Papua New Guinea Extractive Industries Transparency Initiative (PNGEITI)

admin

CALL FOR EXPRESSION OF INTEREST (EOI) FOR PREPARATION OF THE FY2022 EITI REPORT

The Extractive Industries Transparency Initiative (EITI) is a global standard for the good governance of oil, gas and mineral resources. As a EITI country, PNG is required to publish this annual EITI report that contains all revenues received by the Government and all material payments made by industry companies, and the reconciliation of these payments and receipts. PNG has published 9 EITI Reports in strict compliance with the requirements of the EITI Global Standard since it became a EITI member country in 2014.

The PNGEITI National Secretariat is hereby calling for expressions of interest from credible auditing firms to collect and collate the financial data and other contextual information and prepare the FY2022 EITI Report. This report preparation is scheduled to commence in June for the final report to be published in December this year.

Interested bidders should obtain a copy of the Terms of Reference (ToR) from the Secretariat office or from its website at www.pngeiti.org.pg, which provides full details on the scope of work involved.

Bidders are required to make submissions containing the technical and financial components of the proposal. Submissions can be emailed to Francis_Diakon@treasury.gov.pg or hand delivered to the Secretariat office at Level 8 of The Treasury Building, Waigani no later than 4:30 pm Friday 2nd
June, 2023.

Terms of Reference (TOR) can be downloaded here

Authorised by:
Lucas Alkan
Head of National Secretariat

Call for Expression of Interest for Short Term Legal Consultant to Finalise the Proposed PNGEITI Commission Bill for Statutory Approval and Enactment

The Extractive Industries Transparency Initiative (EITI) is a global standard that seeks to promote open and accountable management of revenues generated from the non-renewable extractive sector (oil, gas and mining) activities. It also seeks to strengthen government and company systems and processes, inform public debate and enhance trust among different stakeholders.

The PNG EITI National Secretariat immediately seeks a competent and credible consulting firm or an individual consultant with the appropriate legal background and the relevant experience to finalise the proposed Bill and assist the National Secretariat to undertake the required scope of work as outlined in the Terms of Reference (ToR) to meet the required administrative process and to ensure that the proposed PNGEITC Act complies with the statutory requirements before it is submitted to the National Executive Council (NEC) for consideration.

This assignment is expected to take approximately six (6) months from mid- May to November 2023. Interested bidders can obtain a copy of the ToR from the Secretariat office or can be downloaded from its website: www.pngeiti.org.pg, which provides full details on the scope of work involved. Skills, Qualifications and Relevant Experience Required. The assignment must be undertaken by a legal expert that who is credible, trustworthy and technically competent. The Consultant must possess the relevant experience in undertaking similar tasks (familiar with the administrative requirements and statutory compliance process in the PNG legislative system) in the past and have the required skills and knowledge to work within the limited time frame to deliver the outcome.

Expression of Interest must be received no later than 4.30pm on 12th May, 2023. Submissions can be emailed to Francis_Diakon@treasury.gov.pg or delivered to the PNGEITI National Secretariat at Level 8 of The Treasury Building.  Terms of Reference (TOR) can be downloaded here

 

 

Authorised by:
Lucas Alkan
Head of National Secretariat

 

 

PUBLICATION OF THE 8TH & 9TH PAPUA NEW GUINEA EXTRACTIVE INDUSTRIES TRANSPARENCY INITIATIVE REPORTS FOR FINANCIAL YEARS 2020 AND 2121 RESPECTIVELY

The Papua New Guinea Extractive Industries Transparency Initiative (PNGEITI) today (31st March, 2023) announces the publication of two flagship reports covering the fiscal years 2020 and 2021 for the extractive sector.

The reports, sanctioned by the PNGEITI Multi Stakeholder Group (MSG) comprising representatives from relevant government institutions, extractive industry companies and civil society organizations is a culmination of team work from this tripartite oversight body that has been working diligently since 2013.

The purpose of the EITI report is to continue to present to our populace a comprehensive description on the operation of the PNG extractive sector, its contributions to the domestic economy and most importantly, the transparency and accountability of revenues and other benefits received by the Government and the affected landowners and communities.

The EITI Reports build on the progress made in the preceding reports that have already been published, implementing recommendations made from the early reports in terms of addressing data and information gaps and increasing the comprehensiveness, reliability and quality of the reports.

The Reports are published in accordance with the requirements of the international best practice standard known as the EITI Global Standard. PNG is among 53 resource rich countries reporting against the EITI Standard.

A summary of the which is the 2021 Report (latest report) and the reports are presented below.

 

 

 

PNGEITI POSITION ON PORGERA MINE LEGACY TAX ISSUES.

The PNGEITI Head of Secretariat Mr. Lucas Alkan says all parties to the Pogera Mine must adhere to rules governing the extractive industry, particularly when dealing with fiscal matters that must be administered and observed according to law. His comments follow a news article on The National citing the Internal Revenue Commission (IRC) that unmet tax obligations of the Pogera mine stood in the way to expedite the mine re-opening process.  Mr. Alkan says a workable and timely strategy that does not impinge on basic laws is a way forward.   Below is the full comment on this issue. 

