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Wafi-Golpu Should be delivering Income to Morobe Now - PNG's biggest Mining Project Stuck by Dirty Deals

The Governor of Morobe Province has demonstrated his inability to understand basic project economics and financing by falsely claiming that 10 per cent equity in the Wafi- Golpu mine will yield 6.5 billion Kina.

The Leader of the People’s National Congress Party, Hon. Peter O’Neill, CMG, MP, said the Governor is ill-advised and should properly calculate the cost of the equity.

“The facts are that Governor Saonu has no comprehension of how mega resource project financing works, and is making baseless and misleading statements about equity,” Mr. O’Neill said.

“Governor Saonu should be educating himself on the MOU that is already in place, that was signed following due diligence by State legal officers, and provides for real returns to landowners, districts and provinces.

“The MOU that was signed by the O’Neill-Abel Government, and agreed by then Finance Minister Marape, will deliver 53 per cent of income to the people, and 47 per cent to project developers over the life of the mine project with positive cash flow from year one.

“The Governor appears to be making a false assumption that the State and Developers will simply give him and his cronies a 10 per cent stake in one of the world’s largest mining projects for free.

“This is wrong and just false promises to landowners by Saonu and Marape that has only served to unnecessarily delay the Wafi-Golpu project for over 12 months.

“His latest claims are even more damaging for all Papua New Guineans, including the districts, who right now should be benefiting from the project.

“The Governor should remember that such baseless statements signal to domestic and international resources investors, and the financial sector, that PNG is not open for business.”

Mr. O’Neill said there is a bad smell of dirty politics in the deal the Governor has made with Marape.

“Instead of over 300 million Kina being spent on early works in 2019, and a similar amount in 2020, this investment has come to a standstill with almost nothing being invested and so denying employment and small businesses opportunities.

“The failure of this project to advance has already cost over a hundred Papua New Guineans their jobs who had to be laid off when work on the project stopped.

“Are these delays being caused because the Governor is confused about the economic and financial benefits from this incredible but undeveloped project, or is it because of other interests?

“The involvement of paper companies that have no experience in resources projects, but could potentially skim millions off the top of the investment is alarming.

“The Governor has failed to explain why he established the Morobe Resource Holdings Limited company in October 2018 with lawyer Ralph Saulep. The CEO and only Director is his close acquaintance, Elizabeth Bradshaw, and the only shareholder remains Governor Saonu.

“He has stated that it is his dream that 10 per cent equity will be parked in its account, and will also control the massive Wafi-Golpu Engineering, Procurement and Construction contract and all sub-contracts.

“Morobe Resource Holdings Limited would then be solely managing billions of Kina in public funds, which makes a mockery of the Governor’s false cries for the project to benefit all of Morobe Province.

“The apparent conflicts of interest in this arrangement must be properly explained and investigated.”

Mr. O’Neill said that the MOU that has been signed would see an incredible 50 per cent more in royalties to the local people of Morobe.

“Instead of the existing legislation providing only 2 per cent in royalties, the O’Neill-Abel Government negotiated 50 per cent more, and held the developers to a hard line of a 3 per cent royalty.

“To put this into real Kina terms, this is an extra 1.2 billion Kina in cash flow going to landowners over the life of the mine.

“This is a deal that does not load the people of Morobe or the Nation down with debt, and is cashflow positive from year one.

“Added to this are thousands of jobs, small business benefits contracts, medical and healthcare support, education spending and agribusiness projects that the developers committed to undertake in the Province.

“But instead of these benefits being realised, Saonu and Marape have killed the project for their own interests and so are denying the people of Morobe their rightful income and opportunities.

“This is the only resources agreement in the PNG’s history to deliver immediate returns to National stakeholders, and is a template for future mega resources projects.

“We remain very proud of the Wafi-Golpu MOU that was signed in good faith, and encourage the Governor and the Marape-Stephen Government to return genuinely to the negotiating table.

“They must get the project moving instead of running to the IMF and Australia with their hands out for yet more loans to try and prop-up the economy.”

Statement 

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