Integrating Environmental Considerations into the Economic Decision-Making Process
Main items
Volume 3Pacific IslandsPapua New Guuinea Index
Previous Next
 

I. NATIONAL INSTITUTIONAL ARRANGEMENTS FOR INTEGRATING ENVIRONMENTAL CONCERNS INTO POLICY DECISION-MAKING PROCESSES

[ A | B | C | D ]

D. Assessment of adequacy of institutional arrangements

Various government agencies are entrusted with the responsibility of administering and enforcing the environmentally-related Acts and legislation of Papua New Guinea. The Mining and Petroleum Acts are administered by the Department of Mining and Petroleum, while the role of protecting the environment and matters of conservation are the responsibility of the Department of Environment and Conservation. The Bureau of Water Resources is involved in the administration of the Water Resources Act and the Environmental Contaminants Act. The Dumping of Waste at Sea Act is administered by the Department of Environment and Conservation with resources and input from the National Fisheries Authority.

Environmental legislation in Papua New Guinea is regarded as being among the most comprehensive in the developing world, and it is certainly superior to that of its South Pacific neighbours (Carew-Reid, 1989). However, in practice, there has been considerable difficulty in ensuring effective implementation because of four major factors: manpower, financial and information constraints as well as a conflict of interest arising from the dual role of the government as part operator and monitoring authority. Currently, monitoring studies are done on an ad hoc basis by the developers with reports being submitted during quarterly meetings. The enforcement of development controls (e.g.., licences and permits) sometimes brings the State into competition with the landowners and developers. Sometimes the landowners collude with the developers, which undermines the ability of the State to enforce the regulations.

In chapter II it is contended that, among other things, penalties need to be increased to make them an effective deterrent. The reasons for poor enforcement include the fact that scarce administrative resources are often sunk into the maintenance of the regulatory system itself rather than into monitoring and enforcement activities. Although the Papua New Guinea judiciary has proven itself to be independently minded, so far there has not been a successful prosecution under EPA. That is mainly because the bureaucracy has little or no experience of prosecuting regulatory offences. In addition to inadequate monitoring, the problems of poor record keeping as well as a tolerance of some breaches of legislation and confusion over the seriousness of other breaches have contributed to a state of bureaucratic inertia. Current environmental legislation makes provision for individuals to seek compensation for adverse impacts of mining operations. However, there have been no previous cases of individuals or companies seeking redress in the local courts against the government and/or mining companies. The only action of that type was taken in an Australian court to gain maximum international coverage (box 2).

Box 2. Ok Tedi compensation claim

The Ok Tedi gold/copper mine is located in the remote Star Mountains of Papua New Guinea. Like all mines, Ok Tedi was expected to generate a great deal of waste material. Broken Hill Proprietary Company Limited (BHP) originally built a tailings dam. But before the mine could start operating, a landslide washed the dam away. To build a new dam would have delayed the mining operation and there was doubt about the ability of the dam to withstand the constant rainfall in the area. In 1989, the government gave the company permission to commence mining without a tailings dam. The untreated tailings were dumped into the Ok Tedi River.

Since mining commenced, adverse impacts have been felt by the people who live on the flood plain downstream. They claim that the mine has destroyed their traditional lifestyle. The number of fish in the river has reportedly declined and mine waste has covered village gardens (farms) along the bank. In May 1994, the Melbourne-based legal firm, Slater and Gordon, launched the largest litigation claim in Australian history. The claim, financed by Slater and Gordon itself together with environmental groups, comprised A$ 2 billion in exemplary damages for failure to build a tailings dam, and A$2 billion compensation. The court action placed the future of the Papua New Guinea mining industry under a cloud. In its defence, BHP argued that the project was operating in compliance with Papua New Guinea law and with the full support of the Government of Papua New Guinea.

Following the commencement of the court action, the Government of Papua New Guinea passed legislation proscribing compensation claims in foreign courts against resource projects in Papua New Guinea. The government and BHP proposed a compensation package worth A$ 110 million (approximately K 110 million), payable over a period of 15 years, the expected life span of the mine. A total of A$ 14 million was to be paid immediately into a trust fund for the affected villagers. However, the villagers threatened to take court action to close the mine if their Melbourne court action was unable to proceed.

On 8 June, 1996, the parties in the litigation in Melbourne and Papua New Guinea signed an agreement to resolve the dispute. The main elements of the agreement are detailed below.

The plaintiffs agreed to:

  • Discontinue the Melbourne legal proceedings;
  • Withdraw the constitutional challenges in Papua New Guinea;
  • Fully support the Restated Eight Supplemental Agreement;
  • Accept general compensation under the Agreement;
  • Sign the Lower Ok Tedi Heads of Agreement and support negotiations sponsored by the Minister of Mining and Petroleum.

Among other things, BHP agreed to:

  • Pay the legal costs of the plaintiffs, estimated at A$ 7.6 million;
  • Implement a technically and economically feasible tailings option which had State approval.

The general compensation package of A$ 110 million negotiated earlier by the Papua New Guinea Government with BHP was to stand. It was agreed that there would be no effective reduction in the amount payable in the compensation package by the amount spent on any tailings disposal scheme.

As a result of the agreement, the legal proceedings in Melbourne and Papua New Guinea were brought to an end. BHP agreed to meet the legal costs incurred on behalf of the villagers to avoid any liability on their part.

Sources: The Times of Papua New Guinea, 5 May 1994; Australian Financial Review, 15 December 1995; BHP News, 11 June 1996; and Business Insurance, 28 August 1995.

Top
Previous Next