K500m to upgrade Jackson Airport: Polye

THE next five years will see an upgrading of the Jackson Airport at a cost of K500 million.Deputy Prime Minister Don Polye, who is also Minister for Works and Transport, said certain sections of the community had criticised the decision to upgrade the airport, describing it as wasteful.He said they must realise that the airport was the gateway to the country.“We cannot really talk about realising the full potential of tourism when the gateway to this country is substandard,” he told the Moss Capital (Pacific) PNG international conference on Monday.He said certain infrastructure and their proper maintenance were needed to enable development to take place.“Various programmes are currently underway to ensure that plans and projects in land reforms, land and maritime transport infrastructure are achieved.”He also gave an assurance that the National Airports Corporation would focus on improving the cash flow from commercial investments to ensure that the airport was profitable.Polye thanked the organisers of the conference which, he said, would further strengthen ties between the two countries.“As a government, we always welcome unlimited foreign investment into the country to capture the opportunities created by the LNG and other similar projects.“We are committed to maximising local content in all foreign investment, industry growth and entrepreneurial activities.“Ultimately, it is the intention of the Somare-Polye government to ensure that opportunities for wealth creation must be accessible to all Papua New Guineans,” he said.He said that as envisaged in Vision 2050, economic growth and wealth creation would come through agriculture, down streaming processing, enhanced manufacturing activities, infrastructure development and sustained delivery of goods and services.

Tosali: ’10 budget sees K533.3 million surplus

By ALISON ANIS
THE 2010 budget would have a surplus of K533.3 million, 2.1% of the gross domestic product (GDP), according to current estimates released by Secretary for Finance and Treasurer Simon Tosali.Tosali said the estimated surplus was due to the strengthening of global economic recovery and strong domestic economic growth.“The additional revenue of K533.3 available would be spent through a supplementary budget as government continues to have competing expenditure pressures such as the LNG commitments and legal obligations,” Tosali told participants at the three-day national development forum in Port Moresby organised by Consultative Implementation Monitoring Council (CIMC).He said total expenditure was expected to be K7.6 billion this year, with K4.2 billion in recurrent budget and just over K2 billion for the development budget.He explained the higher recurrent budget in 2010 reflected the expected overspends in personal emoluments, by national departments and provincial governments.“The Department of Treasury has taken action by establishing a payroll project team to investigate the causes of these overruns … it has also written to the heads of those agencies seeking their explanations of their overruns,” Tosali said.On the development budget, he said the increased development component is for the payment of remaining business development grants related to the PNG LNG project while grants and ITC had also increased this year.Tosali said total government revenue and grants of K1.8 billion was a lot higher than the outcome last year and this due largely to the higher receipts from the mining and petroleum tax (MPT) collected in the first of the year.The higher MPT estimate is due to an upward revision to commodity price assumptions.“PNG’s economy is expected to strengthen this year with the commencement of PNG LNG gas project and other mining-related projects as well as a rebound in a number o sectors following softer conditions last year.“In addition, growth is also expected to be supported by the improvement in global trade as commodity prices of PNG’s major exports strengthens on the back of growing confidence in the global economic recovery.”

Patel: More business ops here

PAPUA New Guinea is a country that still has a lot to offer in terms of investments and other business opportunities.Speaking at last month’s inaugural Pacific investment summit in Australia, City Pharmacy Ltd (CPL) Group PNG chairman Mahesh Patel said CPL group is committed to further investments through housing projects, cinema complexes, hardware business and various retail formats as the opportunity and demand for these were very high.Patel said the CPL group has so far set up City Pharmacy outlets in all Stop N Shop supermarkets in Port Moresby and other big supermarkets in the country and had also ventured into the building sector with their Hardware Haus.He said also they had signed joint ventures and affiliated themselves to other companies who have an interest in working in the country.He said to date, most investments had been limited to super funds, with Nasfund being the single largest investor in their group, and there were ample opportunities for various investment vehicles to do so.“There are opportunities for financial investors and businesses alike either in joint ventures, franchises, partnerships, supply lines or just business facilitation,” Patel said.He said with every challenge comes an opportunity which the CPL Group has capitalised on in terms of providing social, sporting and community services that have given their business the drive to work harder and earn double digit revenues year after year.CPL Group boasts a staff number of almost 2,000 (98% of whom are PNG citizens) and a group turnover in access of K300 million.The company was listed in the Port Moresby Stock Exchange in 2002 at a par value of K1 per share.Following a 3 to 1 share split in 2007, the shares currently trade at K2.95.

