II. MECHANISMS FOR INTEGRATING ENVIRONMENTAL CONSIDERATIONS INTO SECTOR POLICIES AND FOR MONITORING ENFORCEMENT

[ A | B | C | D ]

B. Experience to date

Under the Mining Act (revised in 1991), an environmental plan must be submitted for each project in addition to the feasibility studies which comprise part of the process of assessment. The environmental plan includes an environmental impact assessment (EIA) and provisions for social monitoring. The environmental plan is discussed at a development forum comprising the developer, landowners, and national and provincial government representatives. The forum process has, so far, appeared to be a useful mechanism by which problems related to the concerns of landowners can be resolved. For example, the forum process was successful in resolving initial landowner problems associated with the Lihir gold mine. However, the long-term success of this mechanism can be ascertained only after the mine has been in operation for some time.

In preparing their environmental plans, the mining companies are expected to consult with both the Department of Environment and Conservation and the Department of Mining and Petroleum. In general, the environmental plans prepared for mining projects have been fairly comprehensive in scope and highly professional compared to those produced for the forestry and agricultural sectors. As a result of a lack of sufficient skilled manpower on the part of the government agencies, much of the data used to evaluate the environmental plans are generated by the mining companies themselves. The government agencies are several years away from having the capacity to obtain sufficient original data to carry out independent appraisals. In recent years, government agencies have turned to independent organizations to provide independent appraisals. It is now standard practice to undertake benchmark studies prior to the commencement of mining projects. The Ok Tedi project, however, commenced before this mechanism was established. Consequently, the lack of a benchmark study on the Ok Tedi and Fly Rivers projects has left a major gap in related environmental data.

Compared to the Department of Environment and Conservation, the Department of Mining and Petroleum as been operational for a relatively long period and has therefore been able to develop its pool of staff and expertise. However, since 1995, there has been a high turnover of skilled staff which has resulted in the Mining Division becoming critically short of manpower. The Department salary structure cannot compete with the remuneration that private mining companies can offer. The Department has had some success in training indigenous staff, although it has been unable to retain those employees as a result of poor salary incentives. In recent years, the Petroleum Division has been successful in obtaining funds from the World Bank and ADB to build up capacity within the Division.

The Department of Environment and Conservation has been in existence for a much shorter period of time. In addition, it has encountered more problems in building up sufficient expertise to enable it to play a more effective role in coordinating activities between the three main interest groups in the minerals sector: the government, the landowners, and the mining companies. The Department of Environment and Conservation engages consultants and solicits comments from relevant government agencies in evaluating environmental plans. The option of accessing external assistance greatly enhances the capabilities of the Department and mitigates some of its manpower problems. Nevertheless, there is an urgent need to build up capacity within the Department of Environment and Conservation to enable it to carry out its mandate more effectively.

The issue of lack of adequate manpower for monitoring and enforcement of environmental regulations is closely linked to the problem of inadequate financial resources. For example, the total 1995 budget allocation for the Department of Environment and Conservation was K 4.9 million, of which K 531,200 was for monitoring activities in the mining sector. The allocation for the Department of Mining and Petroleum was K 12.1 million. In contrast, the mining companies which the government agencies are supposed to monitor devote far more resources to environmental monitoring. For example, the Ok Tedi mining project budget for environmental monitoring in 1995 was US$ 5 million. The other mines and petroleum projects have similar budgets for environmental studies and monitoring.

The allocation of inadequate resources to the regulatory authorities (Department of Environment and Conservation and Department of Mining and Petroleum) creates an additional constraint in the form of an imbalance in access to information between the developers and the regulators. The mining and petroleum companies submit quarterly reports and quarterly reviews that focus on the environment, social impacts and industrial relations. However, the regulatory agencies do not evaluate those reports based on their own sampling and analysis. According to Ila (1996), the developers of mining and petroleum industry projects under the environmental protection legislation are involved in self-regulation because State resources are not sufficient for undertaking the responsibility. The purpose of the quarterly reviews is to assess the progress of the projects and solve emerging problems. Various stakeholders, including representatives of the landowners, the provincial government, the Department of Environment and Conservation, the Department of Mining and Petroleum and the developer, are often present at the reviews.

