Describes how major projects are secured and financed. Explains activities of the multilateral development banks in and other aid-funded projects.
Selling to the Government
According to PNG’s Investment Promotion Authority, Communications, Value Chain, and Transportation sectors are potential areas for investment. These areas heavily involve infrastructure financing. In PNG, this is mostly arranged through Exim banks.
PNG’s procurement requirements are handled by the implementing agency the Department of Finance, which works in close consultation with the country’s National Procurement Commission (former Central Supplies & Tenders Board).
PNG’s procurement law applies to all public and statutory bodies with exceptions for state-owned enterprises (SOEs). The SOEs are exempted mainly due to the investment responsibilities that they are required to perform unlike that of public or statutory bodies. However, the procurement law applies to any procurement requirement sponsored by the national budget and may include SOEs.
For procurement arrangements under international agreements, the agreement supersedes the procurement law. This extends to procurements that involve co-funding, where the law only applies to funding portions involving the Government of Papua New Guinea.
The current national procurement law reserves government contracts valued up to USD 3.1 million only to national companies and Papua New Guineans. Contracts ranging between USD3.1 million to USD 9.2 million, while open to partnerships, will require fifty per cent of the value of the procurement to be undertaken only by local companies. However, these procurement restrictions reach a level playing field for contracts worth USD 9.2 million or more, opening project tenders to service providers, both national and non-national companies. However, the Marape-Basil government is in the process of amending the procurement act to increase the limit to USD 32.53 million.
Amid the opportunities and established legal framework, there is still growing concern regarding the level of transparency and fairness in the process of awarding contracts in PNG.
The central bureaucracy is increasingly politicized, which has eroded the capacity of government departments while allowing nepotism and cronyism to thrive in parts the public service. Observers believe that rampant political interference in the appointment process of the executive management and boards of state-owned enterprises (SOEs) have resulted in most SOEs suffering from poor management. The awarding process for government procurement contracts continues to lack competitive bidding processes due to excessive political influence.
In addition, the lack of proper consultation by the government on legislative and policy reforms have raised serious concerns over the independence and effectiveness of due process.
U.S. companies bidding on Government tenders may also qualify for U.S. Government advocacy. A unit of the U.S. Commerce Department’s International Trade Administration, the Advocacy Center coordinates U.S. Government interagency advocacy efforts on behalf of U.S. exporters bidding on public sector contracts with international governments and government agencies. The Advocacy Center works closely with our network of the U.S. Commercial Service worldwide and inter-agency partners to ensure that exporters of U.S. products and services have the best possible chance of winning government contracts. Advocacy assistance can take many forms but often involves the U.S. Embassy or other U.S. Government agencies expressing support for the U.S. bidders directly to the foreign government. Consult Advocacy for Foreign Government Contracts for additional information.
Financing of Projects
According to PNG’s Investment Promotion Authority, Communications, Value Chain, and Transportation sectors as potential areas for investment. These areas heavily involve infrastructure financing, and, in PNG, this is mostly arranged through Exim banks.
Multilateral Development Banks and Financing Government Sales
Price, payment terms, and financing can be a significant factor in winning a government contract. Many governments finance public works projects through borrowing from the Multilateral Development Banks (MDB). A helpful guide for working with the MDBs is the Trade Finance Guide. The U.S. Department of Commerce’s (USDOC) International Trade Administration (ITA) has a Foreign Commercial Service Officer stationed at each of the five different Multilateral Development Banks (MDBs): the African Development Bank; the Asian Development Bank; the European Bank for Reconstruction and Development; the Inter-American Development Bank; and the World Bank.
Learn more by contacting the:
- Commercial Liaison Office to the Asian Development Bank
- Commercial Liaison Office to the World Bank.