Bougainville Copper will get 15 p.c. return

Press, Volume CXIV, Issue 33664, 14 October 1974, Page 23

Bougainville Copper will get 15 p.c. return

<Xcu> Zealand Press Associalton—Copyright) BOUGAINVILLE. Bougainville Copper. Ltd. will pay the Papua New Guinea Government an extra sssm in revenue this year, forfeit all its tax privileges, and pay an excess-profits tax designed to ensure a 15 per cent return on its capital investment under the terms of the new agreement.

The Chief Minister (Mr Somare) revealed the first' details of the agreement reached by negotiators last week after six months of talks. He said that the new financial package meant that; Bougainville Copper wouldi forfeit tax privileges, and payj an excess-profits tax designed > to ensure a 15 per cent! return on the company’s capi-i tai investment. "We have succeeded in ending the position of Bou-i gainville Copper as a privi-j leged enclave in our society”; said Mr Somare. “As from’ now on. it will, like everyoneelse, be subject to our laws.”; Mr Somare detailed a long, list of changes to the 1967 agreement, which the Gov-; eminent had successfully! sought to change in the inter-; ests of getting a “fair return”] for the foreign exploitation of its resources. Tax holiday ended He confirmed that the main provision of the new agreement was a 70 per cent excess-profits tax, which would cut in at a figure of 587.2 m after payment at the standard company rate of 33-1/3 per cent. The agreed; figure of $87.2m, he said, was] determined by calculating; the amount that would give; the company a reasonable; return of 15 per cent on capi-i al investment after tax. “The cut-in figure may bej adjusted in the future to take; account of new capital invest- • ment and abnormal inflation”! said Mr Somare. The agreement ended the Bougainville Copper tax holiday, which was to extend until 1978-79 under the sarlier agreement; revoked entitlements to “accelerated depreciation” provisions that could have delayed tax payments: and closed a loophole that allowed the company to exclude 20 per cent of its income from tax calculations. Environment fund Also, said Mr Somare, the; company would no longer bej exempt from normal import] duties, stamp duties, vehicle-! ■egistration fees, and other! similar charges. Additional features of the! jew agreement provided for; i payment by the company of!

50c a tonne of copper to an; environmental rehabilitation; fund, and Government con-] trols over pollution, imports; and exports, and approval of j contracts. Controls introduced | The company’s relations' I with Bougainville Islanders] were also covered in the! agreement. When the agreement comes] before the Cabinet for ap-i prova! next week. Ministers! )would be asked to consider! -Government controls on the] company’s business advisory! jservices, a guarantee that no; new mines would be devel-i ioped without local approval, and veto power for Governjment directors over company grants and donations. ; In an apparent reference to the Government’s share of 534.6 m from the company’s first-year profits of slsBm, Mr Somare said that the new 1 package was worth from! s2oom to Ssoom over the. next 10 years, depending on! the copper prices. Government criticised The unexpected release of the details came in response to the stirrings of another political group — the eighth so far — in Papua New Guinea. Led by a dissident public; (servant, Simon Kaumi, who; was dismissed and then re-i instated after criticising the Minister of the Interior (Mr- . Poe and asserting the mem-! bership of leading black; intellectuals, the group said] that it would seek public support to help free the country from “foreign domination.” So far, said Mr Kaumi, the new group was in the formative stage, but it would hold meetings to gauge support for its stand against the “great sell-out of our country and its resources, human or otherwise.” In his reply, Mr Somare said that the "Government team had been in control of jthe Bougainville talks, and I that discussions had generally (been limited to its own position and not to alternatives (suggested by the company. “We decided that what we (wanted was tax money for ■; development — not owner’s ship of more shares — and!

we got tax revenue," Mr Somare said. “In view of the tremendous improvement we have won in this renegotiation, no-one can question the ability and the (determination of my Govemjment to stand up for the -rights of the people of Papua New Guinea.”