Book review: How the Highlands Highway was built

By MALUM NALU

Since I first travelled the Highlands Highway from Goroka to Lae with my father, the late Mathias Nalu just before independence in 1975 as a seven-year-old, I have always been fascinated by this bik rot (big road) that links the port city of Lae to the Highlands.

One of the things that touched me then, and does to this day, was when we stood at the Rupert Havilland Memorial Lookout on top of Kassam Pass, and gazed down into the magnificent panorama spread out from the Markham Valley of Morobe province to the towering Finisterre Range.

Havilland was only 21 when he supervised of the construction of the Kassam Pass Road, but upon return to Australia, died at a very young age and his ashes were returned to New Guinea to be scattered over the Kassam Pass.

Later, as a student at Aiyura National High School from 1984-1985, I frequently travelled by road from my home in Lae to Aiyura Valley.

Much, much later, while working with the Coffee Industry Corporation in Goroka between 1998-2002, I had the chance to drive throughout the Highlands, and even down to the coastal ports of Lae and Madang, and began to appreciate more the value of this economic lifeline.

However, I have never been able to gather much information about how the bik rot was built, apart from the fact that the legendary kiap (patrol officer) Ian Downs was the main force behind construction.

Things changed two weeks ago when I was invited to accompany one of the original builders of the Highlands Highway, Bob Cleland, to Goroka.

Cleland was one of those who helped build roads over both Kassam and Daulo passes.

His widely-acclaimed book, Big Road, first published in 2010, but not widely on sale yet in PNG,   tells the story of the building of the Highlands Highway, particularly the Daulo stretch between Asaro and Watabung in Eastern Highlands in 1953, which he personally supervised as a 22-year-old kiap.

Bob Cleland shows a copy of Big Road during his recent visit to PNG

Talking with Cleland and reading Big Road has answered all the unanswered questions in my mind about the Highlands Highway.

 The 'big road' today is the Highlands Highway running from the port of Lae and through the highlands provinces of PNG.

 Big Road describes the initial construction by hand, in 1953 and 1954, of the Daulo section of the road, which runs over the 2,478m Daulo Pass and which gives access westward to the great Waghi Valley.

Running right throughout Cleland’s book itself is the ‘big road’ itself, the Highlands Highway that was carved out of mountains and mud with shovels, sweat and tenacity.

Big Road is a pioneering tale that paints a vivid picture of the majesty of the mountains and the mingling of two cultures.

Cleland, before the Daulo Pass, helped the late Rupert Haviland built part of the road over the Kassam Pass.

Cleland checks out a section of the Daulo Pass road which he helped build almost 60 years ago as a young kiap

The big road was neither designed nor built by engineers but by kiaps, with local villagers using only picks, shovels and thousands of hours of backbreaking labour.

When Cleland arrived in the New Guinea Highlands in 1953, many tribes had just seen their first white man only 20 years before.

He was one of a team of young Australians charged with introducing a new form of justice to tribes that had previously settled disputes with spears, axes and arrows.

He was 22, fresh from university where he’d been studying engineering.

As a kiap, Cleland had a triple role of magistrate, policeman and administrator.

But he was not only a kiap, he was also the boss’s son.

His father Donald (later Sir Donald) Cleland was administrator of Papua New Guinea for 15 years from 1951, so his trial by fire in New Guinea was particularly intense.

Right from the start, Cleland was charged with building some of the most-challenging sections of the ‘big road’, linking the Highlands with the coast.

In the early 1950s there was no way into or out of the Highlands except by plane or on foot.

Yet the region was densely populated, home to hundreds of thousands of villagers, and alluringly fertile.

A road connection had to be built, and it had to be constructed by hand – no bulldozers or diggers.

The Eastern Highlands district commissioner then was the legendary Ian Downs, from Scotland, who first came to PNG as a 21-year-old kiap.

He’d been posted to the Highlands only five years after Australian explorers Jim Taylor and Mick Leahy discovered that hundreds of thousands of people lived in extensive upland valleys amid what had always been assumed to be impenetrable mountains.

“In 1953 Kassam Pass – the road into the Highlands dreamed of by many, rejected as impossible by others – was now open for traffic,” Cleland writes.

“Narrow and steep, with sharp ends, it was not a road for heavy vehicles – but it was a start.

“The rough track from Lae remained difficult but the reality of Kassam Pass gave the administration good reason to fund upgrading work.

“Access from Goroka to the great Wahgi Valley and beyond was blocked by a 3,000-metre-high spur of the Bismark Range.

“A road through a 2,440-metre (Daulo) pass and over this spur would provide the final link to the Wahgi Valley.”

Towards the end of July 1953, Downs brought Haviland and bridge builder Ludi Schmidt from Kassam to a temporary camp about a third of the way towards the top of the Daulo Pass.

Haviland, however, had to go on leave and Cleland was given charge of the project by Downs.

“Since 1933, the Koreipa Valley track had been one of the routes used by patrols walking from the Benabena station towards the large valleys and extensive populations further west,” Cleland writes.

“The track crossed the Asaro River at an altitude of about 1,500m and after a kilometer-and-a-half of easy gradient, began an increasingly-steep 10km climb to the top.”

To go into detail would fill archives, however, this was the road that Cleland and his team of hundreds of local villagers built.

Boulders were broken up by heating during the fire with fire and then allowing to cool at night, which made it eventually cracked.

Ludi Schmidt was the bridge expert using local timber.

On September 24, 1953, district commissioner Ian Downs drove to the top of Daulo Pass in his Land Rover.

On October 9, 1953, Ian Downs and his family, Jim Leahy, ex WW11 pilot Jerry Pentland and Mick Leahy (with his wife Jeanette and son Richard) drove through from Goroka to Mt Hagen.

