In this exclusive interview with Business Advantage PNG, Port Moresby Chamber of Commerce and Industry President Rio Fiocco, outlines the numerous challenges facing business in Papua New Guinea as 2021 gets under way.

POMCCI’s Rio Fiocco. Credit: Rocky Roe

Business Advantage PNG: What is the biggest challenge for business at the moment?

Rio Fiocco (RF): The number one concern is still the lack of foreign exchange. I read a report recently that said there are delays between three-to-12 weeks for customers to get foreign exchange. We think that situation is going to continue throughout the whole year, particularly until we see the Porgera mine reopen.

BAPNG: What about the payment of government arrears? Is that a big issue?

RF: I believe they have been paying quite a number of arrears for rentals and goods and services supplied. But there is still a vetting process and that process is still ongoing and hopefully will continue.

The difficulty, from the government’s point of view, is that a lot of the agreements were not properly documented. I think you are going to find a lot of people will end up being very disappointed in the end, particularly if they had a private arrangement with someone in a department to supply goods or services, with nothing being in writing or it not complying with the National Procurement Commission rules.

The payment of arrears is also impacting on PNG Power’s cash flow and ability to maintain and upgrade the transmission network.

‘We are seeing virtually zero money spent.’

BAPNG: How have COVID-19 travel restrictions affected the PNG economy?

RF: They have killed all exploration in both mining and oil and gas because the explorers can’t bring their technical experts in. I believe there were a number of wells supposed to be drilled last year and they were delayed. We are seeing virtually zero money spent.

It is partly due to COVID-19 and possibly also because of potential changes to the [resources] law. [The travel restrictions] have added cost to existing operators because they have had to be in quarantine here and in Australia. FIFO workers have to go into quarantine when they enter the country and two weeks when they fly out to Australia or wherever their home is. And it is not just overseas travellers.

It is also affecting PNG workers – when they go to places like Kutubu they have to spend two weeks quarantining at the Oil Search camp before they are allowed out. So, some foreign workers could end up doing four weeks before they get on the site.

‘Basil says he expects Wafi-Golpu will be fully permitted and ready to go by July or August of this year. We will wait and see on that one.’

BAPNG: Are there other infrastructure issues?

RF: The main one is power. The business community is waiting to see when the Pasca [Twinza Oil] agreement is finally signed off. Then construction can get underway. It is not a huge project but it will have some positive impact. [The Minister for Commerce and Industry] Sam Basil says he expects Wafi-Golpu will be fully permitted and ready to go by July or August of this year. We will wait and see on that one.

BAPNG: Are we going to see reform of State-Owned Enterprises (SOEs)?

Transmission lines installation in Kimbe, West New Britain. Credit: ABD/Flicker

RF: There is a lot of money being lent to the government for that purpose, particularly by the Asian Development Bank. We do expect to see positive changes happen. The main one would be the rural electrification program but that has been sorely impacted by COVID-19 because the technical experts have not been able to fly into PNG to commence the work.

BAPNG: What are some of the likely developments this year for business?

RF: Until we see some clarity as to when some of these major projects (Papua LNG, Wafi, Pasca and Porgera) are getting going, companies are very reluctant to invest further. [A number of] companies are only prepared to allow single males to come to PNG, not people bringing families because it is a risk. What happens if one of their people gets COVID-19? The insurance wouldn’t cover it and you may not be able to get a company to fly them into Australia or other countries.