More than 100 Papua New Guinea soldiers from Taurama Barracks First Royal Pacific Islands Regiment arrived in the Southern Highlands capital of Mendi at the weekend for the state of emergency operation which takes force from today.

Political leaders from the Southern Highlands – including Prime Minister Peter O’Neill, who is from the province – apologised to the nation for the “distress” caused by rioting and destruction of state property last week, reports the PNG Post-Courier.

Video clips circulating in PNG social media at the weekend show armed Southern Highlanders, some with assault rifles, challenging the government and threatening the massive PNG liquefied gas pipeline project in the province.

Some protest placards say “No SHPG then * no PNGLN *no Govt servc”, referring to the suspension of the Southern Highlands provincial government and the appointment by Port Moresby of an acting provincial administrator.

A 24-hour deadline was given by the protesters but it was unclear what their demands were or when the deadline would expire.

Prime Minister Peter O’Neill and leaders of the Southern Highlands province, including election petitioners for the governor’s seat, apologised over the distress, upheaval and destruction of state property in last week’s rioting.

Petitioner Joe Kobol met with Prime Minister O’Neill and Southern Highlands leaders with Enga Governor Peter Ipatas and other stakeholders of the province to apologise to the nation and iron out all issues surrounding the recent events.

‘Normalcy’ being restored
O’Neill told the Post-Courier in an interview that “normalcy” was now being restored, saying that all leaders had agreed that an independent provincial administrator would be appointed to maintain balance and independence of the operation of the province.

“All the leaders of Southern Highlands have met, including Joe Kobol and Pastor Bernard, who also contested the governor’s seat, and we have discussed issues that have caused the burning of state properties because of a court decision last week,” he said.

“Normalcy is being restored in the province and today we want to apologise to Papua New Guinea for the recent events that had taken place, mainly out of frustration,” he said.

“The leaders and I want to express and apologise for the distress caused. Our country has always enjoyed the peaceful resolution of the leaders.

“I also want to thank Enga Governor Sir Peter Ipatas, one of our senior statesmen, who is also here with us and I also want to thank Joe Kobol and Pastor Bernard, who are here to apologise and discuss the way forward,” O’Neill said.

The prime minister added that all the leaders had agreed for Thomas Eluh to be SOE Controller and that an emergency committee of Parliament would be convened immediately to assess the situation on the administration and the rule of law and order.

Mobile squad reinforcements
The Post-Courier’s Johnny Poiya reports that a number of Highlands-based police mobile squad groups and soldiers are also in Mendi town strengthening the number of security forces for the operation.

SOE controller Thomas Eluh is expected to arrive from Port Moresby today to the town where he left couple of months ago when he was removed as acting provincial administrator.

Provincial police commander Chief Superintendent Joseph Tondop, joint task force commander Lieutenant-Colonel Emmanuel Todick and senior security officers for the emergency operations met yesterday and discussed their operational plans.

• More Mendi riot stories

Southern Highlands protesters angry about the “suspension” of their provincial government. Video: Cafe Pacific

Papua New Guinea’s prime minister has dismissed as “fake news” a report that claims a partially-Australian funded liquefied natural gas project is failing to deliver a promised economic boom to his people.

Prime Minister Peter O’Neill, in Brisbane for the Australian-PNG business forum, hit out at a damning report by social justice non-government organisation Jubilee Australia which questioned whether projected economic benefits were flowing from the ExxonMobil-led project.

“It’s quite disappointing to note that some of our experts who align themselves with political opponents are continuing to talk down our economy and continuing to release fake news,” O’Neill said in his address to the forum.

READ MORE: Failed predictions and the PNG resource curse

The project supplies eight million tonnes of gas a year to Japan, South Korea and China, with the flow starting in 2014.

Australia’s export credit agency Efic made its largest-ever loan of $500 million to ExxonMobil, OilSearch, Santos and the PNG government in 2009.

Questions are now being asked why the project was backed by the Australian government.

