CATALYST

First set of NEC Directives hailed Inside this Issue

THE Papua New Guinea Extractive IndustriesTransparency Initiative National Secretariat hascongratulated the appointment of Mr Musje Werror(pictured) on his appointment as Chairman of theMineral Resource Authority (MRA) Board.He replaced Robin Moaina who has been in theposition for the past ten years.Mr Werror is a career mining company executiveand is deputy Chief Executive Officer at Ok TediMine-one of Papua New Guinea’s biggest –to page 6

PNG-EITI Congratulates New MRA Chairman

Highlights

• Papua New Guinea is set to be validated in April 2018 by the EITI International based in Oslo, Nor-way to determine whether it made considerable or meaningful progress its our EITI Reporting

• There are two re-ports being compiled concurrently to be published before the year end. The National Secretariat is confident of a successful compilations of the two reports.

Message from the MSG Chair

2

JICA assists in Technical Assistance

3

Industry to Name Beneficial Owners

3

Former Chamber Boss Praised

3

PNGEITI pleased with O&G Leaders

4

PNG Extractive IndustriesTransparency InitiativeSecretariat (PNG EITI) hascalled on government entitiesresponsible for the miner-aland petroleum sectors of theeconomy to implement thefirst EITI ReportRecommendations.The National ExecutiveCouncil acted positively on alldirections sought through therecommendations of first PNGEITI report, which is based onthe 2013 fiscal year.The Recommendations relatedirections to governmententities like the Departmentof Petroleum and Energy(DPE), Mineral Re-sourceDevelopment Company(MRDC), the three KumulSOEs, Auditor General, Officeof the State Solicitor, Mineral

Resource Authority,departments of Finance andTreasury to fully participate inthe EITI process. Mr LucasAlkan when offering hisappreciation said the onuswas now on the namedgovernment agencies to effectthem.“The National Secretariat hasalways had the assurance andthe support of thegovernment and the privatesector in driving the EITIconcept and the NEC decisiononly cements the kind ofworking relationship we have–When it comes to promotingaccountability andtransparency in how wemanage our finances, it iseveryone business to make ithappen for a better society”.To page 3“

Newcrest Country Manager Peter

Aitsi (left) making a point at the

FM 100 Studio recently as PNG

EITI Head of National Secretariat

Lucas Alkan listens– PNGEITI

Image.

Promoting Transparency and Accountability of Revenue from the PNG Mining and Petroleum SectorJuly-September 2017

PNG EXTRACTIVE INDUSTRIES

TRANSPARENCY INITIATIVE NEWSLETTER

On behalf of the National Secretariat Staff and the Multi StakeholderWorking Group (MSG) I warmly welcome all our readers of PNGEITINewsletter. In fact this is our first newsletter which broadly coversactivities that we have advanced so far and I am happy to say that we havemade progress but equally, we need to make more.

This year is particularly challenging and exciting as our candidacy to theEITI will be validated next year (2018) to determine whether we as acountry have made meaningful progress in our endeavour to promotethis global initiative that seeks to promote accountability andtransparency around the management of petroleum and mineral wealth.There are more than fifty countries around the globe that have made thecommitment to this initiative and the fruits of this initiative beingundertaken are better management of resources and enhancement ofgood investment climate. Papua New Guinea’s request to become acandidate country was accepted by the International EITI Board in 2013and since then we have come up with the first two reports based on thefiscal years of 2013 and 2014.We had the honour of having the Prime Minister Hon Peter O’Neilllaunch the first report at the state function room in parliamentwitnessed by a handful of MPs and Ministers.As said earlier, two years into actually implementing the EITI, we will betested as a candidate country, next year (2018). Therefore we arecompiling two reports based on the years 2015 and 2016 this year.It may seem challenging but I am very positive we will get those tworeports just on time for validation as our core working group, the MSG isright behind this great initiative every step of the way.To touch a little bit on progresses made so far, we are making inroads ininfluencing government policy particularly in areas of improvingefficiency and effectiveness in the reporting process so that dataavailable is timely and readily accessible.I would like to acknowledge and thank the National Executive Council(NEC) for endorsing our policy submission for implementation of therecommendations in the 2013 Report.I now leave it to the reader to make his own judgment and we appreciateany comments to improve on the next publication of this PNGEITI NewsLetter.

Lucas AlkanHead of National SecretariatPNG Extractive IndustriesTransparency Initiative It gives me great pleasure to share some thoughts on EITI with readers

of this PNGEITI Newsletter as Minister for Treasury and Chair of thePNGEITI Multi Stakeholder Group (MSG)- the body that oversees EITIactivities in this country. At this time when the economy is sailingchoppy waters, I wish to stress that this government is serious aboutreshaping the economy for the better.

