Papua New Guinea

Government provides support and resources to the EITI process, actively participates in MSG meetings, and acts on the MSG’s recommendations. There is enough evidence to show that government representatives are able to follow-up on decisions made by the MSG and that they are sufficiently engaged in the design of the EITI process.

The largest companies actively participate in MSG activities, and contribute to discussions of broader issues in the sector. While the same number of companies fail to submit signed reporting templates and tax waivers through the years, this does not seem to affect the quality of company engagement in general.

There is an enabling environment for civil society participation and no known restrictions on the right to express, operate, associate and engage wider constituencies. There is no evidence to suggest that the government has attempted to restrict public debate in relation to EITI implementation. Civil society is able to fully participate in the EITI process.

All constituencies regularly attend MSG meetings and actively participate in the design and implementation of the EITI, and engage in substantive conversations about the issues in the sector.

The 2017 and 2018 work plans contain objectives aligned with national issues, have measurable and time-bound activities, provide for plans to address capacity constraints, legal obstacles, and scope of EITI reporting, as well as plans for implementing recommendations. They are fully costed with indication of the sources of funding.

The 2016 EITI Report contains sufficient information on the governing laws in the sector and the roles of the regulatory agencies. It provides an overview of the applicable fiscal regime and the level of fiscal devolution. Policy reforms are also mentioned.

While the EITI Report provides a list of mining tenement awards and transfers, the list appears to be non-comprehensive. For oil and gas, specific licenses awarded in 2016 were not provided in the report. The report only describes the general process for awarding and transferring licenses, and does not include the technical and financial criteria used.

While the report covers all significant aspects of the requirement for mining tenements, there are significant shortcomings in the public availability and comprehensiveness of information on oil and gas licenses. Information on dates of application, award or expiry, coordinates, and commodity(ies) covered by oil and gas licenses were not provided.

The 2016 EITI Report sufficiently explains the government’s policy and actual practice when it comes to contract disclosure. It should be noted, however, that contracts in PNG are not publicly accessible due to confidentiality provisions in the contracts.

The 2016 EITI Report does not contain any information on beneficial owners, although it provides some information on legal owners of mining companies. No such information was given for oil and gas companies.

The report provides a list of companies in which the government holds majority equity interest. However, the list of state participation does not appear to be comprehensive. The report clarifies the actual practice of financial relations between SOEs and the government, but does not describe the statutory rules governing the financial relations.

The 2016 EITI Report provides an overview of the mining, oil and gas sectors, including significant exploration activities.

While PNG has made efforts to reconcile production volumes, the 2016 EITI Report does not provide the production values for minerals and oil and gas. The significant discrepancies in the reconciliation of production figures and the incomplete reporting by the government are also a concern, given that data are based on companies’ self-reporting.

The 2016 EITI Report discloses export values for all minerals, oil and gas exported in 2016, but only provides export volumes for minerals, oil and condensate, not for LNG. While LNG export volumes for 2016 were published on the PNG EITI website in May 2018, there is no reference to the availability of this data in the 2016 EITI Report.

The report does not provide an assessment of the materiality of non-reporting companies’ payments to government. The high value of unreconciled discrepancies is a concern, particularly given stakeholders’ lack of confidence in the explanations provided for discrepancies. There is also no evidence of full unilateral disclosure of government revenues.

Although the report does not explicitly state that the government is not entitled to in-kind revenues as fiscal payments, there was consensus among stakeholders consulted that this requirement was not applicable to PNG under the current fiscal regime.

While the 2016 EITI Report categorises expenditures under infrastructure tax credit (ITC) mechanism as a form of barter arrangement, stakeholders confirmed that extractives companies were not required to undertake expenditures under the ITC scheme.

The 2016 EITI Report confirms that according to Treasury, transport revenues do not exist in PNG except for pipeline fees, which are not material.

The 2016 EITI Report discloses, but does not reconcile, some revenues collected by SOEs from mining, oil and gas companies they hold interests in. While dividends paid by two SOEs to Treasury are disclosed and reconciled, it is unclear whether reporting of SOE transactions with other government entities is comprehensive.

The 2016 EITI Report provides vague and contradictory explanations of the structure and materiality of subnational direct payments linked to the extractives. There is also confusion between subnational direct payments, subnational transfers, SOE transactions with provincial governments and private-to-private transactions (with landowner groups).

The data is disaggregated to the levels required by the Standard, i.e., by individual company, revenue stream and government entity for all revenue streams.

PNG is ahead of the required reporting cycle, having published 2016 data on 30 December 2017. The 2015 data was also published on 30 December 2017.

The report does not provide a clear statement on the comprehensiveness and reliability of financial data, coverage of reconciliation, nor the materiality of payments from reporting entities that did not provide required quality assurances.

The report explains how extractive industry revenues are recorded in the budget. However, there are concerns regarding the accuracy of the information. Where revenues are not recorded, the allocation of revenues were not explained. The report also does not provide links to financial reports.

The report does not clearly distinguish between subnational direct payments, subnational transfers, SOE dividends, earmarked revenues from the Consolidated Revenue Fund, social expenditures and private-to-private transactions not strictly covered by the EITI Standard. Also, the value of subnational transfers of extractives revenues is not disclosed.

It is encouraging that the MSG has made an attempt to include information on the budget-making process, as well as some information on revenue management in the 2016 EITI Report.

The report does not distinguish between mandatory cash and in-kind social expenditures. Comprehensive information as to the nature, value and beneficiaries of social expenditure projects is also missing from the report. Nevertheless, the MSG made efforts to disclose information on mandatory social expenditures despite confidentiality constraints.

While the report notes that no SOE reported any quasi-fiscal expenditures (QFEs) for 2016, some stakeholders view that that material QFEs exist and should be disclosed. It is unclear whether the MSG’s approach to assessing the existence and materiality of QFEs was comprehensive of all types of expenditures that could be considered quasi-fiscal.

The report provides, in absolute and relative terms, estimates of the extractive industries’ contribution to GDP, government revenues, exports, employment and location of major extractive activities. While 2016 employment data provided is not comprehensive, the report is transparent about the constraints in sourcing reliable employment data for PNG.

There is public dissemination of information and it can be seen from online articles and publications that EITI data is referred to in understanding the issues in the sector. There are efforts to engage the media and seek various platforms to promote EITI and contribute to public debate.

While EITI summary data templates are regularly published, there are no efforts to analyse and simplify data. It is not clear how revenues in the report correspond to the reference system adopted by government.

The quality of the recommendations from PNG EITI Reports are remarkable. There is progress in some significant recommendations while the rest of the recommendations have been discussed with agencies. The MSG has adopted a formal mechanism to follow-up on these recommendations.

The MSG’s efforts to review outcomes and impact of EITI implementation are limited and feedback is not sought from other stakeholders outside of the MSG. Nonetheless, there is substantial information on progress against recommendations and against work plan objectives, as well as a good narrative of activities in the annual progress report.