Photo credit: Pacific Mining Watch
According to country manager Hulala Tokome, Puma Energy PNG Ltd's Napa Napa refinery is in danger of closing by the end of this month.
Tokome explained that the planned customs levy on imported refined gasoline products would be the cause of this.
The proposed adjustments include a 5-toea tax cut for refined diesel and petrol, which the government claims would boost fuel industry competitiveness. According to Tokome, the refinery's shutdown would result in the loss of 150 jobs and significant tax revenue for the state.
“The removal of the import tariff would result in importers paying less taxes in country and risk the viability of the Napa Napa refinery operations including the jobs it supports,” Tokome said.
“The import tariff was introduced (in the 2018 National Budget) for two main reasons, it supported the viability of the Napa Napa refinery and the approximately 150 skilled manufacturing jobs and meant importers paid taxes in country rather than keeping profits offshore,” he said.
“The import tariff has never been passed on to the consumer as the Independent Consumer and Competition Commission (ICCC) controls prices.
“The ICCC price formula which limits the maximum price at the retail pump does not have the import tariff included. “So increasing or decreasing the import tariff has no impact on the price at the pump.
“The proposed changes puts a risk on the viability of the refinery (Napa Napa) beyond the end of this year.”
ExxonMobil is said to be the biggest importer of petroleum products into PNG.
Puma Energy is the country's largest importer of crude oil, which is subsequently processed into petroleum products, encouraging downstream processing, which in turn provides employment and taxes.
Puma now has a market share of roughly 55% in the country.
Tokome also stated that they were looking forward to collaborating with the government to come up with a solution that would safeguard both consumers and PNG's indigenous refining capability. The Independent Consumer and Competition Commission did not respond for comment.
Reference: One PNG (1 December 2021). “PUMA Energy PNG Napa Napa Oil refinery at risk of closure, says executive”.
