InterOil provides Gulf LNG project update

InterOil Corporation reiterated its ongoing bid process to select an internationally recognised LNG operator to join the InterOil Gulf LNG project is on schedule, in a press release today.

The bid process is being led by investment banks, Morgan Stanley & Co LLC, Macquarie Capital (USA) Inc.and UBS AG.

The company is pleased with the process being conducted by the investment banks and the number of bidders involved in the process.

Selection of the preferred LNG operator is targeted for the second quarter of 2012.

The Project Agreement stipulates that FID be reached by June 2013 for the 7.6 million tonnes per annum Gulf LNG Project.

 The FEED packages for the project facilities are mostly completed.

"We understand the PNG Government's desire to have an internationally recognised LNG operator join the project and we trust that our LNG bid process will fully satisfy that requirement," said Phil Mulacek, InterOil's CEO.

 "We welcome the continued support of both the Prime Minister and the Minister for Petroleum who endorse an LNG project in the Gulf which complies with the LNG Project Agreement."

Lae chamber welcomes port project

By MALUM NALU

LAE Chamber of Commerce and Industry has welcomed the K700 million Lae port expansion and redevelopment project.
The contract, approved by the national executive council, has been awarded to China Harbor Engineering, the lowest bidder for the contract, worth K734, 343,882.

An aerial view of Lae port.-Picture by PETER BOYD of Riback Stevedores

The project is being funded 70% by the Asian Development Bank and 30% by the national government.
The NEC decision requires China Harbor Engineering Company to agree to have a significant proportion of national labour in its workforce and to employ PNG sub-contractors.
The main element of the project is the construction of new port facilities including a tidal basin, a berth and a terminal.
Work is expected to start in the middle of this year and finish towards the end of 2015.
"The tidal basin project is just about to start, which will see 250m more wharf space for Lae," Lae Chamber of Commerce and Industry president Alan McLay said.
"The current project, which is extending berth three, will add a further 140m to give Lae the chance of coping with the demand.
"Some of the dredged soil will also fill swampy areas, which will add to the port area, and hopefully be used wisely to decrease congestion.
"Without this development, Lae would be too hard to ship goods and shippers would look at other alternative ports."
McLay said Lae port had become the largest in the Pacific, due to the increase in imported goods mainly for manufacturing, but also for mining infrastructure.
"First the Porgera, then Lihir and now Morobe Mining Joint Ventures and Ramu, where Lae port brought in the construction and infrastructural materials," he said.
"Of course we see the port absolutely stretched to its limits by the infrastructural needs of the LNG project.
"There are always four or five ships anchored offshore, waiting for berth at the port.
"Shipping companies are now charging a 'congestion fee' to importers to try to recover some of the expenses caused by the delays whilst waiting for a berth.
"The imported goods experience further delays while customs clear the goods, which normally end up as storage charges.
"All of these extra costs are either consumed by the importer, or passed onto the customer and adds to the inflationary prices of goods."
Public Enterprises Minister Sir Mekere Morauta said this was a very significant contract for the nation, especially for the Momase-Highlands region.
"Lae port cannot meet current demand, and is becoming an impediment to the economic development of the region," he said earlier.
"Redevelopment and expansion of the port is urgently required so that many large regional projects, including the LNG project, can be built on time and at a competitive cost."

Alan McLay reelected as Lae chamber president

By MALUM NALU

Reelected Lae Chamber of Commerce and Industry president Alan McLay says expansion and consolidation of the manufacturing sector are among major developments in Lae over the years.

He rates continuous power blackouts and communication problems as among the major problems that have beset Lae.

McLay has been chamber president since 1995.

Alan McLay…concerned about power and communication problems in Lae

He is assisted by senior vice-president Nigel Merrick, junior vice-president Robert Howden, immediate past president Phil Franklin, treasurer Stephen Beach, and councilors  Kaity Bluett, Dennis Brewster, Terry Fuery, Ben Woo, Andrew Gunn, Peter Diezmann, Danny Kepi, Vanessa Chan-Pelgen, and Tony Wyatt.

MccLay said manufacturing was a feature of Lae.                                                         

“Up till the late 1980s, most products were imported in a finished form,” he said.

“They were warehoused in Lae and distributed to the markets, with over 70% to the Highlands.

“Hence, Lae had large wholesalers such as Sullivans, Associated Distributers, Steamships, Colins & Leahy, etc, which have all gone.

“Now most imported goods are components, which are then packaged or finished here in Lae by manufacturers.

“This means more investment in Lae, more employment and consolidation of businesses.”

Power and communication problems worry McLay.

