The Chamber of Mines and Petroleum has responded to a 4-page advertisement by Petroleum Minister Kerenga Kua.
The agency said that implementing the proposed introduction of the government of the production sharing contract (PSC) regime under a proposed organic law not only will stunt the growth of the economy but will eventually retard the tax of the State from resource projects.
“The chamber has attempted to inform the minister and the citizens of PNG of the dangers of the path being followed, this is not out of personal interest,” chamber president Gerea Aopi said. “The minister, in his advertisement, refers multiple times to further ‘legal provisioning in consequential Acts of Parliament’ to suggest that the issues the chamber have raised are not relevant and will be solved in the future. This goes to the core of the matter; much of the proposed changes have not yet been defined. It is uncertainty around the proposed changes that will prevent investment in PNG. An investor will not invest if there is uncertainty in how he will recover his investment and make a profit. Few people in PNG understand how PSCs work, the chamber has many members with detailed understanding on the pros and cons of PSC systems. The chamber is thus a voice-based on deep knowledge that should be heard in this debate. Getting the fiscal settings wrong for the resource sector in PNG will be disastrous for many Papua New Guinean livelihoods. If PNG is going to progress as a nation, there is a need for rational and pragmatic policy settings.”
He added, “PNG is blessed with mineral and petroleum resources, but they are worth nothing unless they are first found and then developed. Developing the resources within a fair and transparent framework will grow the economy, provide jobs, opportunities and infrastructure and ultimately enable other non-resource sectors of the economy to flourish. Whether we like it or not the economy depends on the resources sector. Payments from the resources sector through taxes, royalties, levies and dividends make up close to 30 per cent direct Government take and constitute 85 per cent of PNG’s exports. Indirect contribution to the economy through the multiplier effect likely more than doubles the direct impact of resources projects. The resources sector supports employment for hundreds of thousands of Papua New Guineans directly and indirectly. The resources sector supports entire regional and rural economic ecosystems, almost single-handedly in some cases. Given this background, any radical changes to resource laws and regulations need careful consideration.”
Aopi also said, “The chamber is alarmed at the minister’s proposed changes and their likely impact. The chamber is very focused on working with the Government on policy settings that responsibly grow the economy for the benefit of PNG, it is not a special interest group working against PNG’s best interests. The PNG Chamber of Mines and Petroleum is committed to facilitating investment in PNG for the benefit of the nation. And we stand ready to be part of consultative discussions with the government, for the sound future of our country’s resources sector.”
