K67 Trillion Taken Out of PNG by Resources Industry


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My company through our website and software services has benefited directly from the resource sector in PNG. In the last 3 years we would have almost reached K200,000 in invoiced work. While I am grateful for this position, one has to wonder how big this resources industry in PNG is? What does it really mean for me? My immediate thoughts would be that if this industry is going to grow then I want to be a part of that growth.

But how much is the industry getting out of PNG?

Well at last someone has put a figure to it and it stands at a hefty, mind boggling K67 Trillion. I don’t even know how many zeros that is, but in comparison the U.S. Federal debt is US$14 Trillion and here we are a relatively small developing nation making turn overs in the trillions.

With those sort of amounts it’s no wonder why everyone would be asking about who actually benefits the most from all this activity. On the one hand placing ownership in the hands of the resource owners may do some good for the long outstanding basics such as health and education and so on, but even landowners have a bad reputation for spending big on non essentials in Port Moresby and elsewhere. Perhaps some balance in between would be of benefit and ultimately the government after the elections will have this responsibility.

The Governments of our last 30 years can take full responsibility for the financial shape of our resources industry, but what of the future? Well just this month a Ferid Belhaj, World Bank Director for PNG, Timor-Leste, Pacific Islands and Vivek Suri, World Bank Lead Economist for the same region presented, at ANU, the new World Bank publication Pacific Futures.

The report among other things stated that low business costs were not a prerequisite for attracting business in the Pacific Islands. Companies would come anyway and this was already evident in the history of PNG’s resources. What seemed more important they noted was that a stable business environment was provided. For example lower taxes were not attractive if they were subject to volatility. Ultimately it becomes obvious that if our governments ran their institutions effectively then the Boka Kondra Bill would never have been born.

But since we have arrived to where we are now in history, anyone pushing the Boka Kondra Bill needs to show some more detail as to how it would work. On the other end of the spectrum the Government has to start showing some intelligence as to how they deal with the resource sector. Some examples are below, but my main point being we need more details for everything:

  • Looking into whether we really need to pursue some resource exploitation projects, just because they are there. An example being the experimental undersea mining by Nautilus? How much will it cost to clean up environmental damage and compensate people if things go wrong?  Would the cost of damage outweigh the immediate incomes?
  • Looking at using Tax in a smarter way to finance the government instead of relying too much on lump sum Sovereign Wealth Fund payments. This builds into the industry set incomes for whatever level of activity and reduces the need for drawings from Sovereign Wealth Funds.
  • Financial literacy and education on wealth management and planning for resource owners.
  • Government investment in integrated information systems between Government departments, so for example the Department of Environment can advise on the Impact Assessment of a Mining Lease. Another example could be providing for a Government wide Geographic Information System so we can better manage and plan the usage of our resources.
  • Looking at how we can inject new resource incomes into our other industries like Agriculture and Tourism.

We are at a very important time in out history and we have much to gain in the coming years. Even across to Australia Gillard’s recent Mining Tax only adds to the discussions here in PNG. It is good that finally PNG is standing up for itself but none of that will be worth anything until our discussions begin moving into the details of how our positions can be carried out and the possible outcomes in the next 50 to 100 years.



THE LAWYER behind the Boka Kondra Bill Ambassador Peter Donigi says foreign resource exploiters cannot continue to reap off from PNG as they have taken out more than K67 tillion since the commencement of three largest mines up until 2010.

Ambassador Donigi refuting to paid advertisement taken out by the PNG Chamber of Mines and Petroleum yesterday said, “people of this country should not be fooled by them. They have taken out of PNG more than K67 trillion from three mines – OK Tedi, Lihir and Progera.

You include oil and now gas and other mines, forestry and fishing and what has been pillaged from our shores and lands are more than K100 trillion since Independence. It is now or never. It is now or we will remain resource rich but poor. The Kondra Bills must be passed,” Ambassador Donigi told the Post Courier when asked to comment on the advertorial as the author of the Bill.

Ambassador Donigi high lighted that the Organisation for Economic Co-operation and Development (OECD) Ministers in May 2011 adopted a code for multinational corporations which required the project developers other obligations to implement international law in the countries of their operations and to use their financial powers and capacity to influence change in their countries of operations to respect human rights which they say specifically includes the 2007 United Nation (UN) Declaration on the rights of indigineous peoples.
Australia, New Zealand, Canada and United States are members of the OECD group of countries.

He said Article 26 of the UN Declaration on the Rights of Indigenous Peoples, is the international law which was adopted overwhelmingly by members of the UN in 2007.
The only countries that voted against this law are Australia, New Zealand, Canada and United States.

“The fact that PNG was recorded in the Minutes of the general Assembly as being absent does not make it any less of an international law.
The above means that it is no business of the PNG Chamber of Mines and Petroleum to interfere with the domestic affairs of this nation to do things or support any platform that would be contrary to the above laws both domestic and international.

The Chamber does not elect members of parliament. It has no voting rights in this country. It does not answer to the people of this nation. Landowners elect members of Parliament. Parliamentarians are answerable to the people of this nation and not to the Chamber.

What the Chamber has published have no bearing on protection of human or property rights of the people of this country. They are purveyors of fear and have no legal basis for their call not to change the law. They are driven by greed,” Ambassador Donigi who is now consultant to Warner Shand Lawyer reiterated.

He said the Bills are about recognising and restoring the human rights of Papua New Guineans which include property rights as outlined in the following legal documents: Section 53(5) (a) (c) and (d) fo the Constitution; Section 39(3) (c) of the Constitution which requires PNG’s Courts to take into account the UN Declarations in its deliberations on issues of human and property rights.

“What the Chamber has published have no bearing on protection of human or property rights of the people of this country. They are purveyors of fear and have no legal basis for their call not to change the law. They are driven by greed” the constitutional law expert added.

The Chamber of Mines yesterday said if the Bill which was presented in the Parliament for consideration for this session if passed would greatly impact future investment in PNG and disrupt the economy.

“The Chamber strongly urges our Parliamentarians not to support these Bills,”Dr Ila Temu, the Chamber president said.
The Kondra Bill contains the Oil and Gas (Amendment) Bill 2012 and Mining (Amendment) Bill 2012 which intends to transfer mineral and petroleum rights from the State to the resources owners.

[Page 24 Post-Courier, Friday, March 23, 2012]