“Lack of planning and installation of reliable back-up generators has left Lae short of good quality power,” he said.

“The aging generators at Yonki have become unreliable due to lack of serious maintenance over the years.

“Now the 78 megawatt output from the Yonki installation is insufficient to supply the network: Lae, Madang, Kainantu, Goroka, Kundiawa, Hagen, etc, as well as the new commitment to provide power for Hidden Valley.

“The Milfordhaven and Taraka power stations do not even provide half the city’s power needs, which means power has to be rationed in load shedding exercises when Yonki is down.

“The real bad thing about insufficient power is that the power is poor quality, with huge spikes and fluctuations, which causes damage to modern sensitive equipment.

“The private sector has had to armor itself against the constant outages and spikes, by installing costly standby generators, and power protection devices.

“I am waiting for PNG Power to brief me on their plans to construct what I believe will be a new 40 megawatt sub-station at Singaua and plans for a hydro scheme between Lae and Finschhafen.

“This will of course relieve the power problems.”

McLay said reliance on mountaintop repeater stations had caused communications outages over the years, which culminated in two weeks of near total communications blackout in January this year.

“With the decrease in tariff duties by customs, our manufacturers have to increasingly compete on the international market,” he said.

“With poor communications and power, how can we do that?

“Fortunately Telikom are running fibre optic cables on power pylons – first to Madang which will be finished by May.

“This will see Lae connected to the international gateway in Madang, and will be more than a back-up to the current system.

“We anxiously await this installation.”

InterOil accused of deviating from Gulf LNG project

By MALUM NALU

InterOil has been accused by state-owned Petromin of ‘staging’ the Gulf LNG project and not ‘delivering’ as per agreement with the government,

The controversial and much-delayed Gulf LNG project took a new twist yesterday (Tuesday) with state-owned Petromin PNG Holdings accusing InterOil and Liquid Niugini Gas Ltd (LNGL) of deviating from delivering the project.

This follows Prime Minister Peter O’Neill’s denial of releasing any statement in support of the project, following the release of a statement by one of his staffers, Susuve Laumaea last Friday to this effect.

The statement released by Laumaea, a former InterOil employee, said O’Neill supported the InterOil-led Gulf LNG project, which the prime minister has denied saying.

Prime Minister’s media advisor, Daniel Korimbao, told The National yesterday (Tuesday) that Laumaea might have misunderstood a conversation he had with O’Neill regarding the Gulf LNG project.

He said the government supported InterOil, however, did not support the company’s new development proposal or the continuous final investment decision (FID) deferrals.

“The government of Papua New Guinea recognises the license released to InterOil,” Korimbao said.

“The project has the full backing of the government.

“The government, however, does not support the new development proposal put forward by InterOil.”

Petromin chairman Brown Bai released a statement yesterday commending O’Neill for clarifying government’s position on development of the Elk and Antelope gas fields in Gulf province, as well as taking a swipe at InterOil and Liquid Niugini Gas.

“InterOil and Niugini Gas Ltd have deviated from delivering the project in the project agreement,” he said.

“They cannot change the goal post and disregard their contractual obligations.

“I urge InterOil and Liquid Niugini Gas to respect Papua New Guinea’s laws, systems and processes, including accepting that the National Executive Council has rejected the Gulf LNG project as proposed by them.

“InterOil and Liquid Niugini Gas should be working with the state to deliver the project in the project agreement.

“Now that the prime minister has clarified the position, Petromin is ready to work with the developer and the respective agencies of government, including the Department of Petroleum and Energy, to deliver the project in the project agreement.”

Bai said as the state nominee in the project, Petromin had invested over US$15 million in upstream exploration work and this investment had significantly contributed towards upgrading of the total gas resource in the license.

“The (Petromin) board approved this investment for the project, envisaged in the project agreement, and not for the staged ‘Gulf LNG Project’ as promoted by InterOil and Liquid Niugini Gas,” he said.

“The project agreement signed between InterOil/Liquid Niugini Gas and the state in 2009 is a binding contractual agreement and the parties are bound by this contract to deliver the project, according to the scope envisaged in the project agreement.

“The scope includes a large-scale 7.6 million tonnes per annum (MPTA) to 10.6 MPTA capacity plant operated by an internationally-recognised LNG operator.”