“In 1933, it had taken Mick Leahy and Jim Taylor – acknowledged as two of the 20^th century’s most acclaimed explorers – two weeks to get to the Mt Hagen area,” Cleland writes.

“Now here they were, 20 years later, making the 240km journey in a single day.

‘Big Road: a journey to the heart of the New Guinea highlands, 1953-56’, by Bob Cleland [Red Hill Publishing, $30.45, 240 pp, 9780980672022]

Memories of the 1970 Lae Show

By PAUL OATES

Finschhafen kiap (patrol officer) of that period

 Mid way through 1970, it came time for the annual Lae Show and this was something the DC (district commissioner) , Bill (Father) Seale gave much attention to. 

Kukukuku (Menyamya) warrior

 It was a splendid opportunity for each sub district to display the craft and produce of their region. Each sub district was required to submit a display and most of the liklik kiaps (patrol officers) were required to provide some sort of supervision for those who were attending.

Many of us were also, by default, required to help organise our sub district display.

 The prestige of winning the sub district display was, we discovered, much sought after and competition between some sub district exhibits was fierce. 

Display at the 1970 Lae stall

 Various show committees had been preparing for months but to many of us “Johnny come lately’ this was a new experience.

So there we were, three liklik kiaps from the Finschhafen sub district, who had been extracted from our stations, flown to Lae at short notice and told we were to organise our exhibit.

 I remember arriving at the showground, showing my police warrant card to get in to the showgrounds and being met with a mountain of produce, various exhibits including a live tree kangaroo in a wire fronted box and a group of Tami Island wood carvers. 

Tami Island carvers

A large display stand had been allocated for our use and we observed other field staff busily erecting their own sub district exhibits in stands nearby.

Having visited the Sydney Royal Easter Show in my youth, my artistic temperament came to the fore and I suggested we collect all the fruit and vegetables from the sub district that had been piled in a heap at the front of the stand, and separate it into groups of various colours and sizes. We could then place this fruit and vegetables into various geometric patterns on the stand.

So for the want of any other direction or even a better idea, this we started to do.

At that point, some Kukukuku warriors in full dress suddenly intervened.

Their sub district (was it Wau or Menyamya?), had brought these blokes as part of their display. The ‘Kuks’ as everyone else referred to them as, (although I understand this was originally a derogatory term in their language meaning muruk/cassowary), decided to stage an impromptu singsing rehearsal.

Kukukuku warriors at the 1970 Lae show

 To anyone who has never seen or was stationed in a Kukukuku region, their form of singsing is quite different from other areas.

 Firstly, they did not use drums (kundu) and instead of having eloquent head dresses, costumes and dance steps evident in other areas, they would grab their weapons and men and women would all run around in a circle yelling “Eyahh…yah…yah…’ in a high pitched yell.

We didn’t hear that initial cry however we did hear the result.

There was a sudden rumble, not unlike a guria (earthquake), a great cloud of dust and within 30 seconds, the whole area cleared of people.

A few heads were then observed peering around corners and down from their vantage points in the nearby trees, all with apprehensive expressions on their faces. 

The kiaps in charge of the ‘Kuks’ then told them to ‘settle down’ and we all got back to our preparations.

After a while, people started to appear again but there was an initial nervous scampering between vantage points, as everyone kept an eye on a possible getaway route.

ABC stall at the 1970 Lae show

 It was an object lesson of how these small men, dressed in grass sporrans and with their stone clubs and bows and arrows, were still regarded by the majority of other local people.

Whoever had collected our sub district produce had excelled themselves and we had a mountain of fruit and vegetables to select from.

Pineapples (ananas) bananas, taro, sugarcane, etc. were all arranged in geometric designs and the display came together quite well.

At the end, there were still some items left over that just didn’t quite fit into the rest of the exhibit, due to their unusual size or shape.

 Two of these items were those enormous glass balls (over a foot in diameter and covered in knotted rope) that the Japanese long line fishing boats kept losing and ended up being washed up on the local beaches.

What could we do with these things we wondered?

We scratched our heads.

They were too good not to use but where?

“Alright’, I said, “lift them up here,” and I tied them onto the central metal truss that supported the roof of the stand.

They just didn’t look quite right however and looking around, I spied an enormous, red marita (large, long, bright red conical fruit of the pandanus, about three feet long).

Whoever had cut it had left a long bit of woody stalk and this fitted perfectly between the ropes holding the glass balls up to the roof.

If the Sepiks could have their ‘phallic symbols’ at Maprik I thought, why couldn’t we have ours?

This instantly became a splendid talking point.

People would stop in their tracks and admire the “exhibit”.

 We, in our immature naivety, thought we had done the sub district proud.

 Then came the time for the judging of the exhibits.

The judging committee was chaired by the DC’s wife, no less.

 We even thought we might get a prize for our efforts.

The judging committee toured around each exhibit and took notes.

We held our breath and the Tami Islanders doubled their efforts and their mounds of wood chips.

Other sub districts had also been hard at work however and the Haviland’s from Kaiapit had produced a marvellous exhibit with miniature people and a diorama of the sub district.

 They got first prize.

 I think from memory we got some sort of prize however all I can remember is a senior officer pulling me aside later on, and informing me that we might have done better if the DC’s wife hadn’t been “severely put off” by a certain part of our exhibit.

(Oh well. What do they say about a “Streaker’s defence”? ‘It seemed like a good idea at the time’).

All that was left was for us to auction off our fruit and vegetables to help defray the expense of bringing them all to the show.

Ahh! It seems like only yesterday…

10 lessons for PNG from the last decade

By MALUM NALU
The last 10 years of economic growth in PNG has not seen improved development outcomes for the people, according to Asian Development Bank country economist Aaron Batten, The National reports.
He was speaking at the launching of a new ADB report, Diagnosing PNG’s Critical Development Constraints, at the University of PNG on Wednesday night.
“The last decade of economic growth has not been able to catalyse improved developed outcomes for the majority of PNG,” Batten said.

