PNG petrol supply at threat over Puma issues

Transcript

Papua New Guinea's major petrol supplier has warned that the country is set to run out of petrol in the coming weeks as the company winds down its supply.

Puma is in negotiations with the government over outstanding issues on customs duties and 1.4 billion US dollars in taxes for crude oil it imports into PNG.  

Johnny Blades has more
 
Puma Energy bought InterOil's oil refinery and petroleum products distribution business in PNG last year for $US526 million. However Puma made a decision to stop supplying petrol over the weekend. PNG's minister for petroleum and energy Nixon Duban is determined that the country's petrol supply remains in good stead.

NIXON DUBAN: I will talk to Puma, and I will also try and talk to the minister for treasury and the customs commissioner general to try to allow some exemptions if there is a need. And I think it is about time that we put this issue to rest and allow the flow of petrol for the country to remain stable.

Nixon Duban says Puma is being given every opportunity to address their issues with the state.

NIXON DUBAN: I have always recommended to them to talk to the Customs Commissioner who has insisted that they owe the state a certain amount of money which they are not willing to settle. And it is going around a circle and we are hoping that there will be a compromise at some point of time. I also am sympathetic towards the plight of Puma given that they are running one of the biggest refineries in the country. We are looking at certain options that the prime minister has directed to try and address this dilemma.

The Customs Commissioner Ray Paul confirms Customs has some outstanding issues that it's currently in discussions with Puma to resolve. He says Customs is not preventing Puma operating as normal.

RAY PAUL: We have not and we will not because we are here to grow business in PNG, number one. secondly, we... as much as possible, they are investors, they're coming in here, and what they invest in, we want to see them having their return, so we're not in the business to close anyone from doing business unless they have issues, then yes we will want to deal with them up front.

In a statement, Puma Energy's country manager Jim Collings said they're working to resolve the issue but put the blame on a lack of liquidity in the forex markets.

JIM COLLINGS: Due to the lack of liquidity in the forex markets, Puma Energy has only been able to convert very limited amounts of local currency into US dollars to pay for its supplies. Puma has kept the government informed on this matter and has been trying to work with them on a solution. For the past year, Puma Energy has used its own resources in order to avoid fuel product shortages for Papua New Guinea, in the hope that a liquidity resolution is achieved. This has not been forthcoming in any meaningful way and we have now reached a stage that is unsustainable.

Puma says it's managing the supply into Port Moresby in an effort to minimise impact to essential services and customers. The company has warned of continued shortages over the next few days and other products will be affected if a resolution is not reached this week. The Prime Minister's office says it expects to conclude talks with Puma soon but has revealed it's talking to other suppliers like Mobil to fill the gap. It says the monopoly granted to InterOil by past governments has come back to haunt the current government.