(Reposted):
𝗙𝗢𝗥𝗠𝗘𝗥 𝗖𝗛𝗜𝗘𝗙 𝗦𝗘𝗖𝗥𝗘𝗧𝗔𝗥𝗬 𝗥𝗔𝗜𝗦𝗘𝗦 𝗖𝗢𝗡𝗖𝗘𝗥𝗡 𝗢𝗡 𝗧𝗛𝗘 𝗚𝗢𝗟𝗗 𝗥𝗘𝗙𝗜𝗡𝗘𝗥𝗬 𝗘𝗦𝗧𝗔𝗕𝗟𝗜𝗦𝗛𝗠𝗘𝗡𝗧 𝗔𝗚𝗥𝗘𝗘𝗠𝗘𝗡𝗧
THE former Chief Secretary to Papua New Guinea government, Mr. Isaac Lupari raised a concern that the agreement that has been reached between the State and the Refinery Holdings, a Singapore based entity to establish a gold refinery in PNG would provide unprecedented access to a foreign owned company to what should be a state asset.
Mr. Lupari said that it is critical that more analysis and work should be undertaken in relation to this project as it addresses all fiscal, legal and constitutional issues.
He said the proposed arrangement sets a dangerous precedent which, in many ways outsources constitutional authority and power to a foreign entity and this cannot be allowed to happen.
“It has very significant constitutional implications and impacts our national sovereignty. It is therefore incumbent upon the government and the prime minister to provide assurances that issues around taxation, concessions and exemptions have been addressed, ensuring that a private based entity is not empowered by law to effectively intervene in State Fiscal Policy.”
Mr. Lupari called on the government to undertake a full fiscal and legal analysis of the project to determine alternative options that do not undermine the sovereignty and integrity of the nation.
Mr. Lupari, in a media statement specifically listed the issues of main concern and they are;
• The establishment of a company police known as the “Gold Police”: this would be unconstitutional and would undermine the authority of the Royal Papua New Guinean Constabulary.
• Functions of the State: the draft bill confers functions which would ordinarily be appropriate that a private company play a regulatory role- the in effect creates parallel regulatory systems.
• Reputation of Refinery Holdings: does the company have industry credentials, and it is recognized by the London based Independent Precious Metals Authority?
• Impact of operators: the impact on existing mining companies and existing state contracts is unclear.
• Prime Minister Appointment as Director of the State Equity Corporation: this created a potential conflict that may arise from your role as Chair of the National Executive Council.
• Impact on industry: the proposed arrangements effectively create a monopoly where the new Gold Corporation is given extraordinary powers relative to its function, including enforcement and compliance. These are not appropriate for a private entity controlled by a foreign company.
• Lack of consultation: there is a need for consultation with industry before any arrangements are finalized.
• Role of the Central Bank: the proposal would see core economic functions of the Central Bank removed and placed with the company, which is majority foreign owned.
• Potential for abuse of power: the new entity will effectively be given a right to issue legal tender, bypassing regulatory oversight.
• Taxation: the proposal contains significant exemptions regarding taxation and fiscal liability which cannot be approved without the approval of parliament, including a unilateral power to waive taxes and charges.
• Risk: the state appears to assume all the risk.
• State undertakings: project undertakings would appear to interfere with the state’s ability to exercise sovereign powers.
• State’s interest: the proposal bypasses the function of Kumul Mineral Holdings Limited (KMHL).
• Exclusively: the proposed arrangement gives exclusive rights to Refinery Holdings and all their subsidiaries. This again impacts other industry players.
• Constitutional authority: the proposed legislation to govern this project exceeds constitutional authority and could have lasting implications on the state.
• Access to standing appropriations: this again has very significant legal and fiscal implications.
• Monetary policy: the proposed arrangements undermines constitutional arrangements with respect to setting of monetary policy.
• Financial credential: this was to ensure that the company and its shareholders have adequate financial capacity and its credit worthiness.
Mr. Lupari said the draft bill which was prepared by Refinery Holdings should be reviewed to ensure that the state’s ability to deal with our own mineral resources is not eroded, whilst at the same time protecting the role of the Central Bank.
“I commend the prime minister for supporting this initiative and his drive to take back PNG what rightfully belongs to our people, but in my view, the proposal that the state has agreed to will achieve the very opposite. It will further erode our national power, significantly benefit a foreign entity, and undermine the very basis of lawful authority and good governance that the Marape Government stands for.”
Mr. Lupari said that he had written to the prime minister to ask that he revisit his decision, undertake full due diligence and chart a way forward that benefits and not harms the nation.
He said he had also offered to assist the government if required.
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