Tuesday, June 29, 2010

Sir Julius upset over delays in resource laws review

Sir Julius...the Government should stop playing “deaf-ear” and take heed of growing resource-owner concerns.

Papua New Guinea is currently experiencing an unprecedented level of mineral boom with so much hype of the economic gains that has the potential to transforming the socio-economic conditions of the country.
Inevitably, comes with the developments in the extractive industries sector, are landowner related concerns and issues, which have similarly attracted much debate in recent times than ever before.
Concerns over resource ownership, mining royalties, equity participation, and benefit sharing and related issues have taken from the back burner to the forefront as more and more resources owners are aware of their rights to gain maximum benefit from their land, sea and environment.
This has been particularly so following the experiences of Misima gold mine in Milne province, the forced closure of the Panguna mine on Bougainville as well as currently operating Ok Tedi and Tolukuma mines.
Experiences of Misima and Panguna mines, not exactly the same, have many similarities and provided customary landowners, local communities and their provincial governments some valuable lessons.
Concerns of landowner benefits, equity participation, Special Support Grants (SSG) to provincial governments and the National Government not honoring its commitments and obligations in signed Memorandum of Agreements (MOA) with provincial governments are still pressing issues to be resolved.
Since the gold rush day of Bulolo, Eddie Creek and Koranga in Morobe province in the early 1920s, customary landowners PNG-wide have been crying foul over poor treatment by miners over royalties, preferential employment and business opportunities for local communities , equity participation, tax credit schemes and benefit sharing arrangements.
These issues will continue to be hot potatoes as long as mining activities continue in PNG.
Whist there is much excitement and fanfare with promises of much economic gains from PNG’s huge mineral resources, the National Parliament is yet to deal with a motion initiated by New Ireland Governor and former Prime Minister Sir Julius Chan that seek some revolutionary changes to the Mining Act 1992.
One of the underlying objectives of the motion is that Sir Julius believes that in these fast-changing 21st Century times, law makers need to review the laws relating to resource exploitation.
Another is that Papua New Guinea should not allow itself to be raped of its vast natural resources by multi-national corporations under outdated laws and regulations.
Instead, Sir Julius proposes appropriate changes in resource laws in line with the true wishes and aspirations of the people on whose lands these vast natural resources are found.
The over-orchestrated myth by some people including politicians that PNG’s current laws governing the extraction of mineral, oil, gas and resources are sufficient is absurd and a total nonsense.
Because, in general, the existing laws do not favour the resource owners.
 It disadvantages the resource owners, making them minor recipients of benefits from resources derived on and in their customary land.
Not only the landowners miss out, but if benefits are reaching them, sometimes it takes months and even years for promised goods and services to arrive.
The National Government had failed in some instances to honor its commitments to provinces where it has entered into agreements with commitments of Special Support Grants and other funds for the provinces.
Lihir Gold Mine in the New Ireland province is a classical example.
Since the signing of the Memorandum of Agreement (MOA) between the National Government and the New Ireland Provincial Government in 1995, the former had failed over the years to fully honor its commitments as per the MOA. 
The fact that Waigani failed over the years to fully honor its commitments has resulted in the people of Lihir and New Ireland province in general missing out on infrastructure projects and socio-economic benefits generated by those projects.
That MOA specifies for among others the National Government to allocate each year major infrastructure grants, SSG and major infrastructure projects.
The major infrastructure projects include an international airport, an international seaport, a modern well-equipped hospital at Namatanai and major redevelopment and sealing of the Bulminski Highway.
To date, none of these projects have been undertaken since the signing of the MOA in 1995.
As well, the New Ireland people through their provincial government have missed out on a lot of opportunities.
National Government owes the New Ireland provincial government over K400 million in outstanding infrastructure grants.
Divide that by 15 years from 1995 when the MOA was signed and find that the province has been missing out on up to K26 million annually.
If all the grants were paid on time and if use properly, imagine what New Ireland province would be like now, or for that matter provinces where major resource development projects are taking place.
Considering these and other outstanding cases, the motion by Sir Julius, when passed by parliament will not only resolve the outstanding claims or entitlements of the NIP, but also for existing as well as new projects in the country.
It is over one year this month that Sir Julius gave Notice of Motion for the comprehensive review of the Mining Act 1992 to transfer all natural resources ownership to landowners.
The motion, seconded by Bulolo MP Sam Basil, in whose electorate the new Hidden Valley and Wafi gold mines are coming up, is to move for the National Government to review the ownership of minerals as part of a comprehensive review of the Mining Act 1992.
The review calls for among others:
•           Review the decisions by the State to reduce the rate of Special Support Grant (SSG) calculations from 1% to 0.25% and demand the state to immediately restore the 1% special support grants (SSG) will full compensation to be paid to affected provinces retrospectively to the date of the Governments unilaterally, without consulting the stakeholders or invoking settlement of dispute under Terms of the MOA;
•           SSG calculation be increased from 1% to 10% of annual FOB sales revenue and that SSG be given untied;
•           The principle of derivation revenue (5%) paid to provinces be applied also to mineral exports;
•           The rate of mineral royalty payment be increased from 2% to 5% of annual FOB sales revenue;
•           The 10% equity option offered to Provincial Government and the landowners be fully carried by the State;
•           The supply and procurement of goods and services from within PNG be transferred from within the province where the mining operation is located so that GST to the provinces is maximised;
•           Tax credit scheme be supplemented with more favourable arrangements to enable linking infrastructures to be established right from day one of the mining operations;
•           Mining companies contribute at least 10% of the value of further expansion costs not originally planned for that many prolong the payment of corporate tax;
•           Mining companies committed to support infrastructure as recommended by the Provincial Government and this commitment must from part of the mining contract;
•           National Government  immediately settle all outstanding MOA by 30 June 2009; and
•           Amendment to the Mining Act 1992 and transfer all natural resources, (Timber, Fish and Underwater Mining, Oil and Gas), ownership to resource owners with clear and agreed sharing formula.
Sir Julius has made a statement outlining the reasons why it is imperative for changes in the relevant laws to transfer all the resource ownership to the landowners.
This week, when asked about his motion, Sir Julius expressed concern that for some unexplained reason, the motion cannot be listed for Parliament’s deliberation.
“It is an important motion and should be brought forthwith without unnecessary delay so that we debate, discuss and reach some decision. It’s very important considering the increased activities nationwide in extractive industries sector,” he stressed.

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