Time to plug all the loopholes

 AT long last, the arduous and sensitive process of clan vetting in the Papua New Guinea liquefied natural gas project impact areas is finally coming to an end.

It has taken four years since the start of the LNG project in 2009 for the Department of Petroleum and Energy to carry out this systematic process of identifying genuine clan members in the petroleum development licence (PDL) areas.

The process is in line with the commitments made by the State under the Umbrella Benefits Sharing Agreement (UBSA) and Landowners Benefits Sharing Agreement (LBSA), which were signed before the start of PNG’s first liquefied natural gas project in Hela.

As a result of the vetting process, the clan leaders and people of the Hiwa Block in the Hides area were able to elect their chairman last week. The Hiwa Block has 37 per cent in benefit share in PDL1, the highest among the other five clans because most of the well heads in the Hides area are located on their land.

Businessman Larry Andagali of the Arua clan was elected unopposed by the other nine Hiwa clan leaders during the vetting process conducted by the department, which was witnessed by a capacity crowd at the June police station in Hides last Tuesday.

Andagali, the managing director of Trans Wonder Land (TWL), is held in high esteem by the clan leaders and people of the Hiwa Block. They see him as their shining light and the key to the development door.

With years of experience in the petroleum industry, through his employment with Oil Search Limited, Andagali has established one of the most successful trucking businesses in this country, which is based in Lae and has been servicing the PNG LNG project in Hela over the past four years.

His election as chairman of the Hiwa Block is a significant step towards establishing Gas Resources Hides, which will manage the royalty and equity benefits for PDL1 landowners and clan members. There are six blocks in PDL1, including Hiwa, and the five other block chairmen will be elected who will eventually form the board of Gas Resource Hides. This new entity will come under the umbrella of the Mineral Resources Development Com­pany like Petroleum Re­sources Kutubu (PRK), Petroleum Resources Gobe (PRG) and other landowner entities.

However, Andagali wants to ensure that Gas Resource Hides (GRH), which is expected to be established in the first quarter of 2014, does not become a victim of bad investment decisions by MRDC. He is concerned that landowners were misled by the MRDC and subsequently lost millions of kina in the failed Port Moresby casino hotel development, which he described as “a big scam”.

“MRDC should be char­ged and funds repaid to the petroleum resources boards because they were wrongly advised. But since there is no legal trust deed in place MRDC cannot be sued.”

We agree with Andagali that this loophole needs to be patched up so that landowner entities can seek legal redress for this bad and costly investment decision by MRDC. Indeed, no local investor would want to see a repeat of the Port Moresby casino development saga.

The Hela businessman is concerned about loopholes in the current system of benefits payment to clan members in the PNG LNG project impact areas.

He says that clan members are not fully benefiting from their royalty and equity benefits because the payments are being siphoned off through administrative and operational costs.

The Government and its relevant authorities need to take heed of Andagali’s concerns and close these loopholes in the system before gas flows from the Hides fields by the end of 2014 and millions of kina flowing back into the people’s royalty and equity accounts.

Genuine landowners and clan members, who have been properly identified and processed by the Department of Petroleum and Energy through the vetting process, must be able to receive their fair share of the benefits from the PNG LNG project.

They should not be denied their full benefits by a faulty funds disbursement system.

The same principle must be applied to other resource projects throughout the country.