PNG Not prepared for LNG Impact

OP.ED

PAPUA New Guinea is ill-prepared for the impact of LNG. Up to now, the project has been thought of as something that might happen and that, if it did, it would impact the financial and economic sectors of the country and little else. Such thoughts are drawn from the shallow pool of ignorance and PNG pays a hefty price for ignorance.

Ill-prepared, both as a government and as a people, the full benefits of any resource project have overflown PNG entirely, leaving it to flounder in their wake and fighting over pet fodder such as royalties and taxes while the prized steak in substantial control and ownership and, in major spin-off contracts, have been left in the control of the multi-national conglomerates. Bougainville, Ok Tedi, Misima, Kainantu and Kutubu oil have come and go.

There is absolutely nothing to show for them. The reason is simply ignorance. Ignorance and a rather peculiar reluctance to learn from past lessons. That especial, if tragic, trait of PNG’s persists today and is about to hit PNG with the force of a tornado with the advent of the LNG project.

Nobody in this fair country will be untouched by its impact. Unless adequate protection is garnered on emergency footing right away, when the eerie peace and quiet that always comes in the aftermath of such a storm finally settles in 30 or so years, it will be upon a strange landscape – the same land but devoid of life and energy and filled with vultures, hyenas and carrion feeders of every kind that walks the earth. In another sense, PNG will never be the same again.

The LNG projects, ExxonMobil’s as well as the one promoted by InterOil, will change the face of PNG.
As we have heard in the Asian inquiry, there are 14,000 applications for work permits alone from the LNG and only nine persons to process them. Word is now that when the project goes into full construction stage, there will be a need to process 50,000 visas. Is there capacity at the PNG immigrations and citizenship agency to process that kind of workload? Be sure that hiding among that throng coming in will be the vultures and the hyenas. They got to be stopped at the door.

The real estate industry in PNG is feeling the first direct impact of the project. The project has taken up most of the new residential buildings in Port Moresby at some previously unheard of sum per week for a unit. This has pushed up all other real estate prices so that housing, which has always been expensive, is now well beyond any individual – expatriate or national. Other industries will follow this upward trend. Already, in the Southern Highlands and elsewhere, schools are emptying of teachers as they seek hardship allowances and better terms and conditions of employment. They are not stupid.

Even unskilled labourers in the LNG project are getting paid double and triple the teachers’ salaries. This will have massive impact upon education. Students themselves will be reluctant to go to school. Education in PNG has always been promoted, quite wrongly as it turns out, as the way to a decent job and cash. Why go to school with so much money pouring out of the project? Remain ignorant and continue to be fed trash. Bad logic but immediately feasible and attractive – no work involved.

The agriculture and the fledgling manufacturing sectors, which have never received much attention in the past, will be the first lambs on the sacrificial altar. As the LNG project drives costs, including the cost of labour, up, it will become uneconomical to run factories or plantations. The cost of labour will be too expensive. Cost of factory inputs and fertilisers and fuel will go up. Factories will shut their doors and plantations and estates will be reclaimed by the bush.

For 30 years, nobody will notice – everybody being busy and employed. When the gas is all pumped out, that is when everybody starts looking around for the factories and the plantation sector and they will not be there. That is the phenomenon that is called the resources curse or the Dutch Disease.

By then, PNG will be permeated thoroughly with its contagion. A cash-rich nation will suddenly find, when the source of the cash is dried up, that there is no other source left to turn to.
That is the price of ignorance.

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