PNG Insight Blog

PNG Organic Law on the Integrity of Political Parties and Candidates (and MPs) Is A Failed Political Reform

Peter O'Neill's People's National Congress has the highest number of MPs (27) followed by Independent MPs (14); Don Polye's Triumph Heritage Empowerment Party has 12 MPs; Patrick Pruaitch's National Alliance Party has 8 MPs; United Resources Party and Papua New Guinea Party has 7 MPs each.

It is important to note that the list contained parties and names of MPs who contested under party banners. Many of the MPs who won under sponsored political parties like THE party have jumped ships.

Others have joined government or defected to opposition and middle bench or scattered at the backbench, caught between party politics.

The three convicted MPs are from PNG Party (Francis Potape), PNC party (Havila Kavo) and PUA party (Paul Tiensten). PNG party has also lost Daniel Mona.

THE party leader, Don Polye, is the Opposition leader. His party deputy leader, Leo Dion, is the Deputy Prime Minister. How can a party leader be the leader of the Opposition while his deputy is the Deputy Prime Minister in the government on the other side of the house?

This simply shows that party politics is fragile and pragmatic with no control measures to strengthen political parties. There is, now, a total collapse in the system and structure of political parties which is a cause for concern.

The Organic Law on the Integrity of Political Parties and Candidates (OLIPPAC; passed in 2001) has failed. Stability within the party is non-existent. Unless political parties are strengthened, Independent MPs and smaller parties can do whatever they want on impulse.