A pothole in the centre of downtown Port Moresby yesterday…growth is not translating into development .-Nationalpic by MALUM NALU

“The barriers to inclusive growth are large, but some positive lessons emerge from the last decade.
“Transforming these lessons into actions will be dependent on the people of PNG.”
Batten gave 10 lessons from a decade of growth, latest being the use of social media such as Facebook, Twitter and blogs.
“PNG economy has performed well over the last decade,” he said.
“But the benefits of growth are not being evenly distributed.
“Why isn’t growth translating into more-inclusive development?“
What lessons can the last decade give for improving service delivery and making the next decade of economic growth more inclusive?”
Batten’s 10 lessons were:

• Government funding has a weak relationship with service delivery;

• Better services don’t always require more government money as proven especially by mobile phone and airline companies;

• Services sector has become a major source of prosperity;

• Landowner companies are becoming more compatible with modern business as proven in the success stories of Trans Wonderland, IPI, Star Mountain, National Catering and others;

• Proximity to Asia has become PNG’s most-valuable resource;

• PNG now has a formal economy capable of creating more jobs;

• Rapid population growth erodes progress;

• Unrealistic perceptions of resource wealth distort policy;

• New models of service delivery can offer big advantages; and

• Individuals can make a big difference as widely proven in the use of social media – a new phenomenon which has taken PNG by storm – such as Facebook, Twitter and blogs.

PNG to lead Pacific growth in 2012

By MALUM NALU
Papua New Guinea is again expected to lead Pacific islands growth in 2012 at 7.8%, according to United Nations resident coordinator David McLachlan-Karr, The National reports.
He said at yesterday’s launch of the UN’s Economic and Social Survey of Asia and the Pacific 2012 that this would be boosted by rising commodity prices and growth in domestic demand, coupled with acceleration in investment through the LNG project and several mining projects.

United Nations resident coordinator David McLachlan-Karr (left) presents a copy of the report to Bank of PNG deputy governor Benny Popoitai.-Nationalpic by MALUM NALU

PNG was a star performer with an 8.9% gross domestic product (GDP) growth in 2011 (7.1% growth in 2010), with the economy benefitting from higher commodity prices as a result of a strong demand for oil, gold, copper, coffee, cocoa, palm oil and the PNG LNG project.
“One factor that could affect PNG’s growth prospect is movements in the prices of primary commodities and oil products,” McLachlan-Karr said
“While some countries with rich natural resources such as PNG and Solomon Islands have benefitted from rising commodity prices, their economies remain fragile due to wide price volatility.
“One key challenge to PNG is to manage the resource boom well so that rapid economic expansion does not translate into continuously high inflation.
“It is encouraging that PNG has taken steps to set up the government’s new sovereign wealth fund (SWF) to invest revenue earned from resources for future generations.”
McLachlan-Karr also suggested that PNG and other Pacific governments:

• Devise appropriate social protection policies to protect the poor;

• Diversify to agriculture;

• Improve infrastructure for rural agricultural production and marketing and put more effort into address often-binding constraints to agriculture such as land tenure, high labour costs and marketing infrastructure;

• Introduce initiatives to address increasing unemployment levels, especially among the youth; and

• Address urbanisation issues such as good governance, urban-rural development linkages, housing and related services infrastructure, and ways to deal with natural disasters resulting from climate change.

Bank of PNG deputy governor Benny Popoitai gave an update of the PNG economy, the problems the country was facing, and what the bank was doing to remedy these.
The 2012 Economic and Social Survey of Asia and the Pacific identifies major risks but also presents analysis to inform policy agendas for shared and sustainable growth.
It is produced by ESCAP, the United Nations Economic and Social Commission for Asia and the Pacific.

Pacific Balanced Fund posts K41 million windfall

By GYNNIE KERO
Pacific Balanced Fund (PBF), formerly the well-known PNG Investment Corporation Fund (ICPNG), yesterday (Thursday) announced a net profit of K41 million for the period 2003- 2009, The National reports.
Out of this K41 million, fund manager Melanesian Trustee Services Ltd (MTSL) has resolved to pay out a total of K18 million in dividends, in a massive turnaround from near bankruptcy to profitability and prolonged court battles with former fund manager Pacific Equities and Investment Ltd (PEIL).
MTSL chief executive officer Kennedy Wemin said a K18 million would be paid to the unit holders of PBF at K1.46 per share.

Wemin (centre) announces the K41 million windfall flanked by MTSL director Joshua Bakiri (right) and Securities Commission chairman Douglas Uyassi.-Nationalpic by MALUM NALU

He said total fund value as of December 31, 2011 was K239 million, with total units on offer at 12 million.
“This marks a milestone event since the inception of PBF from the former ICPNG and sets the pace for the future,” Wemin said.
“A once-gloomy and almost-bankrupt PBF has now done a complete turnaround.”
This will be the first time in the history of PBF to pay dividends.
The last dividend paid to unit holders was in 1998 under the former ICPNG.
“Audit files for 2010 and 2011 have been completed for Price Waterhouse Coopers to review and Deloitte to audit,” Wemin said.
“We expect both audits to be completed by end of June 2012 and made available by September 2012.
“PBF intends to commence trading by November or December 2011 and has put in place all necessary systems.
“Unit pricing is a function that was given to KPMG to carry out for the years 2003-2008, which has now been completed and an announcement will be made soon after internal processes are satisfied.
“Unit price for the year ended December 2011 and possibly mid-year 2012 are crucial to enable commencement of trading functions.
“In 2013 onwards, PBF financials will be up-to-date and these compliance matters will be considered complete and routine financial audit will be required each year.”
After the removal of PEIL in 2008 at fund manager, MTSL embarked on rebuilding the shareholder registry with 60% of unit holders now verified through a nationwide road show.
Wemin said following its removal by unit holders, PEIL was reappointed three times against the wishes of unit holders through the Security Commission, “causing a lot of instability in the minds of unit holders and undermining the efforts of MTSL”.
“Numerous court battles have also been put forward by PEIL to challenge the position of MTSL as trustee and interim fund manager, which has cost the fund millions of kina while preventing the trustee.
Wemin encouraged everyone who has not been verified to come forward and assist MTSL verify their shareholding in PBF so that they could share in this windfall.
Securities Commission chairman Douglas Uyassi acknowledged MTSL for the achievement, saying that what made it outstanding was that nothing had been paid out to unit holders for more than 10 years.
“It’s truly a milestone event for PBF and its unit holders since its inception as Investment Corporation Fund of PNG in 1973,” he said.
Meanwhile, MTSL has a new website http://www.mtsl.com.pg/, where announcements and updates will be posted.

