Structure could be good: INA

 THE Institute of National Affairs (INA) says there may be some merit in separating the mining investments from petroleum and gas investments under the Government’s proposed Kumul structure.

INA executive director Paul Barker told The National that there was little issue with rebranding Independent Public Business Corporation (IPBC) as Kumul Holdings.

He said this was only relevant if public accountability, and greater transparency over transactions, earnings and their utilisation (including payment to consolidated revenue), and proper independent advertising and appointments to boards and management positions occur.

“The issue is really about governance, integrity, appointing the right people to boards and management positions (not cronies), awarding contracts on merit to the best bids, or most suitable public-private partnerships, avoiding heavy borrowing with sovereign debt obligations for activities which are lower priorities for the people of PNG, while encouraging genuine competition, where possible, to enable investment, improve services and accountability for the public and consumers,” Barker said. 

“Just shuffling the cards of State-owned companies and holding companies won’t be very relevant unless there’s that commitment to the objectives and requirements above. 

“PNG’s SOEs have been performing very poorly, as a whole, in terms of delivering needed services as indicated in the recent ADB review.”

Sir Mekere Morauta raised the concerns back in the early 2000s, when pursuing a privatisation approach, stating that government had found it increasingly difficult to avoid the temptation of patronage, and appointing mates and wantoks to positions for which they’re widely unqualified and unsuited. 

 “It’s harder to do that in the private sector as performance is a much stronger driving factor,” Sir Mekere said.

“Another concern is that where government delves too much into resource and other commercial investments it undermines its focus on core State functions of providing core infrastructure and essential services. 

“Investing directly into risky commercial ventures, including resource extraction, weakens the State’s role in impartially and professionally establishing a sound fiscal regime, and overseeing social, employment and environmental standards, and we’ve seen how some projects in which the State has chosen to take up equity, having secured approvals, including environment permits, without due process.”