NEWS AND PRESS STATEMENTS

The publication of the PNG Extractive Industries Transparency Initiative reports are meaningless if they do not give rise to critical policy debates for a robust mining and petroleum sector in Papua New Guinea, an official says.

Head of PNGEITI National Secretariat Mr. Lucas Alkan told leaders at the 36th Australia Papua New Guinea Business Forum on Wednesday that EITI work in PNG is progressively helping to shape public policy discussions through EITI report recommendations, and open discussions within the PNGEITI Multi Stakeholder Group (MSG).

Papua New Guinea to date has published a total of seven (7) EITI country reports since the PNG Government signed up to join other 50 plus mineral resource rich countries in 2014 to implement the EITI Global best practice Standard.

To promote transparent and accountable conduct of business in the mining and petroleum industry the core function of EITI implementation is the publication of annual EITI country reports consistent with the requirements of the EITI Global Standard.

Mr. Alkan said those reports must form part of policy discourse in mining and petroleum sectors of the economy as opposed to collecting dust in the shelves.

“Producing EITI reports are meaningless if these reports do not give rise to critical policy and legislative reforms for better management of the sector, “he said.

Mr. Alkan said important progress had been made since PNG’s first EITI report in 2015, providing greater transparency over revenue received by the government from the country’s mining and oil and gas industry.

He said the PNG Government and resource owners receive maximum resource project benefits, with that EITI reporting process identifies revenue leakages to improve corruption perception which would in turn boost investor confidence.

“To improve the country’s investment climate, we have to be transparent in all forms of payments, starting with the negotiation process for development projects to how licenses are issued.

“EITI is a platform that enables all stakeholders to work collaboratively and build trust to realise PNG’s vision for resources development,” Mr. Alkan added.

“Some of the improvements and reforms arising from the work of EITI in PNG are that EITI;
• has been complementing other Government initiatives like the Open Government Partnership (OGP) and the Independent Commission Against Corruption Law (ICAC);
• through its first report, ensured that the Income Tax Act was amended to remove secrecy provisions in the Act to enable the IRC to disclose tax revenue data for EITI reports.
• provisions have been included in project MOAs and Agreements on benefits sharing arrangements for contract transparency;
• establishes a platform for better collaboration and open discussions between different stakeholders to build trust;
• ensures a comprehensive report with available data covering the extractive sector that is now used as reference in debates, which is not the same some years back;
• Report outcomes have influenced the Government to embark on reforming policy and resource laws to strengthen government systems and to ensure fair share from the benefits derived from resource developments;
• is now making progress in comprehensively reporting at sub-national levels of government, beneficial ownership disclosure, and increase transparency in State Owned Entities.
• has forced the government to disclose quasi-fiscal data and taken steps to address opaque nature of some tax incentives such as the Infrastructure Tax Credits.
• report recommendations have pushed the PNGEITI Secretariat and the Auditor General to work together to improve the quality of the financial data in the EITI reports.
“In addition, a National Policy Framework on Transparency and Accountability was approved by Cabinet in 2018,” he said.

Mr. Alkan said among the achievements made so far in EITI implementation in the country, the National Policy Framework on Transparency and Accountability has set the basis for the creation of EITI PNG as an independent administrative body to sustain its operation and the draft law is now being finalised.

The PNG Extractive Industry Transparency Initiative (PNGEITI) has congratulated Richard Kassman on his appointment recently as President of the Papua New Guinea Chamber of Mines and Petroleum.

He recently replaced Gerea Aopi who has been at the helm of the position with distinction. Richard Kassman is the Director Corporate Affairs, Total E&P PNG Limited- an active member of the PNGEITI Multi Stakeholder Group (MSG) and he was vice president of the Chamber during the time of his appointment.

Mr. Kassman represents Total PNG Ltd in the PNGEITI MSG which oversees the implementation of the Global Extractive Industries Transparency Initiative (EITI) in Papua New Guinea.

