Sustainable mining in Papua New Guinea (PNG)

A potted history of a mine in Melanesia

by PAUL OATES

In the 1960’s and 1970’s, the large Copper and Gold mine at Panguna on Bougainville Island was hailed as the ‘cash cow’ of the fledgling PNG government. The mine was intended to provide a steady source of income for the PNG government coffers after Independence in 1975.

When asked well before Independence, what the mine provided for the local people, the Australian External Territories Minister Charles Barnes was accused of telling the Bougainvillean people they would "get nothing" (1.)

After many years of civil disobedience, a civil war, the deaths of thousands and a near mutiny by the PNG Defence Force (PNGDF), the Panguna mine remains closed. Investors would no doubt be wary of reopening the mine even if the local people succeed from mainland PNG and either set up their own nation or join the Solomon Islands and the people they feel ethnically part of.

So what can be learnt from what happened to try to ensure it doesn’t happen again?

‘Joanne Dateransi has stated publicly that the landowners, of who she is one, do not now or ever want the mine reopened. This interview went out live on blufm.org on the 25th of March, 2009. The reasons given were the irresponsibility of the mining company, the environmental damage they caused, and the attempted genocide of the traditional landowners, which ensued once the mine had been closed. Joanne is in fact the owner of the land which the Panguna site is located on, and any claims that landowners want the mine reopened should be treated with suspicion and caution.’(1.)

‘Citizens of Bougainville have filed a class action lawsuit in the United States against Rio Tinto arising from the environmental damage caused by the mine and war crimes occurring during the civil war years. In August 2006, the United States Court of Appeals for the Ninth Circuit rejected Rio Tinto's effort to dismiss the claim. See Sarei v Rio Tinto, 456 F.3d 1069 (9th Cir. 2006).’(1.)

The major shareholders of Bougainville Copper (1.), a subsidiary of Conzinc Rio Tinto (1.), are Rio Tinto (53.6%), Papua New Guinea (19.1%) and the European Shareholders of Bougainville Copper (ESBC) with approx. 4%. The remaining freefloat of 23% is held by private investors, many of which live on Bougainville Island. These shareholders are presumably receiving nothing on their investment.

There are moves afoot by the new autonomous Bougainvillean government to try and reopen Panguna yet the local landowners are currently holding out against this move. So is this is a classic case of NIMBY or (Not In My Back Yard)?

So what happened at Panguna? Let’s examine some of the background issues.

The Panguna mine was opened during the Australian Administration of the then External Territory of Papua New Guinea (TPNG). The Territory was a collection of disparate ethnic groupings artificially crunched together from the 19^th Century colonial carve up of the world. The original German colony of New Guinea was added to the Australian Territory of Papua and administered as a joint Territory after the Second World War. The people of the islands of Bougainville and Buka are ethnically tied to those in the old British Solomon Island Protectorate (BSIP) and were artificially separated from their cousins by a line drawn in the map of the Melanesian Pacific by previous colonial powers.

The people of Bougainville often refer to the people of the rest of PNG as ‘retskins’ (Tokpisin for ‘red skins’), since Bougainvillians are like most Solomon Islanders and noticeably darker than most of the PNG people.

The first issue was therefore a potential for resentment that the resources of Panguna and Bougainville were being used for other regions of PNG and not specifically to benefit the local area. It was clear that a large resource was being removed from traditional control without any real benefit to the local people.

Historical documents at the time also indicate other issues. There was reportedly an historical dispute over exactly who originally owned the land around the mine. The local clan’s claims were disputed by those who had previously been pushed off the land by those who were in residence when the mine was initiated.

Traditionally, PNG land ownership disputes were settled by clan warfare. Mineral rights had never been considered as no mining had ever previously taken place. Mineral rights were never considered by the Administration until the House of Assembly by majority vote in November 1966 awarded 5% of the royalties to local Bougainville landowners.

In addition, the compensation offered to landowners was negligible after considerable tracts of land were required to develop the mine. The area of land far exceeded any small scale gardens originally nominated due to access roads and overland power pylons.

The third and potentially most divisive issue was that the Special Prospecting Authority of 1,000 square miles and the exclusive Prosecting Licence of 25 square miles reportedly did not give any specific entitlement to mining rights. Under Australian legislation, these rights had to be negotiated.

Lastly, it is understood that as it was specifically the Administration’s legal responsibility to negotiate with landowners, mining companies considered themselves excluded from any requirement to discuss these issues with the local people.

The stage was clearly set for an impasse many years before it happened.

Melanesian concepts versus Western concepts of Land Ownership

The concept of land ownership in Melanesia is complex and needs to be understood during discussions over the development of any locally owned natural resource.

Melanesia                                Western nation                        Contrast

Land Ownership
Land traditionally owned collectively by the clan	Private land is owned by the individual if previously purchased and title obtained from the government	Collective ownership versus private ownership
Ownership of resources under the ground
Ownership claimed by some governments but disputed by original landowners who have never given up their traditional rights	Government ownership of minerals under the ground and this is controlled by mining leases and permits.	Traditional Melanesian owners still view that which is in their ground as being still theirs to own.
Ownership of resources on top of the ground
All timber, animals and resources within traditional land boundaries are owned by the landowners	Government legislation and regulations control the ownership and use of all resources that are situated on private land.	Government control over resources versus clan ownership
Ownership of the resources in waterways, rivers and the sea.
Traditional ownership of these resources with national government claiming some control.	All resources controlled and policed under government legislation	Traditional owners view these resources as theirs to own, control and use and not the government’s.
Protection of resources
Traditionally protected by clan members and by force if necessary. Nominal government responsibility mostly in name only.	Government legislation and a reasonably effective legal and court system available,	Strong government controls versus weak government and an acceptance of the use of traditional force to defend these resources if required.