Oil palm estate to expand, double output

AKAMI Oil Palm (AOP) project, an independent estate near Kimbe in West New Britain, will double its production using a K5.3 million loan from the National Development Bank that will finance new plantations.AOP managing director Albert Camillus told The National currently, the company produces a minimum of 240 tonnes annually from a land just less than 200ha.Cammilus said NDB’s assistance would increase its productivity and help it acquire a new block of plantation.Camillus, who came from Nuku in the West Sepik, is now a proud owner of a multi-million kina oil palm project.He is one of the many in the province that supply oil palm fruits to New Britain Palm Oil.Nuku MP and Minister for Housing Andrew Kumbakor, who witnessed the loan presentation, lauded AOP for becoming a medium-sized oil palm entrepreneur.“Oil palm alone has K1 billion in exports earnings and getting serious in such medium-scale project is the way forward to go.“Compared to other agriculture-based export commodities, oil palm is the singles biggest earner and the government should look more seriously into expanding and encouraging locals to get into serious business in the industry.”The other two NDB clients that received loans were KK & Sons from Mt Hagen for a total of K1.6 million for equipment and plant hire, while Madang Bakery received K500,000 for redevelopment.

InterOil reports drop in net profit

INTEROIL has reported a US$1.6 million drop in net profit to US$7.8 million for the second quarter ending June 30, from the US$9.4 million posted during the same period last year.However, the company said its balance sheet and liquidity had remained strong with cash equivalents and cash restricted of US$50.9 million.Its operations – refining and downstream operating segments – derived a net profit for the quarter of US$17.6 million, while the upstream and midstream liquefaction development segments had a net loss of US$8.3 million due to higher exploration expenses.The earnings before interest, taxes, depreciation and amortisation for the quarter was US$14.9 million, compared with US$17.9 million in the same quarter of last year, down US$3 million.Sales and operating revenue increased by US$$76.8 million from US$148.5 million to US$225.3 million.InterOil said the refinery and distribution operating businesses generated earnings of US$24 million before interest, taxes, depreciation and amortisation (EBITDA) during the quarter.This amount offset expenditures from the developing upstream and liquefaction businesses, resulting in a net US$14.9 million in EBITDA on a consolidated basis.Chief executive officer Phil Mulacek said: “We are pleased that our forward momentum has been sustained well into 2010.”“Our delineation drilling results continue to demonstrate the value of our reservoir at Antelope 2, and the finalisation of the joint venture operating agreement with Mitsui & Co is another step in our strategy to monetise our liquid resources at the Elk and Antelope fields.“These accomplishments, combined with our strong balance sheet and the financing we have in place, will enable us to support our continued growth and operational success,” Mulacek said.

InterOil secures further capital of US$25m

PACIFIC LNG Ltd has advanced US$25 million (K67.5 million) to InterOil as additional capital to enable the gas company accelerate its upstream operations.The funding will also allow InterOil to pre-invest with Pacific’s partner Mitsui and, thus, advance the condensate stripping project (CSP).InterOil and Mitsui recently announced a joint venture operating agreement on CSP.Pacific LNG president Henry Aldorf said: “We are pleased to provide additional capital to InterOil in order to accelerate its upstream operations and pre-invest with out partner Mitsui …”Aldorf disclosed that InterOil was drilling its second horizontal well at Antelope-2.He said the well was targeting a higher condensate-to-gas ratio deeper in the reservoir, which can only enhance an already high rate of return project and add resources to the year-end 2009 of 9.1 TCFE (trillion standard cubit feet equivalent).Aldorf said InterOil’s second rig arrived at its refinery in the country and was waiting to be deployed to the field in the fourth quarter following modifications for jungle drilling in this now proven basin.The term loan facility matures in Jan 31 next year and will be used for upstream development and general corporate expenses.InterOil also agreed to pledge Clarion Finanz with a 2.5% interest in the Elk and Antelope fields as collateral.InterOil chief financial officer Collin Vissagio said they were pleased to have obtained this facility which would allow them to maintain financial flexibility while seeking potential industry investors in the two fields.

