Challenge To Amendments To PNG’s Environment Act Threatens PNG’s Sovereign Risk Rating

In May, PNG’s parliament pushed through a series of amendments to the Environment Act. The amendments were made in response to a Court decision that possibly renders environmental permits for resource projects – such as mining or forestry projects – invalid and unenforceable.

This is part of a continuing campaign by NGOs opposed to forestry and mining projects to use loopholes in PNG laws to obstruct projects. Current targets are forestry and mining projects in PNG.

The amendments to the Environment Act attempt to sidestep this possibility by giving new discretionary powers to the Secretary of the Department of Conservation to rule on compliance with the PNG law of environmental assessments by resource developers. An additional regulation applies these powers to permits granted prior to 2000.

To complicate matters further, a court has granted an injunction that work on the Ramu NiCo project of Chinese miner, MCC, halt because of claims by NGOS that implementation of the regulation is unconstitutional.

If successful, this challenge would raise enormously the sovereign risk of investing in PNG. According to news reports, the mining industry is watching developments very closely. Anyone with an interest in forestry and agriculture in PNG should be doing the same.