Botten says P’nyang is next biggest LNG resource

By MALUM NALU
Oil Search managing director Peter Botten says the P’nyang field in Western province – hailed as the next big gas field in PNG – is a “very interesting” resource, The National reports.
Botten, asked about the potential for P’nyang after the Oil Search annual general meeting in Port Moresby on Tuesday, was reserved but hinted that it had a lot of potential.

Peter Botten…a “very interesting” resource

“It’s relatively early days,” he said.
“It’s a significant resource in terms of the country.
“It’s a good resource.
“It’s a very interesting resource.”
P’nyang is among a number of appraisal, development and exploration wells that will be drilled across Oil Search’s PNG Highlands and Gulf licences over the next 18 months, as it embarks on the biggest drilling programme in its history.
Oil Search shares hit an all-time high two weeks ago because of significant gas discovery at P’nyang South sidetrack in Western province, according to investor relations manager Ann Diamont.
“The well extended the size of the known gas column at P’nyang South to 380 metres, with a potential additional up-dip upside, which could mean that the total gas column is over 650 metres,” Diamont said.
“It is subject to further evaluation, but it could help to underpin LNG expansion.”
An Oil Search drilling report says that on April 19, the P’nyang South 1 ST1 well was at a depth of 2,944 metres and undertaking a formation evaluation programme over the Toro sandstone.
“Based on the preliminary interpretation of data collected in both P’nyang South 1 and P’nyang South 1 ST1, the gas zone is interpreted to extend approximately 200 metres deeper than the lowest known gas in P’nyang South 1, indicating an increase in the total gas column to approximately 380 metres,” the report says.
“Seismic interpretation and structural mapping suggests additional up-dip potential above P’nyang South 1 and indicates a potential vertical gas column in the P’nyang South field of over 650 metres.”
P’nyang South is located four kilometres south-west of the P’nyang 1X gas discovery and approximately 90 kilometres north-west of the Juha gas field.
The participants in P’nyang South 1 ST1 are: Oil Search Ltd (38.5%), ExxonMobil affiliates (49%), JX Nippon (12.5%).

DPE: InterOil’s Gulf LNG project rejected

By MALUM NALU
The Department of Petroleum and Energy insists that InterOil’s controversial Gulf LNG project has been rejected by the government, and the company must respect that decision, The National reports.
Department secretary Rendle Rimua said that last year, the National Executive Council (NEC) rejected the Gulf LNG project primarily because Liquid Niugini Gas Ltd/Interoil deviated from the project concept that was agreed to with the State in the 2009Project Agreement.
A copy of Rimua’s statement was sent to InterOil on Tuesday for comment, however, the company had not responded by yesterday.

Rimua said the project was rejected as LNGL/Interoil did not:

• Formally seek and get approval from the state to change the scope and concept of the project;

• Find an internationally-recognised reputable LNG operator;

• Produce a proposal consistent with the project agreement; and

• Prove the proposed technologies were proven in the context of processing large amounts of LNG.

“During that time, Interoil released information on many occasions that they had completed the front end engineering and design (FEED) when the process of lodging applications for relevant licences had not been done yet,” Rimua said.
“They continued to promote the ‘Gulf LNG Project’ concept when they were advised on numerous occasions the concept was not the agreed concept in the 2009 Project Agreement.
“Recently, Interoil came out public stating that FEED was still in progress and the government had not rejected the ‘Gulf LNG Project’ concept.
“This is factually misleading.
Rimua said the department is aware that the FEED for the condensate stripping programme is complete “but we are not aware on the status of the FEED for the whole project”.
“The department has not even discussed or reviewed the FEED documents in detail with LNGL/Interoil as none have been lodged with the department,” he said.
“The department is also amazed that LNGL/Interoil states that the ‘Gulf LNG project’ has not been rejected even when the Minister for Petroleum and Energy publicly stated on various occasions that it was rejected by the NEC.”

ADB: Private sector will foster economic growth

By MALUM NALU
Nurturing the private sector and improving public service is key to foster growth in Papua New Guinea’s economy over the next 10 years, according to a new report from the Asian Development Bank, The National reports.
The report, Diagnosing PNG’s Critical Development Constraints, was launched at the University of PNG last night.

