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[Tree]

PNG Sovereign Welfare Fund to manage revenue: Yauieb

By Online Editor
12:54 pm GMT+12, 18/09/2012, Papua New Guinea

The  Papua New Guinea Sovereign Welfare Fund (SWF) will manage revenue from the mining and petroleum sector to support the economy and future developments.

Department of Treasury deputy secretary for economic and financial policy Anthony Yauieb made the comment while discussing the fund during the National Budget Forum in Port Moresby last Wednesday.

 Yauieb said the Stabilisation Fund was to manage the impact of fluctuations in mineral and petroleum revenue on the country’s economy and budget, while the purpose of the Development Fund was to provide a definite and ongoing funding source for the provision of development in key economic and social priorities in accordance with government development plans.

“The Stabilisation Fund can help everyone in PNG by ensuring that a steady stream of revenue flows to the government budget for social and development spending,” Yauieb said.

“It will help protect PNG’s economy from the volatility and uncertainty in global markets that we continue to see.”

For the SWF Development Fund, Yauieb said the mining and petroleum resources would be exhausted in the future and revenue generated from this sector would stop.

As such, the Development Fund would safeguard a portion of revenue to provide a dedicated stream of funds for urgently needed nation–building infrastructure maintenance, the recapitalisation of state owned entities, and for future development priorities.

Yauieb said one key feature of the sovereign fund was that while investments were undertaken by an independent board, the state would retain full ownership and control over assets.

He said past lessons would lead to the sovereign fund being fully integrated into the budget to manage government spending and the economy.

“This is to ensure that all revenues, including dividends, from the LNG project and other mineral and petroleum projects and the timing of all expenditures can be used to advance PNG’s social and economic development.”

Yauieb said the importance of the sovereign fund could not be fully understated “as it aims to ensure the country’s resource revenue are well managed and used, and support the economy and future developments envisioned in the country’s development strategies”.

[ValueSleuth]

Is Sir Rabbie still going to run it, or has someone else been tapped by the new PNG government?

VS

[Tree]

Is Sir Rabbie still going to run it, or has someone else been tapped by the new PNG government? VS

As far as we know, VS.

Since his appointment to manage SWF Sir Rabbie has been placed on IOC's BOD.  Would that be a conflict that would cause him to resign SWF duties?

PACIFIC ISLANDS REPORT Pacific Islands Development Program/East-West Center With Support From Center for Pacific Islands Studies/University of Hawai‘i
PNG TO TIGHTEN SOVEREIGN WEALTH FUND MANAGEMENT LAW PM O’Neill says funds need to benefit people, future generations’ By Elizabeth Vuvu PORT MORESBY, Papua New Guinea (The National, Nov.1, 2011) – The national government is adamant in preventing mismanagement of funds by tightening the Sovereign Wealth Fund (SWF) management law, Prime Minister Peter O’Neill said last week. He said that last Friday when officiating at the opening of the Mataure Rabaul Microfinance Ltd office in Rabaul town, East New Britain. "We have had world class mines like Bougainville, Ok Tedi and continue to have Lihir but revenues have been mismanaged as such and we don’t have any money now," he said. O’Neill said this was why the government was always struggling to make sure the little resources it got from the national budget were being spread around the country in a manner that would continue to bring services. "We must learn from the mismanagement of the wealth created by those big mining projects over the many years." O’Neill said the SWF management law would be tightened later this month in parliament and Sir Rabbie Namaliu had been tasked to manage it. "Sir Rabbie has the integrity, standing and personal love for his country to manage the fund for our people and the future generation and not for this government. "It is important that PNG has a law that will manage the fund, how we invest in that fund, how it reports to parliament every three months so that every Papua New Guinean knows the status of the money." Earlier, O’Neill said: "The importance of the PNG SWF cannot be understated. "It aims to ensure PNG’s natural resource revenues are well-managed and used and support the economy and future development of our nation as envisaged in the PNG development strategies – the PNG Vision 2050, DSP and the MTDP. "Nearly 40 nations around the world have sovereign wealth funds and it is time for PNG to benefit from this well-established practice of managing resource wealth." He said the welfare fund was designed to manage public mining and petroleum resource revenues. There are two distinct operational arms – the stabilisation fund and the development fund. "The stabilisation fund can help everyone in PNG. "It will ensure a steady stream of revenues to the government budget for social and development spending. "It will help protect PNG’s economy from the volatility and uncertainty in global markets that we continue to see. Without it PNG risks repeating the cycles of boom then bust, and not making the most from our resource wealth. "PNG’s mining and petroleum resources will one day be exhausted. "We cannot forget that they are limited and non-renewable."

[ArtM72]

I can't see much in the way of serious potential conflicts of interest for Sir Rabbie as I understand the interests and purpose of the fund tpo be disbursement control. If anything Sir Rabbie could be expected to encourage the rapid funding of its programs over which I presume the NEC and DPE have greater control.

An arguement could be made that the development of infrastructure in the Gulf Province and Port Moresby could be viewed as benefitting IOC, but there the benefit would I suspect be secondary.

[Palm]

Sir Rabbie does many things with investment orgs and companies in PNG. He may have to step aside for certain things regarding decisions directly connected to IOC, but I doubt he will have to step down as SWF director. I doubt he would have accepted director position of IOC if he thought it would keep him from serving at SWF.

[ValueSleuth]

Thanks, Tree, Art, and Palm.

Sir Rabbie appears to be a great person to be on IOC's BOD and it was a personal pleasure meeting and conversing with him at the AGM.

Selfishly, I certainly don't want him excluded from his IOC activities because of any SWF conflict or for any other reason.

Conversely, I'm sure he can be of great assistance on the SWF and his other PNG activities.

I agree that the issue was likely well researched before the BOD appointment.

However, the sands shift in PNG, and I wanted to see if anybody had anything new on the subject.

VS

[Petrovale]

If there is a conflict of interest between Sir Rabbie's appointment to PNG's SWF and IOC's BOD, we might find some consolation in the fact that the Asian Development Bank is pushing hard to bring PNG's State Owned Enterprises, including Petromin, under the control of the Independent Public Business Corporation. Next, I would expect tax reforms, monitoring internal and external capital flows, while promoting foreign investment and improving the competitiveness of PNG abroad. I think that's the current thread for emerging economies like PNG.

[Palm]

Sir Rabbie is also Chairman of Kina Asset Management LTD. Very trusted and respected person overall and considered financially very savvy.
http://www.kaml.com.pg/kaml/directors.html

[Petrovale]

No doubts whatsoever about the credibility of Sir Rabbie. Just considering PNG as the land of the unexpected and the pressures the government, I think, is now facing when dealing with the Asian Development Bank and a number of OECD countries, which are interested in the Gulf LNG project.

[Orlando]

The smart move of bringing Sir Rabbie on as an advisory board member over a year ago ranks up there as one of things for which IOC management does not get enough credit. I believe it was a brilliant move.