THE Student Representative Council of the University of Papua New Guinea has chosen a different playbook than the Unitech folks regarding the K3 billion loan the PNG government has negotiated through global private bank UBS.
Whilst some people are sceptical of their approach, the SRC must be commended for taking a stand on an issue of national significance - affecting every citizen.
As such, it is unfair to place the burden of addressing the matter solely on the shoulders of UPNG students.
Oil Search and the government of PNG have got themselves into a mess over their arrangement with InterOil.
That Oil Search has decided to seek legal recourse over the deal between InterOil and Total indicates how it may have screwed up its risk assessment. The PNG government on the other hand has screwed up because some politicians and their advisors seemed to have spent too much time watching Wolf of Wall Street.
In relation to the loan and its implications, I wish to focus on one thing - corporate welfare.
Corporate welfare is sometimes couched in public relations terms as “government incentives to encourage private sector investment”. It means that rich companies are given taxpayers’ money to do something they’d probably do themselves anyway.
In the Oil Search example, PNG poured bucketloads of money into an Australian oil company to encourage it to make a risky bet in Gulf Province.
One could ask why the State didn’t buy a direct stake in the Elk-Antelope project but instead chose to hand over cold hard cash to an Australian company so it would buy the stake.
The government, of course, got some lollies in return for its corporate welfare: a 10.1% stake of Oil Search’s ordinary shares.
Previously, PNG had preferential shares in Oil Search. Not now. They were handed over to the Arabs as part of another deal.
Basically, the UBS-Oil Search-InterOil arrangements are as transparent as mud.
The UPNG students deserve our support despite the fact that some MPs have been paying their tuition fees and telling them not to go on strike.
Hopefully the students will not have to resort to such drastic action and the government will listen to the demands they have made on behalf of the people of PNG.
However given the tendency for so called representatives of the people to be self-serving, the people may need to chastise these wannabe Wolf’s of Wall Street at the ballot box.
The government’s role is meant to ensure the wellbeing of the people rather than the wellbeing of rich corporations. People’s welfare must take precedence over corporate welfare.
Economic growth does not necessarily mean improvements in social indicators. Even the Asian Development Bank has recognised recently that whilst PNG’s GDP will grow by 21% next year, the gap between rich and poor is set to widen.
The government’s risky bet in the Gulf gas project will certainly contribute to broadening that chasm.