PNG Government Sets Aside LNG Earnings for Long-Term Savings

The Papua New Guinea Government will begin setting aside seven percent of revenue from the PNG LNG project into a sovereign wealth fund as part of efforts to strengthen the country’s financial future.

Prime Minister James Marape said Kumul Petroleum Holdings Limited will oversee the management of the fund following the government’s successful retirement of LNG-related bank debts.

Early construction of PNG LNG [Photo PNGLNG/supplied]

He said the loans, estimated at K69 billion, had placed a heavy burden on public finances and their repayment now allows the country to focus on long-term planning.

Marape said the new revenue arrangement is designed to balance immediate budget support with future investment, especially as PNG prepares for further gas developments.

Under the proposed dividend policy, most LNG earnings outside the sovereign wealth fund will be channelled back into the national budget.

The Prime Minister said maintaining a strong balance sheet at Kumul Petroleum is critical as the company moves to participate in major upcoming projects, including Papua LNG and P’nyang LNG.

“Eighty percent will flow to support the national budget. Going forward, as Kumul Petroleum participates in other projects, it is important that its balance sheet remains strong,” Marape said. “We are looking forward not only to equity earnings but also to tax revenues, which will continue to support the national budget.”