The Marape Basil government is obtaining a 1.75 billion kina loan from the Asian Development Bank with the first 350 million kina to be made available next year.
Treasury Minister Ian Ling Stucky says this is to support the government’s plans to transform State Owned Enterprises into high performance organizations.
Around 100 million kina from the initial funding will be used to assist restructure and reorganize Air Niugini.
In a statement released at 12:22am last night, Treasurer Ian Ling Stucky is expecting some commentary from the opposition about this loan but says this loan will be at an interest of less than one per cent.
This loan is provided on what Stucky describes as highly concessional terms and is linked to the London Interbank Offer rate for 6 months which is currently 0.25 per cent. It includes a grace period of 3 years and a 12-year repayment period.
And he is confident the rate of return from this project, to transform all SOEs will be high and the government can cover the cost of the borrowings.
He says there are good reasons to keep the SOEs operating in the country and although many SOEs have failed to meet the citizens’ expectations, he says Sir Mekere Morauta set a good legacy behind when he undertook a reform of the SOEs back then and Bank South Pacific and NASFUND are success stories from this reform.
Stucky adds this government is now restarting this reform and will set in place clearer frameworks for Public Private Partnerships ensuring that the public interest is protected while encouraging a level playing field for increased competition.
And he further says these reforms may be similar to the BSP and NASFUND reforms.
He said they will ensure SOEs are accountable, more reliable and more efficient with better boards appointed on merit.
This he says is part of making PNG stronger as the nation emerges from the COVID-19 pandemic.
During the pandemic, Stucky said the government in its observation saw that some SOEs operations continued smoothly like PNG Ports and Water PNG while others like Air Niugini were severely impacted.
Stucky predicts a more difficult road ahead for Air Niugini as is the case for all Air Lines around the world and so a funding of K100 million from the initial K350 million kina to be obtained from ADB next year will be invested in this SOE.
This will assist in restructure and reorganization following the resumption of domestic flights and the rebuilding of international flight services.