PAPUA New Guinea (PNG) is losing billions in US Dollars from the fisheries industry in revenue inflows because 80 percent of fish caught in the PNG Exclusive Economic Zone (EEZ) is processed and sold in other countries in US Dollars since PNG does not have a Domestication Policy.
Chairman of RD Group, Mr. Roy Rivera revealed that over 60 per cent of RD’s business is done in US Dollars because it processes the fish in PNG and sell to Europe and the US market as premium canned tuna under their various brand names. This is the very important part of their business mix.
Mr. Rivera said: “Imagine how much US Dollars PNG could be making if all the fishing companies were processing fish into semi and final products and exporting to other countries in US Dollars. As the first fishing company in PNG, we want to commend the Marape-Rosso Government for finally making a very bold decision after 49 years to correct this policy and bring in a Domestication Policy where all fish caught in PNG is processed in PNG. This will significantly increase PNG’s earnings in US Dollars and really contribute to minimizing the US Dollar crisis that PNG is struggling with. It will also result in creation of 50,000 to 100, 000 new jobs.”
Mr. Rivera stated: “Our company (RD) is so grateful that of all the fishing companies in PNG and outside PNG, the Marape-Rosso Government has chosen to partner us in this exciting new JV Fishing Company. We are committed to this JV, and we want to assure Prime Minister, Hon. James Marape, MP, and the Marape-Rosso Government that we are very committed to this JV and are determined to ensure that we do our best to make sure that our JV Fishing Company succeeds.
We will be working very closely with the new Chairman of the SNT, Mr. Dairi Vele, and the technical team and lawyers from both sides to make sure that over the next four weeks we will finalize the negotiations and have the draft agreements- the Heads of Agreement between the State and RD, and the Shareholder Agreement between the State and RD for the operations of the JV, ready for submission to the NEC for approval. My team will be travelling to Port Moresby in the next two weeks to meet with the SNT to finalize the agreements.”
Mr. Rivera also stated that plans to develop the Pacific Marine Industrial Zone (PMIZ) would not work unless the JV company have fish to process.
“At the moment we are really struggling to meet the demand of our customers. In PNG, we cannot meet the local market demand because we are not able to produce enough canned fish with our current capacity, and we are also not able to meet our international market demand. Currently our business split is 40 percent domestic and 60 percent international. With our own fishing fleet under this JV, we are confident that we will be able to increase the supply of fish so we can process more fish to meet our domestic and international market demand,” said Mr. Rivera.
Under the proposed JV, RD is offering their 645 hectares of land in Vidar, Madang, to be jointly owned by the State and RD under the JV company.
“This is a very important step because the PMIZ and PNG’s dream to be the ‘Tuna Capital’ of the world will not happen unless we have all the complimentary services that the fisheries sector will need including water supply, shops, dry dock, slipway, international wharf, etc. That is why we are making our land available,” said Mr. Rivera.
Mr. Rivera further stated: “We are now talking to KCH to enter into a Memorandum of Understanding (MoU) over the next two weeks to work with them to develop a Masterplan for our proposed SEZ. We cannot develop new canneries and processing plants without water and power supply, and a new international wharf. These are the areas of expertise that KCH has which we want to lean on, so a partnership with KCH for us is so critical at this stage. We want to go out on international tender in partnership with KCH for a development of a Masterplan for our 645 hectares of land together with the land that NFA owns we can make our shared dream of making PNG the ‘Tuna Capital’ of the world. We have an urgent need to build a new cannery to meet our domestic and international market demand, but we cannot do that without a reliable supply of water and power, and sewerage system. Power supply is a very serious issue.
Currently, the power supply to Vidar is so bad that we are basically running our diesel generators 24 hours a day. We are therefore in discussions with KCH to enter a long-term partnership with them to help us develop water, power, and sewerage facilities so we can develop the second cannery which will enable us to meet the huge demand for canned tuna in PNG and our international market demand.”
“We are very happy that Madang Governor, Hon. Ramsey Parawi, MP, and Member of Rai Coast & Minister for Labor and Employment, Hon. Kessy Sawang, MP, are on the State Negotiating Team because we have to involve our local leaders and people in this massive development that we want to do in phases in Madang. We have to make sure that local people benefit from all the spinoff opportunities, and we are also involving the two districts who are part of PMIZ- Madang and Sumkar districts,” added Mr. Rivera.
Minister Maru said this fishing JV is a new step for the Government to chart into uncharted waters.
“There are risks involved and it is important that the SNT in its negotiations is able to give confidence to the Government when it presents the submission that this JV will minimize risks to the State and that it has a chance to succeed,” said Minister Maru.’
Minister Maru further stated: “For the first time, Papua New Guineans will sit on the fishing vessels of this JV company, crew the fishing vessels which employ up to 40 crew per
vessel, and master the trade of fishing, processing, and marketing of fish. Spending a long time at sea is a very serious deterrent to our locals in long-term employment as fishermen where they do not get back to their families for up to a year and in some cases two years.”
“It is important that under the new JV we look at ways in the negotiations to attract our own people to work as fishermen and live on the vessels while at the same time we must look at ways to look after their families in a way that their package and renumeration is structured to attract many of our unemployed youths to work on the fishing vessels and also to work in the fishing industry. These are some important parts of the negotiations that the SNT must undertake.”
Chairman Rivera and Minister Maru agreed that the JV agreement must also include Phase 2 which is the building of a new cannery and Phase 3 which is the development of a new Special Economic Zone (SEZ).
“The Fishing Company is under phase 1 of our partnership between RD and the State. Phase 2 will include the building of a new cannery which is needed right now, and phase 3 will cover the development of a new SEZ to include the 645 hectares land that RD is offering to the new JV Fishing Company. The requirement for capital could be achieved by listing this JV company in the National Stock Exchange so provinces, especially coastal provinces and our own people and institutional investors can invest in this company, so it truly becomes a PNG-owned integrated business,” said Minister Maru.
“If we attend to issues like water and power supply and provide all the infrastructure like international wharf and dry dock, we have a great chance of attracting other Pacific Island States to come and invest within the PMIZ. If we know how to operate canneries, we can lend them a helping hand to set up their own. Right now, we do not have the knowledge ourselves. Countries like Namibia and Australia are Fishing States because they do not allow other people and other countries to come in under bilateral agreements to fish their waters. This is the step that PNG must take and must be prepared to take.”
Minister Maru further added: “There is going to be a lot of hard work and a steep learning curve, but I thank the Prime Minister for his leadership and the support of the Minister for Fisheries, Minister for State Enterprises, and the Cabinet for making the decision to domesticate our fishing industry starting with the JV with RD. One day PNG will be a Fishing State and I am excited we are starting with the first step now. This will be one of the greatest decisions that Marape-Rosso Government will make in its term, and I look forward to the next four weeks of solid negotiations and the approval of the agreements so we can operationalize this JV Fishing Company and start this new journey.”
Meanwhile, new SNT Chairman, Mr. Dairi Vele has given his commitment that he will work very closely with the chairman of RD and the negotiating team to tidy up the negotiations and finalize the two agreements over the next four weeks.
“I am confident that the negotiations and the two agreements will be finalized in the next four weeks because a lot of work has already been done by the previous Chairman and his team in terms of the negotiations,” said Mr. Vele.
