"We declare our first goal to be for every person to be dynamically involved in the process of freeing himself or herself from every form of domination or oppression so that each man or woman will have the opportunity to develop as a whole person in relationship with others".

- Papua New Guinea National Goals and Directive Principles

Monday, 24 December 2012

Australia adamant in supporting PNG LNG project

Radio New Zealand International - 23 December 2012

The Australia government says to not support the Papua New Guinean government in delevoping the liquified natural gas project would be negligent.

An Australian NGO, Jubilee Australia, says the government has put PNG at risk by investing in the multi-billion dollar project.

It says violence associated with the project could increase in coming years because of high expectations in local communities.

Australia’s parliamentary secretary for foreign affairs, Richard Marles, says Australia has to be doing everything it can to see the project succeed.

“It’s right that Australia should be there helping PNG in relation to what has the potential to be a transformational project for that country. So, it is easy to criticise these projects, at the end of the day, it’s happening, it matters greatly that it works well, and we need to be there, being the best friend that we can be and supporting that project.”

Richard Marles says Australia is supporting the project in economic terms and to make sure it pays a social dividend too.

Thursday, 20 December 2012

LNG may have negative impact

By Ancilla Wrakuale: Post Courier 20 December 2012 

AN investigation report on the PNG LNG project by an NGO called Jubilee Australia has revealed that there are serious risks that revenues generated by the largest multi-billion kina gas project will not mitigate the negative economic and social impacts of the project.

“In fact it is very likely that the project will exacerbate poverty, increase corruption and lead to more violence in the country,” the report says.

The PNG LNG project is the biggest-ever resource undertaking in the history of PNG and the Pacific.

“The project is expected to generate as much as $US19 billion in tax, levy and royalty receipts to the PNG government over the 30 years that the gas will flow.

“The report is the most complete discussion to date of the potential risks and benefits of the project to the people of PNG,” the authors said.

The report highlighted circumstances, events and impacts associated with the multi-billion gas project in PNG.

Director of the Institute of the National Affairs (INA) Mr Paul Barker said the construction phase has brought major inflows of jobs and activities to both local and overseas businesses.

However, he said as the construction phase winds down, there will be few jobs offered by the project to less than 1000 jobs as the project goes into the production phase in 2014.

“Once LNG is in production it will provide few jobs, so the benefits depends on how well national and provincial governments and landowners invest and utilise their funds,” Mr Barker said.

“If they’re wasted through inefficient management, corruption etc, then the opportunity will have been lost, and the whole venture will end up with a negative gain for PNG. If it uses these funds efficiently, there is a good chance there could be solid net gains for the country.

“The trouble is that PNG’s track record with money has been poor. In the 1990s the then ‘minerals boom’ encouraged loose expenditure, boom and bust, with a series of structural adjustment programs to try and put the economy back on a solid footing,” Mr Barker said.

Meanwhile, there are also concerns that the LNG project is also having an impact on agricultural commodities with the appreciation of the PGK on the global market.

Executive director of the PNG Palm Oil Council Mr Ian Orrell said one of the impacts of the county’s booming extractive sector, as we have already seen, is an appreciation of the PGK that has affected the export of agricultural products,” he said.

“This has already had a very significant negative impact on the country's agricultural export crops.

“The two most dominant factors affecting the price we get for export crops are the global commodity price and the value of the PGK against the currency the commodity is traded in on the world market".

Wednesday, 12 December 2012

We have seen this movie before!!

Yesterday Jubilee Australia released a damning report on PNG LNG. Its findings echo the experience of Chad-Cameroon with ExxonMobil. Why didn't PNG's leaders conduct due diligence into Exxon before getting into bed with them! Now it is the people of PNG who are going to pay. 

Compare Chad-Cameroon findings:

"When the Chad-Cameroon  Oil and Pipeline Project was officially inaugurated in 2003, the World Bank explained its rationale for supporting the project: 'There are two essential reasons for World Bank Group involvement: The first is to help ensure that Chad's oil money is used for the well-being of all Chadians, particularly the poor…. The second reason is that World Bank Group involvement has helped ensure that the Bank Group's rigorous safeguard policies were observed in order to implement the project in an environmentally and socially sound manner.'

Despite the World Bank Group's unprecedented efforts, it has failed on both counts. The social and environmental situation in Chad has not improved. In fact, there is evidence (some reflected in World Bank statements and official reports) that things are worse. The project appears to have fueled violence, impoverished people in the oil fields and along the pipeline route, exacerbated the pressures on indigenous peoples and created new environmental problems. Meanwhile ExxonMobil, the leader of the oil consortium and the world's largest oil company, is registering record profits".


