Pacific Media Centre Newsdesk

The Autonomous Bougainville Government, led by president Dr John Momis, has been accused by a research and advocacy group of allowing a “reckless land grab” with its planned mining law changes.

The proposed amendments to the 2015 Bougainville Mining Act, along with accompanying legislation, will give the ABG the power to hand over mining leases to all parts of the island not under existing leases to Bougainville Advanced Mining, a new entity created for this purpose.

The ABG would have 60 percent ownership of Bougainville Advanced Mining, while 40 percent would be owned by a foreign partner.

READ MORE: Bougainville’s mining deal meets widespread opposition

Statements made President Momis last week suggested that Caballus mining, a Perth-based company headed by Jeff McGlinn, would be the foreign partner involved, said Jubilee Australia.

“These are radical changes and appear to be nothing more than a reckless land grab,” Jubilee Australia’s executive director Dr Luke Fletcher said in a statement.

“First, this would hand over control of the majority of the island to the President and his foreign partner, Mr McGlinn.

“Second, the president would have the power to unilaterally distribute leases without any consultation or permission from landowners.

‘Cut out of process’
“As a result, landowners will be cut out of the process. These amendments undermine the principal of free, prior and informed consent,” said Dr Fletcher.

“Doing so is both anathema to Melanesian culture and vitally important in the Bougainville context.

“It is not clear to us that this legislation is even constitutional,” said Dr Fletcher.

“It is a startling and dangerous move. Given the disastrous history of the Panguna mine in Bougainville, which has caused irreparable environmental damage to the Jaba river and was the major cause of the Pacific region’s worst ever civil war, forcing through such enormous changes with very little consultation is a reckless and desperate ploy.”

President Momis told Radio New Zealand the move was justified to enable the Bougainville independence referendum taking place.

“The people of Bougainville are determined to have the referendum and they must find the money to fund the referendum,” the President reportedly.

“One way of doing it would be if we started our own company and generated the revenue to enable us to conduct the referendum. We cannot sit on our hands.

Dubious over plans
However, Dr Flectcher said: “As our recent study of the question demonstrates, we are highly dubious that mines like Panguna could ever raise enough revenue to satisfy both foreign investors and the people of Bougainville,’ said Dr Fletcher.

“It is certainly impossible that the mine will raise any revenue before the independence vote.

“It will take years for the building/repair of infrastructure, the completion of environmental studies and other importance processes that need to take place before the mine can generate revenue.”

The Panguna mine was one of the world’s biggest copper-gold mines until a 10-year civil war forced its closure in 1989.

The war cost up to 20,000 lives and displaced 10,000 people. The Panguna mine was a leading cause of the war and communities have not been offered redress for the damage.

Since 2009, there has been a push to re-open the mine, with proponents claiming that Bougainville needs the mine to be economically independent.

President Momis has been at the forefront of this fight, under the auspices of former operator Bougainville Copper Limited (BCL), claiming that it would be the best and quickest option to generate revenue.

In December 2017, however, the president announced a moratorium of mining at Panguna and revoked BCL’s mining licence, after a meeting of landowner meetings voted against such an extension.

“On almost every measure of economic welfare, the PNG economy would have been better off without the PNG LNG project.”

Pacific Media Centre Newsdesk

Papua New Guinea’s massive PNG LNG project is one of “broken promises” that has largely failed the country, according to a major study released yesterday by Jubilee Australia.

Entitled Double or Nothing: The Broken Economic Promises of PNG LNG, this report, co-authored by Paul Flanagan and Dr Luke Fletcher, compares the projected economic benefits of the PNG LNG project with actual outcomes.

The new study uses PNG government data to examine the predictions of the 2008 project report commissioned by ExxonMobil and promoted by Oil Search.

This examination finds that the positive predictions for the PNG economy were largely incorrect.

Key findings:

• Despite predictions of a doubling in the size of the economy, the outcome was a gain of only 10 percent and all of this focused on the largely foreign-owned resource sector itself;
• Despite predictions of an 84 percent increase in household incomes, the outcome was a fall of 6 percent;
• ●Despite predictions of a 42 percent increase in employment, the outcome was a fall of 27 percent;
• ●Despite predictions of an 85 percent increase in government expenditure to support better education, health, law and order, and infrastructure, the outcome was a fall of 32 percent; and
• ●Despite predictions of a 58 percent increase in imports, the outcome was a fall of 73 percent.

30-year span
PNG LNG is an Exxon-led project which supplies about 8 million tonnes of LNG a year to Japan, South Korea and China.

It is projected to run for 30 years. In 2009, Australia’s Export Credit Agency, Efic lent A$500 million to Exxon, OilSearch, Santos and the government of PNG.

Efic’s decision was based on advice from the Department of Foreign Affairs and Trade (DFAT) provided to the then-Minister for Trade, Simon Crean, on advice from DFAT. This is the largest loan ever made by Efic.

Paul Flanagan writes in PNG Economics:

Specifically, growth in the resource sector has matched the confident predictions even with the fall in oil prices in 2014.

However, all other parts of the PNG economy have not done as well as predicted.

This is a major “broken promises” gap. This is the basis for the title of the latest report – the PNG LNG project promised to double GDP, but the outcome of 10 percent is close to nothing (especially when the size of PNG’s GDP is facing a major downgrade in the latest NSO 2015 update).

Revenues to the budget are only one-third of expected levels, and after allowing for project costs, will continue having a net negative impact on the budget (so below nothing) until around 2024.

Economy gone backwards
Of even greater concern, the examination finds that the PNG economy, apart from the resource sector, has actually gone backwards relative to its underlying growth path.

The most likely explanation for this sad outcome is PNG has slipped again into poor policies associated with the resource curse. The temptations of the rosy PNG LNG promises were too strong for politicians despite warnings from PNG Treasury, BPNG and outside academics.

During the O’Neill/Dion government, PNG descended into very damaging economic policies of a bloated budget and PNG’s largest deficits ever, fixing the exchange rate at an over-valued level, making foolish investments in areas such as Oil Search and harming the independence of PNG’s economic institutions.

With the focus being so strongly on getting the PNG LNG project operational, there was a lack of policy emphasis on other parts of the economy.

This is the “resource curse” gap.

Third time
PNG needs to learn the lessons from this experience. This is the third time that PNG has suffered from the resource curse:

• the first was with Bougainville Copper and the experience of the late 1980s;
• the second was the Kutubu/Porgera expectations that crashed so badly in the mid-90s;
• and the PNG LNG period is the third resource crisis.

The benefits of PNG’s resource wealth could in theory be tapped without damaging the rest of the economy.

But it would require very different choices by PNG’s politicians. PNG probably lacks the strong governance and institutions required to deal with the powerful resource sector lobby.

Even in Australia, the power of vested interests around the resource sector is blocking sensible options for sharing resource benefits more equitably and efficiently.

The Oil Search facility near Lake Kutubu in Hela province, Papua New Guinea’s Southern Highlands. Image: Damian Baker/Jubilee Australia