Abstract
Papua New Guinea is rich in natural resources, including minerals, oil, gas, timber and fish, and cash crops such as coffee, palm oil, cocoa, copra, rubber, tea and spices which contribute significantly to Papua New Guinea’s overall development. Several mining, oil and gas companies are currently operating in Porgera, Ok Tedi, Lihir, Hidden Valley, Sinivit, Simberi, Tolukuma, Kutubu and Gobe. The operations of these companies have generated an estimated K13.42 billion to Papua New Guinea’s economy. Landowners affected by these developments also receive royalties from those operations. However this wealth has not been translated into tangible human development across the country, as shown in persistently poorly performing social indicators. Instead income from the exploitation of natural resources is being used in unplanned projects and not focused on the delivery of core social functions, such as the provision of a stable and non-distorting policy aimed at building and sustaining the development of a modern market, and legislative and regulatory frameworks, social services, social security and social infrastructure which would lead to the improvement in the delivery of essential services to all Papua New Guineans. There is widespread evidence of benefits not being distributed to all landowners. Landowners are yet to fulfil their aspirations regarding these developments and to see improvements in their living standards. This paper discusses two case studies: the Porgera and Lihir mines, outlining the landowners associations’ experiences, which illustrate issues of governance and management of the distribution of benefit flows from the exploitation of Papua New Guinea’s natural resource wealth.The focus of the article’s discussion is on governance and management issues that affect the distribution of benefits, delivery of essential services to rural areas of PNG, stability within government, and the expectations of landowners.
Highlights
According to the law of Papua New Guinea (PNG), the state owns all the country’s land[1] and water,[2] including mineral[3] and petroleum[4] resources
PNG landowners do not accept this law. They have difficulties in reconciling this concept of ownership with their customary/traditional way of life,[5] which maintains that the clan should be the primary arbiter of ownership, and any issuance of leases over land for resource development should require the consent of the landowning communities.[6]
Under an MOA,[13] benefits are provided in: (i) royalties – revenue allocated to the provincial government;[14] (ii) special support grants (SSG) – grants allocated to the provincial government as budget support for infrastructure development;[15] and (iii) state equity – 22.5 per cent from petroleum projects[16] and 30 per cent from mining projects,[17] a share of which is allocated to the provincial government hosting the project to support the development of infrastructure, and delivery of goods and services
Summary
According to the law of Papua New Guinea (PNG), the state owns all the country’s land[1] and water,[2] including mineral[3] and petroleum[4] resources. PNG landowners do not accept this law. Landowners receive 40 per cent of benefits flows including: (i) mitigation projects – in funding provisions for social infrastructure, such as schools, health services (aid-posts) and roads; (ii) first preferences for employment; (iii) project community relations extension support in the field of primary health care, business development and land mobilisation; (iv) enhanced education and training opportunities, and. 85. 5 Ibid. 6 Glenn Banks, ‘Understanding “Resource” Conflicts in Papua New Guinea’ (2008) 49(1) Asia Pacific Viewpoint 24. 7 Ibid
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