15 Mar 2012

ADB says few earnings for PNG government from LNG before 2023

7:31 pm on 15 March 2012

The Asian Development Bank says the Liquified Natural Gas project in Papua New Guinea is not expected to generate significant earnings in the first five to ten years of production.

The ADB's country economist for PNG, Aaron Batten, says revenue is expected to be small in the first decade because of tax benefits given to the LNG project.

He says the LNG revenue will make a difference to government coffers overall but it will compensate for a decline in government revenue from older mines and oil fields from about 2023.

"Well this is the currently forecasted time period for when those taxation benefits begin to wind down. So this is when the project will begin to start paying a full rate of tax to government as a result both of the government's equity stake in the project, which is 20 percent, as well as just its normal company tax."

Aaron Batten says for the first five to ten years of production the government is expected to gain up to 468-thousand US dollars per annum and by 2023 it is expected to gain up to 1.4 billion depending on the price of LNG.