PNG's Central Province demands equal share of Papua LNG earnings

Papua New Guinea's Central Province is pushing back hard against a proposed revenue-sharing formula for the Papua LNG project, insisting it deserves a far bigger cut than what has been put on the table. Governor Rufina Peter has told project stakeholders the province will not settle for anything less than near-equal treatment as a co-host of the venture.

Central Governor Rufina Peter

The disagreement centres on how a K6.6 billion benefits package—covering royalties, equity, development levies, business and infrastructure grants, and major infrastructure works—will be divided between landowners, provincial administrations, district authorities and local-level governments across Gulf and Central over the life of the project.

According to Peter, the tier-1 proposal currently on offer would hand Gulf a 70 per cent share of legislated benefits against Central's 30 per cent, and an even steeper 80:20 split favouring Gulf on negotiated benefits. She has flatly dismissed both figures.

"Central unequivocally rejects the director's tier-1 proposal for the 70:30 per cent split for legislated benefits, and the 80:20 per cent split for the negotiated benefits as it lacks basis," Peter said. "Central instead proposes a 55:45 per cent split across all benefits which is supported by updated data."

Beyond the headline split, Central's demands include a 50:50 division of the K1.228 billion reserved benefit, equal shares of the commercial equity arrangement to be known as Lakatoi Equity, first right of refusal for Gulf and Central in domestic market obligation opportunities, and a fifth of the State's 2 per cent production levy to help the province cope with the strain of hosting the project. The province also wants a dedicated Papua LNG-Central GST code set up with the Internal Revenue Commission, along with firm transparency and governance safeguards—including a role for the Extractive Industries Transparency Initiative—written into the development agreement.

Peter said the position is shaped heavily by what happened with the earlier PNG LNG project, where she said Central was locked out of negotiations entirely and lumped in with other pipeline provinces.

"We were treated as a project-impacted province, and allocated 28 per cent of project benefits, together with the other pipeline provinces, inclusive of Gulf and Western," she said. "Central received only 15 per cent of total of the PNG LNG Project benefits even though the gas conditioning, liquefaction, storage, and export facilities at Caution Bay—which converted raw gas into an exportable commodity—accounted for over 55 per cent of capital expenditure.

"Central will not accept such treatment in this instance."