Esso Highlands concerned about resource ownership

By MALUM NALU

Esso Highlands managing director Peter Graham has expressed concern about the issue of resource ownership which appeared in The National yesterday.

He told the Papua New Guinea Advantage 2012 investment conference in Port Moresby yesterday that such things made investors “nervous”.

Lawyer Hubert Namani told a mining industry gathering organised by the Mineral Resource Authority last Friday that it was only a matter of time before “resource nationalism” – a growing global trend – came to PNG.

The proposed amendment to the Mining Act was endorsed by three key figures – North Fly MP Boka Kondra, Central Bougainville MP James Miringtoro and former Western Governor Bob Danaya – and seeks that resources belong to the people and not the state.

Lawyer Peter Donigi, the architect of this bill, argues that resources belong to the people and, therefore, investors are required to enter into contracts with the owner of the resource to extract the resource.

He said PNG had the lowest return at 22.5% for oil and gas and 30% for minerals.

“From an investment perspective, one of the things that strikes me is stability,” Graham told the conference.

“Removal of uncertainty around investments.

“Reading this morning’s paper, the issue of resource ownership has popped up: transfer of ownership of resources from state to landowners.

“The uncertainty of that is not going to do any constructive to current investments in this country.

“It’s an issue that we’ve been given assurance by the new government that it’s not going to get legs and move on.

“I think investors around the country are wondering about the fiscal regime, the regulatory regime, the ownership regime.

“That’s the sort of thing that makes people nervous.”

PNG Made Expo begins in Port Moresby

By MALUM NALU

A two-day PNG Made Expo, being run in conjunction with the Papua New Guinea Advantage 2012 investment conference, began at the Gateway Hotel in Port Moresby yesterday.

It is organised by the Manufacturers’ Council and conference organisers and features leading PNG manufacturers such as SP Brewery, KK Kingston, Paradise Spices, RD Tuna Canners and Hugo Canning.

Stephanie Bawo (left) of Air Niugini at the RD Tuna Canners stall with Roger Galow (centre) and Ken Namasu.-Nationalpic by MALUM NALU

Council chairman Murray Woo, when opening the expo yesterday, said manufacturing in PNG was an integral part of the economy and would always be so.

“Now is the time we should take advantage of the opportunity of this period of exceptional growth to support and assist the growing manufacturing sector, including downstream processing and other value-adding industries, as they have and will continue to contribute to the fabric of PNG,” he said.

“Local manufacturers supply and distribute nationwide and some successfully export to international markets.

“Despite adverse operating conditions and lack of political support, our members have continued to increase their growth and investment.

“PNG must now take strong steps towards improving the infrastructure and grow our manufacturing and value-adding industries.”

Woo said the manufacturing sector employed more than 25% of the formal workforce in PNG in agriculture, timber and fisheries, among others.

“For too long, we have exported timber, fisheries and agriculture products with little or no added value,” he said.

“The council will soon roll out another PNG Made media campaign with support from our members to continue to promote this brand and what it stands for.

“Standard of goods manufactured here in PNG surpasses many cheap, imported goods.

“The recognition of the PNG Made brand hopes to bring pride and loyalty to our loyal consumers to choose products made by firms who invested in PNG, that are creating jobs and livelihoods for our people.”

Micah: Public enterprises a liability

By MALUM NALU

Public enterprises are in no better shape than they were 10 years ago, according to Minister for Public Enterprises and State Investments Ben Micah.
He told the Papua New Guinea Advantage 2012 investment conference in Port Moresby yesterday (Monday) that “the unpalatable fact is that we (government) have injected many hundreds of millions of kina into them (public enterprises) since 2002 for no net benefit”.

