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Natural Resources(PNGLNG) Incomes and Management Issues

June 11 2011 at 1:34 AM
Analyst 

Papua New Guinea is blessed with many natural resources from the coast to the highlands. There is fish in the oceans, animals in the forests, we have food in the gardens and even our human resources too is of significant value. furthermore, we also have the resources below the ground such as Gold, Gas and Oil. Fine examples of these could be seen in Lihir, Gobe, Kutubu, Porgera and Misima.We also have the upcoming resource developments like Wafi gold mine, Hides, Ramu, the Elk antelope project as well. However, the question we must now ask ourselves is this: How have we made good use of income from those resources?

We are now faced with one of the biggest project that our great country has ever undertaken. Through the sheer handwork of MPs like Arthur Somare and William Duma and the Grand Chief Sir Michael Somare himself, Papua New Guinea has attracted the largest petroleum company in the world, Exxon Mobil Corporation, to invest in our country. The result is the Papua New Guinea Liquified Natural Gas Project (or Infamously known as PNGLNG). This investment is worth several billions of dollars in construction and upstream projects alone excluding indirect and direct tax revenues from the project over the 30 or so lifespan of the project.

But the real issue we are faced with is the proper and prudent management of those revenues earned from non renewable resource projects. Through proper planning and organisation will we be able to realise tangible benefits for our people to realise a better standard of living on par with the modern, developed, first world countries.Steps are taken towards this aim by the Somare government through the implementation of such policies as the Vision 2050 plan. However, the main looming danger on the horizon seems to be the dreaded Dutch Disease. Contradictory to the name, it is not a disease but an economic situation where increase in the exploitation of natural resources "kill" off other sectors of the economy such manufacturing.

The government has all the mechanisms and tools available to properly manage incomes derived from resources but the underlying problem is management. If we can manage our country well with the livelihood and well being of our people at the core, then we will move forward as a nation and prosper.

 
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Geranimo

Management ? What are the terms of the Muti Million Kina Agreements?Agreements

June 11 2011, 4:55 AM 

I totally agree with what Analyst is saying. Management of income derived from our resources is a very important issue for PNGeans to address however, before we can discuss management issues,we need to consider how William Duma, the Somare's and whoever else was involved negotiated the terms of such significant and important long term multi-million Kina Projects and, whether or not PNGeans were given the best possible deal from these negotiations.

Who did the Politicians engage as their advisors? what were their qualifications, backgrounds and experience in negotiating similar agreements?

Did we get the best possible outcome from these negotiations in terms of revenue, infrastructure and development? These Agreements are usually long term, cannot be changed once executed and the Somares and Duma's may not be around to see the conclusion of such agreements and whether or not they made any error, judgment or assumption. We will be stuck with the terms of a legally binding agreement for the next thirty years or so.

Are the landowners getting the best possible deal? Are there proper mechanisms in place for proper investment of their withheld monetary benefits by the State? Should landowners have a say in deciding who manages and invests their withheld percentage of royalty from these projects apart from MRDC?

Recently, we have seen a dramatic increase in new foreign owned companies setting up business in PNG putting up 1 page advertisements in our daily papers and on EMTV looking for employees. These companies are operating from lucrative offices from downtown area who are paying 2 -3 years rental in advance.

Who owns these companies? Isn't there any PNG owned Human Resource company who can recruit employees for the PNG LNG Project?
Isn't there any PNG owned Security Company who can provide security services to Contractors of the PNG LNG Project? How did the Americans or the Japanese eliminate PNG Companies from being awarded these lucrative contracts?

We now hear of 5,000 plus employees being brought in from overseas to be employed by the LNG Project and very soon we will be seeing foreigners driving buses and trucks to the LNG site. What next?

All the above issues have to be considered during the negotiation stage of any multi-million kina Project and we need to ensure we are negotiating the best possible terms for PNGeans and we are not sweeping crumbs of the floor left by foreigners.

Liklik Ting ting tasol.

Geranimo







 
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