03-13-2012, 08:00 PM
The March 2012 edition of the Asian Development Bank's Pacific Economic Monitor says the revenues from PNG LNG project are going to fall short until after 2023. You read that right - that's over a decade from now!
Some key quotes:
What conclusion might be drawn from this? The same one this board has been reflecting for a while now: PNG absolutely needs / requires / must have early revenues from Gulf LNG to fill the shortfall. Plus, the deals must be structured in a way so as to prevent a similarly long and drawn out period before PNG benefits from the revenues. Additionally, landowner compensation issues must not stand in the way of forward progress on the road to revenues.
All signs point to Gulf LNG as the cure for these ills.
beta.adb.org/sites/default/files/pub/2012/pacmonitor-201203.pdf
Some key quotes:
"One of the features of the new law is its drawdown
rule, which effectively makes the SWF an expenditure
smoothing fund rather than a savings fund. Revenues
from current mining operations are expected to fall by
as much as 30% over the next 3 years. Hence, the
addition of LNG revenues in 2015 will only be sufficient
to restore mineral receipts (in real terms) to a level
slightly below 2011 receipts—and well below those
realized during their peak between 2006 and 2008. As
the bulk of LNG revenues will be used for expenditure
smoothing, estimates suggest that the SWF is unlikely
to accumulate significant offshore savings until after
2023, when LNG tax concessions will decline."
Quote:"Looking forward, the winding down of LNG construction and the closure of a number of mining operations in 2013 will considerably slow economic growth. This is expected to begin a 2-year period of declining real government revenues. PNG's low public debt (roughly 24% of GDP in 2011) and trust fund savings, offer fiscal space to manage this period without compromising macroeconomic stability."
Quote:"One issue is government‘s growing off-balance sheet contingent liabilities related to resource project guarantees and unfunded superannuation liabilities. Taken together, these liabilities now total 32% of GDP. If ongoing landowner compensation issues continue to delay LNG project construction, then some of these may pose a substantial fiscal burden for the government, with the potential to crowd out funding for service delivery."
What conclusion might be drawn from this? The same one this board has been reflecting for a while now: PNG absolutely needs / requires / must have early revenues from Gulf LNG to fill the shortfall. Plus, the deals must be structured in a way so as to prevent a similarly long and drawn out period before PNG benefits from the revenues. Additionally, landowner compensation issues must not stand in the way of forward progress on the road to revenues.
All signs point to Gulf LNG as the cure for these ills.
beta.adb.org/sites/default/files/pub/2012/pacmonitor-201203.pdf