Chapter 6. Incorporating Huli: Lessons from the Hides Licence Area

Development of petroleum reserves around Lake Kutubu in the Southern Highlands Province of PNG began in the late 1980s. The original developer, Chevron Niugini Ltd (CNGL), established a system of Incorporated Land Groups (ILGs) in the project area with the approval and support of the then Department of Minerals and Energy. These ILGs were established under the Land Groups Incorporation Act 1974 (LGIA) — a law that was meant to empower customary groups to manage the acquisition, use and disposal of their own customary land and regulate their internal affairs and disputes in accordance with ‘custom’ (see Fingleton, this volume). As a piece of legislation, the Act is deliberately general in nature so as to reflect the diversity of customary social organisation found across PNG. For example, it often comes as a surprise to those who consult the Act that it does not contain the word ‘clan’.

There is no legal compulsion on landowners to form ILGs, nor are developers under any corresponding obligation to perform the function of ILG registration. Under Section 47 of the Oil and Gas Act 1998, the holder of an exploration or development licence is only required to produce ‘Social Mapping and Landowner Identification Studies’ for the information of the Minister and the Department of Petroleum and Energy. However, other sections of the Act make further reference to ILGs. Section 169(2)(b) states that the Minister shall determine by instrument

Section 176(3)(f) states that

The Oil and Gas Act therefore seems to imply that ILGs should be seen as the default system for landowner benefit distribution in the absence of some other agreed upon system.

From a strictly legal point of view, the registration of ILGs is a responsibility of the Registrar of Titles (ROT) in the Department of Lands and Physical Planning. However, because ILGs are also one of the vehicles by which accredited landowners receive financial benefits from resource development projects, other government departments, such as the Department of Petroleum and Energy (DPE), are also involved in the process of registration and the management of issues that arise from it. Recognition of an ILG depends on the preparation of a certificate that includes a detailed constitution for each group (see Fingleton, this volume). Although resource developers have no legal responsibility for the production of these documents, CNGL had little option but to accept some of this responsibility because of the limited capacity of government agencies such as the ROT.

There are currently some 600–700 ILGs representing the customary owners of Petroleum Development Licence (PDL) and Pipeline Licence areas in PNG. While CNGL could reasonably argue that the ILG system ‘has worked’ and the ‘benefits have flowed’, the systemic and persistent factionalising of ILGs has interfered with the process of registration and validation, and has delayed the distribution of landowner benefits. As I noted in one social mapping study:

The consensus is that groups have been opportunistically massaging their oral histories and manipulating the lands officers employed by the resource developer in order to maximise their financial benefits. This can be done by splitting ILGs to reduce the number of ‘members’ attached to any given landholding. In effect, the ILG system has become yet one more mirror to reflect the kind of shifting politics endemic in PNG’s wider society. The question is whether these ‘resource project cultures’ are moving from a predominantly clan-based form of social organisation to one of nucleated families whose members only recognise the wider principles of common descent in a very loose way and whose claims for ‘separate’ landholding status merely express these generic tendencies and trajectories. My argument would be that these are not broad-based changes but rather a manifestation of the narrower opportunistic concern of each group to maximise its financial gains from the system. The ideology of group membership is unchanged and still expresses the way that people relate to each other, to the supernatural world, and to the ground beneath their feet.

The troubled history of ILGs in PNG is also discussed by Fingleton, Weiner and Filer in this volume. Succinctly stated, whatever system has been put in place eventually falls prey to the process of constant fissioning whereby ILGs break up into smaller and more exclusive units. There is opportunistic registration, de-registration and re-registration, all of which signals a more general failure of ILGs to function as anything more than conduits for the distribution of resource project revenues (see Weiner, this volume). While all parties bemoan the parlous state of customary group registration, and acknowledge the problems posed by the process, solutions have so far been conspicuously thin on the ground.

The origin of these problems is frequently attributed to a number of circumstances. Project operators were compelled to usurp by default the functions of the national government in establishing ILGs in the first place because of a lack of government capacity and resources, but while they did not abrogate their responsibilities under this ad hoc arrangement, the operators were not willing in the first instance to do any more than the minimum necessary to ensure that the project met its own milestones. In effect, the operators identified the beneficiary ILG groups, prepared the paperwork, submitted the forms to the ROT, and managed the process of disseminating the outcomes. This procedure was known as ILG ‘facilitation’. The ROT conferred with the DPE to seek initial endorsement of ILG applications since these pertained to existing PDLs. Once DPE staff were satisfied, the ROT usually just endorsed the applications that had been received. There appears to have been little formality to this process: for example, there were no joint committee meetings or decision-making forums involving both government agencies.

While developers took on the burden of creating ILGs, they did not have an exclusive monopoly on this activity, either in law or practice, so even in a new operational area, their efforts could be matched by local people taking their own initiatives, travelling to Port Moresby and filing their own certificates of registration with the ROT. As we have seen, local people’s empowerment was precisely the objective of the 1974 Act, but the lack of coordination between the stakeholders was not conducive to a sustainable outcome. In effect, the project operator soon lost control of which, and how many, groups were actually registered within the licence areas. Groups sought to increase their share of project benefits by establishing their own independent ILGs, both as a marker of structural autonomy and as a reflection of the dynamic political shifts and entrenched factionalism that has always characterised indigenous social organisation in both lowland and highland societies of New Guinea.

