FUEL SUBSIDY TO BE PLACED IN CENTRAL BANK AS GOVERNMENT REVIEWS NAPANAPA REFINERY CAPACITY
The National Government will place the K1 billion fuel subsidy with the Central Bank for fuel suppliers to access, while it considers ways to increase fuel storage capacity at the Napanapa Oil Refinery.
This was revealed by Minister for Rural and Community Development Joseph Leland in Port Moresby last Friday.
He said the K1 billion announced by the Prime Minister to address rising fuel prices will be made available through the Bank of Papua New Guinea.
“We have met with fuel importers, ExxonMobil and Puma. We will be meeting with Ok Tedi shortly to address the fundamentals of the subsidisation and the mechanism of how it will work,” Leland said.
“One of the agreements is that the subsidy will be held in the Central Bank of Papua New Guinea so that when importers place orders, they can be assured that funds are available. They can provide one-, two-, or three-month supply signals to overseas suppliers. This is very important. The subsidy will go toward the point of purchase and help adjust price differences, particularly when calculating insurance premiums and import parity pricing of fuel coming into the country.”
He said the government will continue to monitor global oil prices and the strength of the US dollar in order to stabilise fuel prices in the country.
In the long term, the government is looking at developing the Napanapa Oil Refinery and increasing its storage capacity.
Leland said discussions are underway with Ok Tedi regarding ZA1 fuel storage capacity and with Kumul Petroleum Holdings Limited regarding ongoing work to expand storage tanks.
“The main goal is to secure our fuel supply,” he said.
Independent Consumer and Competition Commission Chief Executive Officer Roy Daggy said the current agreement is legally binding between the State and Puma Energy.
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