The Mineral Resources Development Company will begin delivering benefits earmarked for PNG LNG project pipeline landowners starting this year.

PNG LNG Benefits to flow for Pipeline Clans

Pipeline landowners live in remote villages in Hela, Southern Highlands, Western, Gulf and Central provinces. The 679km pipeline transporting gas from Hides in Hela to Caution Bay outside Port Moresby runs through their land, entitling them to royalty and equity benefits from the PNG LNG Project.

Today (Wednesday 04 March, 2020) Petroleum Minister Hon. Kerenga Kua, accompanied by Gulf Governor Hon. Chris Haiveta and MRDC Managing Director Mr. Augustine Mano flew to Kikori, Gulf province, to announce the start of the benefits roll out.

Since 2014, their royalty and equity benefits have been held in trust pending the completion of landowner identification, the opening of clan bank accounts, and the election of directors to the board of their landowner company.

In the last three years, officials from the MRDC, the Department of Petroleum and Energy, Kumul Petroleum Limited, and Bank South Pacific traveled to these remote areas to complete the process, which is a requirement of the Oil and Gas Act.

After delays caused by disputes between clans and tribal fights in parts of Hela, the process is now complete, paving the way for MRDC to roll out the benefits to the landowners.The landowners are divided into 8 segments, with segments 1 – 6 living in

Western, Hela and Southern Highlands, segment 7 in Kikori, and segment 8 in Central province.

“With benefitting clans identified in the Ministerial Determinations, bank accounts opened, and landowning trust company directors appointed, the requirements of the Oil and Gas Act have now been met.

“We are ready to distribute their cash benefits through their bank accounts, as well as start work on community infrastructure development projects vital to the improvement of life for people living in these very remote areas,” MRDC Managing Director Mr. Mano said.The royalty payment for the pipeline landowners is for years 2014 – 2018 and totals K31.3 million, while equity payments total K23.16 million and is for years 2014 – 2016.

Combined, it totals K54.26 million, of which 40% will be distributed as cash benefits through bank accounts, 30% will be spent on community infrastructure projects, while another 30% will be retained in the Future Trust Fund for investment. This split is set by law (Oil and Gas Act).

“And Here in Kikori, Segment 7 today, we will be crediting over K9.2 million in royalty and equity benefits to 37 Major clan bank Accounts”, said Mano.

Segment 7 receives 44.47 percent (K9.2m) of the K20.7 million earmarked as the 40 percent direct cash benefit payment to Segments 1 to 8.

The landowners of segment 6 (Gobe), however, will not receive their benefits as they have disputes pending in court. Their benefits will remain in trust pending the outcome of the disputes.

Mr. Mano said MRDC wants to replicate for the pipeline landowners the kind of community infrastructure projects and investment that are changing lives for the better in the plant site area in Central province.The plant site, or portion 152 landowners, have been receiving their benefits since 2017 as they were the first to meet all the requirements of the Oil and Gas Act.

These landowners have so far received K33.67 million in royalty, and K21.54 million in equity benefits, totaling K55 million.

Of this, K21.9 million has been distributed as cash benefits, K16.6 million spent on infrastructure projects in the community, and K21.9 million invested in high value equities and government securities, and the Dirio Power Project.

“For the people of Papa, Lealea, Boera and Porebada, we have delivered a rural hospital with modern facilities, new classrooms and teachers’ houses for schools, a new water supply system, and dinghies to improve sea transport.

“These community projects are making life a lot better for the people living there.”

Mr. Mano said MRDC was working with their landowner trust company to make prudent investments, and these investments were already delivering good results.

“These investments were returning 12% or better, and that is very good. The plant site landowners hold 12.5% shares in Dirio Power, a project with a better rate of return than most big projects that people talk about. Dirio will secure their future, as it will be in the forefront of the government’s drive to increase household access to power nationwide in years to come.

“The pipeline landowners will also take up shareholding in Dirio Power,” Mr. Mano said.

Meanwhile, greenfield landowners in Hela and Western province have various disputes pending in court. This has delayed bank account opening, and election of directors.

Therefore, the benefits they are entitled to remain in trust.