Once registered, the ILGs received little support by way of training, monitoring, or assistance that might have enabled them to develop their corporate functions and meet their obligations as modern organisations. In effect, the beneficiary ILGs simply became conduits for cash distributions. Since Landowner Companies and Landowner Associations were simultaneously established to cater for the political and economic representation of landowner interests, no further role for ILGs was envisaged by any stakeholder. A succession of studies has shown that ILGs simply do not function as micro-corporations of the kind envisaged by the LGIA. They do not cooperate in the management of their resources and only rarely reinvest their cash receipts in business ventures; they do not regulate their membership lists or manage land disputes; they do not have functional Dispute Settlement Authorities as required by the Act; and they have not received any infrastructure support or training over the course of the last decade (Goldman 2005). Social impact assessment data collected since 1998 shows that landowners’ dissatisfaction with the performance of ILGs has been increasing, while their dissatisfaction with the performance of Landowner Companies and Landowner Associations, although still high, has been falling (Figure 6-1).

Source: Goldman 2005.

While it seems that landowners do not want ILGs to do anything more than distribute benefit streams, many are still dissatisfied with the current regime. Often ILG members do not get their cash benefits because these are stolen by the ILG’s bank passbook holder — usually a male household head. But there are broader systemic problems that pose substantial risks for any further resource development in the affected areas, and therefore seem to demand a new kind of solution. Briefly stated, the problems are common to each of the PDL areas established since the early 1990s — Hides (PDL 1), Kutubu (PDL 2), Gobe (PDLs 3+4), and Moran (PDL 5) — as well as the route of the oil pipeline to Kikori (see Figure 6-2). However, the community affairs teams dealing with landowners in each of these areas have lacked a unified vision or strategic plan for managing such problems. Customary landowner registration has not been carried out in a way that was sensitive to the impact which programs in one area may have on other areas, and different principles for ILG formation and benefit distribution have been applied in different areas. Serious questions have therefore been raised about the need for a common approach to customary landowner registration across the extractive industry sector, most especially when dealing with landowners who belong to a single ‘culture area’.

Making an accurate count of the number of existing ILGs in the licence areas is problematic because the DPE and the ROT do not have an electronic database containing this information, and no audit of relevant ROT files has yet been conducted. Furthermore, records inherited by the current project operators from CNGL are incomplete, and it is likely that landowners have registered many ILGs on their own account without the knowledge of the operators. Table 6-1 presents an approximate count based on evidence available in October 2004. In Gulf Province alone (along the route of the oil pipeline), it would appear that the number of registered ILGs doubled over the three years from 1997 to 2000. By the end of this period, there were at least 318 ILGs representing approximately 2500–2900 people, which meant an average of 7.8 persons per ILG in this region, as compared with an average of around 350 persons per ILG in the Hides Gas Project area (PDL 1). However, less than 50 per cent of ILGs known to exist in 2000 were in receipt of project benefits in that year. Table 6-1 indicates some of the problems of ILG proliferation (see also Weiner, this volume), but if these are considered as ‘operational’ quandaries, the anthropologist can see that the whole ILG venture is diseased in quite another sense.

* Includes pipeline landowners in Southern Highlands Province.

ILG registration proceeded on a ‘user-convenience’ basis. There appears to have been no principled determination in any of the areas as to what unit of social organisation is appropriate for ILG registration. The evidence of systemic splitting of ILGs within a short period suggests that the ILG system is participating in, if not directly impacting on, the wider breakdown of customary social groups. The unchecked tendency for smaller and smaller social units to register as ILGs is a force for division, not cohesion. Although clans and sub-clans in the Kutubu region were always in the process of splitting, the pace and level at which this is now happening far exceeds what has previously been recorded as a ‘customary’ process.

The ethnographic evidence shows that, in some areas, the ILG system has also created new social units not previously recognised in custom. In the case of the Onabasulu people living to the west of the Kutubu production facility, the project operator’s enthusiasm for ILGs created ‘clans’ which are an artefact of a ‘certificate-based incorporation process and which did not pre-exist the era of petroleum development’ (Ernst 1999: 88).

In other words, the application of the LGIA induced social structural changes quite unforeseen and unanticipated by the developer. In place of ‘custom’, the application of the Act introduced newly adapted forms of social organisation and ethnic identity in a process which Ernst calls ‘entification’.

The historical lesson from the Onabasulu ILG program is that it is important for developers to understand the culturally specific nature of local social organisation before embarking on programs of incorporation if sensitivity to culture is to be a guiding operational principle. The Huli, Fasu and Onabasulu people have vastly different kinship and descent systems, and their complexity should compel caution when attempting to apply a ‘clan’-based calculus to an ILG registration system. Nevertheless, the current trend in all areas is towards the formation of nucleated family groups constituting themselves as ‘clan segments’ in a manner that would not have occurred in the pre-development era. In part this may be because the family is the level at which on-the-ground property rights are actually held and exercised, but the ramifications for genealogical structure and descent group fission still have no precedents in the pre-colonial period.

Whilst the argument for change has ringing endorsement from all participants in the ILG process, the form that this should take is still opaque and the analysis of precisely ‘what went wrong’ is yet to produce any clear consensus. The argument I want to pursue here is that the ILG ‘problem’ is precisely the kind of rich landscape in which anthropological expertise of both a pure and applied kind can assist in the development of sustainable representative bodies for project landowners in a manner that also helps resource projects to pursue their business objectives.