Take back PNG and Western Province by removing the emperor’s clothes off PNGSDP
Treasurer Sam Basil’s recent economic update has highlighted serious cash flow issues for the government of Papua New Guinea (GoPNG) as it struggles to deliver the 2019 budget.
As the Treasurer himself highlighted in his speech, collection of corporate income tax, goods and services tax and departmental fees are all below target.
Prime Minister Marape recognizes this dire predicament his government faces and so it was unsurprising that his first overseas trip was to Singapore where he met with the Board of the Papua New Guinea Sustainable Development Program Limited (PNGSDPL).
PNGSDPL is an independent entity as clarified by a recent ruling by the courts in Singapore. It was however born out of an arrangement where Broken Hill Propriety (BHP), now Broken Hill Propriety Billiton (BHP Billiton) was offered immunity from legal liability for environmental damages created by Ok Tedi Mining Limited (OTML) in exchange for BHP’s shares in OTML being transferred to PNGSDPL.
The deal that led to the transfer of shares to PNGSDPL was essentially so that PNGSDPL would cover any successful claims against OTML for environmental damages. PNGSDPL indemnified GoPNG and BHP from any such claims.
Indeed, PNG Sustainable Development Program is bit of a misnomer. It should instead be called GoPNG-BHP Indemnity Fund. Being an indemnity fund it had to be created to be independent so as to be out of reach of both culpable parties and provide them with protection. PNGSDPL in others words is an Insurance Policy and not a development fund. Development spending comes as an afterthought from the primary objective of indemnifying the GoPNG and BHP.
The fact that OTML initially compensated 156 communities is recognition of legal liability for environmental damages. Had the 157th community Sepe-Auti stuck to its guns and prosecuted for favourable damage claims they may have got a better deal than being shoved into the 2012 Mine Life Extension (MLE) deal that they currently are being accommodated by as signatories to the Community Mine Continuation Agreement (CMCA) extension agreement.
When the O’Neill government expropriated PNGSDPL’s stake in OTML in 2013 and opened the door to claims against OTML for damages, naturally PNGSDPL as the indemnity fund had to protect the indemnity funds by withdrawing from PNG jurisdiction. Whilst the rhetoric from O’Neill was that BHP’s immunity was removed, ironically GoPNG as a shareholder of OTML was also exposed to claims against it.
Now that the cash-strapped government wants to “TAKE BACK PNG”, an opportunity exists to strike a new deal that ensures that both the Government of Papua New Guinea and the people of Western Province benefit.
Whilst PNGSDPL is an independent entity, it is still governed by its Programs Rules. These rules dictate how the entity operates. The rules state that one third of PNGSDPL funds are to be applied for the benefit of PNG and the other two thirds for the benefit of Western Province.
I am aware that GoPNG and Western Province leaders are currently seeking to negotiate how those funds are applied. My advice to the Prime Minister and the Western Province leaders is that they first need to recognize the beast for what it is and give the beast what it needs — indemnity protection.
Once immunity is awarded to OTML and by extension BHP and GoPNG, the funds should then be disbursed as follows:
One-Third — Direct Budget Support to GoPNG
Two-thirds — Western Province
The Western Province Portion should then be further disbursed as follows:
- 20 percent: Fly River Provincial Government
- 20 percent: North Fly District Development Authority
- 20 percent: Middle Fly District Development Authority
- 20 percent: South Fly District Development Authority
- 20 percent: CMCA Communities via a brand new entity genuinely owned by the communities and not the elephants at the Ok Tedi Development Foundation (OTDF) who have failed the communities for over a decade.
PNGSDPL should stop pretending to be a development program and and be honest to the people of Papua New Guinea and Western Province as to what kind of monster it truly is. The Singapore Courts have already removed its clothes and revealed the naked truth about its true identity.
As BHP-Billiton bosses of Australian descent and Australians on PNGSDPL Board would recognize, its time for PNGSDPL to be “fair dinkum” with the Papuans of New Guinea.
PNGSDPL’s role should be as a FUNDER as it was originally created as an Independent Insurance FUND and NOT a development program. It’s funds should be applied to improve governance and enhance the capacity of national and sub-national government entities to do their job — which is to deliver public goods and services to the people of Papua New Guinea and Western Province in particular.
