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Pacific Islands Development Program, East-West Center

With Support From Center for Pacific Islands Studies, University of Hawai‘i


PNG Resources Industry Against Land Ownership Changes
Looks for PM O’Neill to oppose move towards local ownership

By Frank Senge Kolma

PORT MORESBY, Papua New Guinea (The National, Dec. 3, 2012) – The extractive resources sector in PNG will be looking for one commitment from Prime Minister Peter O’Neill when he addresses the Mining and Petroleum Conference in Sydney, Australia, today.

It will want an emphatic "no" to current moves to change ownership of the mineral and petroleum resources from the state to individual land-owning groups.

While exploration and development activity in the resource industry is at an all-time high, contributing K2.2 billion a year or one third of the government tax revenue, the industry is bracing for the worst with the growing ownership change debate and a bill before parliament to that effect.

The position of the PNG Chamber of Mines and Petroleum is this: "Complex regimes of landownership already pose significant challenges for resource development in PNG and a change in resource ownership would magnify these social problems many fold.

"Because there is no system of land title for customary land, an explorer would be left with the task of dealing with a resource owned by a community that is always open to challenge from within and without, and where agreements may always be in a state of flux.

"The end result would be a complete loss of security of tenure, making it all but impossible for the resource industry to operate."

"State ownership of minerals is vital to the development of PNG and allows resources to be developed for the benefit all citizens as required by the Constitution," the PNG Chamber of Mines and Petroleum said.

"A change in resource ownership would result in a breakdown of this system; the risk profile would be unacceptable to potential developers."

The prime minister was aware of the gravity of the situation and had previously said the current fiscal regime would not be disturbed.

It is expected he will not depart from this stance at the Sydney conference.

The Chamber of Mines and Petroleum said earlier this year that provincial and local level governments, as well as the wider community, would be the big losers should the system change and be underwritten by private ownership of resources.

Were resource ownership to change, resource extraction would become a private business activity for selected individuals and groups.

The chamber believed landowners would want everything, as they do today, including royalty and state equity and would only share with whoever they pleased if they felt inclined.

Current benefits from the sector include company tax, royalties, dividend withholding tax, salary and wages tax, duties, production levy, dividends (equity), a tax credit scheme, special support grants, development levies, employment, education and training, public health programmes, business and agricultural development and community infrastructure.

North Fly MP Boka Kondra brought to the last parliament a bill to change section 5 of the Mining Act and section 6 of the Oil & Gas Act to transfer ownership from the state to the landowners.

The bill remained the property of parliament.

Senior people such as former prime minister and New Ireland Governor Sir Julius Chan is supportive of a change in regime.

His son and present Mining Minister Byron Chan initially proposed the regime change but of late had adopted a softer stance to review arrangements.

He is also expected to address the conference.

The National: www.thenational.com.pg/
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