Magnitude 7.0 earthquake hits Papua New Guinea, no tsunami alert

(Reuters) - A 7.0 magnitude earthquake struck off the north coast of Papua New Guinea on Tuesday, the U.S. Geological Survey reported. The quake struck at a depth of 125.5 miles and was centered 137 km north of Lae, Papua New Guinea's second-largest city,
The Pacific Tsunami Warning Center said no destructive Pacific-wide tsunami was expected.
Papua New Guinea is on the geologically active Pacific Ring of Fire and suffers many earthquakes but often avoids major damage and casualties because most of its people live in light and flexible housing.
However, more than 2,000 people were killed in 1998 when a 7.0 magnitude quake struck off Papua New Guinea's north coast, causing a tsunami that smashed into isolated villages.

Drama, intrigue mark InterOil's Gulf LNG proposal in PNG

From PLATTS

The veil of political intrigue around InterOil Corporation's Gulf LNG project in Papua New Guinea has thickened, with Prime Minister Peter O'Neill denying a statement issued by his office last Friday that claimed the National Executive Council had not rejected the company's plans for the project.
PNG newspaper the Post-Courier reported today that O'Neill has denied releasing any statement in support of the Gulf LNG project and was "furious" that it had been issued without his knowledge and authorization.
The statement released Friday was given to Platts and other news agencies by Susuve Laumaea, media and public affairs adviser in O'Neill's office. At the time, Laumaea said the statement, delivered via email, would be sent on the Prime minister's official letterhead later that evening, although no follow-up communication was received by Platts.
When contacted by Platts today, a spokeswoman in the Prime Minister's office in Port Moresby said "we were not aware" of the statement and referred questions to Laumaea, who has not yet responded to email and telephone queries.
In the contentious statement, O'Neill was quoted as saying that InterOil's LNG project in the Gulf province would "go ahead when all pre-conditions set by government and the 2009 Project Agreement are fully satisfied." He added, "there is no National Executive Council decision rejecting the Gulf LNG project."
The document went on to say that the Prime Minister "reiterated his earlier statement in August last year that the government under his watch would assist InterOil to secure a strategic operating partner, rescope the project agreement to enable phased LNG development, and to locate the project in Gulf province."
O'Neill also "directed the ministry and Department of Petroleum and Energy to cooperate with InterOil and desist from confusing the investment community and Gulf province government and landowners with media statements about rejection of the project."
Questions about the status of InterOil's Gulf LNG proposal have been swirling since last September, when the NEC rejected its plans for a phased development. According to a copy of the NEC's decision NG37/2011, obtained earlier this week by Platts, InterOil's plan would be "an inefficient use of the state's gas resources" and "inconsistent with the project agreement."
The NEC's decision, which was signed by O'Neill as chairman of the executive body, also endorsed the views of and actions taken by Minister for Petroleum & Energy William Duma "to ensure that the gas resources of PNG are developed according to the project agreement, in particular, if LNGL/InterOil proceeds with the Gulf project, and takes a final investment decision in relation to any of the projects that make up the Gulf project or otherwise commits a repudiatory breach of the project agreement."
The NEC comprises about 30 politicians who meet regularly. September's decision has not subsequently been overturned, local sources said.
The Gulf LNG project proponent is Liquid Niugini Gas Limited or LNGL, a joint venture between US-listed InterOil and Clarion Finanz affiliate Pacific LNG, which is also a large shareholder in InterOil.
On Friday, Duma told Platts he wanted to "remind" InterOil of his comments last September, when he pointed out that the project agreement called for InterOil to deliver a 7.6 million-10.6 million mt/year LNG facility based on its Elk and Antelope gas reserves, using internationally recognized technology and operators. Instead, the company was proposing a three-phase development and did not have an internationally reputable partner on board, Duma said.
As it currently stands, InterOil's overall development plan for its gas resources would see it acting as the upstream field operator. A condensate stripping plant is planned with Japan's Mitsui, to be followed by the LNG project with Australia-based Energy World Corporation.
In February 2011, InterOil signed an agreement with EWC for a modular LNG plant to be developed in two phases -- 2 million mt/year, with a later expansion of 1 million mt/year. The agreement, which was originally conditional on a final investment decision on the project being taken by December 31, 2011, provided for a possible expansion of upto 8 million mt/year.
That deal followed an agreement in August 2010 by InterOil and Mitsui for a $550 million liquids stripping project at the Elk and Antelope fields that would be a precursor to the LNG development.
Under its project agreement, InterOil has until June 2013 for an FID on the LNG project, but both it and the liquids stripping proposal are running way behind schedule.
The projects had been due for FID by March 31, 2012, but InterOil has now extended the deadline for the liquids plant to June 30, 2012, with provision for a possible further delay to December 31, 2012. The deadline for an FID on the LNG project has also been pushed back to the end of this year.
Duma said last week he had urged InterOil to talk to Shell and other majors about its plans for the LNG project, rather than pursue its proposed phased development with EWC, or talks with a Korea Gas Corporation-led group that includes Mitsui and Japan Petroleum Exploration Company. "Kogas is not an LNG plant operator, it is an importer of LNG," he added.
Shell is an obvious potential partner for InterOil, as it has a strategic alliance with PNG's state-owned Petromin, signed last August, and is actively pursuing LNG opportunities through a Port Moresby office opened in February this year. "Shell believes that PNG offers the potential for upstream development and is very keen to invest and develop business opportunities in PNG," a company spokesman said this week.
ExxonMobil is also active in PNG, and is looking for gas reserves to support an expansion of its two-train LNG plant currently under construction near Port Moresby. The US oil and gas giant's $15.7 billion project will put PNG on the map as an LNG producer, pumping out 6.6 million mt/year from 2014.
InterOil CEO Phil Mulacek said Friday that international investment banks Morgan Stanley, Macquarie Capital and UBS were working to secure a project partner "to accelerate the LNG capacity [of the Gulf project] to 8 million mt/year, with them as lead operator." But he said talks with "Shell or other LNG partners" were all under confidentiality agreements and so could not comment further.
Mulacek said the plan to bring in a partner might involve the incoming party buying part of the Elk and Antelope gas assets, a proposal which had been "outlined to the PNG government and was accepted."
Local industry observers said InterOil's determination to remain the operator of the upstream development at Elk and Antelope may have been one of the hurdles to the company concluding a deal with a major partner. InterOil, which is the operator of PNG's sole 36,000 b/d oil refinery, is seen as lacking experience as an upstream operator, they added.
Papua New Guinea has been in the grip of a constitutional crisis since August 2011, when O'Neill took the helm after a power struggle with incumbent prime minister Michael Somare. General elections are scheduled to be held in the impoverished but resource-rich nation in June