Differences between the traditional Melanesian concept and the Western concept of Wealth and the transfer of Wealth

Melanesia                                Western nation                        Contrast

Wealth can traditionally only be obtained by giving desirable commodities away within the clan or village and so obtaining a reciprocal obligation	Modern wealth can be accumulated and stored in banks and business shares. There is no obligation to anyone except for government taxes	Clan wealth versus individual wealth
Wealth distribution is an obligation between ‘wantoks’ (Tokpisin) of the same ethnic group	Individuals are able to generate and store wealth without any obligation to their community	Traditional Melanesian wealth distribution contrasts with Western individualism
Banking facilities and long term wealth storage is not available to many in the village	Modern banking and wealth storage available to everyone	Problems with PNG wealth storage and retaining long term benefits from wealth
The transfer of wealth is traditionally within the clan and usually involves joint ownership of land and natural resources	Wealth can be passed onto to future generations via liquid and tangible assets	Recognition that individual wealth can be passed on versus mostly community owned and recognised wealth

The history of developing resources in Melanesia

The history of the development of natural resources in Melanesia has been mostly focussed on the extraction of the resources (minerals, timbers, marine), in the most expeditious manner using western concepts of wealth transfer.

Between the two World Wars, the Administration of the Trust Territory of New Guinea, as opposed to the Australian Territory of Papua, was primarily paid for from gold extracted from the Wau/Bulolo area. The traditional owners of this resource were not considered as the gold was viewed in the Western concept of being government owned.

In addition, due to the understandably somewhat belligerent nature of the local people, many workers from other areas in New Guinea were brought in and employed in the extraction of the gold. These outsiders settled in and around the towns and established families.

During the late 1930’s, enormous mechanical gold dredges were flown into Bulolo in pieces and assembled on site. The mullock heaps left by the dredges from their alluvial operations was soil previously at the bottom of the river. After the dredges ceased operations, these huge waste dumps were taken over by outsiders as ‘new land’ and therefore claimed as their own.

 The perception of the descendents of the original landowners is now underlying hostility to the ‘foreigners’ who are now ensconced within the local gold producing community. Recent riots in early 2011 where the local Watut people have demanded the repatriation of people from areas like the Sepik are an example of how the problem of how local people view those from other regions benefitting from local resources.

An example of historical necessity creating problems for today happened in the Solomon Islands. During World War 2, the American Forces there decided they needed more labour than was locally available on the island of Guadalcanal and imported workers from the neighbouring island of Malaita. Recent riots and loss of life from civil unrest between local Guadalcanal people and the descendents of the Malaita labourers have led to the requirement for foreign ‘Peace keeping troops’ from regional neighbouring countries (Regional Assistance Mission to Solomon Islands - RAMSI) to now become a long term necessity.

The development of the Nickel mine in New Caledonia is another example of large scale mining in Melanesia. While the French government claims the Island is French territory and therefore bound by French metropolitan law, the descendents of the original local Melanesian people who owned the island have no claim to the wealth being generated. Yet when the mine’s waste overflowed and reportedly poisoned the surrounding sea, local people saw their livelihood severely threatened.

Current problems in managing PNG resources

Viewed from a ‘Western perspective’ (refer to the above matrix), the concept of resource development is fairly straightforward. While there are many examples of where either a lack of forethought or subsequent operational problems have caused protests and the premature closure of an activity in Australia, developers can fall back on government protection and legislation. The issue of who owns the available natural resources can if disputed, be legally determined by a court.

This is not necessarily the case with resource development projects in PNG where government legislation is either contested or ignored and government control in rural areas weak to non existent. This has led to many confrontations between local landowners and mining companies as was the case with the Panguna mine. The local Bougainville people felt they were not consulted about the project, fully informed about the implications or sufficiently compensated when their land and natural resources were disrupted or destroyed. Recently, in other areas in PNG, there have been reports of many local landowners being forcibly removed from their land in order to allow mining projects to go ahead.

The nature of PNG customary land ownership often leads to disputes over just who is a landowner and who should be included in any benefits or compensation on offer.

‘Some argue that PNG has a classic case of the resource curse: Dutch Disease, weak accountability and corruption, which all conspire to undermine economic, social and political development. A key question is how to break with this past experience and chart a new development path?’ (3.)

Land alienation and its consequences

‘Ahi villagers in Lae have been told in no uncertain terms – so many times – not to sell any more of their land if they want to survive.’ (4.)

In a recent development, the Somare government has decided to foster initiatives to bypass any delaying tactics by local landowners that might hinder development of the nation’s natural resources.

A so called ‘Maladina Amendment’ (named after the MP who proposed it), and pushed through the PNG Parliament by the Somare government against all opposition and extensive public demonstrations, specifies that the Head of the Environment Department can singlehandedly determine if a proposed mining project meets PNG legislation. This was in answer to legal injunctions brought against the predominantly Chinese owned Ramu Nickel mine near the coast at Madang.

If a future PNG government repeals this legislation, what happens to an already operating mine that depended on this law to override original local landowner objections? What happens if current landowners resort to violence to prevent their land and sea resources from being polluted? Will the mining company resort to armed intervention from privately hired police as has reported elsewhere?