“The people of PNG would have been better off had the project not happened at all,” report co-author Paul Flanagan, a former Australian Treasury official, said.

Report defended
Flanagan also defended the report: “I feel at this stage very, very confident in the numbers we had in that report. The report indicated that welfare in PNG has decreased because of the PNG LNG project.”

But O’Neill characterised the report as “utter nonsense” in his keynote address.

“It’s quite disappointing to note that some experts, who align themselves with political groupings, continue to talk down the (PNG) economy and continue to release fake news,” O’Neill said.

“It’s quite unrealistic to suggest the LNG project is not contributing to the economy of the country.”

ExxonMobil has defended the project saying it had contributed $5.69 billion to local businesses and the government through employment tax and royalties.

“Good governance, accountability and revenue transparency are critical to ensuring that the value unlocked from gas resources in PNG results in economic growth, increased opportunities and a better standard of living for Papua New Guineans,” a spokeswoman said.

A failure to identify landowners who would get hundreds of millions of dollars in royalties has triggered violence in PNG’S Highlands, raising fears of a resources civil war like the 1990s Bougainville crisis.

Australian backing questioned
Australian Australia’s backing of the project before the landowners’ issue was resolved is now being questioned. The report’s co-author, Paul Flanagan, says stakeholders need to be careful.

“It would seem sensible to ensure that local laws are followed before those funds are released,” he said.

Australia’s overseas-finance agency Efic backed the project with a $500 million loan. Australia’s Assistant Trade Minister, Mark Coulston, says there will be an investigation, but he says he cannot comment further at this stage.

“Obviously, there will be an investigation into the mechanism of how that works,” he said.

Coulton focused on the “game changer” upcoming Asia Pacific Economic Cooperation leaders summit in Port Moresby.

“It is an opportunity to showcase the business potential of PNG to the world – a stable, reliable democracy and an attractive commercial environment,” Coulton said.

“It is incumbent on us, during tough times, to keep making the case about the growth and competitiveness that comes from opening markets to trade and investment.”

Free trade stand
He praised PNG’s decision to reconsider joining up to the Pacific Pacer Plus free trade agreement.

Australian companies have $18 billion invested in PNG and more than 4600 Australian businesses are exporting goods into PNG.

A Exxon natural gas project site in Papua New Guinea.

Santos says liquefied natural gas production in PNG will return to full capacity next month.

Stefan Armbruster is Pacific correspondent of SBS News. Additional reporting by AAP, Amanda Copp. This article is republished with permission.

“On almost every measure of economic welfare, the PNG economy would have been better off without the PNG LNG project.”

Pacific Media Centre Newsdesk

Papua New Guinea’s massive PNG LNG project is one of “broken promises” that has largely failed the country, according to a major study released yesterday by social justice non-government organisation Jubilee Australia.

Entitled Double or Nothing: The Broken Economic Promises of PNG LNG, this report, co-authored by Paul Flanagan and Dr Luke Fletcher, compares the projected economic benefits of the PNG LNG project with actual outcomes.

The new study uses PNG government data to examine the predictions of the 2008 project report commissioned by ExxonMobil and promoted by Oil Search.

This examination finds that the positive predictions for the PNG economy were largely incorrect.

Key findings:

• Despite predictions of a doubling in the size of the economy, the outcome was a gain of only 10 percent and all of this focused on the largely foreign-owned resource sector itself;
• Despite predictions of an 84 percent increase in household incomes, the outcome was a fall of 6 percent;
• ●Despite predictions of a 42 percent increase in employment, the outcome was a fall of 27 percent;
• ●Despite predictions of an 85 percent increase in government expenditure to support better education, health, law and order, and infrastructure, the outcome was a fall of 32 percent; and
• ●Despite predictions of a 58 percent increase in imports, the outcome was a fall of 73 percent.

30-year span
PNG LNG is an Exxon-led project which supplies about 8 million tonnes of LNG a year to Japan, South Korea and China.

