Foreign exchange affects market – Post Courier

BY PATRICK TOM

Domestic market supplies remains impacted with the current shortage of foreign currency.

Puma Energy PNG Limited country manager Hulala Tokome told Post-Courier that the rising oil prices will have a significant impact on Papua New Guinea this year.

Mr Tokome said last week, the price of the benchmark Brent Crude Oil went over US$100 (K354) a barrel for the first time since August 2014.

“The movement up in oil prices is being felt around the world.

The most obvious is the increased global uncertainty caused by Russia’s invasion of Ukraine,” he said.

“The physical market is tight, as stocks of crude and diesel are drawn to the lows of the seasonal range, and OPEC continues to underperform against its crude production quotas, adding to tight supply.”

Mr Tokome said locally, the price of fuel has gone up by close to 0.50 toea per litre just over the last couple of months, and it will most likely jump up by another 15 to 20 toea per litre in March again.

“This also creates a further issue for us as the ongoing shortage of foreign exchange (FX) in PNG is not good for us because we are not able to get the FX that is required in the market in order to pay for our crude supplies” he said.

“It is having a huge impact on our business.

We can’t continue to sustain our business operations if we are not able to pay for the crude of which we are at that critical point right now.”

He pointed out that an option would be to cut back and shorten the market which would prove counter-productive and wouldn’t want to go down that path.

“We want to make sure that we continue to maintain supply in country hence we’ve been heavily engaged with all stakeholders in the market in terms of being able to maintain supply,” he said.

“However inflation and the costs of goods in country as you can already realise in shops, has significantly increased.”

BSP Financial Group Limited CEO also added that outstanding foreign exchange orders for imports, foreign service payments and capital payments reduced dramatically.