Airfare war

FLYING between Cairns, Australia and Port Moresby has all of a sudden become very affordable, with the price of a one-way ticket on Air Niugini costing just under K400.The introduction of a QantasLink service from Cairns to Port Moresby last month has sparked a price war between airlines.Air Niugini has launched all-inclusive airfares from A$175 one-way for travel from August to the end of October, making it cheaper to travel to Port Moresby from Cairns than from that city to Brisbane, Sydney and Melbourne.The cheapest airfares to those Australian capital cities yesterday ranged from A$169 from Cairns to Brisbane and up to A$389 to Sydney or Melbourne with Jetstar, the Cairns Post newspaper said.Air Niugini is also offering triple loyalty points until the sale ends on Aug 31.QantasLink, meanwhile, is offering one-way, all-inclusive fares from A$248 and double points to frequent flyers on its direct service.Airlines PNG is offering all-inclusive regular fares from A$200 one-way on the same route.Air Niugini spokesman Colin Lyttle said the “very aggressive” airfare was introduced to compete with QantasLink.“We wanted to remind our customers we operate nine times a week in and out of Cairns,” he said.Lyttle said Air Niugini was considering adding another two services to the Cairns to Port Moresby route.A QantasLink spokeswoman said the airline was “extremely pleased” with passenger numbers on its new direct service.It operated 12 services a week from Cairns to Port Moresby.“We began the service because there is a great demand from mining and resources business people based in Queensland and Cairns,” she said.There are now 23 return services from Cairns to Port Moresby each week.

Indon palm oil firm cleared of charges

JAKARTA: Indonesia’s biggest palm oil producer said yesterday it had been cleared of allegations made by environmental group Greenpeace that it had destroyed high conservation-value forests on Borneo.A report commissioned by SMART, part of the Singapore-listed Sinar Mas agri-business group, found that it was not to blame for widespread destruction of Borneo’s forests as repeatedly alleged by Greenpeace, the company said.“The report concluded that the allegations were largely unfounded and that SMART was not responsible for deforestation of primary forests and the destruction of orangutan habitats,” SMART president Daud Dharsono said.The investigation was carried out by Control Union Certifications and BSI Group.SMART, the Indonesian palm oil unit of its Singapore-listed parent company Golden Agri Resources (GAR) and part of the Sinar Mas agri-industry empire, commissioned the probe in February after the claims were first made by Greenpeace.Greenpeace accuses SMART of widespread forest destruction, including clearing primary forests and peatland.GAR has lost major clients including Unilever, Kraft and Nestle over environmental concerns.SMART’S Dharsono said yesterday: “All the land in the 11 concessions examined comprised of secondary forests, degraded and shrub land and were no longer primary forests before SMART started land clearing and planting.” –AFP

InterOil finalises JV deal with Mitsui

INTEROIL Corp last week announced the finalised joint venture operating agreement (JVOA) for its proposed condensate stripping plant (CSP) with Mitsui & Co Ltd.The JVOA sets out the rights and obligations of the participants to develop a CSP at InterOil’s Elk and Antelope field sites in the Gulf province.It replaces the preliminary joint venture agreement announced last April.This agreement allows InterOil and Mitsui to each have 50% ownership stake, before the government of PNG’s statutory right could acquire up to 22.5% in the CSP.The CSP design is expected to process approximately 400 million standard cubic feet per day (mmscf/day) of well-head gas with an anticipated yield of about 9,000 barrels (bbls) of condensate per day.Located roughly 30km southwest of the fields, the wells and condensate transport from the CSP will be the responsibility of the Elk and Antelope fields owners.

Why Indons replaced M'sia as top palm oil producer?

