• PNG Business News

Scoping Study to be conducted on Extractive state-owned entities



The PNGEITI National Secretariat through its Multi-stakeholders Group (MSG) has already commenced preparation to engage a consultant to scope out the operations of State-Owned

Entities (SOEs).


This will include Trustees involved in the extractive sector or those that have an equity share, either on behalf of the Government or provincial governments.


Head of National Secretariat Lucas Alkan announced this week that the execution of the study on SOEs was an important undertaking in not only meeting the requirement of the EITI Standard as recommended in the country’s first validation but also, as part of the Government’s commitment to enhancing transparency in the operations of these entities.


“The scoping study will also include Trustees established by the Government for managing business arms established by provincial and local level governments and landowners using revenue flows from extractive activities in the country,” Alkan said.


“The study is intended to understand the relations between all SOEs and trustees and the transactions between extractive SOEs (and their subsidiaries) and to recommend possible

policy and legislative reforms to improve transparency and accountability for EITI reporting requirements.


“Most importantly, the study will enable the Government to have a clear visibility and oversight on the operations of these entities,” he said.


The study is anticipated to take about four to five months and will commence in April, 2020.

Alkan said though the study will be confined to SOEs involved in the extractive sector, the

work will complement and support the Government’s overall current SOE reform policy agenda.


A Technical Working Group made up of MSG members has been working to engage a consultant to execute the study. An announcement for expressions of interest for a consultant was advertised in the daily newspapers last week and also posted on the PNGEITI website.


The following recommendations were made for the study of SOEs;

· PNG should clearly establish its definition of SOEs to delineate the SOEs within the scope of EITI reporting to ensure that a comprehensive list of state participation in the extractive industries, including terms associated with state equity and any changes in the year under review be made publicly accessible.


  • PNG must clarify the rules and practices governing financial relations between all SOEs

  • PNG should undertake a comprehensive assessment of transactions between extractives SOEs (and their subsidiaries) and mining, oil and gas companies, as well as between the extractive SOEs (including their subsidiaries) and government in its scoping for future EITI Reports.

  • All SOEs collecting material revenues or making material payments to government should be included in future EITI reporting.

  • PNG should undertake a comprehensive review of all expenditures undertaken by extractive SOEs (and their subsidiaries) that could be considered quasi-fiscal.


Furthermore, it was recommended through the validation process that PNG should develop a reporting process with a view to achieving a level of transparency commensurate with other payments and revenue streams, and should include SOE subsidiaries and joint ventures and their financing and equity arrangements in extractive projects.

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