“As we all know Mr. Kassman is a dedicated professional with active engagement in both the Government and private sector in Papua New Guinea with deep commitment with in those various roles he plays,” PNGEITI Head of National Secretariat Mr. Lucas Alkan said.

“His insights and contributions to the advancement of EITI reporting in this country has resonated with great value and the PNGEITI MSG is privileged to have him on board.

“At this juncture, we acknowledge his invaluable commitment and contribution over the years since PNG commenced implementing the EITI 7 years ago. Now as elected President of the PNG Chamber of Mines and Petroleum, we look forward to a heighted working relation with regards to the role that the industry plays as the key stakeholder in implementing and maintaining PNG’s position as an EITI affiliated member country.

Mr. Alkan said Kassman’s experience would greatly enhance the work of the PNG Chamber of Mines and Petroleum in representing EITI in PNG and would give prominence to the cause by building on the momentum of the program that has produced several financial year reports from the extractive sector.

PNGEITI’s (PNG Extractive Industries Transparency Initiative) participation in the recent Project agreement reviews has paved an opportunity to advance the current scope of EITI mainstreaming from policy to practice.

The PNGEITI National Secretariat participated in the week-long review of Woodlark Mining Project MoA (Memorandum of Agreement) held in Alotau, Milne Bay, from October 12 to the 17, 2020.

Head of National Secretariat Mr. Lucas Alkan said the purpose of PNGEITI’s participation in the review of the Woodlark MoA was to ensure that the EITI provisions were included in the project agreement for contract transparency or disclosure of contracts that has now become mandatory for all EITI implementing countries including PNG.

“As part of its efforts to mainstream the EITI Standard and requirements on National and Subnational payments, including Beneficial Ownership, and Contract Transparency reporting, the Secretariat has been undertaking joint workshops, presentations and information sessions together with its Multi-Stakeholder Group (MSG) that comprises representatives from the Government, Extractive Industry and the Civil Society groups.

“On the last day of the forum, the State team included EITI reporting clause into the agreement. This is actually the second project MoA after K92 project to have an EITI Reporting clause included,” Mr. Alkan said.

“The PNGEITI envisage to cover all mining projects in the country to capture national and subnational reporting requirements,” Mr. Alkan added.

The forum discussed various undertakings by the MoA parties, of which some of the issues raised were relevant to EITI such as the need to;

1. Create EITI awareness at the project impacted areas, especially the communities;
2. Report royalty distribution in monetary value;
3. Disclose in monetary value the Developer and State’s share of the total aggregate profit/return on the mine project;
4. Disclose production volumes and values for gold extracted;
5. Inform landowners well on the ownership of the infrastructure/services during operation of the mine before its closure;
6. Disclose data on special support grant – this is in relation to custodians of mining trust accounts in terms of disclosure of trust account information relating to payments and recipients/expenditures; and.
7. Create greater awareness on information relating to economic and social impact assessment report by the people of the impacted area.

Photo caption: In front: Deputy Head of PNGEITI National Secretariat Christopher Tabel stressed on the importance of ensuring contract transparency and systematic reporting is built into transparency mechanisms in contracts and MoAs.   

By the year 2021, Papua New Guinea as an EITI implementing country will be required to publicly disclose all mining, oil and gas project development agreements.

This is according to the Head of PNGEITI National Secretariat Mr. Lucas Alkan.

Mr. Alkan said that all project memorandum of agreements (MoAs) and contracts that will be entered into by the Government and Project developers as of next year 2021, will be required to be disclosed as public information.

“The current practice in Papua New Guinea is that once the agreements are signed, they are filed by the State Solicitor’s office and not disclosed as public information.

“A number of project agreements including that of the multi-billion Kina PNGLNG Project are protected by secrecy provisions and have not been disclosed for EITI reporting purposes,” Mr. Alkan said.

“These agreements needed to be disclosed, not only because PNG is implementing the EITI Global best practice standard but it is also in the best interest of the resource owners and the people of this country to know what is contained in these agreements.

Mr. Alkan added that mining and petroleum contracts, development licences and associated agreements are important fragments of the legal framework that governs the exploration and exploitation of our natural wealth.