With PNG LNG Findings:

"This Report is the most complete discussion to date of the potential risks and benefits of the Project to the people of PNG; it argues that, contrary to the official discourse, there are serious risks that the revenues generated by the project will not mitigate the negative economic and social impacts of the Project. In fact, it is very likely that the Project will exacerbate poverty, increase corruption and lead to more violence in the country".

http://www.jubileeaustralia.org/LiteratureRetrieve.aspx?ID=112463 (3576 KB)

Tuesday, 11 December 2012

PIPE DREAMS: The PNG LNG Project and the future hopes of a nation

This investigative report by Jubilee Australia highlights circumstances, events and impacts associated with Exxon Mobil’s US $19 billion Gas Project in Papua New Guinea’s (PNG) Southern Highlands.
The PNG LNG Project is the largest single development in the history of Papua New Guinea, and the Pacific. The Project will see ExxonMobil and its joint venture partners, Oil Search, Santos, JX Nippon Oil and Energy, and the PNG Government, arrange for the extraction of the large gas resources deep underground in the country’s Southern Highlands, and their shipment by pipeline from the newly-created Hela Province, to Caution Bay near Port Moresby, where they will be liquefied and sold to energy-hungry buyers in East Asia. The Project is expected to generate as much as $US 30 billion in tax, levy and royalty receipts to the PNG Government over the 30 years that the gas will flow.

This Report is the most complete discussion to date of the potential risks and benefits of the Project to the people of PNG; it argues that, contrary to the official discourse, there are serious risks that the revenues generated by the project will not mitigate the negative economic and social impacts of the Project. In fact, it is very likely that the Project will exacerbate poverty, increase corruption and lead to more violence in the country.

Pipe Dreams also discusses the nature and the implications of the Australian Government’s financial and institutional support of the PNG LNG Project, continuing Jubilee Australia’s investigation of Australia’s export credit arrangements first revealed in the 2009 report, Risky Business.

Warning on fraud in PNG gas project

Richard Baker - Sydney Morning Herald, 12/12/2012

THE economic benefit of Papua New Guinea's biggest natural resources project has been questioned, with a report warning that ordinary citizens risk missing out because of corruption and contracts that favour the lead proponent, ExxonMobil.

A report by anti-poverty group Jubilee Australia, to be released Wednesday, examines the predicted economic benefit of PNG's liquefied natural gas project and the Australian government's provision of $500 million towards it.

The report highlights endemic corruption in PNG and warns that a government sovereign wealth fund and other official bodies established to handle billions of dollars in revenues could be defrauded.

''The governance and public life of PNG are to this day beset by political intrigue, self-interest of politicians and gross misuse of public funds,'' the report warns.

Scheduled to begin production in 2014, the LNG project is valued at $22 billion and predicted to double PNG's gross domestic product.

Australian companies Santos and Oil Search are prominent players in the joint venture project led by US giant ExxonMobil.

The report by Jubilee Australia - whose supporters include World Vision and the National Coalition of Churches - includes allegations that the PNG government was ''pressured into the signing'' of agreements by the joint-venture companies.

Former PNG attorney-general Allan Marat is quoted in the report as saying he and his office had less than 24 hours to analyse a 200-page agreement before determining whether it was in the best interests of his country. ''This gas agreement was drawn up overseas. It was taken away from our government negotiating team and structured overseas. 
And, we are now forced to dance to the music of foreigners,'' he said.

In response to questions from Jubilee Australia, ExxonMobil disputed the claims and argued that the fast negotiations could be explained by the fact the PNG government relied on many of the same fiscal terms as previously agreed to in a defunct 2006 proposal.

The report found mixed economic benefits for PNG people as a result of the massive investments already being made for the project.

It stated that although PNG citizens fortunate enough to have been directly employed by the project had reported that their livelihoods had improved, there was a strong view that ''an educated and well-connected elite'' had captured most of the benefits.

Using the results of a 2011 study by New Zealand's University of Otago, the report found the project was also leading to increased tensions among landowners in the PNG southern highlands and a phenomenon known as ''bride price'', where the groom's family makes a payment to the bride's family.

The expectations created by the perceived extra wealth being directed into local communities was increasing this price, making ''it more difficult for many young men to marry''.

The report also highlighted an increase in ''destructive social practices'', with the influx of temporary workers and money leading to more gambling, prostitution, drug and alcohol abuse problems.

Increasing environmental incidents have also been noted. The most recent was a January mudslide at a quarry that killed at least 26 people, mainly migrant workers. The quarry had been used by a company working on the project until mid-2011.