“The Papua New Guinea Extractive Industries Transparency Initiative (PNGEITI) commends The National newspaper for attempting to bring to light what appears to be the final outstanding issue (among others) in the Porgera Mine recommencement negotiations (more on this in footnote). We’ve noted from the reporting that taxation matters are legacy issues that appear to be standing in the way for the multi-million-kina Porgera Gold Mine to re-open.

We have observed that the Government was on track to conclude negotiations and re-open the Mine by June last year, however this did not eventuate as anticipated. Attempts to reopening the Mine in the second half of last year was not feasible due to the national general elections and the formation of government. It appeared that all negotiations were concluded and a new Porgera Mining Agreement Framework was in place for the Mine to be re-opened in the first quarter of this year.

Surprisingly, we learn that an old Porgera Tax liability dispute is standing in the way for the Mine to be re-opened. The early recommencement of the Mine, preferably within the first quarter of this year is critical for the country as the lead time required for mobilizing resources and the significant start-up capital needed to get the mine back into its full operating capacity would be a significant challenge. On this, we are aware there are also discussions going on with the developer and the government as to who is going to meet the startup cost but we understand Barrick Niugini Limited might meet the full cost of starting up the Mine and government would refund later but unsure as to whether this understanding has been reached or not yet.

With regards to the current standoff, the EITI based on its global best practice principles is of the view that the existing law governing taxation matters must dictate or take precedence over any political intervention. We do not know the specifics of the on-going tax matter but understand that it is related to a tax dispute concerning the ‘old Porgera Mine’. If it is a significant amount of tax owed by Barrick to the Government based IRC’s audit in 2013 then it is a legal tax obligation that Barrick and its joint venture partners need to settle as required by law.

We fail to understand as to why the old Porgera tax obligation/liability clause was inserted into the new Porgera Mining Framework Agreement making it a condition to resolve this legacy tax issue before reopening the Mine. If whatever was reported and commented by PM Marape recently is true then Barrick Niugini Limited and the State need to speed up the negotiation process and resolve this dispute immediately. Both parties should exercise good faith – Barrick Niugini Limited should not pull strings on this old Porgera tax liability matter and delay the re-opening of the Mine. It is understood the State (IRC) may not easily forego if there is a substantial amount of tax liability to be paid by the operator.

Whatever the parties decide to do, they should resolve the tax liability issue through the due process of law but allow the Mine to re-open immediately under the New Porgera Framework Agreement. Political intervention is not recommended to resolve this dispute as this can undermine investor confidence, set bad precedence for the Government and create an uneven playing field for project developers. Barrack Niugini Limited should not put undue pressure on the State to resolve this matter politically in order to re-open the mine as it is not a best business practice.

All stakeholders and the citizens have the right to know the specific issues or the nature of this tax liability issue between Barrick Niugini Limited (BNL) and the Internal Revenue Commission (IRC) as the continued delay in re-opening the Mine continues to have negative consequences on the economy.  The prolonged delay has not only resulted in significant revenue loss to the Government (including the provincial and local level governments in the impacted resource area) but also loss of employment, business opportunities and spin-off benefits to the landowners and the wider communities.

The shutting down of the Mine 3 years ago has had significant negative consequences on the economy including the current foreign exchange shortage that has constrained business operations in the other sectors of the economy. Porgera Mine had been a good source of foreign exchange inflows and its continued shutdown will definitely not going to contribute to the 4% economic growth (that was largely to be driven by the extractive sector) projected for by the World Bank for last year and the real GDP growth of 4% projected for this year in the 2023 National Budget.

PNGEITI commends the transparent negotiation process to date that took substantial amount of time and effort to ensure the interests of all parties were reflected in those agreements. We encourage all parties to continue to respect and observe the laws of the land in this dispute resolution process to address the tax liability issue. We believe that a win-win situation for both parties (Government and Barrick) is to re-open the mine first and work together to resolve the outstanding tax liability dispute later going forward.

ENDS.

Note: This article was initially written for The National newspaper as response note to media query.

TIMELY ACTION BY GOVERNMENT IS CRITICAL TO REALISE GROWTH PROJECTED BACKED BY THE EXTRACTIVE SECTOR

The PNG economy stands to make a quick recovery and growth can pick up this year if the Government acts early to facilitate recovery in a fragile environment as the country slowly recovers from the Covid 19 challenges, according to the PNG EITI.

Head of the PNG Extractive Industry Industries Transparency Initiative Mr Lucas Alkan was commenting on a recent Word Bank Report, which projected  the PNG economy to grow by around 4 per cent this year- largely driven by growth in the extractive sector. The projection was  made in its  Economic Update for PNG released in March this year. The Bank’s projection stems from its estimate of the economy returning to positive growth of 1 per cent in 2021 after contracting by 3.5 per cent in 2020.

