A challenging year for Papua New Guinea

Author: Ronald May, ANU

In Papua New Guinea (PNG), as in many countries, the dominant narrative in 2021 was COVID-19.

The outbreak of the pandemic posed a threat to PNG, as the country’s health services had been in decline for years and were struggling to cope with drug-resistant tuberculosis, HIV/AIDS and other chronic health issues. At the end of January 2021, PNG had officially recorded only 867 COVID-19 cases and 9 deaths. Low levels of testing and poor awareness of the pandemic mean these figures were likely understated.

This changed in February 2021 as infection rates rose exponentially. By 19 March, recorded cases had more than tripled and deaths had risen to 36. Most of these cases were in Port Moresby and the two provinces, Western and West Sepik, on the border with Indonesia. Despite moves to restrict the movement of people, the virus quickly spread to most of the country.

PNG’s vaccine rollout commenced as further surges in recorded cases occurred in May and then September. Teams from Australia, China, France, the United Kingdom and New Zealand assisted in the delivery and administering of vaccines. There was strong resistance to vaccination, however, largely on cultural and religious grounds, and many doses at risk of expiring had to be diverted to other countries or destroyed.

Hospitals and health centres were overwhelmed. In several instances, health workers and awareness teams were physically attacked. As of 28 December 2021, the country had recorded 36,137 cases and 590 deaths, while less than 5 per cent of people had been vaccinated.

In 2019, Prime Minister James Marape announced a ‘Take Back PNG’ policy designed to secure better terms from international companies operating and seeking new developments in PNG’s mining and petroleum sector. During 2020 several major resource projects were put on hold, pending the outcome of negotiations with the government. During 2021, negotiations continued with ExxonMobil over the P’nyang LNG project and with Twinza Oil over the proposed Pasca A offshore LNG project. Further talks took place between Barrick Gold, Kumul Mining and the government over the Porgera gold and copper mine, with an announcement in November that the mine would reopen in April 2022.

Little progress has been made towards the commencement of the controversial Wafi-Golpu joint mining venture in Morobe Province, where the provincial government has challenged the national government’s granting of an environmental permit. Communities along the Sepik River have launched human rights cases against the proposed Frieda River gold and copper mine in West Sepik Province.

An agreement was signed in November last year with a subsidiary of China’s Jaxin Group for investment in the oil and gas sector, involving US$10 billion in the first three years. The Australian-based Fortescue announced it would partner with PNG to develop large scale green energy projects, including hydropower in the Purari Delta and geothermal energy in West New Britain.

The Marape government also announced that foreign logging companies would be required to process 50 per cent of logs in PNG, with a view to a total ban on log exports by 2025. In September, Forestry officials were told to stop issuing logging permits.

Faced with the COVID-19 pandemic and a continuing decline in foreign investment, PNG’s forecast real growth in GDP in 2021 is 1.5 per cent, well below the 2021 budget forecast of 3.5 per cent. The 2022 budget, presented in November, provides for a 46 per cent increase in health expenditure and a 34 per cent increase in expenditure on education, with a deficit to be covered largely by international borrowing. But an anticipated rebound in the resources sector and expenditure associated with the forthcoming national election are forecast to lift growth in 2022.

Post-referendum consultations between the Autonomous Bougainville Government (ABG) and the national government began in 2021, with Bougainville President Ishmael Toroama calling for independence by 2025. In May, Toroama and Marape signed an agreement to speed up the transfer of powers to Bougainville. The Lands Department functions were transferred the following month and public service personnel matters were transferred in August.

At the second round of talks in July, it was agreed that the future political status of Bougainville would be resolved by 2027. But in August, Marape issued a reminder that ‘the matter has to be addressed in the National Parliament’ and spoke of ‘the sanctity of the union of PNG as one country’, describing Bougainville’s possible independence as ‘the biggest challenge facing the nation’.

Again in September, Marape told the National Parliament that he had made no commitment to the ABG ‘that independence will be the final outcome of consultations’. Central Bougainville MP Sam Akoitai responded that ‘the issue must be addressed amicably or there could be another unilateral declaration of independence’. A vote on the final political settlement is expected to take place in the National Parliament in 2025.

At the end of 2021, Marape had survived another year after adjourning parliament in April to avoid a vote of no confidence, and there are expectations of improved economic circumstances in 2022. The country is gearing up for a scheduled national election in mid-2022, amid reports of a build-up of firearms in the highlands and concerns that the deferral of the 2021 census will hamper the updating of electoral rolls.

Ronald May is Emeritus Fellow at the Department of Pacific Affairs, The Australian National University.

This article is part of an EAF special feature series on 2021 in review and the year ahead.