Chamber backs state ownership of resources

By MALUM NALU
PNG Chamber of Mines and Petroleum has declared that state’s ownership of resources is key to further development of mines and gas projects in the country.
The chamber’s position was stressed in its February 2012 position paper, where it said the state ownership was the norm accepted worldwide except in parts of the US and small parts of Canada.
“The chamber is a very strong supporter of state ownership of resources, which is the norm worldwide except for part of the USA and a small part of Canada.
“The chamber views the promotion of landowner ownership – private ownership – as a populist policy presented as a panacea to address the problems facing the grassroots communities without any consideration of the impacts the changes will bring.”
The chamber’s paper highlighted that the mine and petroleum industry currently contributed over one-third of government tax revenue with payments of more than K2 billion a year, making it the backbone of the economy.
“PNG could develop several new mines and additional gas projects over the next five years if it maintains conducive investment environment,” the paper said.
“Mineral and petroleum resources in PNG are owned by the state, allowing for equitable national distribution of the resulting benefits.
The paper said complex changes of landownership already posed significant challenges for resource development in PNG and a change in resource ownership would magnify these social problems many fold.
“Because there is no system for land titling of customary land, an explorer would be left with the task of dealing with a resource owned by a community that is always open to challenge from within and without, and where agreements may always be in a state of flux,” it added.
“The end result would be a compete loss of tenure, making it all but impossible for the resource industry to operate.”
The paper said state ownership of minerals was vital to the development of PNG, and allowed resources to be developed for the benefit of all citizens as required by the constitution.
“The state issues production licences over these resources, and they are managed in an effective and orderly manner that is recognised internationally and accepted by the investor,” it said.
“A change in resource ownership would result in a breakdown of this system; the risk profile would be unacceptable to developers.
“The provincial and local-level governments would be big losers in a system underwritten by private ownership of minerals.
“Resource extraction would become a private business activity for individuals and groups.
“Landowners would want everything, including royalty and state equity, and would only share these with provincial and local-level governments if they felt inclined.”
The paper said benefits provided by resource projects were diverse and included: taxes (company tax, royalty, dividend withholding tax, salary and wages tax, duties, production levy), tax credit scheme, special project grants and development levies, employment, education and training, public health programs, business and agricultural development, and community infrastructure.
“Papua New Guinea has one of the most-equitable benefit-sharing systems in the world for mining and petroleum developments,” the paper said.
“The country has developed a formula for benefit sharing, which is unique on a worldwide basis.”
“It includes the national government, affected provincial and local-level governments, and the impacted communities.