Recent concerns have also been raised about the use of Special Purpose Lease Agreements that have been allowed to be formalised by the PNG government and reportedly cover 10% of the country. These agreements permit traditionally owned land to be ‘leased’ and not sold. Once a ‘lease’ has been negotiated, say for the growing of Oil Palm or any other commercial crop, the present forest and timber resources must logically be ‘removed’ by the ‘developer’ who then can sell this resource.

Whether the commercial crop then ever gets planted and returns an investment remains problematical at this stage. How any ‘lease’ payments are disbursed also raise significant concerns due to difficulties in determining exactly who is a landowner and what their share might be?

Resource development in PNG - where to from here?

Extractive industries are by their very nature, disruptive to the existing environment. The existing natural environment is very often the only source of wealth local landowners have. It may also be the only source of income and food production available. In addition, local customs and traditions concerning the land may stretch back many generations. This involves the ability to hunt and fish and where necessary, obtain building materials and other personal requisites from the surrounding forests.

Initial payments to landowners made by developers may at first be very welcome. When the offers of money, new schools and education opportunities, health facilities and infrastructure development may first be well received, subsequent misunderstandings over who receives what share of the available remuneration can lead to subsequent disputes.

A lack of formal education may promote miscommunication between the parties concerned. This can inevitably lead to mistrust and possible conflict. Signed contracts are not a feature of traditional village life and may not be viewed in the same way as in a western country.

Having a signed contract that has been endorsed by the government has demonstrably been proven to be no guarantee that there won’t be future disruption and possible cessation of operations and loss by the developer.

What happens when the available ‘compensation’ is fully spent and no longer available or completely missing for future generations is also a divisive issue. Future benefits for a few local landowners may be disputed by others who see themselves missing out. The PNG government will also wish to assume financial benefits that will be claimed are for the whole population. If these subsequent monies are then lost through corruption, the responsibility under Melanesian custom, could be seen to include all those involved with the original contract.

Local people may well ask what long term and lasting benefits will be? Who will maintain the schools and health centres when the development activity ceases?

When mining ends and the company leaves, who will pick up the pieces? Is there any enforceable arrangement available to the local landowners if they cannot rely on their government to act for them and defend their interests?

Who will be responsible for the restoration of the local forests, rivers and marine resources if they have been irrevocably destroyed, either intentionally or unintentionally? What surety is being offered in case a natural disaster occurs and the by products of a development activity pollute the local environment?

Summary

Before any decision is made to commence any mining activity in PNG, a full ‘holistic’ background check must be made and all stakeholder views considered.

Recognition of the Melanesian concept of ownership involved with any extractive industry involving natural resources, either on land or in a marine environment, will assist any negotiations.

The lessons to be learnt from the Panguna mine on Bougainville should not be overlooked.

(1.)  http://en.wikipedia.org/wiki/Bougainville_Copper

(2.)  http://www.riotinto.com/aboutus/history.asp

(3.)  How can PNG fight the Resource Curse? Mathew Morris 27^th May 2011  http://masalai.wordpress.com/2011/05/27/how-can-png-fight-the-resource-curse/#comment-13573

(4.)  Land is no cheap commodity – PNG’s ‘The National’ Friday June 10^th 2011

Preserving wealth in Papua New Guinea

BY PAUL OATES

"Those who cannot learn from history are doomed to repeat it." - George Santayana 1863 - 1952.

Preserving Personal Wealth

Many have observed that ‘It takes one generation to build up a gigantic fortune and the next one (or two, or three) disperses it again with some combination of bad decisions and lavish living.’

The guiding principle is: ‘Don’t touch the Principal’. Yet even the invested ‘principal’ or capital can disappear as demonstrated in the recent Global Financial Crisis.

‘Bricks and Mortar’ was another successful stand of yesteryear however look at what happened to the US property market where houses and properties are now being repossessed and selling for a fraction of their original value as borrowing agencies try to recoup their losses?

Preserving National Wealth

PNG’s Liquefied Natural Gas (LNG) Project is about to come on line:

‘The LNG project is the largest investment scheme in PNG’s history. Production is expected to start within four years and has the potential to double the country’s income.

In Port Moresby, the government faces the challenge of ensuring this new-found prosperity is handled responsibly and transparently. Ministers have announced plans to set up special accounts known as sovereign wealth funds to save some of the revenue for future generations.’ (1)

The proposal to set up a ‘sovereign wealth fund’ for PNG has a familiar ring to it.

The Republic of Nauru was declared in 1968. The Island’s economy was solely based on the extraction and export of phosphate rock, a left over from when the island was uninhabited and a roosting/nesting place for Pacific birds. The birds shed their guano over thousands of years and that eventually compacted on top of the coral rock to become phosphate, a prized component of fertilizer.

In the 1960’s and 70’s, the island’s population of less than 10,000 enjoyed the highest per capita income in the South Pacific from phosphate royalties.

The following excerpts are from Wikipedia:

‘The Nauruan economy peaked in the early 1980s. Nauru's economy depends almost entirely on the phosphate deposits that originate from the droppings of sea birds. There are few other resources, and most necessities are imported. Small-scale mining is still conducted by the RONPhos, formerly known as the Nauru Phosphate Corporation. The government places a percentage of RONPhos's earnings into the Nauru Phosphate Royalties Trust. The Trust manages long-term investments, intended to support the citizens once the phosphate reserves have been exhausted.