As the extractive sector’s contribution to the economy is verysignificant, we are serious about making sure that every kina that iscoming from the industry must be accounted for and put to itsprudent use as opposed to poor resource management.The EITI is indisputably a step in the right direction that aptlycomplement government efforts towards promoting accountabilityand transparency in the management of revenue from the extractivesector of the economy. I note that EITI made considerable progress interms of building industry capacity to improve the EITI Reportingprocess.EITI is giving us some array of hope that we are more nearer toputting our petroleum and mineral wealth into prudent use thanbefore. This government is proud to have given the go-ahead for theestablishment of this great initiative.The establishment of the Sovereign Wealth Fund is another way wecan become wiser to better manage our resources. Treasury hascommenced the implementation of the enabling legislation, theOrganic Law on Sovereign Wealth Fund (OLSWF) with the preliminarywork to establish the board for the SWF of PNG in mid – 2016.Thiswork is almost concluded and formal process for appointment of theboard is expected to commence soon.I am happy to say that this government will strengthen the EITIactivities so that it continue to serve serves as a useful barometer togive us a clear image of where the industry is headed to.On behalf of the government, I would like to thank the MultiStakeholder Group which I chair and the PNGEITI National Secretariatfor a job well done so far and I look forward to fruitful discussions andoutcomes as we advance EITI activities in this country.I wish every reader well in reading this newsletter and trust eachreader will make sense of the items to form their own judgmentabout EITI activities this country.May God continue to grant us wisdom as we all strive to make thiscountry a better place to live.

Hon Charles Abel, MPChairman- PNGEITI MSG Treasurer and Deputy Prime Minister

WELCOMEWELCOME

Industry players to name Beneficial Owners COMPANIES directly involved in thepetroleum and mining sectors will berequired to disclose informationregarding their beneficial owners come2020.Beneficial owner (s) of resourceprojects (mine, oil and gas companies)refers to the natural person (s) whodirectly or indirectly owns or controls acorporate entity/ company.This follows yesterday’s (3rd July 2017)signing of contract between PNGExtractive Industries TransparencyInitiative (PNGEITI) NationalSecretariat and KPMG, the successfulbidder for the implement theBeneficial Ownership Roadmap thatspells out how Papua New Guinea candevelop a matrix to report thebeneficial owners.The implementation of the roadmapwas effected yesterday soon after thesigning of the contractand will be rolled out until the finalquarter of 2019 after which a platformor matrix will have been developed forreporting -through the EITI reportingprocess in 2020.Head of the PNG Extractive IndustryTransparency Initiative NationalSecretariat Mr Lucas Alkan said it wasthe decision of EITI international

board.It wants all EITI implementingcountries, including Papua NewGuinea, to ensure that corporateentities that bid for, operate or investin extractive assets disclose theidentities of their beneficial owners byJanuary 1, 2020.Mr Alkan said this was done to identifythe real owners of the companies whohad acquired rights to extract oil, gasand minerals which, in many caseswere not known and often hiddenbehind a chain of corporate entities.The lack of transparency in this areaoften creates an environment for otherillegal activities such as moneylaundering and transfer pricing.“This affects other sectors of theeconomy and often create a conduciveenvironment for corruption and taxevasion.Mr Alkan said people living inresource-rich countries such as PapuaNew Guinea risked losing out asrevenues generated from resourcesexploitation in the extractive industrywere often misallocated and wasted.“The EITI requirement will ensure thatbeneficial ownership information ismade available through publicregisters such as those collected

KPMG Advisory Services Manager Mr Shimar Saxena (left)

PNGETI Head of National Secretariat Mr Lucas Alkan after

signing the contract signing.

