Ok Tedi laws 'increase perception of sovereign risk'

GOVERNMENT legislation allowing the nationalisation of Ok Tedi mine in Papua New Guinea increases the perception of sovereign risk and will undermine investor confidence, according to PNG’s former prime minister.
Ok Tedi laws 'increase perception of sovereign risk' Ok Tedi laws 'increase perception of sovereign risk' Ok Tedi laws 'increase perception of sovereign risk' Ok Tedi laws 'increase perception of sovereign risk' Ok Tedi laws 'increase perception of sovereign risk'

Sir Mekere Morauta said the laws gave far too much power to Prime Minister Peter O'Neill and set a precedent for expropriation.

Last week's bill allowed the state to take ownership of the Ok Tedi copper and gold mine on the Fly River in Western Province.

A 63.4% shareholding had been held by PNG Sustainable Development Program, a trust which was established when BHP Billiton agreed its exit from the mine.

But PNGSDP chairman Morauta said the latest developments were "extraordinarily dangerous".

"The laws are dangerous for the nation in terms of perceptions of sovereign risk and would undermine investor confidence at a time when a number of very large investments were on the horizon," he said in a statement.

"Investors, both domestic and international, needed to have good laws that are clear and offer them the comfort they need to make decisions about spending large amounts of money.

"The laws also set a precedent for expropriation, which is one of the most drastic steps a government can take.

"They should have been circulated widely and debated widely and fully, not kept secret and bulldozed through in one day.

"I am especially concerned about the sections relating to the payment of compensation for the expropriation."

Morauta said the legislation permitted O'Neill, acting on the advice of National Executive Council, to declare whether compensation was to be paid for the expropriated shares, to whom the compensation would be paid and the amount.

"In the first place it is wrong to leave it to politicians to decide if compensation is to be paid," he added.

"The constitution is clear - 'just compensation' must be paid for 'unjust deprivation of property'.

"A decision on whether compensation should be paid and the amount belongs in the courts or according to agreed arbitration.

"In the second place, leaving one politician to have the ultimate say on who gets the money is extraordinarily dangerous.

"Such decisions need to be taken according to clearly defined, established processes with full accountability and transparency."


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