The Trust's fixed and current assets, many of which were in Melbourne, were reduced considerably, and many never fully recovered. Some of the failed investments included financing 1993's Leonardo the Musical, which was a financial failure, the purchase of the vacant Carlton and United Breweries site on Swanston Street in 1994 which was sold undeveloped in 1998, and a loan to the Fitzroy Football Club which went into liquidation in 1996.

The Mercure Hotel in Sydney and Nauru House in Melbourne were sold in 2004 to finance debts and Air Nauru's only Boeing 737, which was repossessed in December 2005. Normal air service resumed after the aircraft was replaced with a Boeing 737-300 airliner in June 2006.

The value of the Trust is estimated to have shrunk from A$1.3 billion in 1991 to $138 million in 2002. In 2005, the corporation sold its property asset in Melbourne, the vacant Savoy Tavern site, for $7.5 million. Nauru currently lacks money to perform many of the basic functions of government; for example, the National Bank of Nauru is insolvent. The CIA World Factbook estimated GDP per capita at $5,000 in 2005. The Asian Development Bank 2007 economic report on Nauru estimated GDP per capita at $2,400 to $2,715’

So what happened to Nauru’s wealth? Why has the average income of this nation’s citizens now diminished from a comfortable living to that of virtual poverty? Again, Wikipedia gives an answer:

‘When the phosphate reserves were exhausted, and the environment had been seriously harmed by mining, the trust that had been established to manage the island's wealth diminished in value. To earn income, Nauru briefly became a tax haven and illegal money laundering centre. From 2001 to 2008, it accepted aid from the Australian government in exchange for housing a Nauru detention centre that held and processed those who had tried to enter Australia irregularly.

The island has one airport, Nauru International Airport. From December 2005 to September 2006, Nauru became partially isolated from the outside world when Air Nauru, the airline which serviced the island, ceased operations and left the island accessible only by ship. The airline was subsequently able to restart operations under the name Our Airline with monetary aid from the Republic of China.

Nauru was one of three great phosphate rock islands in the Pacific Ocean (the others were Banaba (Ocean Island) in Kiribati and Makatea in French Polynesia). However, the phosphate reserves on Nauru are depleted for all practical purposes. Phosphate mining in the central plateau has left a barren terrain of jagged limestone pinnacles up to 15 metres (49 ft) high. A century of mining has stripped and devastated about 80% of the land area. Mining has also affected the surrounding Exclusive Economic Zone, with 40% of marine life estimated to have been killed by silt and phosphate runoff.

Following decades of mismanagement, corruption, and spiralling loans to General Electric, estimated to amount to approximately A$227 million, the Nauru Phosphate Royalties Trust (NPRT) was forced to sell off its international assets to pay loans.

When the new Australian Labor government decided to close the Nauru detention centre in 2008, the country’s Foreign Affairs Minister Dr. Kieren Keke, stated that it would result in 100 Nauruans losing their jobs, and would affect 10% of the island's population directly or indirectly: "We have got a huge number of families that are suddenly going to be without any income. We are looking at ways we can try and provide some welfare assistance but our capacity to do that is very limited. Literally we have got a major unemployment crisis in front of us."’

Sustainable Resources

‘A sustainable resource is a resource that is used up at the same speed that it is renewed. Wood can be a sustainable resource if the trees are harvested at the same rate as new trees mature. Wind is a sustainable resource as the wind is not "used" up. Solar and hydroelectric power can be considered sustainable. Oil, natural gas, minerals taken from the earth do not regenerate and are non-sustainable. Fish stocks can be renewed and can be used in a sustainable fashion but are presently being used at a greater rate than they are being renewed and are considered non-sustainable.’ (2)

Sustainable National Resources

The ancient Chinese monopoly on silk trade seemed to be a good example of a sustainable national resource until silk worm grubs were smuggled out of China.

The same situation happened with Brazilian rubber. Brazil enjoyed a huge world trade in rubber with centres like Manaus 1,000 miles up the Amazon, becoming a thriving metropolis. Then seeds of the rubber plant were smuggled out of Brazil and the country lost its rubber monopoly. Malaysia then became a major world producer.

Most extractive industries are logically, finite in nature and therefore not sustainable. Nauru is a classic example. Let’s examine two exceptions:

The timber industry can be a potentially sustainable resource but this industry must be managed assiduously.

Prior to PNG Independence in 1975, Commonwealth New Guinea Timbers (CNGT) located in Bulolo had a principle that for every Klinki pine tree felled, 10 new seedlings would be planted.

The guiding principle adopted was that with successive logging and replanting, the naturally occurring forests of native Klinki pine would be self sustaining and could be harvested every 30 years on a cyclical basis.

‘Forests cover more than 70 % (32 to 36 million hectares) of the total area of Papua & New Guinea Territory, and of that area at least 8-12 million hectares have considerable industrial potential. The approximate total of the already investigated resources is 2.6 million hectares carrying some 6,100 million superficial meters of merchantable timber, which represents approximately 25 % of the known merchantable forests of Papua and New Guinea (Anon. 1967). Production in 1965-1966 was more than 41 million superficial meters as compared with 5.5 million superficial meters in 1950-1951.

The Department of Forests has undertaken a reforestation program of harvested productive forests and of rehabilitating low value forests and grasslands since 1948. Major plantations are being established at Brown River, Bulolo, Kerevat and Wau.