Name Political Party Number of Members

1 Joseph Lelang Coalition for Reform Party

2 Sasindran Muthuvel Coalition for Reform Party

3 Komun Joe Koim Independent

4 Kila Haoda Independent

5 Noah Kool Independent

6 Ron Ganarafo Independent

7 Bire Kimisopa Independent

8 Robert Atiyafa Independent

9 James Lagea Independent

10 Johnson Tuke Independent

11 Camillus Bongoro Independent

12 Nixon Mangape Independent

13 De Kewanu Independent

14 Kelly Naru Independent

15 Solan Mirisim Independent

16 Richard Maru Independent

17 Loujaya Toni Indigenous People's Party

18 Malakai Tabar Melanesian Liberal Party

19 Dr Allan Marat Melanesian Liberal Party

20 Patrick Pruaitch National Alliance Party

21 Salio Waipo [2] National Alliance Party

22 John Hickey National Alliance Party

23 Sir Michael Somare National Alliance Party

24 John Simon National Alliance Party

25 Joe Sungi National Alliance Party

26 Kerenga Kua National Alliance Party

27 Jim Simatab National Alliance Party

28 William Tongkamp New Generation Party

29 Ronnie Knight New Generation Party

30 Sir Puka Temu Our Development Party

31 Richard Mendani Papua New Guinea Country Party

32 Jeffrey Kuave Papua New Guinea Country Party

33 Sam Basil Papua and New Guinea United Party (PANGU)

34 Daniel Mona (Deceased)Papua New Guinea Party

35 Lukas Dekena Papua New Guinea Party

36 Ross Seymour Papua New Guinea Party

37 Francis Potape(Convicted) Papua New Guinea Party

38 Jim Kas Papua New Guinea Party

39 Francis Marus Papua New Guinea Party

40 Belden Namah Papua New Guinea Party

41 Tommy Tomscoll People's Democratic Movement

42 Paias Wingti People's Democratic Movement

43 Labi Amaiu People's Movement For Change Party

44 Garry Juffa People's Movement For Change Party

45 Charles Abel People's National Congress

46 Koi Trape People's National Congress

47 Jim Miringtoro People's National Congress

48 Havila Kavo (Convicted) People's National Congress

49 Peter O'Neill People's National Congress

50 Francis Awesa People's National Congress

51 Bob Dadae People's National Congress

52 Paru Aihi People's National Congress

53 Ereman Tobaining Jnr. People's National Congress

54 Nixon Duban People's National Congress

55 Charlie Benjamin People's National Congress

56 Paul Isikiel People's National Congress

57 Roy Biyama People's National Congress

58 Michael Malabag People's National Congress

59 Mangere Siniwim People's National Congress

60 Jeffery Komal People's National Congress

61 Louta Atoi People's National Congress

62 Boka Kondra People's National Congress

63 Isaac Waigavara People's National Congress

64 Ano Pala People's National Congress

65 Gordon Wesley People's National Congress

66 Aide Ganasi People's National Congress

67 William Powi People's National Congress

68 Ken Fairweather People's National Congress

69 James Marape People's National Congress

70 Mao Zeming People's National Congress

71 Benny Allan People's National Congress

72 Wesley Nukundj People's Party

73 Peter Ipatas People's Party

74 Davis Steven People's Party

75 Mogerema Sigo Wei People's Party

76 John Pundari People's Party

77 Robert Sandan Ganim People's Party

78 Ezekiel Anisi 1 People's Progress Party

79 Theo Zurenuoc People's Progress Party

80 Ben Micah People's Progress Party

81 Titus Philemon People's Progress Party

82 Byron Chan People's Progress Party

83 Sir Julius Chan People's Progress Party

84 Anderson Agiru People's United Assembly Party

85 Paul Tiensten (Convicted) People's United Assembly Party

86 Ati Wobiro People's United Assembly Party

87 Tobias Kulang PNG Constitutional Democratic Party 1

88 Justin Tkatchenko Social Democratic Party

89 Powes Parkop Social Democratic Party

90 Joseph Yopyyopy Social Democratic Party

91 Mehrra Minne Kipefa Stars Alliance Party

92 Wera Mori Triumph Heritage Empowerment Party

93 Julie Soso Triumph Heritage Empowerment Party

94 David Arore Triumph Heritage Empowerment Party

95 Don Polye Triumph Heritage Empowerment Party

96 Mark Maipakai Triumph Heritage Empowerment Party

97 Douglas Tomuriesa Triumph Heritage Empowerment Party

98 Philip Nai Triumph Heritage Empowerment Party

99 Leo Dion Triumph Heritage Empowerment Party

100 James Gau Gelak Triumph Heritage Empowerment Party

101 Delilah Gore Triumph Heritage Empowerment Party

102 Benjamin Poponawa Triumph Heritage Empowerment Party

103 Akmat Mai Triumph Heritage Empowerment Party

104 Rimbink Pato United Party

105 Joe Lera United Resources Party

106 William Duma United Resources Party

107 Mai Dop United Resources Party

108 Benjamin Phillip United Resources Party

109 Dr Fabian Pok United Resources Party

110 Steven Pirika Kamma United Resources Party

111 Anton Yagama United Resources Party

Oil Search PNG Advises US$200 Million Write-Down Due to Oil Price Dip

Oil Search PNG, led by CEO Peter Botten, has recently advised a write-down of US$200 million to re-value the company in light of the recent dip in oil prices, as reported by The Financial Review.

While this move may strategically position the company in terms of its assets and equity, it raises questions about the impact on shareholders and the assessment of the government's shareholding on behalf of Papua New Guineans.

Has Peter O'Neill been misled into borrowing and investing heavily, and will the write-down affect the company's share price? And, what does this mean for shareholders and Papua New Guinea Government?

Share Price and Shareholders

A write-down of US$200 million is a significant amount that can greatly impact a company's value. However, it may also serve to put a positive spin on Oil Search's balance sheet and save face for CEO Peter Botten.

The company has shown strong growth, and there may not be immediate cause for alarm. Nevertheless, shareholders may be concerned about the potential impact on the company's share price.

Positive signs can be seen, as Oil Search's share price has been picking up from a low of AUD6.93 in December 2014 to a high of AUD8.24 in February 2015.

While there may be fluctuations in price, it remains to be seen whether the US$200 million write-down will have a negative effect on the share price.

Share price is often considered a good indicator of a company's value in real-time, and if it drops again after the write-down, Peter O'Neill may not be able to solely blame the oil price dip, but also the actions of Oil Search's leadership.

Government Shareholding and Investment Decisions

As a major shareholder in Oil Search, the Papua New Guinea Government needs to carefully assess the value of its shareholdings before any write-down goes ahead.

A fall in share price after a significant write-down could have devastating consequences for the government and the people of Papua New Guinea.

The write-down of US$200 million is a substantial amount, equivalent to double the operating revenue of Oil Search as of September last year. This could potentially erode a significant portion of the company's value.