Money illegally invested in Australia by former management of MVIL

Statement by  Minister for Public Enterprises Rt Hon Mekere Morauta, KCMG MP
Mr Speaker, when the O’Neill-Namah Government was elected on the floor of Parliament last year, we faced a tremendous task of reconstruction and reform after 10 years of waste, neglect and lost opportunity.

I have spoken previously about the areas where this waste and neglect, and indeed corruption, was most prevalent and caused the most damage – in the State Owned Enterprises supervised by the Independent Public Business Corporation under the stewardship of the suspended Member for Angoram and his outrigger Mr Glen Blake who during that time claimed to be (and probably still is) the Somare family financial adviser.

Since we were elected in August last year, much of the focus of my efforts, as Minister for State Enterprises, has been on finding out how big a mess the State Owned Enterprises are in; and where they have lost money, how that money was lost, where the money went to, and to try to get as much of that lost money back as we can.

Mr Speaker, this is public money we are talking about, which should have been used for the benefit of all Papua New Guineans, building roads and bridges, schools and hospitals, but which instead has been frittered away, wasted, lost through incompetence, or in some cases, simply stolen.

We quickly discovered that one of the worst State Owned Enterprises in this respect was Motor Vehicle Insurances Limited, which we all know as MVIL. Mr Speaker, MVIL has a vital function within government and as the third party motor vehicle insurer, it must maintain large financial reserves in order to pay out insurance claims for years into the future.

This made MVIL a tempting target for highly dubious so-called “investment managers” from overseas to extract a large slice of MVIL’s investment funds, 96 million kina, and place that money at the disposal of these “investment managers”, initially in a bank account in a New South Wales country town. Regrettably, Mr Speaker, the “investment managers”, Woodlawn Capital Pty Ltd, appear to have been ably assisted by the then Managing Director of MVIL, Dr John Mua, in their endeavours to extract money from MVIL.

When this 96 million kina was “invested” with Woodlawn in July 2009, Woodlawn Capital Pty Ltd had been incorporated for only a few weeks; it was a classic “two dollar company” – that is, it has a paid up share capital of only two, one dollar shares; it did not hold any financial services licence which, under Australian law, every such investment manager must have; and it had no other funds under investment.

It would seem ridiculous for any rational businessman to invest any funds, let alone 96 million kina, with such a company with no history, no backing and no licences, but that is what Dr Mua and MVIL did in 2009.

Mr Speaker, this has not been an easy task, but we are not giving up. And unfortunately, in this we have not always been assisted by everyone at MVIL.

We required Woodlawn to repatriate the total funds to PNG and terminate the investment arrangement, but we received nothing but obfuscation, delay and a refusal even to give us the most basic information about how much of the original investment of 96 million kina is left, or where the funds may be held.

