PNG LANDOWNERS REJECT TWO PERCENT GAS ROYALTY OFFER

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Southern Highland governor also dismisses proposal

PORT MORESBY, Papua New Guinea (The National, April 30, 2009) – Landowners and their provincial governments connected to the PNG liquefied natural gas (LNG) project will get K16 billion [US$5.8 billion] in benefits over 30 years, the project lifetime.

This will come from the 2 percent royalty, 2 percent in development levy and 2 percent equity in the project.

This is the State’s position which was made known to the landowners in a presentation in Kokopo, East New Britain province, yesterday.

Southern Highlands Governor Anderson Agiru and landowners immediately rejected the proposal.

After Petroleum Department secretary Randal Rimua and Treasury Department official Dairi Vele laid out the State’s position in relation to the benefits, Mr. Agiru rejected the offer and made known that the provincial government and landowners would push for increased equity in the project.

The State projected that K16 billion will flow to the provincial governments, local level governments and landowners over 30 years.

They estimated that K5.39 billion [US$2 billion] will flow from 2 percent royalty, K5.39 billion from 2 percent development levy and K5.21 billion from a 2 percent equity.

On top of that, about K500 million will be made available in tax credits for the affected area.

Under law, benefits flowing to the provincial government and landowners should not exceed 20 percent of total net benefits of the project going to the State.

Also, during the construction phase of the project, landowners will earn up to K1.35 billion in businesses and other spin-off activities, while 5,250 people will be employed.

But Agiru said last night they had rejected outright the 2 percent equity offer.

He had also rejected the proposal that existing project landowners from Gobe, Kutubu and Moran would pay for their equity (1.2 percent) in the project.

"In the 1960s and 70s, Southern Highlanders went to places afar like East New Britain to work as labourers in plantations.

"We are talking about another plantation (gas fields)," Agiru said.

"We are here to chart our destiny.

"We are going to cut a deal that is fair to all," Agiru said.

It is understood the provincial government and landowners will push for 10 percent equity in the project, and will make this position known to the State during negotiations in the coming days.

The BSA meeting was to start early yesterday, but was delayed because Agiru was still in Port Moresby.

The landowners did not want the meeting to proceed without him.

The meeting got underway at 5pm after Agiru arrived on a commercial flight.

Speaking during the opening of the meeting, Treasurer Patrick Pruaitch said the project was "one-in-a-million opportunity that we cannot afford to miss".

"We need to leave a lasting impact on the lives of our people," Mr. Pruaitch said, adding: "We must learn from past mistakes."

The Department of Petroleum, convener of the meeting, must deliver an umbrella benefit sharing agreement (BSA) by May 8.

A court action has delayed the meeting by eight days.

Parties to the court proceedings, which ended on Tuesday, agreed not to call the Kokopo meet a development forum, as required under the Oil and Gas Act.

But some landowner leaders, spoken to yesterday, said after the first day of presentations in Kokopo, it was already taking the shape of a development forum, and it was likely the consensus order agreed before Justice Ambeng Kandakasi would be breached.

The National: www.thenational.com.pg/

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