Questions arise as to whether this write-down is a mere smoke-screen to cover up poor investment decisions if any potential investments are cut. It is crucial for the government to thoroughly evaluate the situation and ensure that the best interests of Papua New Guineans are safeguarded.

Conclusion

Oil Search's recent announcement of a US$200 million write-down to re-value the company due to the dip in oil prices has raised concerns among shareholders and the Papua New Guinea Government.

The impact on the company's share price and the government's shareholding needs to be carefully considered, and questions about the company's investment decisions need to be addressed.

As the situation unfolds, all stakeholders, including shareholders and the government, will be closely watching the developments and their potential implications for Oil Search and Papua New Guinea's economy.

SBE Awareness: English Only - Elementary Schools To Start With Teaching Phonics, Handwriting Ignored Part Two

Commentary - The Education Secretary talked about increasing time allocation to subjects taught at elementary schools. It is achievable if courses taught in Outcome Based Curriculum are slashed, giving enough time to add to Mathematics, for example. The core subjects to be taught at Elementary schools are Language, Mathematics, English and Culture and Community.

The idea of scripted teachers' lesson plans is ideal during the introduction of SBE. It must be done properly and in detail rather than a brushed work.

Scripted plans must be complimented with worksheets or teaching aids. If the resources are missing, lessons plans are likely to have little or no use.

I like the way Dr Micheal Tapo explained teaching of phonics, though there is not enough detail. How can elementary teachers teach spelling or reading with emphasis on Phonics? Two common ways to teach early-years pupils 'how' to sound words are either by learning the sound of letters before sounding words; and or memorising sight words. Put together and phonics make sense.

FOr example, the 'consonant sounds' and 'vowel sounds' have to be taught at stages. By this I mean instead of learning A, B, C, D, E, F, ....X, Y, Z it would be better to sound them as Aaa, baa, caa, dee, eee, faa, gaa..... Xaa, Yaa, Zaa with the emphasis placed on Aaa, Eee, Iii, Ooo and Uuu.

These are the basic sounds when reinforced properly at an earlier age, established correct pronunciation, eloquence and accentuation. This 'standard' if developed properly and taught rigorously, like in the days our forefathers, will see great results in students' ability to speak, read, write and use proper English.

What I can be critical about is the emphasis on 'writing'. Writing is a skill. It must be developed properly at Elementary school. But, why is not prescribed alongside Phonics?

The NDoE needs to improve on their ability to clearly set out how to teach Handwriting. This is important and must be part of early years learning. I hope the secretary can take this into consideration.

Another oversight is the assumption that elementary teachers have teaching aid like mobile phones. The NDoE thinks that they can provide teaching resources in SD cards for teachers to use. Using mobile phones as teaching aid has limitations though the intention is good. Some limitations include battery longevity, visibility, audibility and other practical aspects within classroom setting.

I am for the Standard Based Education. I want to see it taking off. Despite that, I am of the opinion that the change is far from creating an Education revolution in the country. Not because it is a bad idea. It is simply not prepared well - the change must be smart, sharp and efficient.

I am afraid after 22 years of Outcome Based Education and scrapping of it, Papua New Guinea is likely to have gone down the same path with SBE as far as preparation, awareness and implementation is concerned.

Read Page 2 of secretary release in line with commentaries in Part One and Part Two (above)

continue....

Increase in time allocation

There will also be an increase in the time allocation for teaching of English, language and mathematics. The new time allocation for English is 300 minutes per week and for language it is 300 minutes per week while mathematics has increased from 210 minutes per week to 240 minutes per week, an increase of 30 minutes at the elementary level.

Use of phonics

In the first 10 weeks of the first term (Term 1) in 2015, every elementary pupil will be taught reading and spelling using phonics, a method based on the sounds of letters, groups of letters and syllables.

Elementary pupils will also be prompted to read books that the World Bank-backed READ PNG project has provided for classroom libraries so that every pupil is encouraged to read from the beginning of their school life.

The DOE has produced new curriculum documents in preparation for the teaching of the elementary SBC in 2015. In OBC, elementary teachers were given samples of big lesson books and asked to develop their own lessons using the language of instruction. Hence, teachers spent too much time developing resources and very little time on high-quality lesson delivery, resulting in poor education at the elementary level.

