BPNG, PUMA Energy and Air Niugini Saga Explained
Papua Niugini
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BPNG, PUMA Energy and Air Niugini Saga
By Hon. Marsh Narewec, Member for Wau Waria
It went back to 1997 when PNG Government sign 30 year agreement with InterOil for InterOil to built its Oil Refinery at Napanapa, outside Port Moresby. InterOil Oil sourced crude Oil from Oil Search and refined it at its Napanapa Refinery. The agreement between PNG Government and InterOil allows fuel leaving Napanapa Refinery to include cost of shipping the Oil from Singapore to Port Moresby.
In 2006 InterOil bought off Shell PNG operations and becomes the monopoly, controlling the Fuel processing and distribution market in PNG.
In 2014 InterOil PNG operation was bought off by Puma Energy and Puma continued this arrangement. There is some issues with Napanapa Refinery and so it could not refine Jet A1 Fuel needed by aeroplanes. Puma Energy has to import that Fuel overseas and supply to Air Niugini.
In 2015 BPNG issue some Foreign Exchange Directives that stops businesses and individuals to hold Foreign Currency accounts with their commercial banks. This means BPNG maintain a tight control over FX coming in and coming out. They did this because of 'non-compliance' issues.
How is this two topics related?
Overtime due to BPNG tight control, the process of obtaining FX become expensive, tedious and causing much delay and an inconvenience to businesses. We all read about it in the news.
Therefore to make it convenient for themselves, the businesses are starting to keep their income made in PNG in the overseas accounts. This affects the inflow of FX into the country.
BPNG found out that Puma Energy is not remitting income made in PNG back to PNG. Therefore, when Puma Energy applies for FX to buy fuel overseas, BPNG blocks this payment and advise Puma Energy to comply with its regulations.
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Because Puma Energy is a monopoly, it refuses to comply with BPNG regulations and stops supplying Jet A1 Fuel to Air Niugini which resulted in Air Niugini cancelling their flights. This is just to get Government's attention and intervention.
The short term solution is for BPNG to relax its FX regulations and allow some compliant businesses to open local FX accounts at their commercial banks. And long-term will be to build our own Oil Refinery at Kikori or Kutubu.
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Senior Marine Underwriter at Zurich Financial Services Australia
1 年Surely Puma is not the only supplier of Jet A1 in the region?
Professional Civil Engineer - MIEPNG RegEng# 4933
2 年Driving force behind all production is fuel. Operational costs in PNG is very high. Thanks to monopoly…