Martyn Namorong | December 19, 2018
I have a strong affinity for Morobe province. Although I am not from the province, my surname -Namorong- is Morobean. I won’t bore you with the long tumbuna stori but it has something to do with a young Lutheran pastor from Tapen in the Rai Coast climbing the “hundred mountains” of the Finisterre Range and working with the people of Teptep in the 1970s.
The first time I entered the debates on the extractive sector in Morobe, was in 2012, when communities along the Watut and Markham rivers reported fish and eels dying after what they believed to have been related to a cyanide spill from the Hidden Valley mine (Same miners now involved in Wafi-Golpu).
Last year, with assistance from generous development partners, I ran a workshop in Lae bringing together government officials and community leaders from mining communities associated with the Hidden Valley and Wafi Golpu projects. My interest as well as that of the funders was to educate and empower sub-national leaders on PNG’s extractive sector. An overview of PNG’s mining regulatory framework was presented by the Mineral Resources Authority.
I have since had the privilege of meeting and listening to landowner and provincial government representatives. One such meeting ironically happened at the 8th floor conference room of Treasury building, where landowner representatives were lobbying for the Open Book Financial Modelling of the Wafi-Golpu project.
Katim na skelim Pik
One of the hot topic discussions of any resource project is benefit sharing with local stakeholders, colloquially referred to has “katim pik”.
For a faction of Wafi-Golpu landowners, having access to the Open Book Financial Modelling is critical to them in informing their decision making regarding the project.
What the Open Book Model does is it mathematically models the “size and weight of the pig” so to speak and then predicts the financial implications of “cutting the pig” in a certain way.
Say for instance, it predicts how much profit or loss the project will make depending on an upper and lower limit of the World Market price of copper.
During the Wafi Golpu Memorandum of Agreement (MOA) discussions held in the middle of this year, Treasury Officials told local Morobean parties that they had access to the Open Book Model.
Landowners and Morobe Provincial Government officials have since been pursuing that model from Treasury.
Now under PNG Mining and Petroleum laws, the Development Contract for a resource project is negotiated by the National Government and the company wanting to exploit the resource.
The Provincial Government, Local Level Government and Landowners only come into the picture after the Development Contract is signed. Their participation is only at the Development Forum stage where benefit sharing agreements are signed between the National Government and sub-national parties.
This procedure exposes a fundamental flaw – landowners and provincial governments are not party to discussions on how the pig is cut.
So what happens in PNG is that by law the government and a foreign corporation cut the pig and then the government redistributes its share with the sub-national stakeholders. If government officials negotiate poorly as they have notoriously done previously, provincial governments and local governments including landowners are given the “pig skin” instead of “meat”.
Free Prior Informed Consent and Contract Transparency on Wafi-Golpu
Morobeans, under the international principle of Free Prior Informed Consent (FPIC) that is aimed at protecting the rights of vulnerable ingenious communities, have a right to information that will help them make informed decisions about the Wafi-Golpu project.
Access to critical financial modelling information is important even if PNG law doesn’t cater for their interests at this stage of project negotiations.
National authorities have historically failed in their fiduciary duty to protect the interests of local authorities and landowners. The Morobeans therefore have every right to be sceptical about whether Waigani will protect their interests during negotiations of the Wafi-Golpu Development Contract.
Contract transparency following the principles of the Extractive Industries Transparency (EITI) that the government of PNG has signed up to are therefore crucial in building understanding and trust between all stakeholders and not undermining the interests of the people of Morobe during negotiations of the Development Contract.
Morobeans aren’t naive
Morobeans have had their first mining experience from Bulolo and Wau Gold fields. Today they live with the Hidden Valley mine for better or for worse. They know the same dodgy characters from Hidden Valley are know plying their dirty trade at Wafi-Golpu.
Perhaps for me, the most poignant moment was at the Sydney Mining and Petroleum Investment Conference, seeing highly educated Morobeans urging their governor not to sign the MOA with Wafi-Golpu project partners when rumours were spreading at the conference venue that the Mining Minister and Prime Minister were keen of getting the Governor to sign.
Hats off to the Morobe Governor and Landowners of Wafi-Golpu. I hope that your actions will lead to improvements to how PNG’s natural resource contracts are negotiated and that PNG has broader contract transparency consistent with the EITI global standard.