The DOE’s Curriculum Development and Assessment Division (CDAD) has produced scripted lessons and teacher guides:

• English scripted lessons;

• Mathematics scripted lessons;

• Language scripted lessons; and

• Culture and community teacher guide.

In the SBC scripted lessons, detailed lessons in English have been written by the curriculum writers at CDAD for each elementary subject. What the elementary teacher has to do is simply pick up the lesson plan for each period and teach.

The teacher will spend less time preparing lessons and consequently will spend more high-quality time with the elementary pupils in the teaching and learning activities. Other resources will also be provided to each elementary teacher and class for effective teaching throughout the year.

The DOE has re-introduced Shell Books to be used together with School Journals to encourage elementary pupils to learn to read English books at an early age. These are produced by the DOE. Shell books are small readers containing stories, with pictures, from Papua New Guinea. They are written in English and Tok Pisin, with space for teachers to translate the stories into their own languages and with questions for the children.

These books complement the English and language teaching and can support culture and community and mathematics teaching at the elementary level. There are also DVDs containing dramas, songs and music. There are also SD cards for mobile phones containing songs to accompany elementary scripted lessons so teaching and learning become playful and fun, in order to allow elementary pupils to enjoy their lessons.

The DOE believes that all elementary teachers have private mobiles phones with slots for SD cards, to be used during lessons as his/her teaching aid. In our next editorial we will elaborate on other resources to support and complement the syllabuses.

Dr. Michael F. Tapo, EdD

Secretary for Education

Standard Based Education Awareness: Analysis of Secretary's Statement On SBE Part One

Commentary -
Papua New Guinea NDoE secretary, Dr Michael Tapo, promised to update parents, elementary school teachers and the country about developments in Standard Based Education is a step forward. In a first of a series, he has released in a three-page pdf document outlining what is likely to happen and what teachers can do to kick-start teaching. His commitment to 'outline issues and developments twice a week' should be commended.

All elementary school teachers are to check the department's website, as they are checking their bank balance every fortnight, to see whether there is an increment in their pay or any new resource for use when teaching.

Be aware that this change is the start of a complete overhaul in the Education System. A new curriculum (the secretary called Standard Based Curriculum) as well as a new Education Structure (Two-Six-six) are now taking effect, starting at elementary. Eventually Papua New Guineans will have realised 14 years of Elementary to Secondary education, instead of 12 years like in the 2-6-4 structure.

In is reassuring to know that lesson plans have been drafted as guides for teachers at the elementary schools to use. Any experience teacher can attest to the fact that a plan created by someone is helpful, but can not be used strictly in classroom by every teacher.

As the new trend in our education system is taking effect now, 2015. I am afraid the change takes place with minimal preparation. For the changes - both curriculum and structure - to be successful there has to be proper research and guides.

At the moment we are seeing it developed in parts. It is like, building a house without a plan.

Here is the NDoE press first release:

The Department of Education (DOE) is now embarking on improving the standards of education from 2015 onwards. This means that standards in the school curriculum, teacher preparation and professional development, examinations, inspections, school governance and restructuring of the school system and structures are some of the many components of education which will be improved by a Standards-Based Curriculum (SBC).

The department will be outlining here SBC issues and developments twice a week to make the public and teachers aware of the changes.

Various means will be used to improve the awareness of the SBC to be implemented in 2015, including

• Minister for Education and Secretary for Education speeches and presentations;

• DOE officers giving presentations to schools and other stakeholders;

• Presentation of SBC documents to schools and other stakeholders; and

• In-service training of all elementary and junior primary school teachers (Grades 3 and 4)

Structure of School System

The Government has embarked on free and compulsory education in 2015 and the level of resources will need to complement the school structure to enhance the standards of education and to keep the children in school.

• Two years of Early Childhood Education;

• 6 years of Primary education — Grade 1, Grade 2, Grade 3, Grade 4 and Grade 5 and Grade 6 and;

• 6 years of High School/Secondary education — Grade 7, Grade 8, Grade 9, Grade 10, Grade 11 and Grade 12

Elementary syllabuses

• English

Elementary teachers will teach English as a subject with the emphasis on teaching phonics through scripted daily lessons. The introduction of English as a subject is to address the low literacy rate in the nation. All teachers will use English as a medium of instruction beginning at this level.

