Economist calls for transparent talks in sector

Business

THE need to review and update fiscal arrangement in the resource sector is apparent, said PNG Institute of National Affairs director Paul Barker.
In his 2021 economic outlook, Barker said that constructive dialogue with the industry and project investors/operators was required.
“Review and updates also for individual projects when their licenses fell due for review or renewal, but this needed to be conducted in an open and orderly manner, avoiding undue disruption,” he said.
“Constructive dialogue with the State using sound international reviews and evidence, and not being pushed about or spoon-fed.
“However, the art of making a good deal requires a readiness for compromise, unless there are very good grounds for not doing so, such as if the project is of marginal benefit, or can be advantageously deferred or rescheduled, rather than having multiple new projects simultaneously.
“Clearly, the costs or risks (including environmental) for some projects may be excessive and the Government fully justified in rejecting or deferring them, at least until better knowledge or technology is available.”
Barker said in 2019 and 2020, the Government’s stand seemed “unduly rigid over some prospective resource projects, seen as potentially providing a substantial economic stimulus impact, but most notably with the Porgera mine”.
“Unlike other projects, the Porgera mine was a long-operating mine in a remote part of the Highlands, in which the State had once held a significant equity, which was subsequently sold, except the province’s small but valuable share, together with the landowners’.
“The investors were ready to improve the State’s and local equity and other benefits, and robust negotiations were certainly justified, but unfortunately the State’s demand seemed excessive and unduly rigid, and failed to appreciate the extent of economic and social benefits and revenue provided by the mine.”