Thorough study needed on impact of LNG project

Letters, Normal

The National – Thursday, December 16, 2010

PNG is ill-prepared for the impact of liquefied natural gas (LNG).
So far, we have watched the progress from gas agreement in May 2008 to financial closure on March 11 with little more than fascination.
We heard the talk of the project, about the enormous wealth creation and its potential to change our fortunes but thought little of how it might impact us individually or as a community.
Partly, this has been because there has been little to work on it.
Nobody has given us any clue on the full cost and benefit of this project.
The blame must be placed squarely at the doorstep of the executive government and parliament.
While there has been a ministerial economic committee formed for the express purpose of the LNG project, its sole purpose, so it would seem, has been to speed up the approval of the project.
Little has been done by way of preparing the nation for the effect which will have a tsunami-like consequence upon our fragile social structure and small economy.
So much has been said about what the multi-billion kina project might bring but so little is said about where this money is going to be spent on or what kind of impact so much money will have on PNG.
So much money is not necessarily a good thing.
As we have seen since the advent of the Bougainville copper agreement in 1974, and every other copper, gold and oil agreement since.
All the billions of kina from those projects seem to have vapourised into thin air.
Australia has spent nearly K20 billion since independence in budget support but there is nothing to show for those billions.
PNG enjoyed windfall money from good commodity prices of some K6 billion in the last six years.
This money has disappeared and the Highlands Highway still in dire need of maintenance, with hospitals still running short of essential medicine, with nurses, doctors and other civil servants still waiting for their awards and with the rural outback still in need of essential services.
So, a lot of money is not a good thing if the government does not have a plan on where the money ought to be spent.
ExxonMobil is the world’s No.1 in the oil and gas business.
It will drive this project in as responsible a manner as is commensurate with its reputation.
But Exxon cannot be expected to fulfil the statutory and constitutional functions of the state.
That is the state’s responsibility and we have not seen this plan as the project progresses to construction phase.
The executive government seems to have conducted itself more as a project beneficiary than as the neutral state negotiating on behalf of the people with the project developers.
In that sense, it has compromised itself.
It now falls on parliament to conduct a study of the full import and impact of the LNG project for and on behalf of the people.
Relevant parliamentary committees relating to the economy, security and infrastructure should conduct a joint meeting and propose a joint inquiry which will look at how the project will affect the entire nation across the entire social, economic and infrastructure sectors.
The LNG project will affect this country in a very substantial way, whether we like it or not.
As we have heard in the Asian riots inquiry, there are some 14,000 applications for work permits alone from the LNG project and only nine persons to process them.
Word is that when the project goes into full construction stage, there will be a need to process 50,000 visas and, as we have also learnt, there is little capacity in Immigrations to process that kind of workload.
The economic costs will also increase because the state will need to match or surpass LNG salaries to keep its workforce.
And that is only one area of  concern.
In the absence of any cost-benefit analysis by the government, PNG does not know the full import of the LNG project.
This is not an academic exercise.
It is a crucial task that parliament must establish immediately with an urgent inquiry with sufficient funding for the engagement of professional socio-economic analysts to study the LNG’s impact on every industry, every sector and every region of the country.


Prof Jason Nakandaul Herra
Via email