The Australian government's decision to contribute a $500 million loan to help the financing of the project has also been criticised in the report. The loan by Australia's Export Finance and Insurance Corporation was made on the basis that 
Australian equity in the project was about 43 per cent and there was $1.5 billion of procurement contracts available to Australian firms.

EFIC used what is known as ''the national interest account'' to fund 80 per cent of the loan. As such, nearly all the documents it holds on the assessment process for the PNG loan are exempt from freedom-of-information scrutiny.


Monday, 3 December 2012

PNG energy sector is burning bright – but for who?

Governor Garry Juffa, MP

The Hilton hotel where PNG's resources will be sliced and diced
The Hilton hotel where PNG’s resources will be sliced and diced
In December from the 3rd -0 5th, 2012, the 12th PNG – Australia Gas and Petroleum Conference will be held in Sydney, NSW, Australia, organized by the PNG Chamber of Mines and Petroleum. It will be held at the prestigious Sydney Hilton and once more all manner of people involved in the gas and petroleum industry in Papua New Guinea, either directly or indirectly will be there networking, hoping to impress one another with what they know, or who they are or who they know.
There will be many current and ex politicians from PNG and Australia even, experts, gurus on this and that and econometricians, geologists, engineers, lawyers and accountants and so forth. There will be middlemen and agents, those who actually mine and those who mine the stock exchanges around the world, boosting their shares up with great news from the last frontier. In fact there will also be many experts on PNG, some who have actually lived there, some are even Papua New Guinean.
Again, there will be much to discuss and much is at stake – for instance PNG’s future economic prospects and the future profits of the investors in this industry. The two significant questions that come from both these areas of concern are: how does PNG benefit and, how do the investors benefit?
Of course, the investors care very little how much PNG benefits as long as PNG allows access to its resources, grant all manner of Tax and Customs exemptions and allows the Mobile Squad to stand guard at project sites to counter irritating landowners. All the while, PNG is supposed to feel very grateful for a pittance of a stake of some sort in such projects. Clever schemes set up by lawyers and accountants force the PNG Government to excessively fund costs associated with being a stakeholder of some sort and undertake to handle all landowner issues an example of which was witnessed by Papua New Guinea and the rest of the world in Bougainville with the loss of 20,000 lives from 1988 to 1998 and the destruction of a province and a people who are still recovering to this day.
But they can’t say that, at least not in public, survival is their focus, profit is their agenda.
A test of care would be to measure the stake Papua New Guinea owns in any mineral resource project – less then 10% in many instances and this often very reluctantly from the investor.
Meanwhile, Papua New Guineans are always being told in overt or covert manner by investors how grateful they should be for the developments taking place in their country. Expert spin Doctors paid oodles of money arrive on PNG shores literally every day with brand new ideas on how to convince the people to not only accept but to demand and ask and even pay for investments in their country, for their own resources. These magicians who write and talk up a great and convincing hype arrive heeding the call by the industries major players who are willing to pay buckets of money so that they do not have to pay what is rightfully due to the resource owners, that is the people of PNG.
As for the keepers of the gate of the economy, the Government, well they are usually the first to sell out. At least that has been the case and has become the tradition since the first missionaries were sent to urge Papua New Guinea to help the people turn a collective cheek so that the administration that followed could plunder at will and whim and “civilize” the people, often brutally and in condescending and discriminatory fashion until their independence, where by they could now be geographically and politically independent but remain economically manipulated for as long as possible.
So, while the spin doctors churn out propaganda products galore, referred to by the corporate world as “marketing tools” or “community affairs promotion efforts” that are designed to pacify the people and assure the developers that their conscience is clear, the reality is just the opposite for the average Papua New Guinean who has to cope with the burgeoning cost of living, food and accommodation costs ever more while salaries and wages remain ever low with increasingly less accessible government services and increasing crime and fewer opportunities for employment or business. As for the landowner, few genuine landowners benefit, most often miss out. It is usually those who are educated to some degree and in the right place at the right time that end up benefitting. For many, benefitting means they are a conduit for funds from the investor in the form of royalties paid to a plethora of service providers such as prostitutes, loan sharks, pokies outlets and so forth – all in Port Moresby and Lae and increasingly Suva and Nadi and Cairns. Their actual homes remain largely unaffected in any positive way, many have abandoned their wives and children and live their new lives in Port Moresby or Lae.
Now let us look at the national scene in so far as development is concerned. Let us just look at Education and Health as examples. One always hears about the law and order situation and how Port Morbid is in the top 10 list of most dangerous cities in the world and where rape and murder are but daily events throughout much of PNG where many crimes go unreported and unpunished and where ethnic tribal fights are now modernized into raging gun battles that run for days and where many are killed – often unreported.
One can measure how a country is actually progressing by glancing at the indicators in these two areas of development – Health and Education. Papua New Guinea boasts of the worst indicators in the region in so far as Health and Education are concerned. Illiteracy is making a huge comeback and ignorance is his dear friend. Schools are overcrowded with classrooms of 80 – 100 children common and children sit on dirt floors listening to exhausted teachers. Every year almost 80,000 school leavers are ejected from Papua New Guineans education system with only 10,000 finding meaningful employment, the rest experience lives turmoil and challenges witness their dreams evaporate and are forced to downscale them to accommodate reality. Meanwhile the education system itself is a disaster with outdated curriculum and poor administration forcing teachers to leave for other vocations or even depart for positions in smaller pacific island countries where safety is guaranteed and benefits are far more reasonable.