We have complained to the corporate regulator in Australia, ASIC, about Woodlawn’s actions in claiming to hold an Australian Financial Services licence when it did not, and dealing with investment monies when unlicensed. These are clear breaches of Australian securities law.

Mr Speaker, we had been most concerned that all or nearly all of the 96 million kina invested with Woodlawn over two years ago may have been lost. A couple of months ago it appeared that Woodlawn was suggesting it would return only a few million dollars, perhaps only 10 or 15 percent of the original investment , to MVIL. It would be a sad day for Papua New Guinea if we were to lose about 80 million kina to crooked investment advisers overseas – money which should be available for the benefit of the people of PNG and improving their living standards. This is the sad legacy of the Somare regime’s years of waste, neglect and corruption.

However, Mr Speaker, there is some light at the end of the tunnel. With the totally un-cooperative approach from Woodlawn, we had no option but to instruct our legal advisers in New South Wales to commence legal proceedings against Woodlawn and its two directors, McNamara and Breen, to recover the money they had illegally obtained.

Following the institution of legal proceedings, I have now been informed that the New South Wales Supreme Court ordered the remaining MVIL investment portfolio frozen, so Woodlawn and its directors cannot deal with those funds, and Woodlawn has been required to give full information about the current value of the MVIL investments managed by Woodlawn.

While this may sound positive, it is not all goods news. Legal action is expensive, and it is possible, or likely, that more legal action will need to be taken before we get our money back. Also, while we do not yet know precisely how much money is left, it seems that it could be somewhat less than 30 million Australian dollars, which would mean a loss of about one quarter of the original investment two and a half years ago, since 96 million kina then equalled about 40 million Australian dollars.

Of course we are not conceding that this money is necessarily lost – we will do everything we can to pursue Woodlawn for the full value of our investment and the damages we have suffered, but we obviously do not know yet how successful we will be.

This MVIL saga is, Mr Speaker, another example of the Somare regime’s scandalous misuse of public funds – not as newsworthy, but just as bad in its own way, as the Falcon jet fiasco. The people of Papua New Guinea deserve better, and we are making sure they get better than that, by making these most strenuous efforts to get back this money which has been extracted from the public purse.

PNG LNG project on target

By MALUM NALU
Esso Highlands Ltd managing director Peter Graham says the PNG LNG project is on target to start exporting in 2014, despite the many associated problems.
Graham said this during a meeting with senior editorial staff of The National yesterday (Monday), where he gave an update of the project.

Esso Highlands managing director Peter Arnold (right), media advisor Rebecca Arnold and public and government affairs manager Kenneth Freeman.

He said the project was of enormous proportions and the world was watching developments in PNG with interest.
“It’s a big project and it’s very important,” Graham said.
“It means a whole lot more people around the world are watching.
“We’re the biggest development in Papua New Guinea’s history.”
The project is well into accomplishing many components after two years in the construction phase.
The 3.2km long Komo airfield - which will be longer than Port Moresby’s 2.8km long Jackson Airport - has now completed 50% of earthworks to lay the foundation, with the runway aggregate base course pavement commencing.
Graham said installation of the first foundations for the terminal building had also commenced.
“That needs to be completed by the end of this year,” he said,
The completion of Komo would allow the Hides gas conditioning plant to complete construction.
The Komo airfield would be used to transport huge pieces of equipment to complete the conditioning plant.
Gas from Hides and Angore in Southern Highlands, and Juha in Western province, would be piped more than 700km to Port Moresby for export.
Graham said more than 100km of 300km of the onshore pipeline between the gas fields and Kopi in Gulf province had been completed, while laying of the 400km offshore pipeline between Kopi and Port Moresby was proceeding “very fast”.
The massive liquefaction and storage facility site outside Port Moresby is also on target and on track to be completed in early 2014, in time for first exports later that year.
Graham admitted that the project was one of the most-difficult Exxon Mobil had carried out internationally.
“Papua New Guinea is difficult in that the infrastructure is very challenging in most parts of the country,” he said.
“It’s more isolated, it’s more challenging.”

Business Council of PNG doesn’t support another protest

The Business Council of PNG strongly opposes a planned protest march for Thursday this week, said to be organised by activist Noel Anjo. “The Business Council of PNG supported the initial sit-in protest held at the Sir John Guise Stadium earlier this month during which the Prime Minister and his senior cabinet members attended and received the petition signed by the citizen groups,” council president Ernie Gangloff said in a letter to NCD police operations commander Andy Bawa.

