New Ireland Governor Sir Julius Chan has urged for the implementation of reforms in the Mining Act, for an increase in the country’s revenues and to make our country financially independent and debt-free.
Sir Julius has been proposing changes to the Mining Act Since 2010.
Whilst welcoming the recent increase of royalty to landowners to 10 percent by Minister Magua Dilu, Governor Chan stated that PNG currently has the lowest system of royalty assessment and that the new reforms will be more consistent with US, Canada and many African countries whose royalty for landowners is much higher.
Sir Julius is urging the government to revisit and drastically revise its approach to royalties, equity participation and taxation in the mining, oil and gas sectors.
Governor Chan reiterated that the key areas of concern in structuring the legislation and regulation for any agreement regarding a natural resource project must include; 1. The level and structure of royalties 2. The structure of equity participation by the State and 3. The structure of the taxation system.
“The amendment law will change the ownership of mineral resources found within customary lands from the State to customary landowners. For so long indigenous landowners have been deprived of the rights to ownership of minerals,” he said.
According to Sir Julius the structure of mining, oil and gas regimes in PNG were drafted at a time when PNG had little experience in the way countries around the world structured their mining and gas laws.
In PNG, legislations were flawed to provide a fair and dependable reform to respective stakeholders.
The Mining Act 1994 establishes State equity at 22.5% of the project. Once a lease is issued the State gives away all the minerals which is different from countries around the world, where the State receives automatic equity in any extraction project.
For PNG’s taxation system, Governor Chan said PNG still has so much to learn from the world. Therefore the Government must implement reforms in the PNG tax laws to make the Effective Tax Rate consistent with International Standards which will result in additional income for the State.
Sir Julius said ownership of the resources is the next priority of his government and New Ireland is prepared to table this in Parliament under his proposed Mining (Amendment) Bill 2023.