Southern Highlands does not want to be another Bougainville

By Sam Vulum

THE Governor of the oil and gas rich province of Southern Highlands in Papua New Guinea, Anderson Agiru does not have to be reminded about the lessons from the ongoing Bougainville crisis.

Agiru, whose province will be the source of the massive US$3.5 billion Papua New Guinea to Australia gas pipeline project, is well aware of the Bougainville situation and as a responsible leader, he does not want to see the same mis takes repeated in this project.

He knows that Papua New Guinea, in particular his people of Southern Highlands, are set to reap the benefits of this huge development. But he also knows that these benefits will not be realised without a proper mechanism in place to enable this to happen.

It was disgruntled landowners, led by Francis Ona, who took up arms against the developer of the Panguna copper mine, Bougainville Copper Limited and the PNG Government in 1989 in protest over equitable distribution of wealth from the mine. This resulted in the current prolonged

crisis. BCL has announced in March that it might consider abandoning the mine for more profitable areas. Chair Barry Cusack told shareholders that since Bougainville ceased 10 years ago, the company had concentrated its efforts on preparing for a return to the war-torn island. But because of the depressed copper and gold prices, further devaluation of the assets on Bougainville and the slow pace of the peace process, it was likely to be some years before mining by BCL could start.

Agiru, who strongly opposed Oil Search’s planned 25 per cent stake in the Hides gas fields to Santos Limited in favor of landowners, has made it his business to ensure that there is some or if not full landowner participation and control in the project through the National Gas Corporation.

NGC is a proposed local company, to be formed under the Oil and Gas Act, to represent the interest of the affected provincial governments and landowners in the project.

“There are a number of lessons that we can learn from the past. Problems we have and continue to have, in

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Bougainville can be directly attributed to the issue of landowner participation and involvement in key resource

development projects,” Agiru said dur

ing an NGC road show on March 26 that he organised to prepare the groundwork for the establishment of the corporation.

It was a first of such meetings aimed at promoting the NGC as a vehi cle for encouraging common owner ship of gas projects in PNG.

Agiru was critical against sugges tions by his colleague governors that the equity participation in the NGC should be limited to the 20 provincial governments only.

He told the meeting that the Organic Law on Provincial and Local- Level Governments explicitly explains under Section 15 (2) that landowners shall be consulted on all natural resource developments in their provinces.

“Any decision not to consult the landowners will be a direct contraven tion of this section,” he said.

“The project is the biggest ever pro posed to be undertaken in PNG and it is indeed bigger than other mining related resource development projects.

“Given its importance to PNG, the role and participation of landowners cannot be overlooked.”

He said critics have to realise that 100 per cent of the gas to be sold in the pipeline project come from land owned by landowners in the Southern Highlands province.

One of the specific rights of the NGC is to buy and own 10 per cent of the pipeline project.

Agiru said the project will require

investments of at least US$3.6 billion and total funds required for the PNG sector alone is estimated at US$l.B billion.

He said through specific require ments, NGC is entitled to 12 per cent of this amount or US$2l4 million.

Agiru warned that stakeholders in

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NGC need to be aware that under a standard project financing, stakehold ers are required to contribute an amount about 30 percent or K 135 mil lion of the total funding requirement to demonstrate their commitment and their share of the risk in the project with the financiers. He said to raise the 30 percent funding, stakeholders will not only need to contribute cash but also supplement this by securing loans from PNG debt providers to finance their 30 percent equity contri bution.

The governor said it’s a big call for the provincial governments and landowners, however, the time has come for Papua New Guineans to take up the challenge in achieving eco nomic independence and local man

power development.

“We need to re-direct the develop ment goals that are reflected in the eighth point plan established at inde pendence.

“To do this, we have to start con trolling direct ownership of the vast natural resources if we are to be a truly economically independent PNG,” he said.

It is truly the biggest development in PNG and indeed the second largest ever in Australia.

Estimated gas reserves total six million cu ft, and the first gas is expected to flow in the second half of 2001 or first half of 2002.

It is unique in that it is perhaps the first resource project where the envi ronmental approval process starts in one country and ends in another.

From the forested Highlands of PNG to the sensitive marine culture of the Torres Strait and the arid extremes of northern Queensland, the pipeline encounters a variety of ter rain rarely seen elsewhere.

The project will require about 700,000 tonnes of steel pipe, nearly 500 kilometre of which will be laid in the Torres Strait. ■