National Planning and Monitoring secretary Dr Peter Kora, ADB country economist Aaron Batten and UPNG vice-chancellor Prof Ross Hynes with copies of the report at UPNG last night.-Nationalpic by MALUM NALU

It studies the dramatic improvements in the PNG economy over the last 10 years, during which time, benefits of economic growth have been small with mounting evidence of growing inequality and declining social indicators across many parts of the country.
ADB PNG country director Charles Andrews said the PNG economy had transformed over the last decade with stable government finances, private investment and high commodity prices boosting income and employment.
“However, for many citizens, the benefits of economic growth have been small with mounting evidence of growing inequality and declining social indicators across many parts of the country,” he said.
“PNG has one of the highest levels of income inequality in Asia and the Pacific.
“There is a huge geographical divide too, with 94% of PNG’s poor living in rural areas.
“Poor roads between farms and national and international markets, coupled with high cost of finance, have held back development in agricultural areas.
“Creating a more-favorable environment for private enterprises to flourish would encourage economic diversification and competition as reforms in the telecommunications, aviation and financial services sectors over the past 10 years unleashed widespread benefits for the PNG population.”
The report said the government should strive to improve the quality of public services such as transport, electricity and water systems.
“Better education and health services would improve the livelihood prospects for all Papua New Guineans, helping to provide the foundation for sustained economic growth,” Andrews said.
“Many of the recommendations outlined in the report are line with the government’s development programme, Vision 2050.”
Papua New Guinea joined ADB in 1971 and is ADB’s largest partner in the Pacific in terms of loans for public and private sector investment.

Brighter metals prospects for PNG

By OXFORD BUSINESS GROUP
A series of significant mineral finds in Papua New Guinea have highlighted the role exports are set to play in the nation’s economic future.
However, there have been calls from industry players and opposition officials asking the government to do more to ensure revenues stay in the country.
In mid-April, state-owned Petromin announced that it had found a 364-metre intersection of porphyry copper, molybdenum and gold mineralisation at its Ipi River prospect, located 50km north of its Tolukuma gold mine in Central province.
In the same month, Australia-based Indochine Mining announced that gold and silver finds at Mount Kare had underlined the “outstanding potential” of the project to become one of PNG’s next major mining operations.
Officials also revealed that Kula Gold’s Woodlark Island project, which has estimated reserves of 700,000 ounces, was on track to start producing in 2014.
Also in April, Nautilus Minerals of Australia announced that it had obtained a license from PNG to mine a site the size of 21 football fields under the sea.
The company hopes to develop and expand undersea mining to obtain copper, gold, silver and zinc from the seafloor.
These recent finds and progress underline the significant contribution metals are set to make to GDP in the coming years.
In 2010, activities directly attributed to mining comprised 21% of domestic revenues, while high global commodity prices are widely credited for GDP growth reaching 8.5% in 2011 and the predicted rate for this year.
“In 2012, real GDP is projected to grow at 8%, supported by a recovery in mining output,” the IMF wrote in February.
However, concerns over the environmental impacts of mining and foreign miners over-exploiting PNG’s resources have led to calls for the country to tighten its tax regime.
Observers have called for the country to emulate Australia’s controversial mining tax, which will levy 30% of the “super profits” from corporations mining iron ore and coal.
Meanwhile, critics point to the 10-year tax holidays currently in place for a number of mining projects in the country, including the Chinese-operated $1.4 billion Ramu nickel-cobalt project.

Bird view picture of Basamuk in Madang province, site of the Chinese-operated $1.4 billion Ramu nickel-cobalt project

The government has proposed legislative reforms to increase domestic involvement in mining projects, with Belden Namah, the deputy prime minister, saying in February that the Mining Act will be reviewed to increase landowner participation in mining projects.
However, Namah’s plans were met with a strong backlash from industry players and opposition officials.
In February, the IMF echoed these concerns, stating the resource sector could make a larger contribution to public revenues.
The fund recommended that the government strengthen its current means of revenue collection, reinforce the internal revenue and Customs services, streamline tax concessions and apply the additional profits tax to mining activities.
The government’s grip on mining revenues will come under more scrutiny as speculation grows over the potential of the Wafi-Golpu copper-gold project, which Marian van der Walt, the investor relations manager at South Africa-based Harmony Gold Mining, in March described as the “find of the century”.
Exploration has already discovered 27m ounces of gold and 9m tonnes of copper, and those numbers are expected to grow before commissioning in 2018, wrote PNGIndustryNews.
“We believe Wafi-Golpu is amongst, possibly, the top-10 copper-gold porphyries in the world at this stage,” van der Walt told the Mines and Money conference in Hong Kong on March 22.
For his part, Prime Minister Peter O’Neill stressed in March that the revenues from the Wafi-Golpu will, like those from the $15.7 billion Exxon-led PNG liquefied natural gas (LNG) project, be carefully managed by the country’s Sovereign Wealth Fund to ensure that they benefit development in infrastructure and education.
“By 2016, we expect our budget to be three times bigger due to the monies coming into the country, not only from our LNG but other major projects, including the proceeds from the Wafi gold (and copper) mine in Morobe, Yandera in Madang and Frieda mine in Sepik,” O’Neill said. “We will use these funds to pay for school fees for students who are attending our universities. “By then, the entire education system in the country will be free.”
However, speculation in April that Swiss-based mining company Xstrata was mulling withdrawal from the Frieda mine project – which is estimated to have more than 11 million tonnes of copper and 18 million ounces of gold – may prove to be a challenge for the government as it struggles to attract investors.
To address the multiple factors limiting investment in the mineral sector, observers say stronger political will is needed for resources-driven economic growth to translate into real development.
“Public sector weaknesses and the extent to which corruption has infected this sector will be a real challenge in capitalising on this opportunity,” said Ian Kemmish, Australia’s High Commissioner to PNG, in March.
“Political stability will also be very important.”

