Puma Energy has shut down its operations nationwide in Papua New Guinea while Prime Minister James Marape leaves overseas again to Fiji as the nation is left scraping for what is left in the oil tanks of its ailing economy.
The country will be on total shut down today.
Assuring the country that a solution would be found soon for the fuel saga in his response in Parliament last month, Prime Minister Marape’s promise has not materialised.
The much talked about K13 billion (US$5.3bn) in foreign reserve did niot amount to anything as the country’s entire fuel supplies ceased from yesterday.
Puma Energy has confirmed with the PNG Post-Courier that none of its orders had been satisfied and agreements made in Singapore have not come to fruition.
The fuel refiner needs an urgent US$100 million in foreign exchange orders from the country’s Central Bank to trade and replenish all pumps.
They need at least US$80 million a month to trade and operate.
No immediate solution
Prime Minister Marape stated in Parliament last month that he had told Puma Energy bluntly in Singapore on Sunday, January 8, 2023, that he did not “tolerate the country being held to ransom”.
But it seems the government and the Central Bank are holding the nation to ransom with no clear immediate solution in place with the issue still persisting.
Puma Energy country general manager Hulala Tokome said that what was discussed and agreed upon in Singapore by the government had not been honoured.
“We are going to go for total shut down by close of business today [Sunday],” Tokome said.
“It’s going to impact [on] the communications as well because they run on fuel, repeater stations. You know, it will take us more than one month to replenish our stock.
“The root cause of the problem is we just need the bank of PNG to approve our FX orders.”
The Post-Courier checked with the aviation industry and there has been no indication of immediate interruptions to flights as of last night.
FX orders ‘blocked’
In July 2022, when the same problem escalated, Puma Energy wrote to Marape and the government over the treatment of the company under BPNG Special Purpose Audit (SPA) and removal of access to FX markets.
“As per our conversation, the Puma Energy group of companies in PNG is currently undergoing a SPA with the BPNG.
“Our FX orders have been restricted or blocked by the Bank of PNG, which is limiting our ability to operate and ensure supply of product into the country. As discussed, this will impact the availability of fuel if our FX orders aren’t settled.
“Today, we need a minimum of US$40 million in FX orders to ensure continuity of supply into PNG,” the company wrote to Marape in July 2022.
Yesterday Tokome said: “For the FX orders, for now we would need at least, US$100 million to trade, if they had allowed us to trade, we would have been at least be able to get the commercial flows, or we would not have this happening . . . we have been for the last seven weeks not been able to trade and therefore, we going to need at least another US$100 million to get us to operate, and we talking about two months now.
“If we continue to be cut off from the FX markets we will be unable to purchase replacement cargoes of crude oil and refined products in order to supply the country.
“This will unfortunately result in a product stock out and place security of supply of the country at risks — a scenario we are working hard to avoid.
Foreign reserves questions
“Given the lead time for cargo procurement and the corresponding payment obligations we will need to incur, we must have certainty on our ability to receive FX in order to secure supply.”
As Puma shut down its operations on Sunday, many asked where were the K13 billion in foreign reserves at the Bank of PNG that the government announced recently?
Today aviation, commercial, mining, schools, hospitals and other businesses will face the full brunt of reality as petrol and diesel is not supplied.
Expected power and communication cuts will all but see the country held to ransom as the capital of Port Moresby — the engine room of PNG — shuts down operations.
Yesterday, only three major fuel depots in the nation’s capital were open for three hours, allowing only K20 cash and K50 bank cards for vehicles to refuel.
Republished from the PNG Post-Courier with permission.
Article by AsiaPacificReport.nz