PAPUA
New Guinea has come a long way to be a free and sovereign State and democracy
has been the guiding principal that holds this unique country together.
More
or less the PNG constitution was built upon the principal of democracy which continues
to provide for us the very laws that holds us together.
Over
the past 40 years the resource laws governing our vast natural resources have
favoured multi- international corporations who profited from our oil, gas, gold,
silver, copper, nickel, forest, fisheries etc… upon the ignorance of the
government.
The
call by our Prime Minister James Marape to ‘Take Back PNG’ and make it one of
the ‘richest black nations’ in the world will only come true if the resource
laws are reviewed to favour all parties concerned.
Prime
Minister Marape in his first official address to Parliament after being sworn
in called for a review to the resource laws that are of colonial in nature. A long
overdue call that the country has been praying for and it’s about time Papua
New Guineans or resources owners are accorded their right to participate on an
even playing field in the mining and hydrocarbon sector.
For
far too long, foreign investors particularly the resource developers of the gas
and mining projects continue to play their deceptive conduct and lie to cover up
on unfulfilled agreements in the mining and petroleum sector in the country.
A truthful regime must
now be adopted, where the landowners and the government, as owners of the
assets, must retain the majority interest in all of the country’s natural
resource projects.
The mining or petroleum
companies which invest in the exploration and discovery of a particular mineral
or petroleum asset, should only receive an interest that is proportionate to
its total investment in the exploration and discovery of the mineral or
petroleum asset.
The
United Nations Assembly in its declaration of the rights of the indigenous
peoples of the world in 2007 requires the Papua New Guinea government to adopt
the declaration. Article 26, requires the State to return land and resource
ownership rights stolen in the process of colonisation to its indigenous
owners. Almost all members of the UN Member countries have adopted the
Declaration, including the USA, Australia, Canada and New Zealand who initially
voted against the bill.
What
is the PNG government waiting for? Most Papua New Guineans are indigenous who
have owned the same mineral rights which were stolen by the State, the new
entity formed by our colonisers upon their arrival on this island.
Natural
resources in many States of the USA are owned by private landowners who enter
into production or profit sharing agreements with private developers. The State
collects its revenues by charging its taxes, duties and royalties. Many of the
companies exploiting our resources come from capitalist economies where private
individuals are major shareholders. Why allow them to take our resources if we
are afraid that only a few will be rich
then? Is the Chamber of Mines and Petroleum really saying that it’s okay for
their few shareholders to be capitalists but not for PNG citizens?
Papua New Guinea is
indeed the land of the unexpected; where things that do not happen elsewhere in
the world, happen here ordinarily, to the amazement of visitors from around the
world.
One such example is the
conversion of mineral and petroleum assets discovered by mining and petroleum
companies in Papua New Guinea, to liabilities, called “free carried interests” for project landowners and the government of
Papua New Guinea.
Free
carried interest, is a liability to a project partner
such as a landowner group or the government, when their share of a project’s
development cost is paid for or carried by the other project partners.
The carried interest then becomes a loan or
in other words, a liability which is repayable over time from the project’s
profits, due to the landowners or the government, whoever is being carried.
In such an arrangement,
the free carried partners would usually end up with a very small interest in
the project, because of their inability to raise significant monetary capital
to pay for their share of equity or interest in the project.
The questions which
then correctly linger in the minds of the ordinary citizens of this country
are; what has become of the capital in the value of the physical asset of the
mineral or petroleum being extracted?
Why has the value of the capital asset contribution by the owners of the
minerals or petroleum to the project become zero, resulting in the owners of
the asset, suddenly becoming liable to the other project partners? At what point did the owners transfer the
ownership of the wealth from the landowners and the government to the mining or
Petroleum Company? Or did they transfer their ownership of the wealth to the
mining or Petroleum Company at all? The
answers to all these questions is simply no, the owners did not at any time
transfer their wealth to the developer. It was simply wrestled off them. The
owners were naive, incompetent, weak, inexperienced, uneducated or whatever;
which allowed the other partners ending up with the ownership of the asset. The
owners then had to buy back some of it through the so called “free carry” concept.
It is evident that many
of the foreign investors have ripped off our national wealth without any
benefit to the people of this country. One classic example is the Porgera Gold
Mine which has been in operation for the past 30 years without any benefit to
the landowners, the provincial government and the national government.
What will happen if the
government renews the SML for the next 20 years? Will the people of Porgera
continue to suffer while only few minority benefit from the gold that is mined
in their land? Who will step up to protect those innocent people who have been
victims of rape, violence, environment damage and all that? Will the government
of PM James Marape step in to assess the situation and assist the resource
owners?
The PNG LNG project
still had some outstanding issues regarding the Kokopo Landowners Benefiting
Sharing Agreement (LBSA) and the Umbrella Benefit Sharing Agreement (UBSA) MOU
signing. Some of the development agreement is still left incomplete, never done
or still in negotiation and some have never even happen. One of them is the
landowner’s equity and royalty payment which is still outstanding to this date.
The question now is; what
will the Marape-Steven government do to really support the resource owners and
fight for what is rightfully theirs?