Secretariat calls for action on NEC directives- (from page 1)

We at the Secretariat with the Multi Stakeholder believe we are part of the bigger calling topromote accountability and transparency in how we manage wealth to tackle pertinent issueslike poverty and corruption” Mr Alkan said.EITI is a global standard that promotes transparency and accountability in the oil, gas andmining sectors.“At the EITI, transparency is about Oil, Gas and Mining Companies disclosing informationabout their operations, including payment to government and the government disclosing itsreceipt and other relevant information on the industry. This is done through annual reporting”“And for accountability, a Multi Stakeholder Group (MSG) with representative from thegovernment, companies and civil societies oversees the process and communicate thefindings of the EITI reporting and promote the integration of EITI into broader transparency inthe country”

EITI Pleased with Oil and Gas Leaders THE PNG Extractive Industries TransparencyInitiative has welcomed the frankdiscussions by leaders in the oil and gassector on the volume of petroleum reservesin the country.Head of EITI national secretariat LucasAlkan was commenting on a statement byOil Search managing director Peter Bottenabout the untapped oil reserves of sevenbillion barrels. Botten said so far, only 40per cent of the oil and gas resources hadbeen tapped into.Kumul Petroleum Holdings Ltd managingdirector Wapu Sonk said extractivecompanies operating in the country had sofar discovered close to 30TCF (trillion cubicfeet) of gas.He said there was more to be found,especially offshore which has hugepotential and yet to be tested.

Alkan said: “Such disclosure by leaders in oiland gas companies goes to show that theyare investing with the true spirit oftransparency and accountability.“This is what Extractive IndustriesTransparency Initiative is all about.“The National Secretariat is of the view thatextractive companies are willing to committo the EITI reporting process and we highlyappreciate this.“This is one of the ways in which we canattract competiveness in the petroleummarket. “The end result is a well-coordinated approach to do business in thepetroleum sector.“We welcome the disclosure of suchinformation and we hope to see morecooperation and support from the industryas we strive to promote PNG ExtractiveIndustries Transparency

Outgoing Mines and Petroleum Chamber Boss praised

The PNG Extractive Industries Transparency Initiative National Secretariat has commended outgoing Executive Director of the PNG Chamber of Mines and Petroleum Mr Greg Anderson (pictured) for painting a rosy picture about the industry upon his exit. Greg Anderson, who has been at the helm of the industry peak body since 1989 said he was confident the next generation of resource projects will distribute prosperity to a much larger proportion of Papua New Guinea. He noted that for the first time in PNG history, exports earned from the industry just topped over K20 billion in 2016 out of the total export worth K24.8 billion. “While much of the past developments are regarded by economists and others as “enclave” projects, I feel confident that the next generation of resource projects is about to change that perception. The PNG LNG Project and the mega-projects now on PNG’s drawing boards will distribute prosperity to a much larger

proportion of Papua New Guineans,” Mr Anderson said in the chamber’s a bi-monthly Mining and Petroleum

Mr Anderson said the mining ventures, as well as the quantities of gas that was available, would see a vast increase in electricity generation so that most people living in towns and some villages will have access to power in the next ten to fifteen years. Head of PNGEITI National Secretariat Mr Lucas Alkan said. “We are equally confident as Mr Anderson of a bright future the mining and petroleum sectors hold for the Papua New Guinea economy” “This is a good message for Papua New Guinea from someone who knows better about the extractive industry” Mr Alkan said. “We at the PNGEITI are excited to be part of this exciting times ahead by promoting transparency and accountability in the mining and petroleum sectors through our EITI annual reporting process,” Mr Alkan said

PNGEITI Multi-Stakeholder Group UpdateThe PNGEITI Multi-Stakeholder Group held a total of sixmeetings in 2016, more than what is required under theexisting PNGEITI MSG Memorandum of Understanding 2013,to guide the production of the Second PNGEITI Report.The attendance at the MSG meetings was excellent withequal representation from the Government, Industry and CivilSociety Groups. The year 2016 also saw the inclusion andparticipation of State Owned Entities to the PNGEITI MSG.Their participation was crucial in the successful production ofthe 2014 PNGEITI Report and signalled a long termcommitment of all stakeholders to report to the EITIimplementation in the country.The PNGEITI MSG achieved key milestones achievements in

initiating the Beneficial Ownership Roadmap, Open DataPolicy and the establishment of the Legislative and PolicyCommittee, active communications and engagementactivities and other International obligations.The MSG also secured renewed commitment from theGovernment through the participation of the Minister forTreasury Hon Patrick Pruaitch who chaired two MSG meetings

and directed the creation of a PNGEITI Policy and Legislationas well as securing budgetary funding for the secretariatthrough the department of treasury.General, engagement by MSG members improvedsignificantly in 2016. This was largely owing to membersbecoming familiar with the EITI Standard’s requirements,related processes and the expectation of MSG members towork hard to ensure PNG meets the requirements set by theEITI Standard.There were valuable discussions and issues addressed duringthese meetings. However, there is still room for furtherimprovement through increased participation at internationalworkshops and training opportunities to enhance the MSGmember’s level of understanding of the EITI Standard, and tolearn from the experiences of other EITI implementingcountries. This will enable the MSG members and PNGNational Secretariat staff to engage effectively during MSGmeetings, and broaden stakeholders’ commitment to andownership of the PNG EITI process and take accountability fordecisions they make.

