Despite being struck by a deadly earthquake in the first quarter of 2018, PNG managed to successfully stage the APEC Leaders’ Summit in November of that year, a meeting which resulted in the signing of a number of trade and investment agreements that are expected to have a significant economic impact. While investor appetite remains subdued as a result of high operating costs, regulatory obstacles and limited land availability, the hosting of APEC led to infrastructure upgrades such as new roads, a modernised airport and the construction of the iconic APEC Haus, all showcasing the maturing economy of PNG. At an estimated cost of PGK1bn ($303.3m), the hosting of the summit provided a strong platform for integration and future development.
With an initial capital investment of PGK9.1bn ($2.8bn), the Wafi-Golpu copper and gold mine project was showcased at the summit when developers Newcrest Mining and Harmony Gold signed a memorandum of understanding (MoU) with PNG for a total project cost of PGK16.7bn ($5.1bn). Although the approval phase had been advancing well, the project was placed on hold following a court injunction obtained by the local governor. Although the MoU committed the government to securing a special mining lease by June 2019, the project’s timeline was affected by the change of government in the previous month. The current administration, led by Prime Minister James Marape, has promised to review the deal with a view to seeking further benefits. Following the official review, the government made an official announcement in early September 2019 that the project had been cleared for implementation; however, Total had yet to publicly comment. The signing of the memorandum of understanding for the LNG project has been cited as a key step towards unlocking PNG’s mining potential.
Another significant agreement that was reached following the APEC meeting was the MoU signed by the government and Total and its partners ExxonMobil and Oil Search, which defined the key terms of a gas agreement that would help in doubling the country’s liquefied natural gas (LNG) output to 16m tonnes per year. The agreement for the Papua LNG project was signed in April 2019 by the outgoing Prime Minister Peter O’Neill and Patrick Pouyanné, chairman and CEO of Total. The deal is expected to result in $13bn in investment for two LNG trains to be developed alongside the existing PNG LNG facilities.
PNG has historically had insufficient capacity to produce enough electricity to meet demand. Another agreement signed at the APEC Summit attempts to boost power capacity and increase electrification rates across the island. The $1.7bn PNG Electrification Partnership (PEP) with Australia, the US, Japan and New Zealand is set to bring power to 70% of PNG’s population by 2030, up from 13% as of March 2019. Signed on the sidelines of the summit, the PEP aims to foster economic growth by providing funding to PNG Power, the primary authority responsible for generation, transmission, distribution and retailing of electricity throughout PNG (see Energy chapter).
The event also played host to a number of key regional agreements. A trilateral partnership between Australia, the US and Japan is set to support infrastructure development across the region with key investments in energy, transportation, tourism and technology infrastructure. Seen as a counter to China’s flagship Belt and Road Initiative, the trilateral partnership hopes to provide a mechanism that will allow more private sector funding for infrastructure.
The new agreements signed around the APEC Summit were a signal of confidence in both the economic potential of PNG and authorities’ willingness to work with investors to develop the country. Indeed, PNG utilised the meeting to showcase opportunities for domestic and foreign investment and is looking to leverage infrastructure improvements in the future.
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