Business Council of PNG president Ernie Gangloff

“Dialogue with the government is continuing and we are monitoring the progress to date.
“At this point in time we are not convinced that another protest march is warranted.
“A coordinated march arranged in conjunction with the RPNGC (Royal Papua New Guinea Constabulary) will succeed and if required, we will seek the support and assistance from your officers to ensure that the outcomes are achieved.
“Our members, the business community also seek to conduct their daily business without the risk of opportunists taking advantage of any uncoordinated protest march.”

End the cargo-cult aid mentality that has ruined our neighbours

By HELEN HUGHES


THE villagers of Papua New Guinea, Solomon Islands and Vanuatu, together with those of Fiji's military dictatorship where living standards have been dropping precipitously, make up most of the population of the Melanesian Spearhead Group. They are now among the very poorest people in the world.
Women and their babies die in childbirth in the bush. Children are wracked by diarrhoea and chest catarrhs. HIV/AIDS in PNG compares with Mali and Burkina Faso. Illnesses no longer evident in most of the world plague adults. Cholera outbreaks in Madang and Lae threaten Australian travellers. Drug-resistant tuberculosis has crossed to Australia's Sabai and other Torres Strait islands.
The gardens worked by women still ensure sufficient food but, because agriculture has not developed, more than a million men hang out without work, bored, dispirited and seething with frustration.
Pacific village women are among the most world's most deprived. Economic stagnation has been followed by social breakdown so that rape has spread from towns. Female teachers are often not safe and girls cannot walk to school. Violence is held at bay only by the presence of Australian policemen in the Solomons.
It is endemic in the PNG highlands where it is still common to see women breastfeeding piglets because they are more valuable than children!
Only 60 per cent of voters are enrolled in PNG. Elections mean a changing roster of "Big Men" to exploit parliamentary power. Senior public servants share in the spoils.
The Regional Assistance Mission to Solomon Islands presides over a stalled economy and fraught politics.
In the Fiji economy, the pickings are more constrained, but all island elites enjoy wealthy lifestyles, travel abroad and shopping. Their real estate includes escape-hatch mansions in Australia and further afield. They have very considerable investments abroad. They educate their children in Australia and fly to Brisbane if they are sick.
Leading Vanuatu families send their children to the Sorbonne. Pacific elites dine and play golf with Australian associates who have benefited from Pacific ventures.
These entrepreneurs support the bureaucracy in Canberra, which is more concerned with Pacific votes in the UN than with how villagers live.
The Australian Strategic Policy Institute is following the calls of Australian business lobbyists with property in Fiji in calling for a thaw in relations with Frank Bainimarama.
Everyone should have decent living standards. Every country needs a private sector and a middle class. But Pacific elites have appropriated the bulk of aid, mineral, forestry and other incomes to become immensely wealthy at the cost of villagers.
The Pacific islands have minerals, forests, agricultural land and marine wealth. They have remarkable tourism potential and are situated near the fast-growing east Asian markets.
They could have been the most rapidly growing developing countries in the world. Instead their elites have created their economic and political stagnation, and Australia, with New Zealand's help, is also responsible.
Since the 1970s the Pacific has received the world's highest aid per head of population. Australia has been by far the highest donor, with aid to the Pacific now running at more than $1 billion a year.
PNG, the Solomons and Vanuatu are the largest recipients. Aid transfers have not been monitored and aid has not supported development. Australian advice has largely been limited to macroeconomic stability to avoid short-term upheavals on our doorstep. Island attempts to reform land tenure to kick-start agriculture have not been backed. Not surprisingly, aid is regarded as "cargo" to be rorted.
The vacuum created by economic and political stagnation is making the Pacific into a Chinese lake. In the absence of local business, Chinatown shopkeepers from Taiwan and China provide goods and services for the rich and for armies of highly paid aid workers. The Chinese government is interested in minerals and influence -- Bainimarama has followed North Korea and Burma in turning to China for patronage. Chinese public and private investment is flowing into Fiji with Chinese workers replacing the skilled emigrants -- Fijian and Fijian Indians -- who are fleeing in large numbers.
Ministers of foreign affairs can make a difference.
Bill Hayden's Jackson committee turned an arm of a defunct colonial department of territories into an aid agency. Against the formidable opposition of a minister of education, Hayden persuaded the Hawke government to create a foreign student industry that not only contributed substantially to export and tourist income, but provided economies of scale for graduate studies and research.
Despite instances of laziness and greed, students from the Pacific and other neighbouring countries who have had the opportunity to study in Australia have greater goodwill towards Australia than that created by all foreign affairs expenditures.
Alexander Downer fought for economic development in the Pacific, only to be repeatedly swamped by the international aid industry's cargo-cult priorities.
After years of efforts to have Australian aid used effectively, he took the brave step of moving some dollars from PNG to Indonesia. Kevin Rudd, immediately on becoming prime minister, visited Port Moresby not only to reinstate this aid, but to begin a round of partnership agreements to weld the Labor government to the exploitative elites of PNG, Solomon Islands and Vanuatu.
Hopefully, Bob Carr will take time from his preoccupation with Australia's influence in world affairs to spare a thought for the Pacific. Peter Ryan, who as a teenager fought behind the Japanese lines in PNG when World War II nearly came to Australia's shores, has been a lone voice for the villagers who saved his life.
Carr will need to go to knowledgeable people such as him, outside the Canberra bureaucracy, and to Australian businessmen with Pacific investments to learn about the misery that Australia has wrought in the Pacific.

