In the week that the ExxonMobil Corp. joint venture’s PNG-LNG project in Papua New Guinea has restarted production from LNG Train 2 and resumed LNG exports after the disruption of the February earthquake, a damning report has emerged saying that the benefits predicted to flow to Papua New Guinea from the overall project have not been realized.
The study, Double or Nothing: The Broken Economic Promises of the PNG-LNG Project, is from Canberra-based Jubilee Australia Research Centre, a body that advocates economic justice and monitors resources projects in the Asia-Pacific region. It said that following the start of the PNG-LNG project in 2014, Papua New Guinea’s economy was predicted to double. Jubilee says in fact it has only increased by 10%. Household incomes were predicted to rise by 84%, but instead have fallen by 6%.
Employment was predicted to rise 42%, but it is down 27%. Government expenditure was expected to increase by 85%, but it is down 32%. Imports were predicted to rise 58%, but are down 73%.
The one area where outcomes were underestimated was a predicted 106% increase in exports. The reality is an increase of 114%.
Economist Paul Flanagan, one of the report authors, said the amount of revenue PNG-LNG was expected to generate for the Papua New Guinea government has also failed to appear.
We expected about 1.4 billion kina/year, about $570 million (Aus.), but the actual numbers coming in are less than 500 million kina/year, or $203 million (Aus.) and most of that is generated from tax payments from employees of the project.
Flanagan said many of the missed opportunities from the project resulted from poor decisions by the Papua New Guinea government, which was focused on the country’s resources sector to the exclusion of everything else.
In the first years of the project the government markedly increased expenditure and bought a 10% share in one of the JV partners (Oil Search Ltd.) at a cost of at least $250 million.
Report co-author Luke Fletcher and Jubilee’s executive director, said the Papua New Guinea government needs to pursue more appropriate development policies. Attention needs to be paid to other sectors like agriculture, tourism, fisheries which, if healthy, benefit the vulnerable rural poor in the country.
