Latest update December 31st, 2024 3:30 AM
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Papua New Guinea goes after its fair share from oil companies through amended legislation
By Kiana Wilburg
After years of being saddled with deals that gave the lion’s share of the nation’s wealth to oil companies, the relatively new administration of Papua New Guinea seems determined to charter a new course for its people. One of the most evident moves in this regard relates to the passage of amended legislation that increases the country’s share of the profits to be had from the exploitation of its oil and mineral resources.
Prime Minister of Papua New Guinea, James Marape
Following the passage of the amended laws on Wednesday, Prime Minister James Marape took to his Facebook Page and wrote, “When laws that lead to economic independence are passed, I know Parliament is doing its job, for government is not only about building infrastructures (so far mostly from borrowed money).”
He added, “…To our investors, as I said in the past we will not break legit contracts or agreements or license, be it exploration or development. I can assure our investors that we know they must make money for their shareholders too so we will not be greedy but we just asking for a fair share, if they want to harvest our resources.”
Marape also noted that his administration will also be promulgating an organic law that will ensure it migrates to a production sharing regime that will become effective in 2025.
TURNING TO IMF
Kaieteur News would have reported yesterday that Papua New Guinea had made billions of dollars on its oil and gas resources since the 1990s. But instead of saving that money for a rainy or for unprecedented circumstances such as the COVID-19 pandemic, those entrusted to protect the people’s wealth, allowed a selected few to embezzle it. According to global watchdog, Transparency International, the cost of corruption to the nation was estimated to be above US$1.4 billion in 2015. And in 2016, former Prime Minister Mekere Morauta cited estimates of more than US$429 million being lost to corruption annually.
As a result of this wanton abuse on the national coffers, the new administration for Papua New Guinea was left with no choice but to turn to the International Monetary Fund (IMF) for emergency funding to address the COVID-19 pandemic.
This publication understands that just a few days ago, the Executive Board of the IMF announced that it approved a disbursement to Papua New Guinea under the Rapid Credit Facility to the tune of US$363.6 million to help cover urgent balance of payments needs.
IMF officials noted that the COVID-19 pandemic is hitting the country’s economy hard, through export losses and the impact of measures to mitigate transmission of the virus. Kaieteur News understands that the crisis erupted as the government was beginning to implement wide-ranging reforms under a Staff-Monitored Programme (SMP). (A SMP is an informal agreement between country authorities and Fund staff to monitor the implementation of the authorities’ economic programme. SMPs do not entail financial assistance or endorsement by the IMF Executive Board.)
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