PNG's change of pace

THERE has always been consternation about Papua New Guinea’s super-slow regulatory approval process. By Wantok

For a long time, the resource sector in PNG has needed an open and transparent government to maintain a level playing field for all industry players.

But with the appointment of Nixon Duban as Minister for Petroleum and Energy, there has been a change of pace that has captured the attention of the resources industry.

Readers will be aware that Duban was controversially named as William Duma's successor early last month ¬- replacing perhaps the longest-serving minister in PNG history, after almost a decade in the post.

While Duma undoubtedly had a rocky relationship with the industry, his replacement was overshadowed by the sacking of for Treasurer Don Polye and the controversy over the PNG government's loan from Swiss bank UBS.

The noise in recent times may have caused some to fail to recognise what can only be described has a plus for both the government and the industry. Duban has acted swiftly on some matters that have been collecting dust for some time.

For instance, in just under a month into his term in office, he has granted a Petroleum Development License to the joint venture partners of the Stanley gas project.

This means the project can now move into construction and production of gas condensate. The minister has also facilitated the equity participation by states nominee (Eda Kopa) in the Solwara 1 project.

Many industry insiders have told Wantok off the record that the former minister was perceived to be an obstacle. His replacement was part of a broader recognition within government that there was a need to streamline the regulatory process.

The current review in mining legislation, for instance, will see the imposition of time limits that government agencies are expected to respond to applications for regulatory approvals.

Penalties will apply should state agencies not respond within the approved time frame. This should increase confidence amongst all stakeholders about the integrity of the regulatory process and reduce the need to grease the wheels.

For ordinary Papua New Guineans, it also means that they can have confidence that the system isn't been hijacked by the national rent seeking elite. The perception that government regulators are corrupt has a negative impact on the relations between developers and the local people on the ground. This mistrust is based on the perception that the umpire (regulator) is biased towards the developer.

The improvement in the regulatory process synergizes with other governance initiatives such as the Extractive Industries Transparency Initiative (EITI). These initiatives will hopefully provide greater clarity amongst the investment community that Papua New Guinea is willing to play by the rules and play fair.

Mistrust of government regulators has fuelled negative community sentiments towards the company at Ramu Nickel, while the current social problems at Porgera may indeed have their roots in the corrupt Placer Affair of the late 1980s.

And of course the Bougainville and Ok Tedi stories stand as reminders of why how poor government regulation can be disastrous.

But there is an air of confidence today about the PNG economy'sfuture prospects. And Duban's approval of the Stanley Gas project will send the right signals to investors that PNG is open for business.

Hopefully, Duban can find a balance between the competing interests of industry, government and local communities. It is a difficult task but certainly not impossible as it is in the interest of all parties that there be economic growth and prosperity in Papua New Guinea.

loader
  • Porgera: Barrick-PNG talks go on - Read more
  • Follow the companies investing in the PNG market - Read more