Call To Review Oil and Gas Act, and Mining Act

Kerenga Kua

Quinton Alomp | EMTV News

Papua New Guinea’s poverty level in terms of the United Nations international ranking can be improved if the Oil and Gas Act, and the Mining Act, are reviewed, a prominent lawyer said.

Lawyer and first-time politician, Sinesine-Yongomul MP, Kerenga Kua, pointed out loopholes in both constitutional acts that continue to create what he describes as “a good investment destination” for petroleum and mining companies.

He said the inequity in the current framework of the Oil and Gas Act, and the Mining Act, must be reformed to get the maximum return on minerals and petroleum for the state.

The law states that all minerals and petroleum belongs to the Independent State of PNG.

But the former Attorney General argues that the state’s ownership is forfeited once a development licence is given to the developer.

“The big, big problem with the Petroleum Development Licence and Mining Lease is this.

“Upon the grant of the Petroleum Development Licence and upon the grant of the Mining Lease, the state ownership to petroleum and to minerals is forfeited right at that point in time.

“Without any compensation in return. It now 100 per cent belongs to the finders. But hold on the state says it owns it, it’s not lost property.” he argued.

Kua said this is the problem where licences were given free of charge with no compensation in return.

The developer then asked the state to buy equity shares in the project. Petroleum companies allow up to 22.5 per cent while mining companies have a maximum of 30 per cent ownership.

The state than struggles to buy shares, goes overseas and borrows from international lenders to buy shares for the licence that was initially provided at no charge.

As the country’s loans build up, the poverty level on the international scale remains extremely poor.

In 2013, the United Nations ranked PNG 156 out of 187 countries with poor access to health, education and clean drinking water.

But Kua argues that the poverty level can be improved only if the Oil and Gas Act, and Mining Act, is revisited and is given a fair compensation for licences.

He said unless the laws are changed, PNG would continue to borrow to buy shares such as the controversial UBS loan sage. 

9 Comments

Filed under Financial returns, Papua New Guinea

9 responses to “Call To Review Oil and Gas Act, and Mining Act

  1. Kanau Iobuna

    ALL LAWS IN THE COUNTRY ARE PRECOLONIAL LAWS INHERITED FROM THE COLONIAL ERA AND GEARED TOWARDS THE INTERESTS OF OUR COLONIAL MASTERS. OIL, GAS AND MINING ACTS WERE CUT AND PASTE AND WERE NOT CUSTOMISED TO OUR MELANESIAN CUSTOMS AND WAY OF DOING THINGS. HENCE THE CURRENT DILEMMA WE ARE FACED WITH TODAY. ALL LAWS IN PNG NEED TO UNDERGO COMPLETE OVERHAUL AND REFORMED TO CAPTURE OUR CUSTOMS AND WAYS OF DOING THINGS (THE MELANESIAN WAY) WHILST EMBRACING WORLD’S BEST PRACTISES.

  2. Tiri Kuimbakul

    What the MP is saying is true. There is no logic for PNG to be buying into oil, gas and mining projects when the State owns the resources. Another aspect of the need for change in the laws is the role and participation of landowners. As the laws stand, the LOs become virtual spectators and recipients of handouts.

  3. Semion Omba

    That is very vital for any contry to be benifited from its natural resources.

    Therefore, the mining, gas and petoleum laws must be revised in such a way which could benifit the host community via royalty, and other socioeconomic development and country as a whole.
    And also the government must revise the environmental laws so that the investor must rehabilitate the mine out area before decommissioning. So that the land can be usful for future generation or it could be created into another mode of touredt hotspot. One way or the other, the land can be useful for future generation.
    Currently our environment are not taken care by the extractive companies.

  4. Mayumbo Ghimey

    What Mr.Kua has stated is so evidently clear that it warrants all PNG citizens to lobby the government to review these two pieces of legislation. Our current PM and his band merry man are so intoxicated with power and greed for money that they will not try anything that will rock the current set up, however disadvantageous it is to the nation.
    Failing this, all like minded Papua New Guineans ,especially those who command some respect in their communities to carry out awareness on this and ensure these current lot of cowards never enter parliament again after 2017 elections, except for people like Mr.Kua and a handful of others in the opposition.

