PM Marape Rejects K28 Billion Revenue Shortfall Claim Over PNG Papua LNG Project

 Prime Minister James Marape

 Prime Minister James Marape has rejected Treasury Department projections that PNG could lose K28 billion in government revenue by 2035 under revised fiscal arrangements for the Papua LNG Project, insisting the deal will deliver long-term economic benefits.

Marape said the country should assess the project beyond short-term changes in petroleum tax receipts, pointing to billions of kina in capital investment, employment opportunities and additional tax revenue expected during construction and production.

 

“There is no revenue loss starting 2029 onwards. It's all an aggregate gain for the country going forward,” Marape said.

He confirmed that he had instructed the Department of Treasury to reconcile its figures with the State Negotiating Team (SNT) at a meeting scheduled for October 26.

The Prime Minister acknowledged that accelerated depreciation arrangements could temporarily reduce petroleum tax receipts from the existing PNG LNG Project. However, he maintained that the revenue impact would be recovered when Papua LNG begins production.

Marape said the construction phase, expected to start in 2027, would also generate additional government revenue through goods and services tax, corporate income tax and personal income tax.

He pointed to the project's estimated US$14.5 billion capital expenditure, valued at about K60 billion under baseline financial modelling, alongside a broader K70 billion investment programme.

“I want to say from the outset – and someone can hold me to my words – that in 2029, there will not be a drop in PNG government revenue,” he said.

“We don't see it just from the lenses of five-year revenue loss. We look at it from the context of intergenerational benefit and value chain to the economy.”

Briefings from the SNT suggest Treasury's projections have treated temporary tax timing changes and State equity financing as permanent financial losses.

The negotiating team estimates that the impact of accelerated depreciation between 2029 and 2032 would be between K4.6 billion and K5 billion, compared with Treasury's estimate of K16.9 billion.

The SNT has also disputed the characterisation of a US$1.95 billion fiscal concession as an unconditional benefit to investors, arguing that the arrangement is tied to international oil prices and includes mechanisms to adjust the State's revenue share.

Marape said PNG needed to maintain competitive terms to attract international investors such as ExxonMobil and TotalEnergies, particularly as other countries pursue major gas developments, including Mozambique's reported 80 trillion cubic feet gas field.

“Investors like Exxon and Total are global investors,” he said.

“The difference this time around is concessions are not free. We have pegged these concessions to price.

“They make the recovery at prices below $81. We make our recovery at prices above $83.”

Marape also assured the Gulf and Central provincial governments and project landowners that the revised fiscal arrangements would not affect their respective equity interests, development levies or royalty entitlements.