“Disclosure of project agreements, MoAs and contracts, allows the public to monitor the conduct of the parties involved in the extraction and sale of mineral and petroleum commodities to determine who is accountable for non-compliance, whether it be benefits sharing, environmental impacts, social obligations and so forth.

“The government has been talking about getting its fair share from resource projects, however if the deals have been done badly in the first place by giving away too many fiscal concessions like a 10-year tax holiday or other tax exemptions then we have locked ourselves into a position where we cannot do much,” he said.

“If there are any legislative impediments to the disclosure of contracts and agreements, the laws must be reviewed as part of current legislative reforms in the extractive sector to amend these legislations that have prevented public disclosure of these important documents,” Mr. Alkan said.

Published: July 16, 2020

Head of PNGEITI National Secretariat Lucas Alkan has commended the efforts of the PNGEITI Multi-Stakeholder Group (MSG) for implementing the EITI Standard over the past 6 years however, called on MSG to utilise EITI’s full potential to improve governance in the sector.

Speaking on the eve of PNGs second validation and during the COVID19 MSG Constituent briefings, Alkan reiterated that PNGs implementation of the Global EITI Standard has gained favourable results so far with the overwhelming support from the PNG MSG, however still a great potential to improve governance in the mining and petroleum sector.

“Our decision to sign up to implement the EITI had opened the door for citizens to question the government and industry on how past and current mining, oil and gas deals are best tailored to contribute to implementing the Government’s development plans and agendas,” Alkan said.

PNG joined 53 other mineral wealthy countries around the world in 2013 and like many implementing countries, is working on mainstreaming a lot of the international EITI principles and requirements.

It is a journey of continuous improvement and most recently, in 2018, the PNG Government came up with a National Policy on Transparency and Accountability that set the framework for EITI implementation in this country.

Alkan acknowledged public sentiments surrounding the debate on Resource Extraction and National Development.

“Citizens have become sceptical that the extraction of these rich mineral wealth would translate into tangible service delivery, funding education and health programs, invested in rundown infrastructures and so forth for a better future for all,” Alkan said.

Photo: The PNGEITI Multi-Stakeholder Group during the first quarter meeting last month (June). The Multi-Stakeholder Group comprises representatives from the government, the extractive companies and the civil society organisations.

As the government proceeds with preparation for negotiating the Wafi Golpu project, the Woodlark and Kainantu Gold Mines MOA reviews and other projects in the pipeline, it will be interesting to see how these negotiations take place and how agreements are entered into.

Head of National Secretariat Lucas Alkan made the remarks following the government’s recent announcement in the media about the upcoming project MOA reviews.

“In these project development process, transparency mechanisms must be considered and built into these project agreements and the MOA reviews,” Alkan said.

Alkan said that the Government’s commitment to implementing EITI will not increase transparency overnight, however, it will assist the government to manage the extractive sector in a more inclusive and transparent manner.

He added that highlighting transparency will also assist in minimising public speculations and distrust towards the government.

“The EITI framework works to assist in bringing various sectors of the economy together and builds trust amongst them and creates a platform for these issues to be discussed so that solutions could be found together for better management of the sector.

Now that PNG is an EITI implementing country, the Government should not lose traction on EITI implementation. It stands to gain from implementing EITI because of the potential governance gains associated with it.

Alkan said that PNG still has a lot of work to do when it comes to citizen engagement.

“According to the World Bank’s World Governance Index 2018 edition, PNG scored very low on the “voice and accountability” indicator which indicates weak performance,” he said.

“As an EITI implementing country, mining and petroleum impacted communities and civil societies have a platform to access information and constructively engage with companies and the government on resource governance issues,” Alkan said.

File photo: Members of the PNGEITI and Mineral Resources Authority (MRA) with (centre) Huon Gulf Open MP Hon. Ross Seymour, in 2018. After an outreach information session conducted for the stakeholders of the Wafi-Golpu project. The outreach was conducted by PNGEITI in preparation for MRA Mining Development Forum which was held later in the same year.