The Prime Minister Peter O’Neill (L) and BAI’s Andrew Wilkins (R) Source: BAI

In his exclusive conversation with Business Advantage PNG’s Andrew Wilkins, the Prime Minister Peter O’Neill says he is looking for deals in LNG and mining projects that will benefit all parties. In the first of a two part series, O’Neill describes how his government is investing to diversify the economy.

Andrew Wilkins: There is a continuing debate in PNG about the best way of ensuring that the government and land owners maximise the returns from PNG’s resources, which are not inexhaustible. It is a delicate balance, is it not, when considering the gas agreement for the next [Total-led] LNG project?

Peter O’Neill: The first LNG project was a unique project. It was our foundation project, so we gave a lot of concessions that are not normally given to such a project.

That was developed off the back of the global financial crisis period and we needed to raise a substantial amount of money.

The success of it is quite good but there is another side of the story. Many of the other stakeholders: the state and the landowners—especially those who are in the project areas— are placing demands.

There are issues like social mapping and the landowner identification—all these things were largely not done properly before the agreements were signed. These are mistakes we don’t want to make again.

‘We will structure an agreement that is fair to all stakeholders.’

The last thing we want to do is change the physical regime of any of these projects where it is going to disadvantage not only the developers but ourselves.

This market is very competitive and we have been speaking a lot to the industry experts.

We have travelled the world, we have discussed many of the LNG issues with many of the leading LNG countries.

We will structure an agreement that is fair to all stakeholders. But the transparency and visibility and flow of benefits to the landowners must be very clear.

The difficulties that we are facing today are because of some of the shortcomings of the previous agreements. But that is a good learning experience.

‘We have been partnering a few of the large investors who have come into the country.’

I can assure the business community that we will do everything possible to make sure the physical regime is stable.

Wilkins: What about the proposed changes to the Mining Act?

O’Neill: I will be encouraging vibrant discussions between the mining community and government, which represents the people. We will have to negotiate an outcome that is beneficial to everyone.

Wilkins: You have mentioned the importance of diversifying PNG economy. Which sectors do you see as the engine room for PNG’s growth?

O’Neill:  We are focusing on agriculture, tourism, small and medium enterprises—getting our people skilled up, making sure they are educated properly.

There is skills-based training in technical colleges, we are building capacities at universities. These are programs that are well-established.

In terms of agricultural development in PNG, it has always been about availability of land. We want to ensure that the rights of the landowners are protected but that the land is made available for investors to invest and the investors’ interests are also protected by a proper titling and proper leasing arrangements of those lands that are being developed.

So we have been partnering a few of the large investors who have come into the country.

There is huge interest in cattle. There is huge interest in rice. These are areas where the government is not trying to come in and participate—not to dominate the industries but to provide security for the investor.

The model that we are developing is starting to work. For example, with the Israelis we have a poultry farm in a place called Koroba in Hela Province. It is not an easy place to do business.

But the Israelis have done it and it is very successful. And the people who benefit the most are the mothers who go every morning to the gate to get the eggs or the chickens that they sell at the local markets. Children also have access to protein. These are models that we want to create.

With the new tourism plan, we will do the same. In Kokopo, we want to build up to at least 2000 beds. The government will partner all the landowners and provincial governments and some of the funds that are now invested elsewhere in the Pacific we will encourage to be invested in our country.

We will give them really good incentives to invest in our country and get direct flights from Sydney or Brisbane to places like Kokopo: Narita to Kokopo, Shanghai to Kokopo. You will see quite a steady stream of long-term tourists come into the country.

Peter O’Neill spoke with Andrew Wilkins at last month’s 2018 Papua New Guinea Investment Conference in Brisbane. The second half of this exclusive interview will be published next week.