This article was first published by the Australian Newspaper

Helen Hughes is a senior fellow at the Centre for Independent Studies. She developed a Pacific program at the Centre for Development Studies at the Australian National University and served as deputy chairwoman of the Jackson Committee to Review Australian Aid. Her Pacific papers are at http://www.cis.org.au/

PNGSDP and World Bank sign agreement for K12.64 million project in Western

PNG Sustainable Development Program Ltd (PNGSDP) will provide K12.64 million (US$6.11 million) for a pilot project which is set to benefit 280,000 people in rural areas of Western province, with assistance of the World Bank. This project is an important contribution to Western and comes at a time when PNGSDP is focusing substantial efforts in developing a number of community projects to support people’s livelihoods in preparation for closure of the Ok Tedi mine.
PNGSDP is contributing the money towards the pilot Rural Services Delivery and Local Governance Project (RSDLGP).
The RSDLGP will be implemented by the Department of Provincial and Local Government Affairs.
Following the signing of this agreement between PNGSDP and the World Bank, a separate agreement will be signed between the World Bank and the PNG government.
The project aims to pilot a community-driven development approach (CDD) as a way to improve the access, quality and management of basic public services delivered in rural communities in PNG.
The project will work with approximately 14 local level governments (LLGs) in Western and another province yet to be selected, and will provide important information to government on the viability of this approach for possible use elsewhere in the country.
David Sode, CEO of PNGSDP, said the company was happy to support this project because it aimed to build capacities at LLGs to spend funds wisely and in areas that maximise benefits to their communities.

Laura Bailey (left) and David Sode during the signing ceremony

“Development can only be meaningful to communities if they are involved in shaping it themselves,” he said.
The testing of CDD systems and procedures will be done through community grants.
These community grants will be used for a wide-range of small-scale social or economic investments or services.
The specific use of individual grants will determined by communities on an annual basis with the support of trained facilitators.
"This generous financing from PNGSDP will allow the World Bank to bring our global experience in programmes for community level service delivery and customise it for the special needs of communities in Papua New Guinea," said Laura Bailey, World Bank country manager for PNG.”
The project will have three parts:
• Systems and financing of community service-delivery grants;
• Capacity building of national and sub-national government (or non-government) entities; and
• Project management (including monitoring, evaluation and knowledge sharing).
PNGSDP Ltd. was established as a result of an agreement between the Government of PNG and BHP Billiton (the Australian company that ran the Ok Tedi Mine in PNG), which supports sustainable development projects and initiatives to benefit the people of PNG.

Public servant cleared of misappropriation charges

By MALUM NALU
A senior civil servant cleared of misappropriation charges laid against him by the Task Force Sweep has challenged the government to carry out more investigations into massive fraud and corruption within its departments.
William Sent, the suspended first assistant secretary of the infrastructure and economic division of the National Planning and Monitoring Department, had all criminal charges against him dismissed by the Waigani Committal Court last Wednesday.

William Sent…cleared of misappropriation charges laid against him by Task Force Sweep

