Thursday, August 8, 2013

PNGSDP: Law wants funds shared

Source: The National, Wednesday August 7th, 2013
 
RECENT public comments in the media about PNG Sustainable Development Program Ltd have prompted me to write to explain our role in terms of national and Western Province sustainable development and how we are required by law to allocate the funding we receive as dividends from the Ok Tedi mine.
PNGSDP was set up by an Act of Parliament, the Ok Tedi Mine Continuation Ninth Supplemental Agreement Act 2001.
The Act resulted from an agreement between the owners of the mine, primarily the Government of Papua New Guinea and BHP Billiton.
It stipulates that the benefits of the mine should flow to ALL Papua New Guineans, and in particular, the Western Province.
The Act states that its purpose was partly to ensure that Ok Tedi might “continue its significant contributions to the advancement of the social and economic welfare of the people of Papua New Guinea in general and the people of Western Province in particular”.
It also states that it specifically takes into account the “national goals and directive principles (including, in particular, the goals that Papua New Guinea should, among other things, be economically independent and its economy basically self-reliant and that Papua New Guinea's natural resources and environment should, among other things, be conserved for the collective benefit of all Papua New Guineans)”.
In other words, PNGSDP is required by law to distribute the income it receives from the mine across the nation, but with special reference to Western Province.
It achieves this balance in a number of ways:

  • We place two-thirds of our net share of the Ok Tedi dividends into the Long Term Fund. This fund, which now stands at $US1.4 billion (K3.04 billion), is reserved for sustainable development of Western Province for 40 years after the mine’s closure.
  • We place one-third of the net dividend share into the Development Fund. Two-thirds of the Development Fund goes to national projects (some of which are in Western province) and one-third is reserved for Western province projects.
The sharing of funds complies with the Constitution, which clearly states (Item 4 of the national goals and directive principles) that natural resources and the environment must be “conserved and used for the collective benefit of us all”.
As trustees, the board and chief executive are obliged to fulfil the legislative mandate of PNGSDP, in an environment of unaccountable trusts.
Collective ownership and sharing of resources is one of the foundations of nationhood.
It underpins the development of Western province before Ok Tedi began paying dividends to the State in 1991.
Before 1991, Western province had very little income. Almost all development was paid for by taxes and other national income raised from outside the province.
The main contributor was the Bougainville copper mine before it was closed in 1989.
PNGSDP is unique in the world. It uses all of the dividends from Ok Tedi for sustainable social and economic development in Western province and elsewhere, according to the law.
It has protected and preserved money in its Long Term Fund which can be used for continued development in Western Province once the mine is closed.
No other mine owner in the world can claim to have returned the profits from mining to the people in such a sustainable way and on such a scale.
This is in addition to the billions of kina paid in compensation for environmental damage and the continuing efforts to mitigate environmental damage, including the development this year of a shortlist of potential sites for a tailings dam.

David Sode
CEO, PNGSDP

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