The self-regulatory exercises undertaken by the mining and petroleum companies has attracted criticism from various quarters including the European Commission. The European Commission (Post Courier, 1997) criticized the fact that mining companies were conducting their own environmental monitoring and it stressed the need for an independent body to carry out such functions. It has been suggested that the role of the State as an independent arbiter in matters related to the environment has been compromised because of its equity participation in major resource projects. The assessment by this report indicates that the mining and petroleum industry in Papua New Guinea is, to a large extent, self-regulating not by choice but because of the inability of the Department of Environment and Conservation and the Department of Mining and Petroleum to effectively carry out their responsibilities.

It has been suggested that the government, acting through its agencies such as the Department of Mining and Petroleum, faces a conflict of interest by acting as a protector of the environment as well as a major shareholder or resource developer. It has been said (Townsend, 1988) that when conflicts have arisen, the responsible department (the Department of Mining and Petroleum) has often taken the position of a State shareholder rather than as an advocate for environmental protection. It is desirable for the Department of Mining and Petroleum not to enter into conflict of interest situations. However, so long as the State has significant holdings, such situations are likely to occur. One approach to solving that anomaly is to allow the Department of Environment and Conservation to assume a more influential role in environmental matters affecting the mining industry. As suggested above, one of the ways in which that can be done is through an increase in the allocation of financial resources to the Department of Environment and Conservation. Such funds could come from revenue flowing in from the various mineral and petroleum projects.

The current arrangements for coordinating activities in the mineral resource development sector are explained below.

The Department of Environment and Conservation is in charge of the coordination of environmental regulations and is supposed to have an officer based at each project site. The Department of Mining and Petroleum should also have a liaison officer based at each project site. A notable strength of that coordination mechanism is that interdepartmental committees have been formed and meet quarterly to review the projects. The committee comprises a representative from the Department of Mining and Petroleum (usually the project coordinator or senior liaison officer), the Department of Finance and Planning (the officer responsible for project funding under the Special Support Grant), the Department of Industrial Relations, the Department of Environment and Conservation (Environmental Impact Assessment Section), the Department of Commerce, and representatives of the landowners. Sometimes the committee is ill-informed about a project since an officer may not be present at the site. If a liaison officer from the Department of Mining and Petroleum happens to be a member of a landowning community he tends to protect the interests of the landowners, thus creating a conflict of interest. That situation therefore makes coordination difficult between the activities of the Department of Environment and Conservation and the Department of Mining and Petroleum. In the interdepartmental committee meetings, quarterly reports are presented by the developer. Usually, the regulatory agents are compelled to comment only on what is presented because of their inability to independently confirm the report.

Conflicts also tend to arise between the landowners, the developer and the State agencies. Some of the conflicts arise from unmet expectations on the part of the landowners regarding the delivery of services. The aim of the development forums is to minimize some of those potential conflicts by involving the landowners in the development planning process. Under the present system, there is apparently no formal procedure for resolving conflicts of interest among government ministries/agencies.

Social impact assessment (SIA) and social monitoring of development projects, as integral parts of the larger process of environmental planning and monitoring, have only been taken seriously in Papua New Guinea since the passage of EPA in 1978. The initiative for undertaking SIAs and social monitoring originally came from the Department of Mining and Petroleum, and the then Department of Finance and Planning. Responsibility for SIAs was only transferred to the Department of Environment and Conservation from the Department of Mining and Petroleum in late 1988. In the past, SIAs submitted as part of the environmental plans under the terms of EPA have lacked depth. Generally speaking they have been limited to:

• The identification of sacred sites in the impact area, together with proposed safeguards;
• Summaries of existing statistical information on the social and economic development of the impact area;
• Undertaking, on the part of the developer, to provide additional employment infrastructure and services to the local community.

