The Papua New Guinea Government has set up a new authority to oversee the restoration of services and infrastructure, following the February 26 earthquake. As humanitarian relief work continues, analysts expect GDP to fall slightly.

Unloading emergency supplies. Credit: Thomas Nybo/ Unicef

The parliament has passed a new Restoration Act, setting up an authority to focus on rebuilding infrastructure and resettling people displaced by the 7.5 magnitude earthquake in Western Province, Enga, Southern Highlands, Hela and West Sepik provinces. It also unanimously agreed to impose a state of emergency in the affected areas.

Prime Minister Peter O’Neill said the restoration work would take four years and Cabinet has approved spending K450 million on restoration programs.

‘The disruption to gas production is likely to directly weigh on growth.’

The National Disaster Centre estimates that around 544,000 people have been affected and that more than 270,000 people need continuing assistance.

Over the last week, three tonnes of relief supplies containing tents, waterproof sheets, water purification tablets, blankets and hygiene kits have arrived in the country, through partnership between the PNG government, the UN, the Australian and New Zealand governments and business organisations.

ExxonMobil staff drop food and water to people in the remote village of Fuma in Western Province. Credit; ExxonMobil

BMI Research, a subsidiary of the ratings agency Fitch, told Business Advantage PNG, that it has revised downwards PNG’s real GDP forecast for 2018 to 2.7 per cent from 2.9 per cent, following the February earthquake.

The disruption to gas production is likely to directly weigh on growth, it says, while investors may delay their investment decision as they reassess their investment risks.

It says that while ‘we do not expect the current crop of planned and proposed projects (P’nyang, Elk Antelope, and the prospective Horizon LNG) to be cancelled or significantly delayed at this juncture, risks are weighted to the downside’.

BMI points out all the prospective projects appear to lie some distance away from PNG’s more earthquake-prone zones, suggesting limited earthquake risks.

Government finances

BMI believes the PNG government lacks the means to raise revenue to finance the rehabilitation process.

‘We expect the government to cut back on other capital and recurrent expenditure to free up resources for reparations, but there is likely to be a limit to expenditure cuts given that Papua New Guinea will be hosting the APEC summit in 2018.’

Meanwhile, the chairman of FGE, a global energy research company, Dr Fereidun Fesharaki, has warned that PNG’s revenue from the PNG LNG plant may be affected as spot prices are expected to fall around the time the plant resumes operations.

Oil Search expects its processing facility and the export pipeline, which were largely undamaged, to be operational later this week as soon as production from the Hides Gas Conditioning Plant (CPF) comes back on-stream.

The company says production from the Kutubu complex fields will be progressively restored from late March as the CPF is brought back on-line. The Agogo Processing Facility and the Moran well pad, which are in the area most impacted by the earthquake, will require some repairs before production can recommence.

Developments

In other developments following our last update:

• Oil Search helicopters have made more than 125 supply drops to villages and have moved 150 tonnes of material to the communities from the company’s Moro Airfield. This has been done in conjunction with Australian and NZ Defence Force aircraft. It will also fund trauma counselling. The Foundation will procure an anaesthesia machine for Mendi Hospital to get the operating theatre back up running.
• UNICEF has delivered 12,000 packets of therapeutic food and enough vaccines to protect 31,700 children against the increasing risk of disease outbreak and malnutrition.
  

  Choppers the only way in to remote areas. Credit: Oil Search

• A joint National Department of Health and World Health Organisation assessment reports that 25 out of 77 health facilities in Hela and Southern Highlands provinces are no longer functioning.
• The main Highlands Highway connecting Western Highlands, Southern Highlands, and Hela provinces has been cleared. However, several roads linking to the highway remain impassable. The main road link from Mt Hagen to Tari is now operational again.
• But the Controller of the Emergency Disaster Restoration Team, Dr William Hamblin, said road access into many remote areas are still cut off by landslides.
• Air Niugini has resumed flights to Hela, and Tari’s hospital was operating as normal.
• An Australian Air Force Hercules plane has made 22 flights, transporting over 178 tonnes of relief supplies into the region. Australia has also deployed three CH47 Chinook helicopters and additional ADF personnel.
• The NZ Defence Force has withdrawn its two Hercules aircraft after the PNG government said no further help was being sought.
• The French naval vessel Vendemiare delivered 10 tonnes of supplies, including tinned fish, beef, rice and water.
• Barrick Niugini, the Porgera gold mine operator, has donated K6.5 million, despite closing down its operation for three weeks, after losing power at its Hides gas plant.
• PNG Air donated three tonnes of supplies and has made its Dash-8 freighter available at no charge. Staff gave their time free of charge to make deliveries.
• Digicel CEO, Valde Fernandez, says the company has repaired 57 of the 66 towers damaged by the earthquakes.