The main species planted are as follows: Hoop pine {Araucaria cunninghamii Ait.), Klinki pine {Araucaria hunsteinii K. Schum.), Teak {Tectona grandis Lin.), Kamarere {Eucalyptus deglupta Blume), and Pinus spp. Except for Teak and Pinus, these species are indigenous to the Territory. The areas planted as of May 1967 are given in Table 1. (below)’

Table 1. Plantation areas in the Territory of Papua and New Guinea as of May 1967.

Species Locality Hectares                   planted

Hoop pine Bulolo/Wau                        4,058

Klinki pine Bulolo/Wau                       1,120

Teak Brown River                                  726

Teak Kerevat                                          630

Kamarere Kerevat                                 311

Pinus spp. Highlands                               92

Miscellaneous All centres                       112

Total net hectares                                7,091

* DEPARTMENT OF FORESTS, BULOLO, T. P. N. G. 1968 - See (3) below

Around Independence however, it was reported that a Japanese company had contracted to extract all CNGT forests and transform this valuable commodity into disposable wooden chopsticks. No comparable reafforestation program was reportedly to be undertaken.

Since Independence in 1975, the natural forests in PNG have been progressively felled and extracted by foreign timber companies. The income for PNG from this timber is negligible when compared to the value added timber products that are eventually marketed by those who process the timber. Very little of the income from timber actually accrues to the PNG nation due to reported corruption and claims of political malpractice. There also seems to be no attempt to develop a locally owned and operated timber processing industry to manufacture furniture to meet local and overseas demand.

On a visit to Weipa, North Queensland in 1982, the author listened to the company liaison officer explained that the local Bauxite ore body, the ore of the metal aluminium, was created by the gradual leaching of other minerals from the subsoil and that this was a continual process.

‘Almost all metallic aluminium is produced from the ore bauxite (AlO_x(OH)_3-2x). Bauxite occurs as a weathering product of low iron and silica bedrock in tropical climatic conditions.’ (4)

It just takes millions of years to produce an ore body of the size available in Weipa.

Summary

Are most natural resources like bank accounts? i.e. ‘The more you withdraw, the less there is?’ Well not necessarily.

There are some potentially long lasting national assets such as unique and beautiful scenery that promotes tourism. Cultural events and rare wildlife also can be useful as long lasting wealth generators again from tourism.

All these examples must be managed, carefully looked after and preserved however.

If it were easy, why everyone would be doing it wouldn’t they?

(1)   Mining Boom promises huge riches’ by Phil Mercer – Voice of America 2011

(2)   http://wiki.answers.com/Q/What_is_a_sustainable_resource

(3)   FOREST TREE AND TIMBER INSECT PESTS IN THE TERRITORY OF PAPUA AND NEW GUINEA By B. Gray DEPARTMENT OF FORESTS, BULOLO, T. P. N. G. 1968

(4)   http://en.wikipedia.org/wiki/Aluminium

Petromin pays out final K1.5m dividend

By PATRICK TALU

 

PAPUA New Guinea's petroleum and mining company Petromin Holdings Ltd paid out its final dividend of K1.5 million to the state last Friday, The National reports.

After recording a K81.5 million profit for last year, K1.5 million was paid to the trustee shareholder, the prime minister, at the 4th annual general meeting in Port Moresby's Gateway Hotel.

Petromin chairman Brown Bai said that although there were constant cash call requirements for the company's investment in the PNG LNG and Elk-Antelope projects as well as reinvesting in the Tolukuma gold mine, funding of mineral exploration budget and ongoing training and development of its legal and commercial people, it still could afford to pay a final dividend.

Bai said that the dividend was an addition payment to a total of K22.9 million tax paid by the group last year.

Mining Minister John Pundari, who was  not present to receive the cheque on behalf of the state said he was proud to see a nationally-owned company performing at that level.

Pundari said Petromin was the brainchild of Prime Minister Sir Michael Somare with a vision to make Petromin the vehicles to drive all hydrocarbon and mining industry in PNG.

Given the purpose for the creation of Petromin, Pundari said he wanted to see Petromin become a leader in the mineral and hydrocarbon industry in PNG and the Asia-Pacific region.

"Petromin was created to drive the commercial interest of the government on behalf of the people of Papua New Guinea."

Pundari challenged Petromin to be at the forefront of the industry and emulate major industries like Singapore and China, who had a track record of nationally-owned hydrocarbon and mining companies.

Meanwhile, the board had retained Bai as the chairman for another term while chief executive officer and managing director Joshua Kalinoe was also retained for a further four-year term.

Other directors reappointed were Sumassy Singin and Jerry Wemin for another term while Deloitte Touche Tohmatsu was reappointed as the company's auditor.

Petromin pays out final K1.5m dividend

By PATRICK TALU

 

PAPUA New Guinea's petroleum and mining company Petromin Holdings Ltd paid out its final dividend of K1.5 million to the state last Friday, The National reports.

After recording a K81.5 million profit for last year, K1.5 million was paid to the trustee shareholder, the prime minister, at the 4th annual general meeting in Port Moresby's Gateway Hotel.

Petromin chairman Brown Bai said that although there were constant cash call requirements for the company's investment in the PNG LNG and Elk-Antelope projects as well as reinvesting in the Tolukuma gold mine, funding of mineral exploration budget and ongoing training and development of its legal and commercial people, it still could afford to pay a final dividend.

Bai said that the dividend was an addition payment to a total of K22.9 million tax paid by the group last year.

Mining Minister John Pundari, who was  not present to receive the cheque on behalf of the state said he was proud to see a nationally-owned company performing at that level.

