PNGEITI’s (PNG Extractive Industries Transparency Initiative) participation in the recent Project agreement reviews has paved an opportunity to advance the current scope of EITI mainstreaming from policy to practice. The PNGEITI National Secretariat participated in the week-long review of Woodlark Mining Project MoA (Memorandum of Agreement) held in Alotau, Milne Bay, from October 12 to the 17, 2020. Head of National Secretariat Mr. Lucas Alkan said the purpose of PNGEITI’s participation in the review of the Woodlark MoA was to ensure that the EITI provisions were included in the project agreement for contract transparency or disclosure of contracts that has now become mandatory for all EITI implementing countries including PNG. “As part of its efforts to mainstream the EITI Standard and requirements on National and Subnational payments, including Beneficial Ownership, and Contract Transparency reporting, the Secretariat has been undertaking joint workshops, presentations and information sessions together with its Multi-Stakeholder Group (MSG) that comprises representatives from the Government, Extractive Industry and the Civil Society groups. “On the last day of the forum, the State team included EITI reporting clause into the agreement. This is actually the second project MoA after K92 project to have an EITI Reporting clause included,” Mr. Alkan said. “The PNGEITI envisage to cover all mining projects in the country to capture national and subnational reporting requirements,” Mr. Alkan added. The forum discussed various undertakings by the MoA parties, of which some of the issues raised were relevant to EITI such as the need to; Create EITI awareness at the project impacted areas, especially the communities; Report royalty distribution in monetary value; Disclose in monetary value the Developer and State’s share of the total aggregate profit/return on the mine project; Disclose production volumes and values for gold extracted; Inform landowners well on the ownership of the infrastructure/services during operation of the mine before its closure; Disclose data on special support grant – this is in relation to custodians of mining trust accounts in terms of disclosure of trust account information relating to payments and recipients/expenditures; and. Create greater awareness on information relating to economic and social impact assessment report by the people of the impacted area. Photo caption: In front: Deputy Head of PNGEITI National Secretariat Christopher Tabel stressed on the importance of ensuring contract transparency and systematic reporting is built into transparency mechanisms in contracts and MoAs.   

By the year 2021, Papua New Guinea as an EITI implementing country will be required to publicly disclose all mining, oil and gas project development agreements. This is according to the Head of PNGEITI National Secretariat Mr. Lucas Alkan. Mr. Alkan said that all project memorandum of agreements (MoAs) and contracts that will be entered into by the Government and Project developers as of next year 2021, will be required to be disclosed as public information. “The current practice in Papua New Guinea is that once the agreements are signed, they are filed by the State Solicitor’s office and not disclosed as public information. “A number of project agreements including that of the multi-billion Kina PNGLNG Project are protected by secrecy provisions and have not been disclosed for EITI reporting purposes,” Mr. Alkan said. “These agreements needed to be disclosed, not only because PNG is implementing the EITI Global best practice standard but it is also in the best interest of the resource owners and the people of this country to know what is contained in these agreements. Mr. Alkan added that mining and petroleum contracts, development licences and associated agreements are important fragments of the legal framework that governs the exploration and exploitation of our natural wealth. “Disclosure of project agreements, MoAs and contracts, allows the public to monitor the conduct of the parties involved in the extraction and sale of mineral and petroleum commodities to determine who is accountable for non-compliance, whether it be benefits sharing, environmental impacts, social obligations and so forth. “The government has been talking about getting its fair share from resource projects, however if the deals have been done badly in the first place by giving away too many fiscal concessions like a 10-year tax holiday or other tax exemptions then we have locked ourselves into a position where we cannot do much,” he said. “If there are any legislative impediments to the disclosure of contracts and agreements, the laws must be reviewed as part of current legislative reforms in the extractive sector to amend these legislations that have prevented public disclosure of these important documents,” Mr. Alkan said.

Published: July 16, 2020 Head of PNGEITI National Secretariat Lucas Alkan has commended the efforts of the PNGEITI Multi-Stakeholder Group (MSG) for implementing the EITI Standard over the past 6 years however, called on MSG to utilise EITI’s full potential to improve governance in the sector. Speaking on the eve of PNGs second validation and during the COVID19 MSG Constituent briefings, Alkan reiterated that PNGs implementation of the Global EITI Standard has gained favourable results so far with the overwhelming support from the PNG MSG, however still a great potential to improve governance in the mining and petroleum sector. “Our decision to sign up to implement the EITI had opened the door for citizens to question the government and industry on how past and current mining, oil and gas deals are best tailored to contribute to implementing the Government’s development plans and agendas,” Alkan said. PNG joined 53 other mineral wealthy countries around the world in 2013 and like many implementing countries, is working on mainstreaming a lot of the international EITI principles and requirements. It is a journey of continuous improvement and most recently, in 2018, the PNG Government came up with a National Policy on Transparency and Accountability that set the framework for EITI implementation in this country. Alkan acknowledged public sentiments surrounding the debate on Resource Extraction and National Development. “Citizens have become sceptical that the extraction of these rich mineral wealth would translate into tangible service delivery, funding education and health programs, invested in rundown infrastructures and so forth for a better future for all,” Alkan said. Photo: The PNGEITI Multi-Stakeholder Group during the first quarter meeting last month (June). The Multi-Stakeholder Group comprises representatives from the government, the extractive companies and the civil society organisations.