Sent said that he had been the victim of a massive “witch hunt” and the government should redirect its efforts into investigating the development budgets of 2009 and 2010.
He was alleged to have used his office to conspire with others to misapply K10 million belonging to the state as air freight subsidy to Travel Air Ltd, owned by Kokopo businessman Eremas Wartoto.
He allegedly conspired with the then acting department secretary, Ruby Zarriga, then national planning and monitoring minister Paul Tiensten and Wartoto to facilitate the payment.
Sent was further alleged to have misappropriated K100,000 belonging to the state, as a director of Kerekamb Island Cooperative Society, which was given to it as funding for purchase of a wokabaut sawmill.
Magistrate Cosmas Bidar, upon perusal from Sent’s lawyer Harold Viyogo and police files, found that there was insufficient evidence to warrant committal of Sent to the National Court for trial.
“Ruby Zariga and I were only given the opportunity to manage the department for five months,” Sent said.
“As per the terms of reference for the sweep team, I would strongly challenge the government to investigate the 2009 and 2010 development budget, under the leadership of Joseph Lelang.
“The country needs a thorough investigation into where the millions have gone, but the way in which the sweep team was set up to do a ‘witch hunt’ is of grave concern to citizens of this country.”
Sent said his name and reputation had been smeared, however, would not say whether or not he would pursue legal action against those responsible.
“I have suffered, my career has suffered because of the false information circulated among my colleagues, development partners and the public through the media,” he said.
“Justice has prevailed.”

Reforming PNG Parliament

By PAUL OATES

Recent events in the life of the present PNG Parliament have revealed some glaring deficiencies in the framework set up to take the nation into Independence in 1975.
In an observationquoted by Nancy Reagan, the wife of former US President Ronald Reagan, ‘the strength of the tea bag is only revealed when it’s immersed in hot water.’
So what are the deficiencies that have been revealed? Basically, many could be collectively described as a lack of the necessary checks and balances in place to ensure parliamentary power and legislative government does not get out of control.
In fairness to the so called founding fathers and their expat ‘minders’, the recent circumstances could hardly have been envisaged when the PNG Constitution was drafted. Yet as PNG has had the resilience to advance from the Stone Age to the Modern Age in one giant leap, so too must the structures of government be adapted to meet the requirements of the day.
The majority of democratic nations throughout the world seem to have one thing in common. That is a House of Review as part of the structure of Parliament. While legislation is debated and enacted in a Lower House, all legislation must be reviewed by an Upper House before being signed into law.
Such is the case in many Commonwealth countries that had their Parliaments modelled on the Westminster system. After many amendments, the United Kingdom’s House of Lords still has a useful function of reviewing legislation from the House of Commons. The Australian Senate performs some very useful functions in that until a Bill from the Lower House is reviewed and passed by the Senate, it cannot be signed by the Governor General and become law.
Perhaps the time has now come for PNG to consider creating an Upper House of Review?
George Washington is supposed to have observed to Thomas Jefferson, another ‘doubting Thomas’ about the necessity of having an Upper House in the United States government. As Jefferson tipped his hot tea into his saucer to cool it, Washington is supposed to have observed, so too an Upper House (in this case the US Senate) performs a similar function with potentially inflammatory matters raised in the US Lower House or Congress.
There is however some conjecture about whether Washington actually said these words since apparently no one has ever seen this written quote until the late 19th Century when it was common place to tip your hot cup of tea or coffee into your saucer to cool it. In fact, the expression, ‘would you like a dish of tea’? originates from this practice. One can only cringe in sympathy with generations of hostesses who had to put up with the inevitable slurping of those guests who tried to drink their tea from their saucers, a receptacle actually designed for holding sauce.
The term ‘Bicameral’ refers to a government that has two chambers. The term apparently originated in the early 19th Century from the Latin ‘bi’ meaning two and ‘camer’(a or al) meaning chamber. The alternative is a single chamber of government or unicameral system.
While there is conjecture as to the efficiency of having a legislature comprised of two houses, the concept has been around since Ancient Roman times where the recognised tendency of the larger plebeian class could be tempered by the patrician Senate, a word reputedly derived from ‘senex’ or old man.
Most nations around the world have opted from a bicameral system of government. The map from Wikipedia below gives an indication of those nations that have bicameral government and those that don’t.

So how could an Upper House of Review be brought into being? Very easily.
Consider the Provincial Governors as a collective group of reviewers. Several have already raised their concerns about the current government and the speed by which Parliamentary votes appear to become law seemingly overnight. Why not determine that at the next general election, the Provincial governors be separated from the ordinary members of Parliament and become instead, a separate house of review as is the Australian Senate.
How would this work in practice?
Well, for one thing, I’m sure the incoming Provincial Governors wouldn’t mind a new title of say, ‘Senator’, a title not unknown and respected throughout much of the world.
Then the powers of the PNG ‘Senate’ could be modelled on similar powers elsewhere.
All legislation must first be reviewed and debated in the PNG Senate before being sent to the PNG Governor General for signing into law. Perhaps there could be a limit, as in Australia, where the Upper House can refer a draft Bill back to the Lower House three times before it must be passed and ultimately become an Act.
Surely this proposal is worthy of consideration from all sides of politics?