Micah speaking at the conference yesterday.-Nationalpic by MALUM NALU

These include Independent Public Business Corporation (IPBC), Air Niugini, Eda Ranu, Motor Vehicle Insurance Ltd (MVIL), National Development Bank (NDB), PNG Ports, PNG Power, Post PNG, Telikom and Water PNG.
“In fact, service delivery standards have declined and the extension of services into rural areas has proceeded at an unacceptably slow pace – if at all,” he said.
“Our critical infrastructure – roads and bridges, ports and airports, power stations, the national telecommunications system, water supplies and sewerage systems are crumbling around us because of poor maintenance.
“As an example of the lack of progress within public enterprises, at the start of 2002, Post PNG had only just been rescued from insolvency.
“Today it is still reliant on IPBC for life support.
“bemobile is also being kept alive by cash injections from its shareholders, including the government.
“MVIL and Ports PNG have lost millions of kina in illegal or foolish investments.
“Some public enterprises have been using debt to finance their daily operations instead of creating revenue-generating assets.
“Others, such as Telikom, have borrowed millions of kina illegally.”
Micah said there was a lack of transparency and accountability within public enterprises, and many were in breach of their statutory obligations.
“They suffer from poor management systems and processes and lack commercial discipline, resulting in high costs and poor delivery to their customers,” he said.
“Each and every public enterprise requires capital injections once again.
“But when we prop up non-performing public enterprises, we do it with money that should be going to where it is needed most – to hospitals, aid posts and clinics, to schools and universities, to law and order, to national security, to advice and assistance to farmers and fishermen, to community development, and so on.
“Our public enterprises are a drag on economic growth in that money spent elsewhere – for example on health and education – brings a higher return.
“It has been estimated by the Asian Development Bank that every kina invested in public enterprises produces seven times less output than the same kina invested in the rest of the economy.”

Parker: OTML is proudly PNG-owned

By MALUM NALU

Ok Tedi Mining Ltd (OTML) managing director and chief executive officer Nigel Parker has reminded the people of Western province and Papua New Guinea that they now own the company 100%.
He highlighted this again during a meeting with a provincial delegation led by Western province Governor Ati Wobiro at the Tabubil Golf Club on Saturday.

Parker (right) welcomes Wobiro to the Tabubil Golf Club on Saturday.-Picture by MALUM NALU

“OTML is now a PNG national asset, arguably worth US$3 billion on a commercial basis, and up optioned up for exploration programmes, worth many more billions,” Parker said,
“However, if valued from the perspective of total return potential to the state, the value is far more substantial.’
Parker said the people of PNG owned OTML through the PNG Sustainable Development Program (63.4%) and PNG government (36.6%) and the ownership of the exploitation of Mt Fubilan mineral wealth was now to the account of all Papua New Guineans.
“The traditional landowners still retain traditional ownership of the land and benefit directly from the exploitation of the mineral wealth through direct payment of royalties, land lease fees, spin-off businesses and the like,” he said.
“The broader Papua New Guineans benefit indirectly through taxes and dividends paid by OTML to the national treasury and from the commercial spend that OTML spends within PNG for goods and services.
“The eventual closure of the mine is being progressively covered by a financial assurance fund – currently US$228 million actual cash.
“The people of the Western province and the Sandaun (West Sepik) province are benefitting from the Ok Tedi Development Foundation Ltd and PNGSDP programmes.”

PNGSDP: Western province's future is secure

By MALUM NALU

PNG Sustainable Development Program (PNGSDP) has reminded the people of Western province that their long-term future is secure.
Chief executive officer, David Sode, told a Fly River provincial government delegation led by Governor Ati Wobiro at Tabubil Golf Club on Saturday that PNGSDP’s long-term fund (LTD) stood at US$1.2 billion (K2.5 billion) at December 2011.

Western Governor Ati Wobiro (centre) is flanked by his deputy Borok Pitalok (left) and South Fly MP Aide Ganasi during last Saturday's meeting in Tabubil.-Picture by MALUM NALU

This LTF can be drawn down only after closure of the Ok Tedi mine to support the Western province for a minimum of 40 years.
Sode explained that PNGSDP currently owned 63.4% of Ok Tedi Mining Ltd (OTML), with the balance of 36.6% owned by the PNG government.
He said two-thirds of its annual dividend was invested in the LTF, while one-third was used by the development fund.
The development fund is further split with one-third being spent in Western province while two-thirds goes to PNGSDP’s national programme.
The balance of the development fund as of July 2012 was US$203.4 million (K420 million), of which US$115.2 million (K238 million) was spent in Western province; and US$88 million (K182.2 million) was spent on the national programme.
“PNGSDP promotes development that meets the needs of the present generation and establishes the foundation for future generations of Papua New Guineans,” Sode said,
“To do this, we partner with credible organisations to deliver development.
“We work with government, multilateral donors, private sector companies, NGOs, community groups.
“Where no partner exists, we have created new subsidiary organisations to deliver our objectives.”
Sode said major projects embarked on in Western province included:

• Commencing survey of the northern and southern ends of a Fly River road corridor (K9 million);

• Daru Deep Water Port which is scheduled to commence in January 2013 and take 24 months to build;

• Completion of Kiunga-Kokonda Road and Gre-Drimgas Road (K51 million);

• Completion of survey and design of the proposed 70km West Bank Road (K5.5 million);

• Upgrading of Bak, Oksapmin, Golgobip, Eliptamin and Telifomin rural airstrips in the mine preferred areas (K5.5 million);

• Upgrading of Daru Airport (K40 million)

• Rehabilitation of Daru water system and construction of sewerage system (K52 million);

• Rural electrification mini-grid power systems (K32 million);

• Establishment of 57 communication towers ( K77.8 million);

• Rubber development (K55 million);

• Daru barramundi hatchery (K27.4 million);

• Microfinance support at K5 million annually; and

• Various others.