PNG affected as Australian foreign aid funding boost delayed till 2016

SYDNEY MORNING HERALD

Papua New Guinea will be among Australian aid recipients affected as foreign aid will be stripped of almost $3 billion with Labor breaking its pledge to spend more on overseas development.
Indonesia ranks as Australia's largest aid recipient at $578 million, with PNG, engulfed by political turmoil over recent months ahead of scheduled national elections, ranking second at $492 million.
The Australian government said despite meeting a 0.5% target for aid a year later, Australia was on track to have doubled overall spending on foreign development between 2007 and 2015.
It said Australian aid had supported an additional 120,000 school enrolments in the Pacific, across PNG, Solomon Islands and Vanuatu.
But it said serious challenges remained with 1.3 billion people living in extreme poverty in the region and around the world — with another 1.1 billion, many in Asia, who live just above the poverty line.
''We also provide aid because Australians find it unacceptable that people across the globe still live without sufficient income to lead a decent life, or to buy basic medicines or send their children to school.''
The government had promised to devote 0.5 per cent of Australia's gross national income to foreign aid by 2015 — raising total spending to potentially as much as $8 billion.
But that increase will now be delayed another year to 2016, despite Labor renewing the 2015 pledge at its national conference in December.
Deferring the target will save the government $447 million this financial year, with savings to almost double annually over the next three years to a total of $2.9 billion.
Fears of aid cuts in the run up to the budget had generated a vocal campaign by charity groups, including stark warnings children will die should Australia fail to meet its target.
But Treasurer Wayne Swan denied the government was balancing its books on the back of the world's poor and insisted Australia could be proud of what it would achieve in overseas development.
He rejected suggestions the cut marked a vote of no-confidence in the ability of Australia's overseas aid agency AusAID to deliver the extra money after heavy criticism in recent times over payments to consultants and wasteful spending.
He said reductions were being felt right across the public purse.
Australia will also lose 44 diplomats from the Foreign Affairs department but, as revealed by The Age in February, gain a new embassy in Senegal.
Foreign Affairs will be funded for a new consulate in Chengdu, China - announced by Prime Minister Julia Gillard in March - and around $72 million will be spent on private contractors to secure the Australian embassy in Iraq.
The government is yet to reveal which Australian city will host G20 leaders in 2014, but has devoted $370 million to the running costs and security for the summit.
In spite of a slower rate of spending, AusAID will continue to grow by $400 million to $5.2 billion overall, with 44 additional staff.
Private charities will get a $194 million slice of the budget, while most official aid continues to be focused on Asia and the Pacific, with around 30 per cent of aid money handed to international funds such as the World Bank and Asian Development Bank.
Some $154 million will be devoted to expanding Australia's ties with six United Nations agencies, including UN Women and the World Health Organisation, but no additional money has been allocated to the campaign to win a temporary seat on the UN Security Council ahead of a vote in October.
Burma stands to be rewarded for its political reforms in the past year with $11 million in extra aid for maternal health and education programs, while Fiji will also benefit from an additional $61 million.

Botten: Oil Shares stock suffer

By MALUM NALU

Oil Search managing director Peter Botten admitted yesterday (Tuesday) that his company’s stocks had suffered on Monday as shares slumped on the Australian Stock Exchange, The National reports.
The good news is that Oil Share shares quickly rebounded from Monday.
Botten said that was a worldwide phenomenon, because of events in the US and Europe, that had made investors quite nervous.
“Unfortunately, when Europe sneezes, we catch the cold,” he said after the Oil Search annual general meeting at the Crowne Plaza in Port Moresby.

Botten addressing yesterday’s Oil Search annual general meeting at the Crowne Plaza in Port Moresby.-Nationalpic by MALUM NALU

“The only positive thing is that we didn’t go down that much.”
Australian shares traded deep in the red on Monday on the back of disappointing US jobs growth and European election results.
Even the local Port Moresby Stock Exchange (POMSOX) was not exempt as the nine dual-listed stocks – on both Australian Stock Exchange (ASX) and POMSOX - and all were in the red on the day.
The nine dual-listed stocks are Cue Resources, Coppermoly, Newcrest Mining, Oil Search, Highlands Pacific, New Guinea Energy, Steamships Trading, Marengo Mining, and Kina Petroleum.
Newcrest Mining and Oil Search showed the largest falls, Newcrest down 1.2% and Oil Search down 2.4% in Australian trading.
POMSOX general manager Geoff Mason said yesterday the movements of Monday did not follow through overnight with the US market down 29 points, which was much better than expected and most European markets closing up from last Friday’s falls.
“The Australian market is up just prior to the close so all in all, a better day then yesterday (Monday),” he said.
“Of the nine dual-listed stocks, there is little change on how they closed yesterday (Monday) except for Oil Search, which is up on the day, however, NCM is currently down 11 cents.”

Oil Search commits to PNG

By GYNNIE KERO
Oil Search Ltd remains committed to PNG despite considerable political uncertainty over the past year, according to chairman Brian Horwood, The National reports.
He told the company’s annual general meeting at Crowne Plaza in Port Moresby yesterday (Tuesday) that despite political instability and concerns within the banking and investment communities, neither the PNG LNG Project nor Oil Search operations were disrupted.

Oil Search shareholders listen attentively at yesterday’s annual general meeting at the Crowne Plaza in Port Moresby.-Nationalpic by MALUM NALU

“Ensuring the continued security and safety of our staff and contractors in the run up to the election remains the highest priority for Oil Search,” Horwood told shareholders.
“We are encouraged that the government has confirmed the election will proceed according to the original timetable.
“The country is already in a period of major social and economic change.
“This will increase further when the very significant revenues from the PNG LNG Project start to flow in 2014.
“We look forward to working with the incoming government, in particular, on establishing structures and processes to manage these very substantial benefits streams, in the best interests of the nation, and on ensuring consistency of fiscal terms, which is critical to ongoing investment.”
Horwood said apart from assisting Esso Highlands with the successful delivery of the PNG LNG project, Oil Search’s other key objectives were:
• To mature and find new gas reserves in the Highlands and PNG Gulf regions, to be used for both LNG expansion and other gas development opportunities; and

• To pursue in-field and near-field oil exploration and appraisal opportunities, based on a view that substantial oil remains to be discovered in our existing producing areas.

