Not many will gain from LNG project

Letters, Normal

I REFER to SHP Governor Anderson Agiru’s letter (The National, March 26) alluding to my letter of March 23.
Mr Agiru and others believed they got the best deal out of this project and people like me should not be making unjustified statements criticising their good work.
With due respect to the governor, whether he and the so-called State negotiating team had done a good job or not will only be proven in due time.
In fact, I would say the results are already being felt by the people.
Hardly a day pass without our newspapers carrying a story or two about the unjust treatment by the project developer, the State giving in to landowners, missing MoA funds or unfulfilled MoA promises, etc.
Was there a win-win situation for all the stakeholders?
I don’t need some myopic analyst from Kokopo or Melbourne to prove me otherwise. 
The governor’s claims that he did his best for PNG remain to be seen, which he rightfully said were kept confidential and locked away in Waigani.
While only the privileged few are  privy to the contents of the negotiations, the majority of us who are dwelling on the fringes will only speculate and deduce what they are based on the results we observed everyday in the newspapers and from grapevine sources.
How can the negotiators call it the best deal when the landowners were given an additional 5% equity from the State’s equity of 19.6% and not from the developer’s 81.4% equity?
Mind you, the extra 5% to the landowners did not increase the original equity of the State. The 19.6% of the State’s equity also included the landowners’ equity of 2%.
I am of the view that PNG negotiators did not have the guts to demand from the developer who had 81.4% to give 5% or more to the landowners.
And that was an exceptional negotiation feat?
How can it be the best deal when the developer is exempted from paying import duty taxes, income tax, GST and a delayed but usual corporate income tax of 30%?
The corporate income tax will come into effect in 2018 or thereabouts when the developer makes a profit.
The inclusion of the additional profit tax (APT) is a bonus but in reality, APT will only work in exceptional cases after the developer records abnormal profits.
I believe our first APT will be due in about 20 or 30 years’ time but the State said that was fine. In reality, the Government is not going to collect any form of taxes at least for the next 10 years and that, also goes for the return on equities because dividends and royalties are only paid when the company makes a profit.
The only immediate benefit to the country is tax revenue and a substantial amount will come from import duty and personal income tax but our negotiators have, in their wisdom, exempted that.
How can the negotiators call it the best deal:
* When the ownership of the extensive pipeline corridor area on the land and under the sea on both sides of the pipeline is owned by the developer and any resource discovered along the corridor area belongs to the developer?; 
* When only K10,000 will be paid to landowners of affected area for relocation?; 
* When landowners are given simple subcontract jobs to cook, clean and provide security for expatriates but the real meat is given to EPC contractors? While Mr Agiru did not want to enlighten us about the nitty-gritty of their negotiations, it was pathetic he did not know how much of the US$17 billion LNG investment would remain in PNG; and
* When a thorough independent impact study of the LNG project was not done to show the real impact of the project on the socio-economic, cultural and environmental landscape?
I think we are blinded by the illusory goodies that the LNG will generate and did not consider the negative impacts whose magnitude has the potential to surpass that of the positive flows from the project. 
They think the LNG project is the economic saviour for the development and future of our country, therefore, we can concede much.
But I want to say that while Australia and the United States have more petroleum resources than PNG, they do not allow such developments to undermine their agriculture sector because they know that the agriculture sector is the real backbone of their economy, and not petroleum.
So we should think twice.


Wotekep Kangtekep
Port Moresby