  5. Mayumbo Ghimey

    I would go one step more and ask the question, Why doesn’t PNG establish it’s own companies to develop our vast mineral and hydrocarbon resources.
    By now, to get this thinking off the ground, if I were PM, I’d set up OkTedi Mining Limited as PNG’s BHP to develop the next mine. Surely by now we have enough experience and knowledge to start something from exploration to exporting of products.

  6. Agree. Laws should be changed to give PNG Govt and the people to maintain ownership 100% ( 50% LOs; 40% National Govt & 10 Provincial govts)

  7. David lambu

    I thank Hon. Kerenga Kua, LLB, MP and the former Attorney General for raising these concerns and recommending reviews of the Oil and Gas Act and the Mining Act to bring more benefits to the landowners and the Government.

    These suggestions are very good and they are in line with one of our prominent lawyers, late Peter Doningi’s attempt to change the laws by filing even Supreme Court reference to determine land and mineral ownerships in PNG. However, without much success.

    We the ordinary citizens are not in a position to change these laws. Whilst, Hon Kua, you are in a position to change these laws in this term of Parliament before the 2017 National elections in PNG. How about that?

    Late Sir Iambakey Okuk is well known in this country for making some bold decisions that have brought everlasting benefits which we are still appreciating and enjoying now, even 30 years after his death. Notable examples are – sealing the Highlands Highway (Sir Okuk Highway) and buying the Dash 7 air crafts (recently up-graded to Dash 8) which are benefiting places like Tari, Mendi, Wabag, Kundiwa, Popondeta and Milne Bay.

    Hon Kua, please take the lead for the good of our people and the country. If Sir Okuk did it, you can do it too. Over to you brother.

  8. Jesse Ramo

    I congratulate MP Mr. Kua for raising this subject and believe he is the right person to take lead in awareness and actual drafting of bills to change the laws in Parliament. All enlighten citizens and residents must support him and this cause.

    As an Accountant I have always been thinking about this subject for some years already, and that is how we could put a value to our resources to be taken as our capital or equity contribution in any project development. This applies to developments by both local and foreign companies. Landowners and government must be given this right of ownership. We don’t have cash, but we have undeveloped resources be it minerals, oil, gas, timber, water, sea or land. Foreign Investors have been taking these away with payment of very small royalties, and asking our governments or landowners to pay high prices for small equity shares in such developments. As stated by the MP, we borrow dearly to pay for our shares, and we suffer to repay the loans.

    This idea should be promoted widely and awareness must be done by students and all educated enlighten people so that our elected leaders can change laws to effect changes to laws that benefit our people. We are and our students are fighting over the bones whilst the Foreign Investors are enjoying the meat back in their comfortable homes.

    One might argue that ownership is not important but employment is, but I argue that any returns to our people in any form such as employment pay, royalty, taxes, rent or dividend must be fair and higher than what it is today. Another might argue that Foreign Investors take big risks to find and develop the resources, so if we make it hard for them they might go elsewhere. I believe this argument does not hold much water as the Investors are now making ship loads of profits and keeping the cash overseas, and we should be aware that other countries have better laws in favour of their own people and we in the Pacific are the only people on earth being taken for a ride.

    As stated by President Barack Obama on his recent visits to Asia and recently the President of India on his visit to PNG, this is our century to rise up and take our opportunities seriously. Therefore, we must arise and shine for the Glory of God shines on us with fresh wisdom, knowledge and skills unprecendented that all mankind together shall see it.

    God Bless PNG and the Pacific Region

  9. If the relevant acts and provisions are revisited the government must be given a reasonable equity share at least 50% stake in the projects and on the other hand the customary land owners, the natural resource owners must be taken into consideration for their benefits, not like the lousy 2% royalty or tax or what ever you sa
    .

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s