• Language

This syllabus is important for two reasons. First it will help current elementary teachers to bridge into teaching English. They have been teaching elementary vernacular for many years and the language syllabus will help them to teach English better. Secondly, the elementary pupils will learn English quickly when Language is used to explain different English words or concepts. It is important for the cognitive and literacy skills development of the child, in preparation for reading and writing.

• Mathematics.

• Culture and Community, with science embedded as a subject in this syllabus.

~~~~
Part two of the commentary will be on use of Phonics in Elementary Schools.

Papua New Guinea National Education Plan - Has The Education System Failed, Is It Failing?

Department of Education Awareness on SBE (CLICK HERE)

Papua New Guineans and concerned friends who do not have the means to put their child/ren in overseas schools or private schools have to take these 4 points seriously:

1) National Education Plan 2005 - 2014 has lapsed. A new NEP (the NEP 2015 - 2024) is NOT out this year. Why is the plan - road map for the next 10 years - not out in the public before the school year begins?

2) Curriculum change (Outcomes Based Education to Standards Based Education) is a system-wide change which takes effect throughout every stage of schooling and it starts now, 2015. The Education Minister and National Department of Education secretary mentioned that this change would take effect regardless of early awareness and preparation. How the change will happen or what is actually changing in still not clear.

3) Structural Change (2-6-6) – The curriculum change is closely followed by structural adjustment. Unlike curriculum change where it takes effect across the system, the two-six-six structural readjustment is gradual. This means that children starting school this year will be pioneer generation. Instead of spending 12 years in schools (i.e. Elementary Gr 1 -2 , primary Gr 3 - 8 and secondary Gr 9-12, every student starting school in 2015 will spend 14 years (not 12 years) before reaching University. So, Papua New Guineas who send their kids to start school at age 6 or 7 now have to realise that these kids will be 20 or 21 when they do first year at university, not 18 or 19. So, what is the right age to start school now? Do we want our kids to be 20/21 before entering unis?

4) Project Fee - schools are directed by the Minister and NDoE not to charge project fees or face disciplinary action. Why now and not 2012, 2013 and 2014? Tuition Free Policy was implemented since 2012. Do the parents get a refund backdated to 2012? Most of them had been paying project fees.

These 4 points show that the Education minister, his secretary, education officials and foreign education consultants are playing around with 'human resource' of PNG. The heads are so disorganised putting parents, principals and teachers placed in precarious situation beginning 2015 school year. There is no clear direction from the top.

These are changes that will have a big impact in the next 10 years (NEP 2015-2024) and the next 14 years (structural change). The best thing the National Department of Education needs to do is to give CLEAR directive to head teachers about what is expected as far as the changes and NEP are concerned.

PNG MPs Continue to Receive Massive Salary Increases Since Sir Michael Somare's Time

Over the years, politicians in Papua New Guinea (PNG) have been receiving staggering pay increases, with no signs of slowing down.

Sir Michael Somare's time as Prime Minister

The trend started during Sir Michael Somare's time as Prime Minister, and within just seven years, parliamentarians would be enjoying an astounding 82% increase in their salaries alone.

It all began in November 2010 when Sir Michael Somare's government unanimously approved a whopping 52% pay rise, just before the Christmas holidays.

This unprecedented increase set a new standard for politicians' salaries in PNG.

Increase for politicians' salaries in PNG

The trend continued in November 2013, when Puka Temu, the then Public Service Minister in Peter O'Neill's government, announced another pay raise of 7%, which was backdated to January 1, 2013, and paid to every Member of Parliament just before their Christmas holiday.

But that's not all - the minister also declared a separate increase of 7.5% and 2.5% to be paid from 2014 to 2016 to every public sector worker, including the MPs.

To clarify, the 2013 increases were in three parts:

a one-time payment of 7%,
a 3-year increase of 7.5% of the actual gross salary, and
a 2.5% of the average salary.

The average salary is calculated by dividing the combined salaries of all earners by the number of earners.

Staggering 30% Spike in MPs Pay

The increase means that every public servant, including MPs, would receive a 7.5%/2.5% increase in instalments over a 3-year period from 2014 to 2016.

If the government stays true to its promise, public servants would have seen a staggering 30% spike in their annual pay by 2016, equivalent to a 10% increment every year.

