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WHY THE LNG RESOURCE OWNERS SHOULD BE CONCERNED WITH TRUST FUNDS HOLDING THEIR ROYALTY MONEY

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by KARK SEMANU WHAT ARE TRUST FUNDS Outside of PNG trust funds are normally established as either medium term holding accounts whose contents at a specified date are turned over to a beneficiary, or to an account maintained in perpetuity, where the principal is never touched and only the earned interest monies are ever withdrawn. CORRUPT USAGE OF TRUST FUNDS:   1. LEAVING THE PRINCIPAL BUT STEALING THE EARNED INTEREST In PNG, the trust account concept has been corrupted in many directions. The most common reason for a politican or a government bureaucrat to want control of a trust account is to steal the interest monies accrued. That is a corruption of the traditional trust account in that they have no authorisation to do this. The interest monies earned belong to the government. The corrupt government official's actions escape the government's attention in many cases in this way: A government disbursement of a quite large amount of money is secured, let's say K2

EXCITING TIMES YET CHALLENGES AHEAD FOR PNG EXTRACTIVE INDUSTRY SECTOR

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by KOMBOL GIBSON   PNG is endowed with a $19bn oil and gas industry. The size of this industry is set to double and almost triple. It’s an exciting prospect for PNG but challenges remain for delivering that blessing to every man, woman and child in PNG. In fact the opposite is happening. PNG should be concerned. There is a large focus on Government-funded programmes in the Hela and Southern Highlands Provinces instead of a more equitable arrangement for all 21 Provinces in PNG. That is a story for another day and a subsequent article, but the upshot of this focus on Hela and SHP is that the vast majority of it ends up in the hands of elites from these Provinces that reside elsewhere, access health services in Port Moresby or overseas, send their children to school overseas, maintaining multiple wives and mistresses and invest in Port Moresby or overseas. So roughly 80% of funding that gets diverted to Hela and SHP ends up in the pockets of Ministers, MPs, senior public servants, a

LNG WORKERS STILL A PROBLEM

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OP/ED THE PNG gas agreement was signed between the state and ExxonMobil in May 2008. At that point, it was almost certain that a liquefied natural gas (LNG) project would become a reality, at least in so far as the government was concerned. Along the way, several other agreements were negotiated and signed, including the two benefits sharing agreements, finalisation of markets, the environmental impact study, front end engineering and design, execution planning, project financing, gas marketing and all the regulatory and permitting work including community and landowner consultation and financial closure. Despite all that, two years on and PNG is still struggling to get sub-contractors organised for the project and is critically short on manpower. Already, there is talk about recruiting welders from neighbouring Fiji and even heavy equipment operators from overseas. This would indicate to us that the government was so concerned with getting the project off the ground that it neglected

LNG WORKERS STILL A PROBLEM

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OP/ED THE PNG gas agreement was signed between the state and ExxonMobil in May 2008. At that point, it was almost certain that a liquefied natural gas (LNG) project would become a reality, at least in so far as the government was concerned. Along the way, several other agreements were negotiated and signed, including the two benefits sharing agreements, finalisation of markets, the environmental impact study, front end engineering and design, execution planning, project financing, gas marketing and all the regulatory and permitting work including community and landowner consultation and financial closure. Despite all that, two years on and PNG is still struggling to get sub-contractors organised for the project and is critically short on manpower. Already, there is talk about recruiting welders from neighbouring Fiji and even heavy equipment operators from overseas. This would indicate to us that the government was so concerned with getting the project off the ground that it neglecte