As for the Health Sector, it is unhealthy and hospitals are crammed full with those seeking medical treatment, dying on emergency floors, mothers literally bleeding from childbirth, ordinary people of severe wounds from growing violent crime or ethnic tension in Port Moresby, the cities capital. Doctors are scarce and the Doctor to patient ratio is alarmingly well below UN recommended figures – in one province it is an atrocious ratio of 1 Doctor for 30,000 people. Health indictors paint a gloomy and depressive picture, the specter of Death is very much visible here, gliding over the vulnerable, the very young, expectant mothers and the elderly, picking at what seems to be will and whim, where he so pleases. All the while the nation is reeling from AIDS, TB and malnutrition while the population growth is the highest in the region at 2% and one of the highest in the world and there seems to be no effort to check its growth.
What of the remote parts of PNG, inaccessible by road? Well, if you get sick, you die. It’s that simple. A terrible story is increasingly told in PNG’s media, the papers, radio and television, sad reports of mothers who die from birth complications, of village children often from snakebites or dysentery or other easily treatable (anywhere – else – in – the world ailments) almost daily throughout Papua New Guineans rural areas where 85% of the people live. Health Stations and Aidposts that once covered PNG providing basic medical services are disappearing, slow agonizing deaths where nurses and doctors do not replace those who retire or die, and how can they when any supporting infrastructure in these areas such as electricity, Police, banks, post offices, bridges and road even deteriorates in direct correspondence.
Entire district stations, built during the colonial period and unmaintained since are now dilapidated and decaying, most have closed down. The Churches are increasingly the only providers in these areas where Government services are but whimsical yearnings for yesteryear by those who can still remember what a Health Extension Officer was. But even they are abandoned increasingly, as foreign interest is turned over to the local priests and pastors and funds that once flowed dry up. Here, Christian spirit is truly tested.
These snapshots of Papua New Guinea’s state of national health and education do not suggest a nation progressing. But can corporate entities be blamed for this?
Of course not! They are corporate entities and their primary function is to turn over a profit and minimize overheads and heed their boards and or shareholders. The parameters of what they can and cannot do in so far as business is concerned, what they must and should pay and their responsibilities to an economy, a people and the environment have to be clearly drawn by the Government on behalf of its people and then, enforced and administrated effectively and with much resilience and constant review to improve by the Government. So no, the corporate sector is not to blame at all because they are doing exactly what they must.
This is where the PNG Government has failed for the last 37 years. They have not exactly done what they should have.
What is the hope in PNG? There is light at the end of the tunnel of doom and gloom for PNG.
The light is a growing middle-income class. A more educated and concerned Papua New Guinea that are communicating and coordinating their concerns, gathering and applying pressure on their government to be more proactive and protective of PNG interests, the hope is the emergence of politicians who are not intimidated by foreign influence and are able to speak their mind out, think long term and be more conscious of the situation their young nation is in. This growing group of Papua New Guineans is finding means and ways to become increasingly involved in business, either as partners or as sole proprietors. They are becoming confident, adventurous and financially prudent. Internet has opened new doors and developed opportunities for greater communication, debate, learning, commerce, networking and coordination of common concern. From everywhere and virtually anywhere, Papua New Guineans are communicating in real time and about real issues that confront their country and they are finding ways to have their say and be heard and they have a lot to say. Social media has become a platform to launch almost radical movements for common causes and the educated Papua New Guinean can now carryout their role in ensuring that the elected leaders, elected by the largely uneducated and innocently ignorant masses, can be held to account.
In what appears to be direct tandem, the greater masses are now being greatly influenced by the middle class, by the educated that are now informing and influencing voting patterns and therefore outcomes. As a result, a greater number of more responsible, more outspoken and more conscious politicians are being elected into parliament. The 9th parliament of 2012 is a testament to this and the next elections will no doubt see an increase in leaders who are not willing to be just politicians but agents of change, actually leading in every sense of the word, critical of the direction PNG is taken and no longer silently ignorant or negligently so of the efforts of foreign powers and multinational corporations.
Perhaps we will see a government that actually reviews the state of our economy and scan the deplorable and despairing state of our rural communities and do something about it. Already there appears to be greater funding opportunities but that can only work with greater financial controls. The Government has claimed that it is reviewing the audit and financial management mechanisms in place to ensure improved effectiveness and efficiency in the delivery of goods and services. The Government has also borrowed substantially from CHINA – K6 Billion to be exact – for much needed infrastructural development purposes.
Hopefully this will be managed prudently, otherwise, as is the usual formula for any funds available for development of any sort, 40% will be soaked up in consultants fees, overstated contracts and dished out to cronies and friends unless the national procurement system is overhauled and stringently applied to ensure proper application of the borrowed funds. And what of the fine print? The media has not yet informed the people that CHINA has insisted that 50% of all projects to be funded by the loan MUST go to Chinese companies. Will this sacrifice be worth it for the progress of Papua New Guinea? Perhaps. Only time hold’s the answers.
Meanwhile, the Opposition of the 9th Parliament looks formidable and is strategizing to demonstrate that it will not oppose for the sake of opposing but be critical and hold the Government to account. This was evident in parliament when the Opposition leader stood up and made a speech supporting the budget and the extension of the 18 month grace period to 30 months to allow the Government more time to prove what it has been preaching.
Meanwhile a new political development is emerging. Here there are a few who sit neither right nor left, neither in Government of Opposition. But they claim to heed the voice of their people and project that voice, those views and thoughts and consideration on the floor of parliament.
Perhaps, all these efforts from all these changes…can collectively exert greater effort into determining their own destiny and demand greater participation in the development of their resources, including and perhaps especially the energy resources… Perhaps they can then ensure that conferences such as the PNG Mining and Petroleum Investment Conference can be held in PNG…where the resources being determined for sale are actually found

