Improving the governance of Papua New Guinea’s State Owned Enterprise in the Mining and Petroleum Sector

Abstract

State-Owned Enterprises (SOEs) play a pivotal role in the economic development of Papua New Guinea (PNG). The country’s economy is heavily dependent on the mining and petroleum sector for revenue generation. Successive governments have relied on SOEs to manage the state’s equity interests in collaboration with resource developers. In 2015, the Kumul Minerals Holding Limited Authorization Act 2015 (KMHLAA) and the Kumul Petroleum Holdings Limited Authorization Act 2015 (KPHLAA) were passed by the Papua New Guinean Parliament, to consolidate all State interests in resource projects and to appoint the incumbent Prime Minister to be the sole trustee. This paper examines these legislative provisions and argues that the above legislative provision contradicts proven corporate governance best practices. The paper also suggests possible reforms in conjunction with practice from benchmarking countries and developing countries that have elevated their corporate governance structures through reforms.