Papua New Guinea (PNG) is heavily reliant on its extractive sector, which includes mining (primarily gold, copper, and nickel) and oil and gas (mainly liquefied natural gas or LNG, with smaller petroleum contributions). These resources account for approximately 80% of export earnings and around 26% of GDP as of 2025. However, despite this wealth, distribution challenges persist due to project-specific agreements, governance issues, and delays in payments. Total extractive revenues in 2022 were about PGK 8.4 billion (roughly USD 2.2 billion at current rates), with mining and petroleum taxes projected to rise 16% to PGK 4.1 billion in 2025 from PGK 3.5 billion in 2024. The PNG LNG project alone has delivered over PGK 30 billion (USD 8 billion) to the economy in its first decade, including taxes, royalties, and equity benefits.
Wealth flows primarily to the national government via taxes deposited into the Consolidated Revenue Fund (CRF) (See the 2017 Act setting this up here), with subnational shares (to provinces, local governments, and landowners) earmarked through royalties, levies, and equity. Management often involves the Mineral Resources Development Company (MRDC), which holds trusts for landowners. Benefits are governed by the Mining Act 1992, Oil and Gas Act 1998, and project-specific Memoranda of Agreement (MoA) or Umbrella Benefits Sharing Agreements (UBSA).
Key Revenue Streams and Distribution
Extractive revenues include royalties (production-based), taxes (e.g., corporate income tax at 30%), levies, and equity dividends. Below is a summary table of major mechanisms, rates, and distributions (based on 2022 data from the PNG Extractive Industries Transparency Initiative or PNGEITI, the most recent comprehensive report; 2025 projections scale similarly).
| Sector | Revenue Type | Rate/Basis | Primary Recipients and Shares | 2022 Amount (PGK) | Notes |
| Mining (Gold, Copper, Nickel) | Royalties | 2% of free-on-board (FOB) value or net smelter returns | - 20% direct to landholders - Remainder: Negotiated split (e.g., 50-70% state, 20-30% provinces/locals via MoA) | 194.8 million | Paid monthly by operators; e.g., Ok Tedi mine dividends split among Treasury (50%), provinces, and landholders. |
| Production Levy | 0.5% of assessable income (or 0.66% of revenues) | - 100% to Mineral Resources Authority (MRA); portion to provinces | 55.2 million | Funds MRA operations; up to 50% of FOB at discretion. | |
| Corporate Income Tax | 30% on taxable income | - 100% to Internal Revenue Commission (IRC) → CRF (national budget) | 3.0 billion | Ring-fenced per project. | |
| Equity/ Dividends | State up to 30% stake; landholders 2.5-5% free carried | - State (Treasury): 50-70% - Provinces/locals: 20-30% - Landholders (via MRDC trusts): 10-20% | 1.8 billion (equity) + 600 million (dividends) | E.g., Kumul Minerals Holdings Ltd dividends: 50% to Treasury. | |
| Oil & Gas (LNG, Petroleum) | Royalties | 2% of wellhead value | - Landowners: 30-50% (via MRDC trusts) - Provinces/locals: 50-70% (per UBSA/MoA) | 372.4 million | E.g., PNG LNG: Split among affected groups; recent 2025 releases of accrued sums (undisclosed total) to landholders. |
| Development Levy | 2% of wellhead value | - 100% to provinces and local governments (via trust fund) | 157.6 million | Annual in arrears. | |
| Corporate Income Tax | 30% on taxable income | - 100% to IRC → CRF | ~800 million (APT component) | Includes Additional Profits Tax for high-profit projects. | |
| Equity/ Dividends | State up to 22.5% stake; landholders 1-2% prescribed | - State (Kumul Petroleum Holdings Ltd): 16.8-21.8% - Provinces: 1-2% per agreement - Landholders: 0.7-1.8% (e.g., Fasu, Foe groups) | 1.8 billion (equity) + 300 million (dividends) | PNG LNG: Post-debt service; KPHL share rising to 21.8%. |
- Taxes and Other Flows: Broader taxes (e.g., withholding taxes at 15%, GST) go almost entirely to the national CRF. Infrastructure tax credits (up to 6.37% of revenues) are deducted and spent on approved local projects.
- Total Subnational Share: Approximately 20-30% of project benefits (royalties + levies + equity) flow outside the national government, but actual receipt depends on MoA negotiations and trust management.
Do Landholders Earn from Resource Exploitation or Pipeline Routing?
Customary landholders (often organized as Incorporated Land Groups or ILGs) receive direct and indirect benefits from resource projects, including mining leases, oil/gas exploration, and infrastructure like pipelines. This is mandated by the Constitution (National Goal 4) and sector laws to ensure "equitable distribution of benefits."
- From Exploitation: Landholders get 20% of mining royalties directly, plus 2% royalties in oil/gas (e.g., PGK 64 million to PNG LNG landholders in 2022). They also hold equity stakes (2-5% free carried in mining; 1-2% in oil/gas via Section 167 of the Oil & Gas Act), yielding dividends managed by MRDC subsidiaries. Business Development Grants (e.g., PGK 120 million for PNG LNG landowner companies) support local enterprises.
- From Pipeline Routing: Infrastructure like the PNG LNG pipeline triggers benefits under the UBSA (2009), including royalties for "affected" areas along the route, Infrastructure Development Grants (PGK 1.2 billion total for project areas), and equity buy-in opportunities (up to 4.22% collective). Community Investment Trust Funds (CITF) finance health, education, and roads near pipelines (e.g., PGK 19 million spent in 2022 for petroleum projects). Delays have occurred—PNG LNG royalties were withheld until October 2025 due to trust disputes—but recent releases confirm landholders' entitlements from project inception.
Challenges include uneven distribution within groups, capacity issues in MRDC trusts, and calls for law reforms to increase shares.
Sovereign Wealth Fund (SWF)
The PNG Sovereign Wealth Fund comprises two components: a Stabilisation Fund (to buffer revenue volatility and avoid "Dutch disease") and a Development Fund (for long-term investments in infrastructure and human capital). Established under the Organic Law on the Sovereign Wealth Fund (2012, amended), it was stalled by legal flaws until recent fixes in 2024-2025.
- Funding: Receives allocated resource revenues (e.g., 7% of mining/oil/gas project benefits per budget laws), plus investment earnings and government contributions. All state mineral/petroleum revenues are notionally directed here, but in practice, it's funded via the national budget from CRF deposits.
- Amounts: No specific 2025 inflows disclosed, but projections tie to rising LNG receipts (expected acceleration from 2025). The fund aims to capture ~20% of long-term resource windfalls.
- Management and Distribution: Governed by the SWF Board (under Treasury); investments focus on global assets for returns. Withdrawals from the Stabilisation Fund are capped at the 15-year moving average of resource revenues as a share of non-mining income, routed through the National Budget for fiscal discipline. The Development Fund supports equity acquisitions in projects. As of 2025, it's operational with an offshore "Financing Fund" model proposed for flexibility, emphasizing transparency via PNGEITI reporting.
For the latest figures or project-specific details, consult PNGEITI annual reports or the Department of Treasury.