“The economy is currently in fragile state, particularly when it is emerging from the aftermath of the Covid 19 pandemic induced disruptions that had devastating impact across all sectors of the economy. The pandemic has created room for complacency and brought about new approaches to living and conducting business as we have been introduced to the ‘new normal’ way of living and doing business in recent times” Mr. Alkan commented.

He indicated that the Bank’s growth forecast is dependent on a number of risks factors that are at play relating to the extractive sector. He said some of these are external risks such as the rising fuel prices brought about by the Russian and Ukraine war which “we have little or no control over”

.”However, there are other risks that can be managed in the remaining months of this year” he observed

“Firstly, the Porgera Mine needed to be re-opened immediately to contribute to the growth projected. The prolonged delay in re-opening the Mine has resulted in significant revenue loss to the State and loss of employment and benefits to local communities. The shutdown of the Mine is having direct impact on the current foreign exchange shortage in constraining business operations domestically. Porgera Mine had been a good source of foreign exchange inflows and its continued shutdown is not assisting PNG to achieve the 4% growth projected by the World Bank,” Mr. Alkan said

Mr Alkan said the growth was projected almost 4 months ago, assuming that the Government would conclude negotiations and re-open the Mine before June, however this has not eventuated. Reopening the Mine anytime soon seems not feasible in light of the current national general elections that will take us up to August for a new government to be in place.

“If all in order the Mine can be re-opened but then the lead time required for mobilizing resources and the significant start-up capital needed to get the mine back to its full operating capacity is a big challenge. Realistically, we may be looking at around October or November for the start-up but then it will be almost end of the year so for Porgera to contribute to the projected 4% economic growth seems unlikely”, Mr Alkan said.

“Secondly, the inherent political risk associated with the current national general election and the formation of a new government is likely to delay any efforts to start up new resource projects currently in the pipeline. The commencement of at least one or two of these projects at the earliest possible time will have positive impact on the economy, and in as far as contributing to the 4% growth projected. Unfortunately, election activities have generally stalled things until a new government arrives but this may not be too soon until around August or September for the new regime to pursue with outstanding negotiations to reach agreements to bring these projects on-line. These projects include; Wafi-Golpu, Frieda and the Papua LNG project that have the potential to contribute positively to the economy during their construction phases.

Thirdly, there is a real risk for the Covid-19 pandemic to surge again, disrupting economic activities in this very fragile environment, especially given the vaccination rate is very low. This is highly likely due to large gatherings taking place right across the country since political campaigns commenced following the issue of writs in May,” he said.

Mr Alkan indicated that some of the above risks and challenges could be minimized if the current or incoming government takes immediate actions within the remaining months. It is understood that the final agreement for Porgera reopening will be sanctioned soon by Mineral Resources Enga (MRE), the remaining party to sign the recommencement agreement.

‘We hope this agreement will be sealed at the earliest for the next phase which is the application of the Special Mining Lease (SML) to recommence the mine.

PNGEITI commends the transparent negotiation process that has taken substantial amount of time and effort to ensure the interests of all parties are reflected in those agreements. We believe the re-opening of Porgera Mine will live up to the expectations of institutions such as the World Bank that predicated PNG’s positive economic growth to be driven strongly by the extractive sector this year.

It would be very critical for the incoming government to also engage with the developers to bring the new projects already in the pipeline on-line at the earliest which will contribute positively to the economy.

We re-echo the World Bank’s sentiment that the PNG economy is navigating a fragile recovery period and if the Government does not act decisively and fast to re-open the Porgera Mine and bring on-line new projects in the pipeline in the next few months then it will be highly likely that the Bank’s projected growth for the extractive sector will not be achieved,” Mr. Alkan said.

ENDS..

LIVE MINING DATA EXCELLENT TOOL FOR TRANSPARENCY

LIVE MINING DATA EXCELLENT TOOL FOR TRANSPARENCY

 

The PNG Extractive Industries Transparency Initiative (PNGEITI) has applauded a collaboration between state’s mine regulator, Mineral Resources Authority (MRA) and mine  operators to create a digital platform to provide real time mineral data from all major mines in the country.

Live data  will  include numbers showing production value, export value, and related information basically livestreamed from a data source of respective mine operators.

Ok Tedi Mine will be fist to streamline live data to the MRA website for public access after engineers have finalized  work. Other will follow soon after.

“The cooperation between the mine regulator and the extractive companies to make live data available for public viewing is an excellent undertaking to garner  investor-public trust and confidence in the way the mining industry is regulated and progressing. PNGEITI highly commends these efforts,” PNGEITI Head of National Secretariat Mr. Lucas Alkan commended.

“We commend the MRA leadership under managing director Jerry Garry as this undertaking will complement and enhance EITI reporting in the country. This is boost for transparency, boost for investor and public confidence,” he said.

 

“We look forward to this important work being undertaken on this space and wish MRA and the companies every success” Mr. Alkan said.

 

ENDS..

 

Back to Top