Petromin PNG Holdings Limited Authorization Act 2007
In 2007 Parliament passed the Petromin PNG Holdings Limited Authorization Act (Petromin Act). Under the Act, the State may nominate Petromin PNG Holdings Limited and its Subsidiaries under the Mining Development Contracts and Gas Agreements as the State nominee. The Act also empowers Petromin to acquire oil, gas and mining assets held by the Independent Public Business Corporation (IPBC) and Minerals Resources Development Company Limited (MRDC) on agreed terms and considerations. It provides for the State and Petromin to negotiate terms mutually acceptable so as to ensure that investment decisions are transparent and comply with the legal and commercial terms of the corporate legal structure.
Petromin PNG Holdings Limited Mandate
Petromin is a company established under the Companies Act 1997 with specific powers conferred on it to be the State Nominee in mineral, oil and gas projects under the Petromin Act. Therefore its principal mandate is;
1. Firstly, being the special purpose vehicle to hold the State’s equity in the development of Papua New Guinea’s mineral, oil and gas resources; and
2. Secondly, as the State’s vehicle company to increase Papua New Guinean ownership of the oil, gas and mineral resources and to develop and commercialize these resources either wholly or in partnership with other investors.
Petromin is an operational (commercial) company and has no policy and regulatory mandate. Relevant State agencies, including the Departments of Petroleum and Mining have the mandate over policy and regulatory matters, including licensing and compliance.
Petromin does not have any special protection from the State with respect to exercising the State’s options to participate in any joint-venture commercial arrangements or pursuing other commercial opportunities either wholly or through joint venture arrangements with other investors. The Petromin Act and the Trust Deed provide the legal basis for Petromin to make investment decisions independently from the State and operate without any protection from the State just like any other company in the mineral and petroleum industry.
This is my interpretation of this Petromin Holdings Limited Act
The 2002-2007 Somare Government, in an effort to maximize ownership and economic gains from the development and production of Papua New Guinea’s non-renewable mineral and petroleum resources, made a conscious policy decision to establish a national oil, gas and minerals company that would drive this agenda. [copied].
This is the birth of Petromin Holdings Limited.
In effect, the Government of Papua New Guinea is saying, they will now take over the negotiation rights and obligations off the Landowners and hand it over to a company called Petromin Holdings Limited.
In my view, it means the so called Landowners are no longer resource owners. Petromin Holdings Limited is the Government recommended Resource owner.
It works fine in the instance where the mine [in this case] is a brand new operation. Petromin Holdings Limited will source and sought out a capable and reputable investor and invite it to come in the extract [mine] the deposits from this new project site.
The instance where it gets trickier is when the Government of Papua New Guinea steps in via its nominee, who is Petromin Holdings to buy a share in an already operating operation or an abandoned operations such as Tolokuma Gold Mine.
When Emperor Mines departed in 2008, the Government of Papua New Guinea took over Tolokuma Gold Mine via its nominee Petromin Holdings Limited. From 2008 to 2015, Petromin Holdings Limited operated TGM only to put it under “care maintenance” in March 2015.
So the question which seem to bother people like me is, Why weren’t the Landowners involved in discussing, searching and deciding on the new operator of TGM?
The answer to my question lays in the Petromin Holdings Mandate.
” Petromin is a company established under the Companies Act 1997 with specific powers conferred on it to be the State Nominee in mineral, oil and gas projects under the Petromin Act. Therefore its principal mandate is;
- Firstly, being the special purpose vehicle to hold the State’s equity in the development of Papua New Guinea’s mineral, oil and gas resources; and
- Secondly, as the State’s vehicle company to increase Papua New Guinean ownership of the oil, gas and mineral resources and to develop and commercialize these resources either wholly or in partnership with other investors.
Papua New Guinea people who claim to be Landowners are no longer Landowners no more. Someone else will negotiate and decide whats best for you. And hand it over to you.
The issue of, if you are happy with the whole deal or not, is not the issue.
Now, I close this with a question that seem very vital, especially in a nation where corruption is a norm…
Will such arrangement not provide a very conducive breeding ground for nepotism, favoritism, cronyism, bribery, under-the-table-deals and deals to flourish out of hand?
Petromin Holdings Limited will no longer be Petromin Holdings Limited starting January 2016. But that does not change the fact that its intended purpose, aims and goals will remind that same.