The governance of natural resources: Issues affecting better management of revenues and distribution of benefits within Papua New Guinea

Hitelai Polume-Kiele

Abstract


Papua New Guinea is rich in natural resources, including minerals, oil, gas, timber and fish, and cash crops such as coffee, palm oil, cocoa, copra, rubber, tea and spices which contribute significantly to Papua New Guinea’s overall development. Several mining, oil and gas companies are currently operating in Porgera, Ok Tedi, Lihir, Hidden Valley, Sinivit, Simberi, Tolukuma, Kutubu and Gobe. The operations of these companies have generated an estimated K13.42 billion to Papua New Guinea’s economy. Landowners affected by these developments also receive royalties from those operations. However this wealth has not been translated into tangible human development across the country, as shown in persistently poorly performing social indicators. Instead income from the exploitation of natural resources is being used in unplanned projects and not focused on the delivery of core social functions, such as the provision of a stable and non-distorting policy aimed at building and sustaining the development of a modern market, and legislative and regulatory frameworks, social services, social security and social infrastructure which would lead to the improvement in the delivery of essential services to all Papua New Guineans. There is widespread evidence of benefits not being distributed to all landowners. Landowners are yet to fulfil their aspirations regarding these developments and to see improvements in their living standards. This paper discusses two case studies: the Porgera and Lihir mines, outlining the landowners associations’ experiences, which illustrate issues of governance and management of the distribution of benefit flows from the exploitation of Papua New Guinea’s natural resource wealth.

The focus of the article’s discussion is on governance and management issues that affect the distribution of benefits, delivery of essential services to rural areas of PNG, stability within government, and the expectations of landowners.


Keywords


mining law; Papua New Guinea mining; mining royalties

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DOI: http://dx.doi.org/10.5130/ijrlp.i1.2014.3850

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