Compliance a challenge on foreign loan benefits

By MATTHEW VARI

Sunday, November 6, 2016 (Sunday Chronicle, PNG)

COST benefits of foreign loans into the country’s much need infrastructure projects was queries during this week’s budget press lockup, when issues on what real value the country and its citizens are getting out of the many loan arrangements the country signs into.

Issues were raised during the lockup on the amount of local content that foreign loaners and their local content conditions are having on local content benefits for infrastructure projects in the country funded through the loans.

Secretary for Treasury Dairi Vele said the issue of compliance was one that the department could not police what and how much of the foreign donor and its contractors could be bring in.

“Issue for us is on compliance. A lot of the foreign loans that we take, the local content of them on their side to get a loan across is usually around 20 to 30%, we can’t police it,” Vele said.

“We can’t make sure that someone is out there to make sure that the drivers they are bringing are Papua New Guinean, because it is a reserved industry and not a foreign worker.”

“I think as we’ve gone on this binge to build our country, and it’s very necessary to build our country, it’s very appropriate to build our country- what we now have to do is now claw back that sovereignty so we hope that with that 5 year period with the next government with the next political leadership we can limit them through the 30% and we up skill ourselves so we can take advantage of some of these things.”

Mr Vele referred to the shortfalls of skilled workers for the PNG LNG project as an example of the need for the country to upskill itself to meets the demands of big infrastructure projects funded under these arrangements.

“With these big mega project, and I use my experience in the PNG LNG, when I used to do the rounds I used to speak to the Institute of Engineers and explain that we had something like 300 welders, the PNG LNG project needed 750 welders. We had every welder in the country going to work on PNG LNG and the rest of the country would fall over.”

“So for us as well we have got a large program and we still don’t have the capacity, part of our challenge is to make when working with these large contracting firms to make sure that we have the capacity to participate meaningfully in the future.”