The impact of these increases is significant.

By the end of 2016, the annual salaries of PNG's politicians would have nearly doubled compared to what they earned in 2010.

PNG MPs Salaries

Prime Minister earns over K364,000
Speaker of Parliament earns over K296,000
Deputy Prime Minister earns over K271,000
Opposition Leader earns over K271,000 (same as Deputy Prime Minister)
Government Ministers earn over K211,000
Other MPs earn over K106,000
Provincial Governors earn over K74,000

These amounts are exorbitant and raise questions about the morality of such increments.

The salaries earned by politicians are more than enough to live with their people and serve their constituencies.

However, it appears that they want even more to sustain a lifestyle elsewhere, away from their localities.

The trend of massive pay increases for politicians in PNG, which started during Sir Michael Somare's time as Prime Minister, continues to persist.

These unprecedented raises have resulted in exorbitant salaries for politicians, raising concerns about the moral implications of such increments.

In conclusion, as the salaries of politicians skyrocket, it's crucial to ensure that public funds are being used responsibly and in the best interest of the people of Papua New Guinea.

Provincial Education Advisers and Administrative Officers Are Misusing Teachers' Leave Fares

By M Steven Reoghberths

(former Education Officer in charge of teachers' leave fares in Morobe)

Pic courtesy: Post Courier Newspaper Jan 2015

The teachers leave fares issue has been ongoing matter mostly due to misappropriation by Division of Education heads in all provinces. Funds allocated purposely for leave fares were usually tampered with and diverted to cover up for shortfalls in other votes or items.

I am speaking from experience especially in Morobe where the highest allocation is given. Yet this is forever an issue year in year out. As the person formally in charge of teachers leave fares in Morobe, I can attest that the fault entirely lies with the provincial authorities and financial delegates in form of provincial education advisers and provincial administrative officers.

Every year funds have always allocated with delivery mechanism designed and in place to have all teachers receive their entitlements, but this all seemed on paper only as half of the funds has always been diverted to cover up for excessive travels, hire cars, hotel bills and travel allowances especially by senior officers.

The Department of Education and Teaching Services Commission should also shoulder blame as this is an overdue issue that should have been resolved a long time ago. Policies and TSC Act Section 130 that manages the teachers leave fares is outdated and should be updated with proper delivery mechanism in place that allows paying of leave fare without obstacles. The current delivery mechanism is effective, but needs tighter stringent measures on this funds so there is no diversion and misuse by provincial authorities, means the Finance Management Act also comes into play so this also has to be updated with stringent control on its use.

Morobe Province being the largest with highest number of teachers is a classic example of how funds meant for teachers leave fare has always had funds diverted by the education adviser and his administrative officer. Every year problems faced by teachers in regards to this has always been ignored and repeated the next year without anything being done by higher authorities.

Papua New Guinea Teachers' Association Must Stand Up For Teachers Without Media Bashing

There is no need to go on strike yet. Teachers from Elementary to Secondary schools in each province have reps. They form the PNGTA. There needs to be a collaborative effort from them to fight for teachers' remuneration and benefits.

Papua New Guinea Teachers' Association

Unlike before, Facebook (and access to it) has changed the way Papua New Guineans communicate. PNGTA (Papua New Guinea Teachers' Association) Chairman and reps from 22 provinces should, first, create an avenue for discussion. FB would be a good place to start.

Papua New Guinea Teachers' Association to communicate with teachers' reps

They must stay in touch with teachers - communicate: find out if they have received their pay increase, Boarding and Duty allowances...etc. They have to have facts and figures at their fingertips.

That information must be presented to the National Department of Education, Teachers' Service Commission and Education Minister on regular basis - this is their job. They MUST do that as well as 'media-bashing'.

PNGTA must fight for teachers

The PNGTA must pursue legal challenges to ascertain irregularities in teachers' entitlements if they have to. They must ensure that the govt remains true to its PROMISES of pay increases.

As I posted some time ago, by 2016 every public servant will have realised a 30% increase in their salaries - this includes the teachers.

Recently, there is another increase in PNG Public Servants' pay (2022-2024) but the poor teachers will have to find out exactly what they are getting.

