Papua New Guinea Parliament Passes Laws for $30B Gas Project
Papua New Guinea's Parliament last Thursday passed the nine amendments that will, among others, provide tax concession during construction of the US$30-billion liquefied natural gas (LNG) project.
The amendments were passed as landowners filed a court action at the National Court to challenge the legality of the LNG agreement signed between the state and ExxonMobil and other partners.
All the legislative amendments were passed on voices, with no objection from the opposition that had earlier threatened to boycott the special session.
"This bipartisan approach is a victory for PNG," leader of government business Paul Tiensten said after parliament adjourned at 6 p.m. He said with the amendments passed, the government would now move on financing its 19.4 percent equity, indicating that it may come from a syndicate or an individual financer from a cash-rich Arab country.
The amendments included the Income Tax Act; Customs Tariff Act; Excise Act; Excise Tariff Act; Dividend (Withholding) and Interest (Withholding) Tax Rates Act; Stamp Duties Act; Income Tax Regulation Act; Insurance Act; Price Regulations Act; and the Employment of Non-Citizens Act.
Specific amendments included the exemption of paying customs tariff if the total cost was US$50 million; exempted from excise tax during the construction period; and being exempted from paying the 2-percent dividend withholding tax, among others.
The amendments to the Non-Citizens Act, introduced by Labour Minister Mark Maipakai, would give PNG professionals the first opportunity to apply for jobs before it can be advertised overseas.
Finance Minister Patrick Pruaitch said the amendments to the relevant tax legislations were aimed at easing the tax burden on developers, especially during construction.
"The construction phase would involve massive capital spending by the developers to bring in necessary machinery and equipment." But he promised that a lot of the equipment could not be sourced locally.
Related amendments to the non-tax legislation would facilitate the movement of funds and technical expertise that could not be sourced locally. He said the amendments would see the growth rate doubling, transfer of technology and management skills and other spin-off benefits.
Pruaitch said the LNG project was on target with the preliminary front end engineering and design work set to start.
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