“During 2011, Oil Search and its partners agreed a comprehensive programme aimed at establishing additional gas resources in the Highlands region,” he said.
“This comprises exploration and appraisal drilling as well as further definition of the gas within existing oil and gas fields.
“…I am pleased to report that the campaign has started extremely well, with the recent discovery of a substantial gas accumulation at P’nyang South.
“Other aspects of our growth plan are also progressing well.
“We had considerable success in the near field exploration programme at Kutubu in 2011.
“Two exploration wells discovered oil and both are now in production.
“In the Gulf of Papua, a range of exciting prospects have been identified from our 3D seismic, with drilling activities targeted to commence at the end of 2012.”

Western province is next frontier of LNG exploration

By MALUM NALU
Western province could soon become the next frontier of PNG LNG project expansion following on from the Southern Highlands, according to New Guinea Energy (NGE) Ltd executive chairman Michael Arnett, The National reports.
Western province is already becoming a multi-million dollar oil and gas exploration ground for companies such as NGE, Talisman Energy Inc, Mitsubishi Corporation, Esso PNG Exploration Ltd and Oil Search.
Last October, PNG Authorities extended the licence period and exploration programmes the NGE’s 50%-owned PPL 268 and PPL 269 with Talisman and the two companies are now committed to a minimum expenditure of US$55.69 million on the licences over the next five years.
On February 23, 2012, Talisman announced that it had entered into a strategic joint venture with Mitsubishi Corporation, worth US5.18 million to aggregate natural gas in the Western province with a view to potential LNG export of approximately three million metric tonnes per annum.
On March 7, 2012, NGE announced the sale of its interest in PPL 277 to Esso PNG Exploration Ltd (Esso) and Oil Search (PNG) Ltd, involving an aggregate cash payment of US$35 million, plus an ongoing royalty on future production, subject to certain conditions.
Arnett told the company’s annual general meeting in Sydney on Tuesday that the recent announcement of the P’nyang South Appraisal well, indicating a potential vertical gas column of over 650 metres, was particularly significant to all Western province explorers.
“This discovery alone could potentially justify the P’nyang field becoming a cornerstone of the PNG LNG project expansion,” Arnett said.
“This could provide Western Province gas discoveries with two export routes: PNG LNG or via the infrastructure that may be built for Talisman’s previously-announced gas aggregation strategy.
“The oil industry as a whole benefits from successful drilling in the Western province as each gas discovery adds to the critical mass necessary to justify oil and gas processing and export infrastructure.
“In that light NGE, was very pleased to hear of the results of the Stanley, Ubuntu, Elevala and Ketu Appraisal wells in the Western province over the last 12 months.
“We believe that 2012 will continue to be a significant year in the company’s history in terms of activity across all the licences.”
Arnett said with two seismic programmes already completed on petroleum prospecting license (PPL) 265 and PPL 266, another planned for PPL 268 in the third quarter of the year, and a third exploration well, this time in PPL 265 anticipated for the fourth quarter of the year, a busy year was forecast.

Ramu Sugar ignites fire to set production rolling

Ramu Agri Industries Ltd (RAIL) yesterday (Monday) lit the fires in its sugar factory boilers, signalling the end of the six-month maintenance season and the beginning of the 2012 sugar cane harvest season, The National reports.

Long-serving employee of 30 years, Buti Sakama Lights up Boiler 2.

With the boilers now lit, a traditional ceremony practised each year, Ramu Sugar production starts today, Tuesday, May 15, 2012
The ceremony was witnessed by management and sugar factory staff alike, marking the culmination of much hard work on everyone’s part and as always a proud moment for all involved.
Head of technical services, Tom Hare thanked all staff for collaborating well with management in ensuring the boilers and the factory had been made ready for the coming season.
He said the task of preparing for production was always a busy period for everyone and the tireless effort that went into ensuring that the factory was ready reflected the commitment of each and every staff member.
General manager Jamie Graham told factory staff: “Without your collaboration and team work, none of this would be possible.
“It is as a result of your hard work and effort that we have come to this day again.”
Yesterday was a special day for Buti Sakama, who has been with the company for the last 30 years.
He is a long-serving employee with the factory department.
Sakama started with Ramu Sugar Ltd in 1982 at the very beginning of the sugar factory operations and worked his way up to the position of boiler supervisor, from which he will retire at the end of 2012.
Graham and Sakama were then given the privilege to each light a boiler to ceremonially announce the upcoming harvest season.


RAIL general manager Jamie Graham lights up Boiler 1.-Pictures courtesy of RAIL

A blessing was bestowed upon the staff and the company for a bountiful harvest by Pastor Angap Moses.

PNG is stable, O'Neill tells UN

AAP

Papua New Guinea Prime Minister Peter O'Neill has rejected claims by the United Nations his government threatens the independence of the judiciary and the rule of law.
In a statement directed at UN Human Rights High Commissioner Navi Pillay, Mr O'Neill said PNG was now secure from political instability.
Ms Pillay issued a warning from Geneva two weeks ago against laws passed by the O'Neill government since it took power on August 2, including the recently implemented Judicial Conduct Act, which gives parliament the power to suspend judges.
Mr O'Neill said he had directed an inter-departmental committee to formally assess the allegations to "ensure the UN Special Rapporteur is provided a brief to assist her [to] understand the PNG political context in which the actions of my government are taken", he said.

