Papua New Guinea

The year 2014 marks another period in Papua New Guinea’s political history that saw a number of unprecedented challenges facing the government of Prime Minister Peter O’Neill. An accountant by profession who has held various senior ministerial portfolios in previous governments, O’Neill is the leader of the People’s National Congress (pnc) Party and was sworn in as prime minister on 4 August 2012 after a period of political impasse that saw the deposition of the government of Sir Michael Somare, the country’s founding prime minister, who had enjoyed the prodigious feat of almost ten years in power.

After the 2012 election, the O’Neill government made a number of significant domestic investments and regional commitments, exhibiting Papua New Guinea’s clout as the rising regional power. As Papua New Guinea expects to host the Pacific Games in July 2015 and the Asia Pacific Economic Cooperation (apec) meeting of world leaders in 2018, the government looked toward China’s construction industry, awarding a bulk of the construction contracts to major Chinese companies to fulfill its endeavor of having the necessary infrastructure in place to cater for these major events. China’s investment in the country has expanded exponentially; in 2014, almost 80 percent of China’s EximBank loan and project financing component in the Pacific region was dedicated to Papua New Guinea (Middleton 2014). This goes to show the country’s economic prominence among Pacific Island nations, owing much to its mineral, forestry, and fisheries resources.

Although Papua New Guinea ranks as the second-biggest recipient of Australian Aid (AusAID) after Indonesia, Prime Minister O’Neill continues to make aid commitments to other Pacific Island countries. The PNG government declared at the September 2013 Pacific Islands Forum meeting in Majuro that in 2014 it would introduce a special budget allocation to fund a regional development assistance program. The announcement was followed by O’Neill’s proclamation of “ongoing support to the Government of Marshall Islands, with a us$1 million grant to assist with Forum costs” and to assist with droughts and flooding that affected the atoll nation (Maclellan 2013).

Noting that Papua New Guinea had provided assistance to Sāmoa after Cyclone Evan in 2012, O’Neill also announced the allocation of k5 million each to Tuvalu and Tonga for programs in climate change assistance and cyclone relief, respectively. (In 2014, one PNG kina [k] averaged us$.38.) In addition to these direct grants, Papua New Guinea was also supporting smaller Pacific nations through regional agreements such as the Parties to the Nauru Agreement on regional fisheries (Maclellan 2013).

In May, Exxon Mobil PNG Ltd sent the first shipment of 80,000 tonnes of liquefied natural gas (lng) to Japan. Prime Minister O’Neill stated that Papua New Guinea has been elevated to the exclusive club of nations that produce and export lng. The economic growth of the project resulted in the employment and training of thousands of locals, more than k10 billion spent on the project, and hundreds of millions of kina invested in infrastructure and community programs. It was expected that the benefits would flow to landowners through the payment of royalties (O’Neill 2014; The National, 15 May 2014).

Although the first lng shipment marked a milestone for Papua New Guinea, the government acknowledged that the country would not see actual profits from lng export immediately, but rather in the next few years. As revenue trickles in, it is crucial that the government not lose sight of the value of the PNG Sovereign Wealth Fund initiated by the last government. The organic law establishing this fund “was designed to ensure that all government revenues from minerals and petroleum passed through a stabilisation fund prior to flowing through to the National Budget in accordance with a specified formula, and that PNG lng dividends accruing to the PNG Government would be paid into a development fund for PNG’s economic and social development” (Osborne 2014).

Among the many issues that haunted the government were the prime minister’s arrest warrant as a result of a letter supposedly signed by him authorizing illegal payments...