Commodities Talk - By Hanim Adnan
Malaysian palm oil sector must not lose its focus

INDONESIA’S taking over Malaysia as the world’s largest crude palm oil (CPO) producer in 2006 had often been associated with the mammoth size of the oil palm planted areas.
In fact, many however failed to comprehend that it was the much increased CPO production in the ensuing years – mainly in terms of higher fresh fruit bunches yield and oil extraction rates – that significantly set Indonesia far ahead from Malaysia’s continued stagnanting CPO production.
This year CPO production in Indonesia is targeted to hit 21.5 million tonnes versus Malaysia’s 17.5 million tonnes.
Within five years, the former is also targeted to produce 27 million tonnes annually while Malaysia production is still expected to linger at 17 million to 18 million tonnes.
While the glaring shift in the CPO production epicentre from Malaysia to Indonesia had resulted in changes in the supply equation, some market observers now fear that Malaysian plantation stocks could also stand to lose out on its attractiveness among international investors and fund managers.
Historically, the oil palm plantation sector in Indonesia had been the domain of state-owned companies. However, the early 1990s saw many private companies entering the industry, lured by attractive margins.
Now it is said that 60% of the 7 million ha total planted area is owned by private companies, of which many have been seeking listing on the Stock Exchange of Singapore (SGX) and the Jakarta Stock Exchange (JSX).
More recently, some quarters claim that regional plantation analysts have been putting foreign plantation groups like Indofood Agri and Wilmar International on their radar instead of the lacklustre rating given to Malaysian planters, which also have sizeable plantations in Indonesia.
Some say the shift to foreign-listed plantation groups, particulary Indonesia, could be due to its status as the world number one CPO producer and gradually being recognised as the future CPO price benchmark setter instead of Malaysia.
In fact, the Indonesian authorities had been busy setting up new CPO contracts to rival that of Malaysia’s Bursa Derivatives Exchange CPO futures (FCPO).
The FCPO is currently the world price benchmark for CPO.
In July last year, Indonesia launched its own CPO physical contract under the Jakarta Futures Exchange (JFE) and last April, a CPO futures contract was launched via the Indonesia Commodity and Derivatives Exchange (ICDX).
While these two Indonesian CPO contracts may still have yet to generate significant liquidity in their markets, there is a looming threat to Malaysia’s FCPO given the participation of many big names in the Indonesian oil palm industry in ICDX and JFE.
Therefore, with the multi-challenges faced by the local oil palm sector, it is pertinent to keep the momentum in terms of improving the stagnanting CPO production, focusing on aggressive replanting with higher-yielding clones, promoting more downstream industries and continuous roadshows among listed plantation companies to generate interest among international fund managers.
While Malaysia may no longer reign as the world’s number one CPO producer, it must try its best not to lose out on its current spot as the world’s largest exporter of palm oil products.
Deputy news editor Hanim Adnan believes that issues pertaining to oil palm production can be handled amicably should the Goverment enforce stricter replanting rules while the private sector must not be hesitant to undertake replanting despite the current attractive CPO price.

PM urges ANZ to invest in micro-lending,banking

By PATRICK TALU
PRIME Minister Sir Michael Somare has urged the Australia & New Zealand Bank Group to create a micro-financing and banking scheme in Papua New Guinea to help the rural people.Sir Michael pointed out that this was the best way to protect and grow their savings.In his keynote address at a gala night last Friday to celebrate the 100th year of ANZ banking services in the country, he said: “I would like to encourage you to look at micro-financing and micro-banking so that you can extend your services by catering for developments taking place all around the country.”Sir Michael said this year the economy was anticipated to grow by about 8.5%, of which 3% would be attributed to construction activities at the liquefied natural gas project.He said all this prosperity was relevant to investors like ANZ Bank which is already one of the more profitable banks in PNG.“You have had a 100 years of experience in the country. “The people of PNG have supported the ANZ Bank all these years and will continue to do so as long as you are here.“I encourage ANZ to help rural people to protect and grow their savings.“I know that your investment will be invaluable to the communities … it will be challenging for you but I believe it will be worth it when you look back a few years from today,” Sir Michael said. The Prime Minister said with the combined experience of ANZ’s top management team in the Asia Pacific region, it can tap into that knowledge to extend services across the country.“With the technology that is available today, I am sure ANZ can provide innovative options to all its existing and potential customers.“Now, more than ever, is the time to reach out to the “unbanked” population of PNG and the Pacific,” Sir Micahel said.