Prime Minister James Marape has given a firm assurance that PNG government revenue will not decline in 2029 as a result of the revised fiscal arrangements for the Papua LNG Project, rejecting Treasury estimates of a potential K28 billion shortfall by 2035.
He said the national economic benefits expected from the project, including investment, construction activity and future gas production, must be considered alongside temporary reductions in petroleum tax revenue from the existing PNG LNG operation.
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| PNG Government Revenue Will Not Fall in 2029, Marape Insists |
“There is no revenue loss starting 2029 onwards. It's all an aggregate gain for the country going forward,” Marape said.
Marape confirmed he had directed Treasury officials to sit down with the State Negotiating Team on October 26 to reconcile the competing assessments and establish a common position on the project's financial implications.
According to the Prime Minister, accelerated depreciation could shift the timing of tax payments from the existing PNG LNG Project, but this should not be interpreted as a permanent loss to the State.
He said the commencement of Papua LNG production would help recover the temporary reduction, while the construction period, anticipated to begin in 2027, would expand government revenue through taxes collected from businesses, workers and economic activity.
The project includes US$14.5 billion in capital expenditure, estimated at about K60 billion under baseline financial modelling. Marape also referred to a combined K70 billion investment programme as part of the wider economic benefits anticipated from the development.
“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.
The disagreement centres on how the financial effects of the revised arrangements have been calculated. The SNT argues that Treasury has overstated the potential loss by treating changes in the timing of tax payments and State equity financing as permanent reductions in revenue.
Its assessment puts the accelerated depreciation impact at approximately K4.6 billion to K5 billion over the 2029–2032 period, substantially below Treasury's K16.9 billion estimate.
The negotiating team has also defended the US$1.95 billion fiscal concession, saying it is linked to international oil prices rather than being an unconditional advantage for project investors. Under the arrangement described by Marape, the State's revenue share adjusts according to price movements.
He said PNG must offer commercially competitive terms to attract major international energy companies, which compare investment opportunities across different countries. Mozambique's large gas resources were among the competing developments he cited.
“Investors like Exxon and Total are global investors,” Marape 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.”
The Prime Minister further assured the Gulf and Central provincial administrations, along with Papua LNG landowners, that their equity holdings, development levies and royalty entitlements would remain unaffected by the revised fiscal arrangements.