Pundari said Petromin was the brainchild of Prime Minister Sir Michael Somare with a vision to make Petromin the vehicles to drive all hydrocarbon and mining industry in PNG.

Given the purpose for the creation of Petromin, Pundari said he wanted to see Petromin become a leader in the mineral and hydrocarbon industry in PNG and the Asia-Pacific region.

"Petromin was created to drive the commercial interest of the government on behalf of the people of Papua New Guinea."

Pundari challenged Petromin to be at the forefront of the industry and emulate major industries like Singapore and China, who had a track record of nationally-owned hydrocarbon and mining companies.

Meanwhile, the board had retained Bai as the chairman for another term while chief executive officer and managing director Joshua Kalinoe was also retained for a further four-year term.

Other directors reappointed were Sumassy Singin and Jerry Wemin for another term while Deloitte Touche Tohmatsu was reappointed as the company's auditor.

Senior cabinet posts remain unoccupied

ACTING Prime Minister Sam Abal has yet to make ministerial appointments for the Foreign Affairs and Petroleum and Energy portfolios, The National reports.

By yesterday, no new appointments had been announced as lobbying heats along the corridors of power at Waigani.

Abal is believed to be under pressure from his National Alliance party and coalition partners who are vying for the key jobs leading into the elections.

Sources close to the acting prime minister said he was still consulting his NA party members, regional groupings, party executives and coalition partners to fill the two vacancies created by the sacking of Don Polye and William Duma.

Last Friday, the opposition called on Abal to immediately appoint the new ministers to give investor confidence in government.

Anglimp South-Waghi MP Jamie Maxtone-Graham said during grievance debate in parliament the appointments were taking longer than expected.

He urged Abal to stand his ground and not bow down to pressure from his party.

Maxtone-Graham said the acting prime minister "must stand firm in the face of adversity to make decisions for the good of the country".

Juha landowner leader Hengebe Haluya has called on Abal to immediately appoint new ministers for petroleum and energy and affairs given the importance of the LNG project.

"Abal is taking too much time in making new appointments," he said.

"If Duma and Polye have done nothing wrong, then reinstate them instead of destabilising the government."

Haluya said if Abal could not reinstate them, "then appoint former treasury and finance minister and Aitape-Lumi MP Patrick Pruaitch to the important petroleum and energy portfolio".

"We, the landowners, want Pruaitch back as minister or reshuffle cabinet and give him back treasury and finance," Haluya said.

He said the MoA and ministerial commitments had been delayed for a long time while "Waigani politics takes over".

Hides PDL1 landowner chief Stanis Talu said Duma and his colleague government ministers Patrick Pruaitch, Paul Tiensten and Arthur Somare had been the key state players in progressing the LNG deal.

"During the umbrella benefits sharing agreement (UBSA) meeting in Kokopo in 2009, Duma, as the minister responsible for the Oil & Gas Act, made commitments to certain landowner representatives to pay them business development grants, with more than K115 million committed and was endorsed for payment by Pruaitch when he was minister for finance and treasury," Talu said.

"With Pruaitch now holding another ministerial portfolio and Duma sacked, we fear that the commitments made at the UBSA and the licensed-based benefits sharing agreements (LBBSA) will not be looked at seriously, or not even considered and progressed further."

He said cabinet had endorsed the commitments through NEC decision No.96/2010 and a total of K93 million was approved for payment.

"In the 2010 supplementary budget, NEC approved the ministerial commitments to be captured for payment. This was done and an appropriation bill was also passed for funds to be allocated (ministerial commitments).

"As such, there is no point in Abal, Treasurer Peter O'Neill and Southern Highlands Governor Anderson Agiru hijacking the payment of LNG funds as these and other project-related funds do not come under their responsibilities," Talu said.

"With Duma and Polye now out of the way, other politicians can now have a field day with landowners' funds as they count down the days towards the general election."

LNG project locals block roads after row with cops

IRATE landowners from Hides, Komo and Angore have blocked off roads leading to the LNG project sites, The National reports.

Reports from Hides yesterday indicated that major bridges and access roads leading to well heads, plant sites, quarries and other construction areas had been blocked.

Attempts yesterday to get comments from the police in the Southern Highlands and at police headquarters were unsuccessful.

Attempts to also get comments from ExxonMobil failed.

According to Wilson and Willie Ayule of Hides 4 PDL7 and Hare Hengi, chairman of Wita Arua Holdings, there were deep trenches on the road between the Nongoli Camp, Hides 4 conditioning plant site, Komo Airport and Hides1.

Ayule said it all started when policemen believed to be from  Mt Hagen forcefully retrieved a vehicle which had been confiscated by the relatives of the women who were run over by it at Nogoli last week.

The women had died instantly. Five men were also injured in that incident.

Ayule said the police allegedly clashed with relatives who wanted to know why they were taking the vehicle away.

One of the landowners, John Kalomo, said the villagers then forcefully took over five other vehicles believed to be owned by ExxonMobil.

However, he said a reinforced police later retrieved all the vehicles.

Ayule said the situation got out of hand because of the unresolved issues between the landowners, the State and ExxonMobil.

"They got one backhoe from CCJV and dug up deep holes near the quarry, the road between Nogoli and Hides 4, Hides 4-Komo junction and also blocked off Tagali River between Tari and Hides," Ayule said.

"The police are to be blamed for the problem at Hides and Komo. They did not follow the (proper) process in retrieving the first vehicle from the relatives (of the deceased).