Occasionally, since 1990, government budget papers have included a separate statement on SIA (Department of Finance and Planning, 1990). The current policy is to produce new and more comprehensive guidelines for SIA and social monitoring which will ensure that those activities are:

• An integral part of improved government planning procedures for major development projects;
• Designed to promote the ongoing process of consultation between the government, the developer and the local community through the development forum;
• Able to provide recommendations which are given effective legal force in the development agreement with the State;
• Maintained at periodic intervals throughout the life of any given project.

The formulation of such guidelines is currently the responsibility of the Environmental Planning Division of the Department of Environment and Conservation, and the Social Affairs Division of the Department of Finance and Planning. Progress to date has been slow because the two agencies lack the time and human resources to complete the task.

One of the earliest examples of a SIA in Papua New Guinea was a study of the Bougainville copper project commissioned by BCL shortly after the start of mining operations in 1972 (Scott, 1973). The report was an insubstantial document and provided an overly optimistic view of the impacts. The Ok Tedi mining project, by contrast, was subjected to a range of impact studies involving various forms and degrees of cooperation between the government and the developer (Jackson, 1977; Jackson and others, 1980; Taukuro and others, 1980; Hyndman, 1982; and Barth and Wikan, 1982). However, those projects were undertaken after government approval was given for development. Other studies were carried out by the Papua New Guinea Institute of Applied Social and Economic Research (Jackson and Ilave, 1983,; and Filer and others, 1984). However, no ongoing effort was made to monitor the socio-economic impacts except in the area of health.

In the early 1980s, a series of socio-economic impact studies (SEIS) was undertaken on gold prospects which had been found to be feasible. Although those projects were all covered by EPA provisions, SEIS were organized by the Department of Mining and Petroleum rather than by the Department of Environment and Conservation; the resulting reports were not included in the environmental plans submitted under the requirements of the Act. The first SEIS to be conducted after responsibility for coordinating SIAs was transferred from the Department of Mining and Petroleum to the Department of Environment and Conservation was that for the Mount Kare project (Jackson, 1988); however, the terms of reference were almost identical to those governing previous SEIS under the coordination of the Department of Mining and Petroleum. Since 1988, SIAs have been presented as an integral part of the environmental plan. However, their quality remains less than desirable. Furthermore, the Department of Environment and Conservation has not shown that it has the capacity to either establish new terms of reference or evaluate the results.

The need for the government agencies to improve their performance in the area of SIAs was highlighted by the start of the Bougainville crisis. Consultants hired to review the BCL project revealed that there had been no social monitoring programme during the years following the renegotiation of the Bougainville Copper Agreement in 1974 (Applied Geology Associates, 1989). Approvals given to subsequent schemes, such as the Misima and Porgera projects, required systematic social monitoring programmes. However, the reports submitted to the Department of Environment and Conservation for the Misima project (Misima Project Social Impact Study Committee, 1989) revealed the failure of the Department of Environment and Conservation to set clear and comprehensive guidelines for that kind of activity.

The continued failure of the government, through its agencies, to develop a consistent and effective approach to SIAs and social monitoring in the minerals sector is reflected in its inability to decide who should be responsible for what or who should pay what. Officially, the government is supposed to be pursuing a "user-pays" policy. However, the approval of the Kutubu petroleum project, for example, did not require the developer to undertake a social monitoring programme.

Currently, there is no coordination among the various government bodies in conducting SIAs. The Social Affairs Division of the Department of Finance and Planning has, in the past, undertaken its own review of SIA guidelines for development projects. The University of Papua New Guinea undertook a review of social monitoring guidelines for the Department of Environment and Conservation as part of a consultancy in the general area of mine monitoring. The Department of Mining and Petroleum has its own Community Liaison Programme which maintains continuous contact with the landowners, and keeps track of their problems and concerns.

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