O'Neill...refutes UN claims

He said the inter-departmental committee will provide the government's response on any breaches or interferences that may have occurred against the UN's charter on the Basic Principles on the Independence of the Judiciary.
Ms Pillay also warned PNG risked sliding towards lawlessness after a reporter was threatened and another attacked in Port Moresby in recent months.
Mr O'Neill denied there was any move to stomp on free speech in PNG, and that a recent debate on press bias in parliament had more to with standards of reporting than gagging free speech.
"PNG continues to enjoy freedom of speech as provided under the constitution," he said.
"The recent debate by PNG government and parliament on free speech with regards to reporting by journalists addresses the substantive issue of factual and unbiased reporting rather than curtailing free speech."
In February, Mr O'Neill's chief of staff, Ben Micah, took out ads in the daily newspapers vowing those who spread "malicious and misleading" information would be "dealt with".
At a subsequent press conference, Mr O'Neill denied his government had any plans to gag free speech, while Mr Micah, in a rare interjection during O'Neill's usually tightly run press conferences, said the statement was aimed at people spreading false rumours of military coups.
"This is not a Stalinist regime," Mr Micah said at the time.
"We will be using normal government apparatus to monitor policy information."
Immediately after passing the Judicial Conduct Act into law in February, the government used it to suspend Chief Justice Sir Salamo Injia and Justice Nicholas Kerriwom, both of whom are sitting on new hearings into the government's legitimacy.
Chief Justice Sir Salamo is accused of interfering in the handling of the estate of the late Justice Timothy Hinchcliffe, and redirecting money owed to his deceased colleague's family into court coffers.
The court has put a permanent stay on his case.
The government also want him gone, having accused him of bias since last year's constitutional court case to decide who was the nation's PM.
The court - headed by Justice Sir Salamo - ruled 3 to 2 on December 12 in favour of dumped prime minister Sir Michael Somare, who lost office to Mr O'Neill in a surprise parliamentary vote on August 2.
That decision, and the majority of parliament's refusal to back away from the decision to install Mr O'Neill, culminated in a failed mutiny by

Department raps InterOil for not complying with laws

Department of Petroleum and Energy (DPE) yesterday (Monday) blunty accused InterOil of not complying with the Oil and Gas Act, The National reports. This follows last week’s announcement by Interoil that it had entered into a binding farm-in agreement with a Peru-based company, Pacific Rubiales Energy (PRE) for PRE to take a 10% net equity interest at an estimated cost of US$345 million in petroleum prospecting license (PPL) 237.
Department Secretary Rendle Rimua said yesterday (Monday) that this arrangement did not include any equity interest transfer in the Elk/Antelope fields which were also partly in PPL 237.
“The 10% stake only relates to the Tricerotops 2 well and associated exploration activities,” he said.
“The Department of Petroleum and Energy is very concerned that Interoil has released information publicly on the transfer of the equity interest without approval from the Minister for Petroleum and Energy (William Duma).
“The Department has also yet to receive any formal request from Interoil requesting the Minister to approve the transfer.
“We have also noted some oil companies releasing public statements on licence transfers and we remind the industry that no licence can be transferred until it is approved by the minister; hence Interoil or any other company involved in transfers and dealings must seek approval of the minister before releasing any information in relation to any equity interest transfers in their licences.
“The department is concerned that such practices are pre-empting the decision of the minister and could also be interpreted as undermining the laws of the country.
“While we encourage investment in the oil and gas sector, the department advises investors to respect the laws of the country.
“If investors do not respect our laws, we will not tolerate such attitude.
“The department has a due diligence process to review; compliance, contract terms and conditions, price and conditions (if any) to be set in any instrument to legitimise transfer of equity interest in a licence.
“In view of this, it is very important oil and gas companies do not release public statements until they receive approval from the Minister.
Rimua said last year the National Executive Council (NEC) rejected the Gulf LNG Project primarily because Liquid Niugini Gas Ltd (LNGL)/Interoil were deviating from the project concept that was agreed to between the state and LNGL/Interoil in the 2009 project agreement.
"Recently, Interoil came out public stating that front end engineering and design (FEED) was still in progress and the government had not rejected the Gulf LNG Project concept,” he said.
“This is factually misleading.
“The department is also amazed that LNGL/Interoil states that the Gulf LNG project has not been rejected even when the Minister for Petroleum and Energy publicly stated on various occasions that it was rejected by the NEC.”

POMSOX calm as Australian shares slump

By MALUM NALU
Port Moresby Stock Exchange (POMSOX) remained calm but cautious yesterday as Australian shares traded deep in the red, on track for their worst day in three months, on the back of disappointing US jobs growth and European election results.
POMSOX general manager Geoff Mason told The National that there were nine dual-listed stocks – on both Australian Stock Exchange (ASX) and POMSOX - and all were in the red on the day.



 Geoff Mason…calm but cautious

The nine dual-listed stocks are Cue Resources, Coppermoly, Newcrest Mining, Oil Search, Highlands Pacific, New Guinea Energy, Steamships Trading, Marengo Mining, and Kina Petroleum.
“However, it is Newcrest Mining and Oil Search which are showing the largest falls,” he said.
“The negative news around will impact POMSOX as we see Newcrest down 1.2% and Oil Search down 2.4% in Australian trading.
“Any trading on POMSOX will mirror these downward movements.”
Mason added: “We are treating this no differently than any other day.
“Whilst no one likes to see large falls in the markets, markets are an indication of how economies are faring and at the moment there is negative news around.
“On the positive side, when the markets settle down it can be a good time to buy quality shares at lower prices.
“When markets begin to strengthen it is the quality shares that rebound first. “
Mason said the Australian market had opened the week heavily down on the back of news out of America, Europe and Australia.
US job figures released Friday showed lower than expected job figures. This may indicate the US economy was stalling on the back of falling consumer spending.
The political changes in Greece and France put pressure on the Euro bailout. Any uncertainty of the bailout would put pressure back on European markets and any hope the Euro zone problem was nearing an end.
Data out of Australia yesterday indicated the Australian economy is weakening. Only the mining sector on the continued demand for Australian resources and retail on the back of continued price discounting, showed signs of strength. The Australian dollar was below 103 against the US$, which was its lowest level for a long time; and
The Australian government continues to push for a surplus budget which would see a large fall in Government spending. This would put downward pressure on the Australian economy.