THE PNG Chamber of Mining and Petroleum is suggesting to the Government to use the windfall from the PNG LNG Project to build up the Sovereign Wealth Fund (SWF).
Chamber president Anthony Smaré said if K4 billion was put into the fund each year, the SWF would be larger than all superfunds combined.
He was addressing new MPs during an induction programme in Parliament on Thursday.
“The Covid-19 showed us the vulnerability of not having sufficient national reserves for a crisis. As a result PNG saw its debt in the past two years mushroom to around 50 per cent of gross domestic product (GDP).
“However, the high oil prices and the pay-down of capital costs of the PNG LNG project means that the State is starting to harvest greater cash flow benefits from the project,” he said.
He said K2.8 billion in the PNG LNG Corporate Income and Additional Profit Taxes had been paid this year so far.
“It may exceed K4 billion by the end of the year,” he said.
“On the basis of moderate oil prices, during this term of Parliament, the taxes and net cash flows to Kumul Petroleum from the PNG LNG Project could exceed K8 billion a year.
“If the State decides to put K4 billion into the SWF each year, it would mean that within four years, the SWF would be larger than all of PNG’s superfunds combined.
“A SWF that invests all over the world in asset classes that is not available in PNG, would enable the State to build up its savings and achieve returns that it could not achieve in PNG.
“PNG’s SWF would invest in areas of innovation, technology and growth which are driving the next 20 years of human progress, sectors which are not available in PNG.”
The National / Pacific Business News