"They forced people and harassed them. And they did the same to the aggrieved landowners who had (taken over) the five other vehicles.

"Now they have to tell ExxonMobil and the state whose interest they were acting for."

Ayule said major activities on all project sites came to a halt expect for minor activities at Hides 4, Komo Airport.

There was no movement of vehicles in and out of Hides and Komo. 

All roads leading to Tari, Hides, and Komo are cut off.

"It seems like the situation is tense and will definitely become like another Bougainville.

"All the landowners want now is the state to come to Hides and Komo and talk to the landowners.

"If they ignore and use the police, it will definitely be like Bougainville as all landowners are up in arms."

Meanwhile, small landowner companies involved in the early works of the LNG project construction are losing money each day when project works shut down, Juha Joint Venture chairman Hengebe Haluya said.

Haluya appealed to the government and police hierarchy to discipline policemen involved in the harassment, assault and intimidation of landowners who have since destroyed three bridges in Hides, forcing a LNG work stoppage.

"My company started from scratch without any seed funding, MoA and ministerial commitments from the government." Haluya said yesterday.

He said landowners wanted the LNG project construction to be on schedule, "but some rogue policemen are causing problems with the landowners".

"The more we stop work, we are losing money," Haluya said.

He raised the issue after landowners removed three bridges between Hides PDL 1 and 7, forcing a stop work on the LNG project.

Haluya said angry landowners felled the Tugu, Tumbi and Kuara bridges.

He said many landowners had died while anxiously waiting for the long delayed MoA and ministerial commitment funds.

Haluya said politicians in Waigani "are delaying the payments and sacking ministers without seriously addressing landowner issues".

He said recently two police vehicles raided the two deceased women's village and arrested 10 leaders who were locked up in Tari and released on K2,000 bail.

The angry landowners then dismantled the three bridges in retaliation over the police action.

"We call on the commanders of Western Highlands and Southern Highlands to immediately take action against those policemen involved."

Haluya said not every policeman was involved but "one or two who were bringing a bad name to the police".

"We, the landowners, want to deliver the LNG project on schedule and such harassment, intimidation and threats will not help the project".

"We, the landowner companies participating on the early works, are losing money because of the behaviour of police and a very slow national government response to MoA and ministerial commitments."

Passam riot

National high school to close for an indefinite period

 

By GABRIEL FITO

 

A GROUP of Grade 12 students at Passam National High School went on a rampage setting fire to three buildings and looting school property, police said, The National reports.

The school in East Sepik faces closure after the administration block and ration store were destroyed early yesterday morning.

Fire to the female students' dormitory was put out by staff and other students.

Wewak police said last night 10 suspects were in police custody and would be questioned over the fire and looting.

Sources said the school would close for an indefinite period after losing all its records and valuables in the fire.

The burning down of the two buildings brings to seven the total number of buildings destroyed by arsonists since 2000.

Wewak police responded hours later after receiving a distress call from Passam late Saturday night and arrested the 10 suspects, all Grade 12 students, who were believed to be among 20 others who went on a rampage earlier in the night, breaking into offices, looting computers and other valuables and attempting to set fire to the dormitory.

Eyewitnesses said that the suspects, armed with the deadly wire catapult, scared off staff and students before continuing to destroy school property until after midday when they set the two buildings on fire.

They said they watched helplessly as the buildings went up in flames while the armed suspects prevented anyone from salvaging any item.

Eyewitnesses said the suspects took advantage on the unavailability of police to ensure everything was burnt to ground before they fled into the bushes.

The angry landowners mobilised with police to track down the suspects yesterday while the staff recalled all students to the school hall for a head count to see who was missing.

School principal Theresa Dingu declined to comment, saying officers at the Department of Education would release information on the incident.

However, sources said the suspects were students who were either suspended or reprimanded by the school on disciplinary issues.

Former governing council chairman, Leo Kabilo confirmed that some of the students, who were now in custody, faced the council last year and were reprimanded for indecent behaviour.

Sources said the school was waiting for instructions from Port Moresby.

Deputy landowner chairman John Sambukoi condemned the burning down of the buildings, saying it was not related to the land compensation issue that the landowners were negotiating with the government.

Digicel Cup Round 7 Results

Mioks 14 bt Isapea 10

Lahanis 36 bt Tigers 6

Muruks 12 v Warriors 12

Vipers 20 by Eagles 12

Gurias 28 bt Wigmen 18

 

Question without notice by Sir Mekere Morauta on the Independent Public Business Corporation

Mr. Speaker, I direct my question to the Minister for State Enterprises.

 

Minister,

 

It is usual in the conduct of public finance that taxes due and payable to the state are initially received into Consolidated Revenue by the Treasury or Finance Department.  The expenditure requirements of government departments and agencies to implement approved government programs are then allocated through the annual budgetary processes.  This is the model practised widely throughout the world.

 

The principal reason for this practice is to allow governments to ensure that fiscal policy is in harmony with monetary policy, together promoting a sustainable macroeconomic framework and stability. By allowing other agencies to independently collect revenue and expend, the government weakens the sharpness of fiscal policy.  In addition, the government loses control over the revenue and expenditure of agencies. 

 

The Somare Government has departed from this widely accepted model and developed a uniquely NA variation where Independent Public Business Corporation (IPBC), under your personal control, receives dividends payable to the state for the government’s shares in commercial enterprises such as the Bank of South Pacific, Oil Search, Be Mobile, Telikom, Air Niugini, PNG Power, PNG Ports, etc.

