Martyn Namorong, the Natural Resource Governance and Communications Specialist of PNG Resource Governance Coalition said one of the hot topics of discussions in any resource project is benefit sharing with local stakeholders, colloquially referred to as “katim pik”.
“For a faction of Wafi-Golpu landowners, having access to the open book financial model is critical to them in informing their decision making regarding the project,” he said.
Mr Namorong said what the open book model does is it mathematically models the “size and weight of the pig” so to speak and then predicts the financial implications of “cutting the pig” in a certain way.
“It predicts how much profit or loss the project will make depending on an upper and lower limit of the world market price of copper,” he said.
He said during the Wafi-Golpu memorandum of agreement discussions, Treasury officials told local Morobean parties that they had access to the open book model.
Mr Namorong said landowners and Morobe provincial government officials have been pursuing that model from Treasury.
He said under PNG Mining and Petroleum laws, the development contract for a resource project is negotiated by the government and the company wanting to exploit the resource.
“The provincial government, local level government and landowners come into the picture after the contract is signed. Their participation is only at the development forum stage where benefit sharing agreements are signed between the government and sub-national parties,” he said.
He said this procedure exposes a fundamental flaw – landowners and provincial governments are not party to discussions on how the pig is cut.
“So what happens in PNG is that by law the government and a foreign corporation cut the pig and then the government redistributes its share with the stakeholders. If the government officials negotiate poorly as they have notoriously done previously, provincial governments and local governments including landowners are given the ‘pig skin’ instead of ‘meat’,” he said.
He said Morobeans, under the international principle of Free Prior Informed Consent that is aimed at protecting the rights of ingenious communities, have a right to information that will help them make informed decisions about the Wafi-Golpu project.
“Access to critical financial modeling information is important even if PNG law doesn’t cater for their interests at this stage of project negotiations,” he said.
He said national authorities have historically failed in their fiduciary duty to protect the interests of local authorities and landowners therefore the Morobeans therefore have every right to be sceptical about whether Waigani will protect their interests during negotiations of the Wafi-Golpu development contract.
“Contract transparency following the principles of the Extractive Industries Transparency that the government of PNG has signed up to are therefore crucial in building understanding and trust between all stakeholders and not undermining the interests of the people of Morobe during negotiations of the development contract,” he said.
Morobeans have had their first mining experience from Bulolo and Wau gold fields and today they live with the Hidden Valley mine for better or for worse.
Mr Namorong said he witnessed in the recent Sydney Mining and Petroleum Investment conference, highly educated Morobeans urging their governor not to sign the MoA with Wafi-Golpu project partners when rumours were spreading at the conference venue that the Mining Minister and Prime Minister Peter O’Neill were keen on getting the governor to sign.