A Commentary By Gedion Timothy 

The extraction of minerals such as gold, copper, zinc and petroleum resources such as liquefied natural gas is complex and challenging. The complex and challenging environment presents both opportunities and challenges for economic advancement for any nation. Governments must be applying the right fiscal tools to derive best value from the extractive value chain particularly for countries like Papa New Guinea which is known to be richly endowed with natural resources and its difficult geography. Strong political leadership backed by a robust service delivery model is key to unlocking value for the extractive industry activities.

It is good to note that the Papua New Guinea state wheels are in motion to implement ambitious state initiatives ranging from policy reforms to legislative changes to resources laws to unpack the economic value the resource sector has for Papua New Guinea’s future.  For example, a proposal to establish a Sovereign Wealth Fund (SFW) was a brilliant move in itself with key officials from the department of Treasury and Bank of Papua New Guinea (BPNG) providing technical oversight- to initially park Government windfalls from the PNGLNG Project for budget support and future use. Drop in oil prices commencing 2014 appears to have temporarily watered-down efforts to get this wealth fund operational but Papua New Guineans still have the faith that the wealth fund will come to fruition at some point in time for the benefit of future generations.

This is a clear testament of the fact that the PNG Government does not fold arms and watch as a by-stander only to collect its dues from the extractive industries for budgeting purposes but also an active participant in the economic value chain of resource projects. The PNG Mining Act provides for the State to acquire up to 30 percent share in any mining project and similarly the Oil and Gas Act provides for the state to acquire up to 22.5 percent shares in petroleum projects.

The streamlining of Government business through the Kumul arrangements strongly demonstrate how smart those in leadership think and plan for the future of Papua New Guinea. The Kumul arrangement places the Sate in a better position than before to actively participate in PNG resources sector.

Alongside these activities, the PNG Government is also serious about promoting transparency and accountability in the mining and petroleum sector which is the present powerhouse of the PNG economy.

Since 2014, the PNG Government commitment is demonstrated through the publication of six reports in strict compliance with international reporting best practice known as the Extractive Industries Transparency Initiative Global Standard.  The seventh PNGEITI Report will be published in the coming days.

A small secretariat situated at the Department of Treasury coordinates a tripartite constituent of key Government agencies, mining & petroleum companies and civil society organisations for oversight and guidance in the publication process of the EITI Reports.

Papua New Guinea is among a band of 53 countries promoting transparency and accountability in the mining and petroleum space through the EITI Reporting process.

Close to seven years into implementing the EITI, a proposed legislation to transition the Papua New Guinea Extractive Industries Transparency Initiative National Secretariat into a statutory body is undergoing public consultation beginning this month.

This follows the successful conclusion of a series of consultations among legal and technical officials of key government institutions, mining & petroleum companies and civil society organizations on the elements of what is proposed to be the Papua New Guinea Extractive Industries Transparency Commission in Port Moresby towards the end of last month.

Head of PNGEITI National Secretariat Mr. Lucas Alkan thanked instrumentalities involved for progress made so far in shaping an appropriate legislation that will be a best fit for the replacement of the PNGEITI National Secretariat which is now situated at the Department of Treasury.

“When enacted into law, the PNGEIT Commission will function as a statutory body for the implementation of the global Extractive Industries Transparency Initiative Standard and principles through the publication of EITI Reports,” Mr. Alkan says

“The push for the establishment of the PNG EIT Commission is part of a bigger policy drive to institutionalize and systemize EITI reporting anchored into the PNG legal and policy framework.

“PNG has made considerable progress with the publication of seven flagship PNGEITI Reports since PNG subscribed to the EITI Global Standard in 2014 to promote transparency and accountability in mining and petroleum sectors to enhance good governance and better management of proceeds from these important sectors of the economy.

“Seven years into implementing the EITI Standards through the publication of EITI Country reports and considering the fact that PNG is endowed richly with mineral and petroleum resources, PNGEITI is maturing into its next stage to meet the evolving challenges of the industry.

“What the PNGEITI Multi Stakeholder Group is doing now is to legally establish an entity to render administrative services for effective EITI implementation in Papua New Guinea.

“I am pleased to note that considerable progress has been made so far with a draft bill already in our hands and also pleased to note that the PNGEITI is comfortable with this piece of legislation which will undergo further public consultation in the coming months.

“A technical team conducting consultation on the draft bill commenced this week in Kokopo, East New Britain with a weeklong consultation scheduled to take place in Kavieng, New Ireland Province starting next week Monday, 12th July, 2021,” says Mr. Alkan.

Papua New Guinea is richly endowed with natural resources for economic development and progress when the resource are put to prudent use as opposed to squandering them or improperly exploiting to the indulgence of a tiny minority. At the watchful eyes of the Papua New Guinea population, it is the function of the State to ensure that proceeds of economic activities associated with the resource sector is trickled down for the benefit of all citizens. The technical nature of the extraction of natural resources presents opportunities and the leeway for corrupt practices to persist.

Photo Caption: (Left) Head of the PNGEITI National Secretariat Mr Lucas Alkan with Channan Kumalau of the Department of Petroleum after a state Technical Working Group Meeting on the Extractive Industries Commission Bill last month in Port Moresby.

Note: The author is short-term journalist with the PNGEITI National Secretariat. The views expressed are his own and does not reflect those of the PNGEITI NS or the PNGEITI Multi Stakeholder Group (MSG). 

The elements of the proposed EIT Commission bill will be discussed next week in a similar article. 

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