotsenburg says this would be in addition to the US$174 million the country received over the last two fiscal years and recent addition of US$169 million.

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The World Bank is aiming to reach a further 40,000 more coffee growers and cocoa farmers through its Productive Partnerships in Agriculture Project. Trotsenburg says  six provinces are now taking part in the project, but with an extra US$30 million, all coffee and cocoa farming provinces were now able to apply.

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Revenue for the City Pharmacy Ltd Group for the first half of 2014 has dropped three per cent from K193 million for the same period last year to K189m. Group chairman Mahesh Patel blamed the fall on the winding down of the construction phase of the PNG LNG project.

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Hailisheng Group (PNG) and the government have signed a US$22 million (K55 million) deal to build a tuna processing facility  at Malahang in Lae, Morobe Province. Construction is due to begin within six months.

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Papua New Guinea is intensifying its efforts to diversify its mineral base and is encouraging investment in minerals other than gold, silver and copper, the Mineral Resources Authority Managing Director Philip Samar told the 7th China international nickel summit in Fuzhou, China.

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Trans Wonderland’s Larry Andagli

Trucking company Trans Wonderland is looking to expand into aviation and shipping, after announcing it has bought Advance Aviation Group of Australia. Announcing a profit of K15.8 million last year, Managing Director Larry Andagali said the company will be launched in PNG with TWL working on attaining its own air operator’s certificate.

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The music industry is losing its value and prestige, according to former CHM producer and Power House Records Studio manager Thomas Mabi. He says a copyright law should be high on the agenda  to protect the music industry.

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Australia has committed almost K900 million over five years to continuing the PNG-Australia Transport Sector Support Program (TSSP). The program includes rebuilding four bridges in Oro Province, expanding road maintenance in Bougainville, long-term maintenance contracts on the Highlands Highway, a scoping and design study on the Ramu Highway and a major training and equipment upgrading project to improve air navigation and traffic control systems nationwide.

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PNG coffee scientists Tom Kukhang, Dr Mark Kenny, and Dr Nelson Simbiken. Credit: Malum Nalu.

The PNG Coffee Growers Inaugural Cupping Competition was launched at the Gateway Hotel on Sunday. Agriculture Minister Tommy Tomscoll also launched his new coffee brand, Simbai Coffee, which is produced from coffee grown by Tomscoll himself as well as other farmers from remote Simbai in Madang.

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PNG LNG project operator ExxonMobil PNG has confirmed that development drilling on the Hides gas field is nearing completion.

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Cott Oil and Gas has raised A$3.3 million to develop the Pandora gas field, after selling 10 million shares in Kina Petroleum.

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Horizon Oil chief financial officer Michael Sheridan insists the company is in no rush to seek an alternative partner after the collapse of the $800 million merger plan with Roc Oil. Sheridan says that with almost $US100 million in the bank and an expected rise in operating cash flows this coming year, Horizon could fund its 21 per cent stake in the Elevala-Ketu project in Western Province.

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The spot price of LNG in Asia is likely to be well below the record high of last winter, according to Reuters. The spot price rose to $14.80 per million British thermal units (mmBtu) last week, a gain of 41% from the three-year low of $10.50 in July.

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PNG High Commissioner to Solomon Islands, Fred Yakasa. Credit: Solomon Star.

Nearly 25 PNG companies are now operating in the Solomon Islands. PNG High Commissioner, Fred Yakasa, says the companies have a total investment of around SBD$500 million (K164.79 million).

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Solomon Water is emerging from its ‘dark days’, cleared its huge debts, and now operating profitably, according to General Manager Richard Austin. The Solomon Islands state-owned enterprise reported a profit of SBD$11.12 million (K3.7 million) in 2013 and forecasts a SBD$10 million (K3.36 million) profit in 2014, after a loss of SBD$22.9 million (K7.7 million) in 2011. These profits are then reinvested in the company.

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The Rockefeller family, which made its fortune in the oil industry, says its philanthropic organisation is planning to divest from fossil fuels and reinvest in clean energy. The Rockefeller Brothers Fund is joining a coalition of philanthropists pledging to rid themselves of more than $US50 billion in fossil fuel assets.