PNGTA has to ensure that the government does what it says

That implies that the PNG government has made a promise to pay the increase. So, PNGTA has to ensure that the government does what it says. If teachers are not receiving the increase or other entitlements over a year, they have to determine why.

Finally, the onus is on PNGTA and teachers' reps in each province. If the association feels that there is a need to call for strike action, by all means, they must do.

But, going on strike (or pretending to go on strike by going to the media like the PNGTA chairman did) is not the best way forward.

ExxonMobil-PNG To Take Defensive Measures By Cutting PNG Jobs Amidst Energy Price Collapse?

The tumbling oil price has forced major oil and gas companies to slash cost. FTSE 100 Oil and gas major, Tullow Oil, has cut back US$2.3 billion on expenses. Other companies in the energy sector are also cutting back as they are hit by over 60% drop in the Energy price in just seven months – Brent Crude Oil for example, has fallen by nearly 50% from US$110 a barrel to US$48 a barrel.

So, where does the huge fall (and continual dip in price) leave Papua New Guinea’s much-talked-about gas development led by ExxonMobil-PNG?

Pic Courtesy: ExxonMobilPNG Twitter

The PNGLNG development has moved onto production since April 2014. That meant that it has completed exploration and development phases of the initial project. To date, over 50 shipments have left the country.

At the peak of energy price, the Prime Minister of PNG (in a response to the Opposition questions) said one shipment was valued at, an average of, US$50 million – yes that is 50 million US Dollars. If price fluctuated at US$50 million ExxonMobil-PNG would have recovered the development cost in less than five years. This also means that if the company continues production at current rate, the time it takes to recover development cost would double. Would ExxonMobil-PNG want to recover US$19 billion development cost in 10 years, instead of 5 years?

The prime minister gave his response to the Opposition MPs when Energy price was at record US$110 a barrel. The price has, since, dropped to US$48 a barrel. Here is what ExxonMobil-PNG’s accountants would have worked out by now – value of a shipment would have averaged at US$25 million.

There is prediction that the price is likely to fall even further based on the fact that Opec countries have not slowed down on production to spike energy price. Major Oil and Gas producing countries like Russia, USA, Venezuela, Nigeria, Saudi Arabia, Libya, etc. have not reacted at all.

What can ExxonMobil-PNG do?

Apart from shelving any plans for exploration and further development, one thing is for sure – ExxonMobil-PNG does not have to cut down on production. The company must produce at full capacity. This has to be done as the Opec group of countries are not cutting down on production, either. Their economies are dependent on oil and reducing production would have drastic consequences on government’s revenue. Russia, for example, whose economy is very much dependent on Oil has considered its options.

A BBC report indicated that many oil and gas dependant countries have not cut down on production to spike Energy price. If they had cut-back on production their economy would have been shaken to the ground.

There are two defensive measures ExxonMobil-PNG can (has to) contemplate on doing. Look within its structure and readjust main expenditures. That would imply that ExxonMobil-PNG would have to either make adjustment to its expanses or increase production (and increase revenue).

Here is one option.

First, ExxonMobil-PNG would have to reconsider its employees’ remuneration and benefit. Many top level employees may have to take a pay cut or agree to some in-house cost cutting measures, like halting fly-in-fly out arrangements.

Second, casual employees the company has used during (and in) exploration and development phases will have to be laid off. This also applies to apprentices, interns and others on the job training exercises. This could, probably, affect their awareness and charity programs too.

Third, the project developer would have to evaluate performance of contractors. Those who have been given chance to partake in contracts awarded by the company will have to prove their worth to remain with it.

Another option would be to increase production like what many Opec counties are doing by producing at full capacity - even increase production capacity. By doing this the company does not have to take the three measures highlighted above, but expand on each area.

This will create more opportunities and increase production – a win-win situation for the company, PNG government and every stakeholder who participates in this project.

All in all, it is eminent ExxonMobil-PNG takes defensive measures now by finding areas where cost can be minimised. But, any cost cutting measure taken in the name of maximising revenue for the company must not compromise Papua New Guinean jobs.