 

People’s money, public money, due and payable to the state, in hundreds of millions of Kina have been paid to and received by IPBC in the last few years.  

 

My questions are:

 

1. What public finance management justification can you give to explain the Somare Government’s variation to the accepted model?

 

2. A small portion of the money received by IPBC has been passed on to the Treasury.  Can you outline the dividend policy agreed between Treasury and IPBC in determining how much of this money should flow to Consolidated Revenue?

 

For example, on 14^th July last year you were both the Treasurer and the Minister for State Enterprises.  You could hardly present a cheque publicly to yourself, so the Prime Minister stood in for you as Treasurer to receive a cheque for K36.5 million from you as Minister for State Enterprises, as dividend from IPBC to the state.

 

Five days earlier, on 9^th July 2010, IPBC was paid a dividend of K42.8 million for its shares in the Bank of South Pacific.

 

3. What reason can you give for only 85% of the 2010 BSP dividend being passed on to Treasury?

 

4. Can you tell us what IPBC has done with the remaining K6.34 million received from BSP?

 

5. Who vets the expenditure of the monies kept by IPBC?

 

6. Can you tell us what the total dividends paid to IPBC have been in the past 3 years, detailed by enterprise?

 

7. Can you tell the people of Papua New Guinea what the expenditure of IPBC has been in the past 3 years?

 

On handing over the cheque to your father last July, you said that the sum of money reflected how well state enterprises were performing under your stewardship.  You neglected to tell the public that ALL of the money you handed over came from one source, the Bank of South Pacific.  I can assure the nation that it is not you, Minister, who can take credit for BSP’s profitability.

 

My final question is this:

 

8. Why is it that the model that has been adopted for IPBC is unique to IPBC?  Why does the Department of Mining for example not receive and retain the taxes and dividends from OTML, Barrick Gold or Lihir Gold Limited, decide itself what it wants to spend, and decide itself if it will hand over any remaining funds to Treasury?  What is so special about IPBC that it should determine its own expenditure and how much of the revenue it receives it will pass on to the rightful owners of that revenue, the people of Papua New Guinea?

 

The questions I ask are of great importance, given that IPBC will receive over 12 billion kina of people’s dividend income from the LNG project.  Under your model, IPBC will have sole control over this money, without being subject to government budgetary processes.

 

Mekere Morauta KCMG MP

Member for Moresby North-West

Cop: Organised crime suspected

Non-Papua New Guineans involved in killing, says Yakasa

 

By JUNIOR UKAHA

 

THE shooting to death of a Malaysian businessman in Port Moresby on Wednesday afternoon has the hallmarks of a syndicate-type killing, police operations chief Fred Yakasa said yesterday, The National reports.

Condemning the killing of Wong Tee Tee, the general manager of Tango Trading, Yakasa said police had every reason to believe the shooting was well-planned and premeditated.

"We have reasons to believe the killing was planned and organised by non-Papua New Guineans," he said.

"We have reasons to believe that this is an assassination due to the manner in which the shooting was carried out.

 "It is similar in nature to the attempted murder of another Asian businessman and owner of J-Mart (Jason Tan) last year," he said.

"We don't know who the suspects are and the motive behind the shooting but we (police) will get to the bottom of this," Yakasa said.

Yakasa, who was one of the first persons to arrive at the scene of the shooting, said yesterday the killing "is similar in method to the Jason Tan attempted killing and is a new trend".

He said nothing was taken from Wong or removed from his vehicle when he died, saying his killers only aimed to take his life. 

Yakasa said Wong was shot between 3pm and 4pm on the Poreporena Freeway as he was driving from Hohola in his 4x4 Hilux Surf.

The first shots were fired at Wong while he was in the tunnel.

Yakasa said unidentified gunmen in a sedan (registration CAH 036) followed Wong and fired at him several times at close range with a bullet hitting his lung and causing his death.

Yakasa said Wong had lived and worked in PNG for more than 20 years and was well known to the Asian business community.

Police are now appealing to the public around the Hohola area and the city who may have any information about the killing to help them in their investigations.

Meanwhile, president of the Chinese Association in PNG Ni Cragnolini yesterday condemned the murder of Wong.

Cragnolini described Wong as a respectable business identity in PNG and did not deserve to be a victim of such heinous crimes.

She said: "Wong was a well known Chinese businessman and was well respected by many in the PNG Chinese community.

"This is such sad news for all those who knew him and we offer our deepest condolences to his family and friends.

"Any killing like this is a shock to all.  It brings bad publicity to the country and causes unnecessary unrest."

Cragnolini went on to condemn the brutal and senseless slaying and called on the police to bring those responsible for this heinous crime to justice.

In conclusion, Cragnolini called for peace and calm in the community. 

"Let the police do their job, be calm and let his family and friends grieve as they lay him to rest," she said.

Also, following questions from media personnel yesterday, Yakasa said: "We have reasons to believe the killing to have been planned and organised by non-Papua New Guineans.

"It is similar in nature to the attempted murder of another Asian businessman and owner of J-Mart but, in that incident, two Asians were involved and caught.

"One of them had been in the country for only a week and both did not speak English or Tok Pisin.

"I assume that there is some level of organised crime syndicate at play somewhere.

"We do not have the evidence to prove this at this point in time but I am confident we will in the near future," he said.

Yakasa said illegal guns were a major concern to police.

"While police have implemented a number of the recommendations within the PNG Guns Control Report, it still requires the endorsement and support of parliament."