Saturday, 1 December 2012

Prime Minister Labels PNG Workers Lazy

When you have a state so eager to become capital, through equity interests in the mining, gas and oil sector, it stands to reason Ministers will begin to think like capital, whose primary focus is disciplining and exploiting labour. Enter Prime Minister O'Neill

LNG blowout irks O’Neill

Source:The National, Friday 30th of November, 2012


In Sydney PRIME Minister Peter O’Neill has blamed the recent blow-out in the PNG LNG product costs in part on the country’s work culture.O’Neill told the Lowy Institute in Australia that productivity remained one of Papua New Guinea’s greatest challenges to development and one that had cost the country dearly.

He said PNG had never really focused on productivity, especially on government measures to improve productivity.It has become “relaxed and comfortable”, even “complacent” to the extent it cost the country greatly as evidenced most recently by the blowout in cost of the PNG LNG project, appreciating from the forecasted US$15.7 billion (K32.49 billion) to US$19 billion (K39.23 billion).

The additional cost is to be borne by shareholders ExxonMobil, Oil Search, Santos, Nippon Oil and Gas and the state, which has a 19.4% stake in the project.“While currency fluctuations have been a factor, there is no doubt that actual construction costs have grown significantly,” O’Neill said.“As a shareholder, the national government, on behalf of the people, will have to meet its share of the additional cost.“What concerns me is that we have taken our eye off the main game when it comes to lifting productivity and addressing the rising cost factors impacting the development of our resource sector.”

The project management recently announced that the cost blowout had in part been caused by currency fluctuations and in part by work stoppages brought on by landowner actions and adverse weather.O’Neill said he would be insisting on efforts to lift productivity across the board in every activity right throughout the country.

Productivity had to increase to best position PNG to reap the benefits of an exciting period of resource sector growth, he said.Productivity would enable PNG to compete with other LNG producing nations in the region and elsewhere to secure sales in an increasingly crowded LNG market.O’Neill said contracts for sale for the first LNG project were concluded and LNG would be exported to China, Japan, Taiwan and Korea but the challenge would be to get contracts of sale for the second project managed by InterOil, which received initial approval recently.

“There are more than 70 applications for petroleum prospecting licences awaiting approval and a number of potential projects for domestic gas and export are advanced,” he said.“That is going to require project developers and the national government to focus on cutting development costs, streamlining processes, making sure our tax regime is competitive and ensuring there are no disruptions during the construction and operation phases.”

That would be the only way Papua New Guinea got ahead and stayed ahead of the competition, he said.