NatGas Revenues to Flow into PNG Sovereign Wealth Fund

PNG Treasurer Don Polye

PNG Treasurer Don Polye

Liquefied Natural Gas (LNG) will drive growth in Papua New Guinea (PNG) this year with the ExxonMobil-led PNG-LNG Project on track to begin exporting in the second half of 2014. The PNG Sovereign Wealth Fund will be the sole beneficiary of the government’s natural resource windfall, PNG Treasury Minister Don Polye has reportedly declared.

The US$ 19 billion PNG-LNG project has gas production and processing facilities spread throughout the Hela, Southern Highlands and Western provinces.

“All proceeds of LNG will go directly into the SWF and I mean 100% of it,” Polye said, according to Post-Courier. “The first sale of the LNG will begin this year and the projected growth of the economy will be roughly approximately valued around K52 billion (US$20 billion) when the first proceeds of the sales of LNG start coming in.”

In November 2010, the PNG government wrote provisions for a sovereign wealth fund into its 2011 budget. The sovereign fund is intended to rein in the effects of historically volatile mineral and petroleum revenues on the economy and government budget as well as to provide for long-run economic development and social programs. According to Post-Courier, Minister Polye said the sovereign wealth fund will be finalized in May at the next parliament session. As for the sovereign fund’s asset allocation policy, Polye is eyeing international markets.[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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