EITI COUNTRIES PERFORM WELL IN 2017 RESOURCE GOVERNANCE INDEX

The Natural Resource Governance Institute(NRGI) has released its latest resourcegovernance index (RGI), assessing thegovernance of the extractive sector in 81resource-rich countries.Commenting on the index, Eddie Rich,Deputy Head of the EITI said: “The ResourceGovernance Index is an important tool forassessing how well the sector is governed ineach country. It complements and willstrengthen the work of the EITI in the 52countries now implementing the Standard.The EITI standard addresses a number of therecommendations highlighted in NRGI’s RGIreport, including project level re-porting andbeneficial ownership disclosure.”The RGI on EITI countriesEITI countries have fared relatively well inthe latest index. Norway and the UnitedKingdom are both in the top “good”performance category. Notable EITIhighlights amongst middle income countriesinclude Colombia, Indonesia, Ghana,Mongolia and Peru, achieving “satisfactory”in their overall rating. Burkina Faso is thehighest placed country among the low-income countries studied, with its miningsector ranked 20th overall. Ghana, Mongoliaand Peru have all also recently been throughthe EITI’s Validation process which assessesin more detail some of the issues high-lighted in the RGI. Nor-way and Burkina Fasoare currently being assessed.The index measures the extent and qualityof dis-closures across all of the main policyaspects of extractive resource management.Three types of disclosures are identified asbeing of particular importance:

• Revenue - payments made togovernments;

• Ownership - the identities of individualswho personally benefit from companieswith which the government doesbusiness; Contracts - the dealsgovernments and companies strike.

The EITI Beneficial Owners Conference“Opening up Ownership-sharing practice,building systems” organized in partnershipwith the Government of Indonesia will takeplace in Jakarta on 23rd -24 October, 300practitioners from the 52 implementingcounties to share best practice on collecting,on publishing and using the data. We expectHE Joko Widowo, the president of Indonesiato open the conference and other high levelspeakers will join.The Conference will have a series of smallerparallelworkshops with a practical focus on topicstarget-ed at the government official whowork on beneficial ownership disclosures intheir countries. Participants are expected torep-resent government agencies responsiblefor tax collection, drafting and implementinglaws, establishing and maintaining companyregisters, regulating the petroleum andmining sectors and coordinating anti-corruption measures taken by thegovernment are expected to attend. Theconference will be followed up with a seriesof regional work-shops with governmentrepresentatives in all EITI counties tomeasure progress in implementing thebeneficial owners roadmaps andcommitments made at the conference inJakarta.

The EITI Beneficial OwnersConference “Opening upOwnership-sharing practice,building systems” organized inpartnership with theGovernment of Indonesia willtake place in Jakarta on 23rd -24October, 300 practitioners fromthe 52 implementing counties toshare best practice on collecting,on publishing and using the data.We expect HE Joko Widowo, thepresident of Indonesia to openthe conference and other highlevel speakers will join.The Conference will have aseries of smaller parallelworkshops with a practical focuson topics targeted at thegovernment official who workon beneficial ownershipdisclosures in their countries.Participants are expected to rep-resent government agenciesresponsible for tax collection,drafting and implementing laws,establishing and maintainingcompany registers, regulatingthe petroleum and miningsectors and coordinating anti-corruption measures taken bythe government are expected toattend. The conference will befollowed up with a series ofregional work-shops withgovernmentrepresentatives in all EITIcounties to measure progress inimplementing the beneficialowners roadmaps andcommitments made at theconference in Jakarta.

PRACTITIONE

RS TO MEET

IN JAKATA TO

TAKE BIG

STEP IN

REVEALING

REAL OWNERS

JICA on Board for Technical Assistance The Japanese InternationalCooperation Agency (JICA) has comeon board as the first developmentpartner to work with the Papua NewGuinea Extractive IndustriesTransparency Initiative (PNG EITI)Secretariat to enhance its capacity.

