PRESS RELEASE – 24TH SEPTEMBER 2018
FEDERATION CALLS ON THE MINING AND PETROLEUM INDUSTRY TO END THEIR DECEPTIVE CONDUCT
The Resource Owners Federation of Papua New Guinea is pleased to note that the leaders of the Country are finally realizing that they have in the past been deceived into giving up their mineral and petroleum resources free of charge to foreign companies and their shareholders, without any direct or indirect benefit to the country and its citizens including and especially the resource owners. The Federation appreciates the admissions by the two senior Statesmen and former Primes Ministers, Sir Julius Chan and Sir Mekere Morauta in parliament last week, that the ownership laws of the country are wrong and need to be changed to restore ownership of mineral and petroleum resources by those who own the land beneath which the resources are found. A correction of the ownership laws will not only bring the new laws to be consistent with the Constitution of the country, but also ensure that the country and its citizens benefit from the development of those resources rather than becoming spectators and/or victims of human rights and other crimes committed against them by the Mining and Petroleum companies in the process of their relentless pursuit of profits.
A classic example of deceptive tactics employed by the Mining and Petroleum companies is the, conversion of the value of mineral or petroleum reserves, found in any land in the country to liabilities for the state and its citizens, when they are told to pay cash contributions towards developing the project in return for equity in the projects. The State and the landowner’s capital contribution in respect of the value of the mineral or petroleum wealth found under their land has disappeared somehow in this equation, resulting in the State and the landowners having to pay for a little of what they already owned in cash contributions which they have to borrow in the form of “free carried interest” or in direct loans from commercial banks. The balance of the total value of the mineral or petroleum reserve has somehow transferred to the Mining or Petroleum companies at no cost to them. This must now come to an end. Going forward, the State and the landowner’s equity contribution is the value of the discovered mineral or petroleum reserve at the current world market price. The State and the landowners must therefore retain the majority of the equity interest in the project, whilst cash contributors can buy into the project towards the development of the project. In this equation, the State and the citizens remain the majority owners and therefore the significant beneficiaries of their natural resources.
Another deceptive tactic employed by the mining and petroleum companies is the deliberate mis-interpretations of the words “entitlements and benefits” during their use of the English language in communications and interactions with the leaders and citizens of Papua New Guinea. The word Entitlements, according to the English dictionary “is a right” that is provided by law. Such rights include for example; taxes, royalties, employment, contracting, compensation and others. The same English dictionary defines the word “benefit” as a “profit”. However, the Mining and Petroleum companies have deceptively and deliberately mis-interpreted the State’s and the landowner’s entitlements as benefits to cover for the transfer of all the profits or benefits of their projects to their own shareholders overseas, leaving the State and the landowners with only their meagre entitlements for decades. This deceptive tactic must also come to an end. It is now time for the country and its leaders to take back what is rightly theirs in majority ownership of equity in projects at no additional cash contributions, so that the real benefits of the country’s natural resources are realized by its citizens.