PNGSDP signs historic agreement with Western province

By MALUM NALU in Tabubil

PNG Sustainable Development Program (PNGSDP), majority shareholder of the giant Ok Tedi mine, has signed a historic agreement with the Fly River provincial government to ensure that more business opportunities flow down to the people of Western province.

The company currently owns 63.4% of Ok Tedi Mining Ltd (OTML), while the balance of 36.6% is owned by the PNG government.

The agreement was signed after a day-long meeting at the Tabubil Golf Club on Saturday in which representatives from PNGSDP, OTML, and Ok Tedi Development Foundation (OTDF) made comprehensive presentations to a delegation led by Governor Ati Wobiro, and deputy provincial administrator Willie Kokoba.

Wobiro signed the agreement on behalf of his people while board chairman Professor Ross Garnaut signed on behalf of PNGSDP.

Garnaut (left) and Wobiro sign the agreement on Saturday.-Picture by MALUM NALU

It was hailed as the beginning of a new era for Western province, especially given that Wobiro is a former employee of PNGSDP, who is familiar with all its workings.

“I’m sure that with the partnership we have already signed, we can bring our resources together,” Wobiro said in his first major engagement as Western province Governor.

“This is an exciting time for all of us.

“Our people expect us to do things and let’s do the right thing by them.”

Garnaut said Western province had access to a lot of funds from different sources and the way forward was to plan how to use these,

“In everything that we (PNGSDP) do, we hope we can work with the provincial government,” he said.

“We are natural partners in development in this province.

“There are a lot of partners that belong to the province in Department of Finance SSG (special support grants), MRDC (Mineral Resources Development Company).

“What we need to do is we need to have a plan to put the funds from PNGSDP, Ok Tedi, OTDF alongside your funds and build the important business projects that can really make a big difference in taking this province forward.

‘“We have a partner who can work with us to make use of this golden opportunity.

“It will be our great opportunity in turning this this opportunity into achievement.”

Western province launches US$2.3 million vessel

From MALUM NALU in Tabubil
 

Western province’s brand-new US$2.3 million vessel, mv Fly Explorer, was delivered to the people at Kiunga along the banks of the Fly River yesterday (Sunday) morning.

mv Fly Explorer steaming up the Fly River yesterday on its way to Kiunga.-Pictures by MALUM NALU

The state-of-the-art vessel, which will be used mainly for research purposes along the Fly River by Ok Tedi Mining Ltd, is owned by the eight Community Mine Continuation Agreement (CMCA) groups of Middle Fly, Dudi, Kiwaba, Manawete, Suki Fly Gogo, Nupmo, Waitri and Tunwe.

Design, customs and delivery was made possible by the Ok Tedi Development Foundation (OTDF).

Immediately after the dedication prayer and welcome speeches by Western province Governor Ati Wobiro and OTDF chairman and OTML managing director and CEO, Nigel Parker, mv Fly Explorer and its sister ship mv Fly Hope took guests on a cruise and lunch along the Fly River.

Sister ships mv Fly Explorer (right) and mv Fly Hope at the busy Kiunga port along the Fly River in Western province yesterday.

An excited OTDF CEO, Ian Middleton, told The National along the Fly River that this was the beginning of beter things to come for Western province as it started making use of its natural “super highway”.

“It (Fly Explorer) will be used by the (OTML) environment department for riverine sampling,” he said.

“That’s the primary purpose but we’ll also do community relations patrols twice a year.”

mv Fly Explorer features has cabins for 12, a purpose-built laboratory, hydrographic winch for sediment sampling, outboard motor and fishing workshop, and office facilities at the top deck.

It was built to order at Saraway Slipways MRI, Malaysia, and was sailed to PNG by an all-PNG crew led by Captain Pokai Aisuk from the Siassi islands of Morobe province.

This is the second such vessel ordered by the OTDF, the first being mv Fly Hope, a purpose-built 150-person passenger  vessel delivered last April to enable accessibility to services never before experienced by the CMCA communities.

A third vessel, mv Fly Warrior, a 65m bulk cargo/fuel carrier, is expected to be delivered to the people of Western province in November this year.