The Extractive Industries TransparencyInitiative is an international standardfor openness around themanagement of revenues from theextractives sector.Governments disclose how much theyreceive from extractive companiesoperating in their countries and thesecompanies disclose how much theypay to the government.A technical team from the JICA Tokyooffice were in the country startingApril 18, 2017 meeting with keystakeholders for a detailed planningdesign survey aimed a demarcatingthe scope of this technicalcooperation.PNG EITI Head of Secretariat LucasAlkan met today (Friday, 28th April,2017) with the JICA technical workinggroup and the senior staff from theDepartment of National Planning

(DNP) for a brief on how the JICAteam would be in town for thiscooperation.Mr Alkan said the purpose of theproject was to promote revenuemanagement and reporting inaccordance with EITI internationalstandards.Mr Alkan said specific outcomeexpected include improving themanagement of registry and the useof registry information at theDepartment of Petroleum and Energy(DPE), enhance the reportingmechanism from extractive sectorcompanies and government agenciesand enhance the aware-ness andimplementation structure for the EITI.Mr Alkansaid “There are number ofdevelopment partners that haveshown interest in helping usstrengthen the EITI reporting processand the secretariat is thankful for JICAcoming on board as the firstdevelopment partner to help usachieveEITI standards. We look forward toworking closely with the JICA team toachieve the outcome of this project”

JICA Chief Technical Officer Someone prese

deliveries his key note address during the

meeting minute signing

NEW MRA CHAIRMAN CONGRATULATED– CONTINUED FROM PAGE 1

mine owned by the state. PNGEITI Head of National Secretariat Mr Lucas Alkan said: “Onbehalf of the PNGEITI Multi Stakeholder Group (MSG) I offer warm congratulations to MrWerror on this appointment tothis I important position”Mr Alkan said. “Having someone in the calibre of Mr Werror is only fitting for MRA, especiallywhen the challenges and opportunity to better shape the mining industry are evolving unlikein the past” Mr Alkan said.“MRA’s distinguished itself well in the EITI activities and we are always encouraged by this andwe look forward to continue the good work the new chair-man and the hard working team ledby Managing Director Mr Philip Samar,” Mr Alkan said.“We are also of the view that through the chair-manship of Mr Werror, the workingrelationship between the MRA and the national mining industry will be further enhanced forthe good of the indus-try, the PNG economy and stakeholders,” he said.

info@pngeiti.org.pg

The PNG Extractive IndustriesTransparency Initiative (PNGEITI),was approved by theGovernment of PNG (GoPNG)through NEC Decision No.90/2013, promoting revenuetransparency and accountabilityin the country’s mining andpetroleum sectors. GoPNG fullysupports the EITI global standardand, in collaboration with CSOsand industry established thePNGEITI multi-stakeholder groupon the 1st of November 2013.Discussion on EITI started in 2006as a result of PNG Gas Project.The Government was asked toimplement EITI as part of theAsian Development Bank (ADB)condition to finance the project(now defunct).A scoping studywas therefore conducted todetermine whether PNG shouldparticipate in the EITI.The scoping study identified thatPNG has already implementedsome of the initiativesestablished under the EITI at theNational Government level,

although PNG was not an EITImember country. However, thestudy also highlighted thatimplementing EITI will greatlyincrease the transparency andaccountability of extractiveindustries revenues to theNational Government andredistribution to the provincialand local level governments.On April 2011, based on thefindings of the scoping study, theNEC in 2011, endorsed (NECDecision No. 47/2011) theestablishment of a State WorkingGroup (SWG) to assess theadvantages and disadvantages ofsigning up to EITI. In particular,the SWG was tasked with furtherinvestigating the possibility ofimplementing the EITI in PNGand report back to NEC with adetailed work plan forendorsementAs a result, the SWG engagedwith major extractive industryparticipants and civil societyorganizations in PNG to gauge:

UPCOMING EVENTS (October 30th-31st, 2018) The

International Head of the EITI Mr.Jonas Moberg will be in thecountry for two days where hewill meet with key economicministers and staff of governmentdepartment responsible for theOil and Gas Sector. He will also bepresent in the pre-validationworkshop at the Laguna Hotel,Port Moresby

(November 28-30, 2018) PNG EITIwill partake in the Papua NewGuinea Mining and PetroleumConference at the Laguna Hotel,Port Moresby. PNGEITI staffmembers also participated in thesame event in Sydney last year.

(October 23rd -24, 2018),Information on the JakataConference. PNGEITI will berepresented by staff from theSecretariat

CONTACT US

2013The Year PNGEITI was Established

2015Produced its first EITI Report of fiscal year 2014

2016Produced its EITI Reports of fiscal year 2015 and 2016

PNG Extractive Industries Transparency InitiativeTreasury Building, Waigani,PO Box 1907,Port Moresby, National Capital DistrictPapua New Guinea

www.pngeiti.org.pg