KFM Weekly Investment Update: Friday, 05 April 2019
- Prime Minister Peter O’Neill announced the appointment of Andrew Baing as
the new Chairman for Kumul Petroleum Holdings Limited (KPHL), effective for
a three-year term. Mr Baing replaced Sir Moi Avei, who retired from the KPHL
Board in October 2018. PM O’Neill said Mr Baing brings to the Board significant
knowledge in the government and business sectors, being an experienced
statesman, having held years of numerous ministerial positions including
Deputy Prime Minister. This would lead to ongoing growth for KPHL as the oil
and gas industry is entering the next phase of developments in the country.
- According to Bank of Papua New Guinea (BPNG), approval of tax concessions
to the country’s major project developers have resulted in lower forex and tax
revenue to the Government. BPNG’s Monetary Policy Statement released this
week stated that current policies relating to extractive industries gave a lot of
tax concessions to project partners for the development of major projects.
BPNG supported the Government’s medium term revenue strategy from 2018-
2022 to review tax concessions so that much needed revenue for the
Government could be raised.
- Furthermore, BPNG Governor Mr Loi Bakani said, real gross domestic product
(GDP) growth for this year projected by BPNG is to be higher than
Government’s 2019 Budget forecast of 4.0%. PNG’s GDP growth was expected
to be driven by full-year production of LNG and crude oil. Mineral production is
also expected to contribute to this growth with higher production of nickel,
cobalt, gold and copper. Non-mineral GDP growth is circa 2.0%. The
commerce, construction and services sectors are expected to grow at a lower
pace following the completion of APEC meetings last year. Over the medium
term, growth is expected to be driven by the non-mineral sectors while the LNG
production is expected to be around levels before the earthquake last year.
- Oil Search (OSH) advised that the PNG LNG Project co-ventures have entered
into a mid-term LNG sale and purchase agreement (SPA) with Unipec
Singapore Pte Ltd (Unipec), for the supply of about 0.45 million tonnes of LNG
per annum (MTPA) over a four-year period commencing April 2019. OSH
Managing Director Mr. Peter Botten, said the SPA with Unipec, is one of PNG
LNG’s original long-term customers and is the final mid-term LNG SPA that the
Project was seeking to secure. Following the signing of SPAs last year with
PetroChina and BP, totaling 0.9 MTPA over 2018 to 2023. These SPAs add to
the 6.6 MTPA committed under long-term contracts to JERA, Osaka Gas,
Sinopec and CPC and take total contracted volumes from the Project to
approximately 7.9 MTPA.
- Kina Bank Limited (KBL) has been given full regulatory approval by the
Independent Consumer & Competition Commission (ICCC) to acquire ANZ
PNG’s Retail SME. KBL Chief Executive Officer Mr Greg Pawson said this
proposed transformative acquisition will provide PNG with two very strong
domestic retail banks, giving customers a better alternative and real choice.
- PNG Biomass is working with PNG Power to lower the power purchase
agreement (PPA) tariff and reached an agreement that will half the price of
power on the Ramu grid. The cost to PNG Power of electricity generation from
diesel on the Ramu grid is close to being greater.
- Project-owner OSH therefore supports PNG Power in wanting to sell power to
its consumers at a much more affordable tariff. As a project that delivers
renewable, domestic and clean energy. PNG Biomass has been classified as
the best large-scale renewable power project in the Pacific by international
lenders, multilateral finance institutions and regional infrastructure development
- This week’s BPNG auction in Central Bank Bills were under-subscribed by
K59.0m from the K710.0m offered. This indicated that there were no appetite
for shorter dated securities. The weighted average yields for 28, 63 and 91 days
all remained unchanged at 1.39%, 2.34% and 2.51% respectively. There were
nil offers for 182 days.
- This week’s BPNG auction in Treasury Bills were over-subscribed by K17.74m
from the K290.94 offered. This indicated that there was an increase in appetite
for longer dated securities. The weighted average yields for 182 days and 364
days remained unchanged at 4.64% and 6.60% respectively from the prior
week. There were no bids for 63, 91 and 273 days.
- The Kina Securities Index increased by 0.10% to close at 5,186.07 points, while
Kina Securities Home Index also up by 1.10% to close at 11,772.95 points. The
increase was underpinned by rise in share price of CCP and OSH.
KFM Weekly Investment Update: Friday, 05 of April 2019