Photo credit: Kumul Petroleum - Ila Temu
The government must now think about creating a strategy to facilitate the raising of equity capital for fresh resource projects.
Dr Ila Temu, country executive director for Barrick Niugini Limited, stated that one of the major challenges that have to be resolved is the financing of equity for resource projects in the nation.
According to him, in the early going in Porgera and Lihir, they were able to secure preferential financing from EXIM banks thanks to a government-to-government connection, and that's how they paid for the equity for Porgera landowners and Lihir landowners.
As there is presently no plan in place, Dr Temu questioned how the government is getting ready to fund the additional stock that they must purchase for the new projects.
He emphasised that the government does have Kumul Petroleum, which owns the ownership in LNG, and that Kumul is organising the money for the equity when it occurs for the Papua LNG project.
According to him, a commercial firm receives funds from another entity to help it conduct its business.
“I’m of the view that the concessional funding either from bilateral or multilateral is still a good way to fund the equity for resource project,” Dr Temu said.
“I think we should explore that a bit more, this is something to live with the new Members of Parliament.”
A finance mechanism that may support the purchase of equity for the state, the government, or the landowners must be put in place, according to him, and this requires government policies and actions.
According to Dr. Temu, the mining and petroleum industries have done very well over the past 30 to 40 years in arranging both the ownership debate and the benefit distribution in a way that permits rights to everyone who is touched.
“Moving forward, there is plenty of room for change and that includes to finding the right pathway on how the government can acquire equity funds for new projects that are in place,” he said.
Reference: Wohi, Lorraine. Post-Courier (29 August 2022). “Government Urged To Look At New Pathways To Acquire Resource Equity”.
