Where is the LNG Money?

NRI Director Charles Yala during the Press conference

By FIDELIS SUKINA

The Liquefied Natural Gas (LNG) project which is Papua New Guineas most acclaimed resource project to double the country’s Gross Domestic Product (GDP) is being questioned by the National Research Institute (NRI).

The leading PNG research institute has questioned why the LNG project revenue was not included in the Mid-Year Economic and Financial Outlook (MYEFO) of PNG this year.

This was highlighted at a press conference on Thursday at the NRI head office by Economic Policy Research Program Leader and Senior Research Fellow with NRI Dr Osborne Sanida and NRI Director Dr Charles Yala

Dr Sanida said the Department of Treasury should have come out and given the right figures in the report.

“By not being upfront and transparent about the LNG revenues in the MYEFO, Treasury is portraying the fiscal situation as being dire when this is; we believe is not the reality. This is because it is portraying a Budget with no LNG revenues accruing to it. It is inconceivable that this could be the case.” Dr Sanida

Dr Sanida said the loses of revenue for the year 2015 comes entirely from the Minning, Oil and LNG sector however what was not explained was where the money of LNG was.

“Given the exports of LNG are expected to be K14 billion in 2015, Treasury needs to explain where the money is that PNG is getting out of this. There are also no dividends from the LNG from the Government’s ownership in LNG that are accounted for in the MYEFO.” Sanida said

Dr Sanida added that the LNG projects contribution to the GDP is somewhere between two possibilities. 1). The LNG project has only added a small amount to GDP and 2). The GDP figures in the MYEFO are wrong

“We believe the truth is somewhere in the middle. The LNG project has added about K13 billion to GDP. In 2013, GDP was about K35 billion, so the LNG project has directly added 40% to GDP since production started.”

“On this note clearly the treasury GDP numbers are questionable. We suspect that the actual GDP growth is substantially higher than reported. According to the just released Treasury MYEFO, GDP growth in 2014 was 13% and is forecasted to be 11% in 2015- this compares to average over the last decade of 8 percent.” Sanida said

Dr Yala said they can only speculate because the figures by treasury seem to be questionable, but NRI thinks it’s a problem of timing.

“Ships with LNG have been leaving our shores and so the money must be coming but where it is we don’t know. We are working on a report which is more comprehensive and detailed, if treasury was forthwith with the information it would have been better, but we think it’s to do with timing something of cash flow. Than bridge financing will be enough.” Yala said