A new authority to keep tabs on the energy sector

Papua New Guinea has taken on a global role in developing policies on climate change, most notably through the successful lobbying to gain recognition for avoided deforestation credits through the UN initiative on Reducing Emissions from Deforestation and forest Degradation (REDD), specifically REDD+ arrangements and via active participation in the Coalition of Rainforest Nations. Most recently, in February 2013, the Office of Climate Change and Development released a draft climate change policy for comment, which envisages:

• Establishment of a climate change authority;

• Introduction of a carbon tax to be imposed on four main areas, namely: on a consumption tax on the use of fossil fuels; flaring and venting of gas from oil and gas wells; clearance of native vegetation for commercial purposes; and harvesting of logs (with a reduced tax on processed timber;

• Establishment of a climate-change fund from funds pre-appropriated from the carbon tax and to be spent on: subsidising investments in measures to reduce emissions; conservation activities, including providing a mechanism for communities to be paid for preserving carbon (e.g. that contained in forests) on their traditional lands as well as the “provision and maintenance of ecosystem services”; and assistance to communities in adapting to climate change; This policy requires substantial further consultation.

Geothermal Energy

There is at present a legal vacuum in relation to regulating the commercial exploitation of geothermal energy. As such, there is little by way of exploration for geothermal energy sources that could potentially be utilised for power generation and other uses. One issue has been that the Mineral Resources Authority and the Energy Division of the Department of Petroleum and Energy are both showing an interest in regulating this area. It is thus a key issue that warrants more attention by the government.

Personal Property Security

The new Personal Property Security Act (PPSA) was passed into law by Parliament on December 9, 2011. When implemented, the act will reform the law relating to security over almost all personal property, and will establish a single register for security interests that will cover mortgages and charges and also other transactions that have economically similar effects. The main purpose of this PPSA is to promote business through facilitating credit. It is aimed at making loan schemes cheaper and more accessible to a wide range of people, giving them further opportunities to participate in the economy, thus promoting economic growth. The act makes provisions for the creation, perfection, prioritisation and enforcement of security interests in certain property. It also provides for related transactions and other interests necessary in giving notice of property status to buyers and prospective creditors. The four general policies of PPSA are as follows: i. To make lending cheaper/more convenient; ii. To provide rules for distinguishing conflicting interests in personal property; iii. To provide transparent information to those who need it with respect to collateral agreements; and iv. To reduce the time and cost and improve the reliability of enforcement tools. The PPSA covers two kinds of security interests.:

• In substance security interests, which cover secure payment or performance of obligations; and

• Deemed security interests, which cover transactions that are treated as security interests, even if they do not secure payment or performance of obligations. While the new act is not yet in force, it is expected to commence operation once the new registry has been established. In the meantime, the government is embarking on an implementation phase, which will include procurement and establishment of the registry system along with a public information-processing phase.