Papua New Guinea’s Prime Minister, Peter O’Neill, has confirmed the government will restructure the country’s interests in oil, gas and mining resources into two separate mining and petroleum companies. All other state-owned enterprises will be absorbed into a third holding company.

PNG Prime Minister Peter O’Neill

Business Advantage PNG understands all mining interests – including in the nation’s stakes in Bougainville Copper Limited, OK Tedi Mining Limited and in the Ramu Nickel project – will be transferred from the Mineral Resources Development Corporation and Petromin Holdings into an entity to be called Kumul Mining Holding Limited.

All petroleum and gas assets, including PNG’s 16.575% interest in the ExxonMobil-led PNG LNG project, will be transferred to Kumul Petroleum Holding Limited.

Under the restructure, the Independent Public Business Corporation (IPBC) will be wound up and all the state-owned enterprises under its control will be transferred to Kumul Corporation Holdings Limited.

‘The restructure of IPBC will ensure that the focus is on rehabilitation through a public–private partnership for our state-owned businesses like Air Niugini, Eda Ranu, PNG Power and PNG Ports Corporation,’ the Prime Minister said in a statement.

The National Executive Council recently approved repealing the Petromin Act, effectively dismantling Petromin Holdings, which owns a variety of companies including Eda Oil Ltd., Kumul LNG, Tolukuma Gold Mines Ltd, Eda Minerals Ltd, and Petromin Gas Limited. Petromin’s founding Managing Director and CEO Joshua Kalinoe last week resigned his position.

Current system too ‘bureaucratic’

This week, Prime Minister O’Neill told Radio Australia that the Government-owned Petromin Holdings, together with assets held by the Independent Public Business Corporation, have become too bureaucratic.

‘We are spreading our resources too thinly,’ he said. ‘As a result, we’re not taking advantage of the value of many of those assets and we are not developing a skill base and management experience for our citizens.

Under the restructure a ‘Kumul Trust’ will be created, according to media reports. The Prime Minister will hold what’s called a Kumul share, while PNG’s former prime ministers will hold an ordinary share.

‘By having former prime ministers as shareholders/trustees, we will be drawing from their wisdom and vast experience,’ O’Neill said.

‘There is some logic in this restructure, in that what you had there in the first place wasn’t created as a logical process,’ Paul Barker, executive director of the independent think-tank, the Institute of National Affairs told Business Advantage PNG. Barker said it was an anomaly that Petromin had not been given control over PNG’s 16.575 per cent interest in the LNG project.

Ok Tedi ownership restructure

O’Neill also foreshadowed last week a restructuring of the management of the Ok Tedi copper mine ‘to ensure its funds are managed in PNG and not in Singapore’.

In a two-page article in the Post Courier newspaper, O’Neill vowed to end what he termed ‘secret arrangements’ between the mine’s former owner, BHP Billiton, and PNG Sustainable Development Program Ltd (PNGSDP).

BHP created PNGSDP in 2002 to manage OK Tedi’s profits on behalf of the people of Western Province, as part of its exit strategy from PNG following massive environmental damage caused by the mine.

PNGSDP, with assets worth $US1.425 billion (K3.03 billion) at the end of 2011, is currently registered in Singapore.

‘When the [Ok Tedi mine] lease expires, the national government will put in place management arrangements that end any secret arrangements, and ensure that the people of Papua New Guinea, including the local landowners, have a say in the mine’s future and its management,’ O’Neill wrote. ‘We will ensure the PNGSDP is managed in Papua New Guinea, and its funds are held in Papua New Guinea, and used transparently for the good of the people of the Fly River [Western] Province, and the nation generally.’

O’Neill said that legislation will be tabled in Parliament before the September session this year. All staff of Petromin and the IPBC will be redeployed to the new entities, and will not suffer any loss of entitlements.