As the government proceeds with preparation for negotiating the Wafi Golpu project, the Woodlark and Kainantu Gold Mines MOA reviews and other projects in the pipeline, it will be interesting to see how these negotiations take place and how agreements are entered into. Head of National Secretariat Lucas Alkan made the remarks following the government’s recent announcement in the media about the upcoming project MOA reviews. “In these project development process, transparency mechanisms must be considered and built into these project agreements and the MOA reviews,” Alkan said. Alkan said that the Government’s commitment to implementing EITI will not increase transparency overnight, however, it will assist the government to manage the extractive sector in a more inclusive and transparent manner. He added that highlighting transparency will also assist in minimising public speculations and distrust towards the government. “The EITI framework works to assist in bringing various sectors of the economy together and builds trust amongst them and creates a platform for these issues to be discussed so that solutions could be found together for better management of the sector. Now that PNG is an EITI implementing country, the Government should not lose traction on EITI implementation. It stands to gain from implementing EITI because of the potential governance gains associated with it. Alkan said that PNG still has a lot of work to do when it comes to citizen engagement. “According to the World Bank’s World Governance Index 2018 edition, PNG scored very low on the “voice and accountability” indicator which indicates weak performance,” he said. “As an EITI implementing country, mining and petroleum impacted communities and civil societies have a platform to access information and constructively engage with companies and the government on resource governance issues,” Alkan said. File photo: Members of the PNGEITI and Mineral Resources Authority (MRA) with (centre) Huon Gulf Open MP Hon. Ross Seymour, in 2018. After an outreach information session conducted for the stakeholders of the Wafi-Golpu project. The outreach was conducted by PNGEITI in preparation for MRA Mining Development Forum which was held later in the same year.

Work has begun on the corrective actions for PNG to be assessed for the second time on its efforts to implement the EITI Global best practice Standard to promote transparency and improve governance in the extractive sector. The second country validation will commence on the 30th of April 2020. The EITI Board granted PNG ‘Meaningful Progress’ overall in implementing the EITI Standard following the conclusion of the first country validation in 2018. This means that PNG met some of the key requirements of implementing the EITI Standard. However, there remained a number of critical areas the Government needed to address in order to fully comply with the Standard. One of the key recommendations is for PNG to publicly disclose licencing information related to award and or transfer of mining tenements and oil and gas licences. This information, including comprehensive information on the licences (mining, oil and gas) for all extractives companies operating in PNG should be made publicly accessible via registers or cadastre systems that are maintained by responsible government authorities. Related to the above recommendation is for PNG to ensure that complete production and export volumes and values for all mineral commodities (including oil, condensate and gas), produced and exported during the year under review for each mineral commodity be made publicly accessible and disaggregated by commodities. Another important recommendation was for PNG to improve transparency in the operations of its extractive State-Owned Entities (SOEs). This is to ensure that a comprehensive list of State participation in the extractive industries, including terms associated with State equity and any changes in the year under review be publicly accessible. Other critical recommendations included increasing the comprehensiveness of all streams of extractive revenues collected by government, improvement in direct sub-national payments and transfers, and improving data quality for EITI reporting, and providing greater details on the distribution of extractive revenues for transparency purpose. The EITI Board allowed PNG 18 months to undertake these corrective actions before the second validation. EITI implementing countries are assessed or validated, consistent with the EITI Standard. The first validation commences 3 years after a country signs up to implement the Standard. The PNG Government signed up to implement the Standard in 2013 and has been implementing it for the last 6 years to date. The validation process is a tool used by EITI International to assess the impact that the EITI process makes at the country level, particularly the policy and legislative reforms to strengthen the systems of government for better management of its extractive wealth. Through this validation process, there are 5 categories that countries can be ranked based on their progress ranging from; No Progress, Inadequate Progress, Meaningful Progress, Satisfactory Progress and Progress Beyond the EITI requirements. PNG having attained ‘Meaningful Progress’ in the first validation is actually a good outcome in its efforts to improve transparency and governance of the sector. This outcome is only one step short of becoming a fully compliant EITI country. Following the first validation, a Technical Working Group (TWG) was established by the Multi-stakeholder Group (MSG) to spearhead preparation for the second validation and the TWG held its first meeting last year. Head of National Secretariat Lucas Alkan said the team would continue to meet and report to the MSG in the coming month as we prepare for the forthcoming validation. “Our intention of setting up the committee is to engage the responsible entities, especially the concerned government departments and State entities to work on the corrective actions leading up to the April 2020 validation period,” said Alkan. During the first meeting, a resolution was made to meet the requirement of public disclosure for areas under license allocation and register. The government entities responsible for disclosure of licenses allocation and registers are working to get that information available on the website and accessible to the public. Currently, these data are separately managed by respective entities in stand-alone databases. Representatives of the responsible entities said to continue working on this requirement in the coming months. Meanwhile, JICA Consultants engaged under the PNGEITI support project have been working with relevant government entities to establish a network where all relevant data-sets will be stored and accessed under one central point. Once a website is up and running, especially at the Department of Petroleum, the stand-alone registers will be uploaded onto the central database, which can then be publicly accessible. “The TWG also resolved to address data quality by working closely with relevant government entities to verify extractive revenue flows and for a possibility of auditing these figures for EITI reporting purposes. “This is to ensure the data they provide are reliable to be included in the annual PNGEITI Reports “For EITI reporting purposes, PNGEITI and the TWG will explore possibilities of engaging reporting government entities and the Auditor General’s Office (AGO) to ensure timely audits. “The TWG through the PNGEITI National Secretariat will consider engaging an independent consultant to carry out a feasibility study, aimed at assisting the AGO to provide timely audit reports for government departments and state-owned entities that report to the EITI process,” Alkan added.