I. NATIONAL INSTITUTIONAL ARRANGEMENTS FOR INTEGRATING ENVIRONMENTAL CONCERNS INTO POLICY DECISION-MAKING PROCESSES
B. Existing regulatory systems
The State oversees the operation of mineral projects in the country through various types of legislation administered by the Department of Mining and Petroleum and the Department of Environment and Conservation. The Mining and Petroleum Acts are administered by the Department of Mining and Petroleum while the protection of the environment is the responsibility of the Department of Environment and Conservation under various Acts of Parliament. The Department of Finance and Planning and the Attorney-General are involved in the planning stages of mining projects, especially during the development forum process and the negotiations for government funding of particular projects.
The Mining and Petroleum Acts serve as the basis of mineral policy development in Papua New Guinea. The national mineral policy stipulates that minerals are the property of the State and therefore allows for their exploration and mining through the granting of various tenements. Under the fiscal provisions of the Acts, the holder of a special mining lease must pay a royalty to the State equivalent to 1.25 per cent of the net proceeds of the sale of minerals. However, it was recently announced that royalty payments would be increased to 2 per cent with an increase of 0.75 per cent in the neutral revenue for the developer. Special mining lease holders are subject to a taxation rate of 35 per cent. They are also liable to an additional profit tax of 35 per cent and have their income "ring-fenced" to isolate the income solely derived from a special mining lease project. Special mining lease holders enjoy tax holidays during the period in which the initial investment is recovered. Concessions on import duties for mining equipment and supplies are also given during that period, and the developer may opt to accelerate depreciation.
Under the Mining Act, the State acquires participatory interest in mining projects, other than small-scale or alluvial projects, on a fully contributing basis with no financial carry. To date, Stateequity has not exceeded 30 per cent. Under the Act, before a special mining lease can be approved, a development forum comprising representatives from the landowners, the developer, and the national and provincial governments must be held. The forum discusses the proposed development, its likely effects and the way in which the benefits will be distributed. The development of all mines to date has included the construction of infrastructure to cater for the needs of the population affected by the project. The capital cost of the infrastructure is borne by the developer while the State contributes to the capital cost of non-operational facilities provided by the developer provided the latter retains priority to use the facilities. Tax credit concessions allow the developer to provide infrastructure that is the responsibility of the State. That enables the developer to create goodwill among the local people living outside of the lease area.
The Petroleum Act and the petroleum policy govern the operations of petroleum projects in the country. The policy stipulates that ownership of petroleum resources onshore or offshore belongs to the State which has the right to licence others to explore for, extract and sell petroleum resources. Other legislation governing petroleum development includes the Income Tax Act (Chapter 110, Division 10A, fiscal regimes), the Central Banking Act (Chapter 138, Foreign Exchange Regulations) and the Environmental Planning Act, 1978.
The legislative requirements enable the State to consider the environmental consequences of any new mining development prior to the granting of approval to proceed. They also require the monitoring and control of any pollution that is subsequently produced. The procedures to be followed by a proponent of any development are essentially the same as the environmental legislation in Australia or North America with the exception of one important respect. In Papua New Guinea, the acceptability or otherwise of a new mining development is judged primarily on perceptions of its effects on land, water and other resources used by the indigenous people. That perspective differs from the one in Western countries, in that it places emphasis on the dependence of indigenous people on natural resources and their predominantly subsistence economy.