It is projected to run for 30 years. In 2009, Australia’s Export Credit Agency, Efic lent A$500 million to Exxon, OilSearch, Santos and the government of PNG.

Efic’s decision was based on advice from the Department of Foreign Affairs and Trade (DFAT) provided to the then-Minister for Trade, Simon Crean, on advice from DFAT. This is the largest loan ever made by Efic.

Paul Flanagan writes in PNG Economics:

Specifically, growth in the resource sector has matched the confident predictions even with the fall in oil prices in 2014.

However, all other parts of the PNG economy have not done as well as predicted.

This is a major “broken promises” gap. This is the basis for the title of the latest report – the PNG LNG project promised to double GDP, but the outcome of 10 percent is close to nothing (especially when the size of PNG’s GDP is facing a major downgrade in the latest NSO 2015 update).

Revenues to the budget are only one-third of expected levels, and after allowing for project costs, will continue having a net negative impact on the budget (so below nothing) until around 2024.

Economy gone backwards
Of even greater concern, the examination finds that the PNG economy, apart from the resource sector, has actually gone backwards relative to its underlying growth path.

The most likely explanation for this sad outcome is PNG has slipped again into poor policies associated with the resource curse. The temptations of the rosy PNG LNG promises were too strong for politicians despite warnings from PNG Treasury, BPNG and outside academics.

During the O’Neill/Dion government, PNG descended into very damaging economic policies of a bloated budget and PNG’s largest deficits ever, fixing the exchange rate at an over-valued level, making foolish investments in areas such as Oil Search and harming the independence of PNG’s economic institutions.

With the focus being so strongly on getting the PNG LNG project operational, there was a lack of policy emphasis on other parts of the economy.

This is the “resource curse” gap.

Third time
PNG needs to learn the lessons from this experience. This is the third time that PNG has suffered from the resource curse:

• the first was with Bougainville Copper and the experience of the late 1980s;
• the second was the Kutubu/Porgera expectations that crashed so badly in the mid-90s;
• and the PNG LNG period is the third resource crisis.

The benefits of PNG’s resource wealth could in theory be tapped without damaging the rest of the economy.

But it would require very different choices by PNG’s politicians. PNG probably lacks the strong governance and institutions required to deal with the powerful resource sector lobby.

Even in Australia, the power of vested interests around the resource sector is blocking sensible options for sharing resource benefits more equitably and efficiently.

• Full Jubilee Australia report

By Meriba Tulo in Boera village, Papua New Guinea

After more than three years and 200 shipments, landowners of Boera village in Papua New Guinea’s Central province have became the first beneficiaries from the PNG LNG Project to receive royalties.

This followed the release of royalty benefits for PNG LNG Petroleum Processing Facility Licence 2 (PPFL2) area landowners to the Mineral Resources Development Company (MRDC) from the Department of Petroleum and Energy, Department of Finance, and the Central Bank.

Royalty payments for the four villages of Boera, Papa, Porebada and Rearea are in line with the Ministerial Determination number G692, 2015, which will see 83 clans receive a share of K15.6 million (NZ$6.7 million).

According to the Oil and Gas Act 1998, only 40 percent is to be paid as cash disbursement to landowners, with the remaining 60 percent to be set aside in two trusts – the Future Generation Trust Fund (FGTF) and Community Investment Trust Fund (CITF).

Royalty Payment Allocation:
1. Cash Payment to Landowners: K6,250,701.00
2. Community Investment Trust Fund: K4,688,026.00
3. Future Generation Trust Fund: K4,688,026.00

From the K6,250,701.00 cash allocation, this is further broken up according to the following:
1. Rearea Village: K1,746,946.00
2. Papa Village: K1,746,946.00
3. Boera Village: K1,352,027.00
4. Porebada Village: K1,154,755.00
5. Others: K250,028.00

Meriba Tulo is a senior reporter and presenter and currently anchors Resource PNG as well as EMTV’s daily National News. EMTV News items are republished by Asia Pacific Report with permission.