SOURCE: Radio Australia News

By Firmin Nanol, Port Moresby

The Agriculture Minister Tommy Tomscoll said the group behind the proposal, Naima Investments, was requesting a 20 year tax concession in return for becoming PNG's primary rice supplier.

They also wanted an 80 percent tariff or tax applied to other rice importers.

Offer you can't accept

Mr Tomscoll said it was cleared that if the conditions were granted, Naima would have a monopoly over the importation, sale and distribution of rice in PNG, which would cause hardships for other rice distributors and affect consumers.

"A monopoly is not good for an open economy like Papua New Guinea where we are encouraging free trade, we are deregulating many of our industries and laws to allow the market to function in terms of supply and demand and the price," he said.

"I would not encourage any company to deliver a monopoly in the rice. Rice is a big staple [of the] diet for our people and that's the last thing I want to do."

Mr Tomscoll added that Naima Investments did not appear to have the capital to back its proposal, and it had not followed the proper legal processes to acquire certain licenses and secure government approval.

The Minister's decision to terminate the project followed growing opposition from parliament and the business community.

One of PNG's major rice suppliers, Trukai Industries, raised concerns when the project was first mooted, saying that it would kill the country's rice industry