FCA 11-03 Wewak Turubu Large Scale Integrated Agriculture Project [OCR]
Forest Clearing Authority
Logging companies mentioned in this document:
Concessions mentioned in this document:
PAPUA NEW GUINEA FOREST
AUTHORITY
FCA NO.: 11 - 03
PROJECT: WEWAK-TURUBU LARGE SCALE INTEGRATED AGRICULTURE PROJECT
(OIL PALM DEVELOPMENT PROJECT)
HOLDER: WEWAK AGRICULTURE DEVELOPMENT LIMITED
LOCATION: TURUBU / WEWAK DISTRICT, EAST SEPIK PROVINCE
FEBRUARY 2017
SCHEDULE 1
INDEPENDENT STATE OF PAPUA NEW GUINEA.
Forestry Act 1991.
Act, Sec. 90B(8). Form 242
Reg. 263
FOREST CLEARING AUTHORITY TO CARRY OUT A LARGE SCALE CONVERSION
OF
FOREST TO AGRICULTURE OR OTHER LAND USE DEVELOPMENT.
Forest Clearing Authority No: FCA 11-03.
Agriculture or other land use Development Project;
WEWAK-TURUBU LARGE SCALE INTEGRATED AGRICULTURE PROJECT (OIL PALM
DEVELOPMENT PROJECT), WEWAK AND TURUBU DISTRICT, EAST SEPIK
PROVINCE.
Pursuant to Section 90B(8) of the Forestry Act 1991. and all other
powers it enabling, the Board
hereby grants a Forest Clearing Authority to WEWAK AGRICULTURE
DEVELOPMENT LIMITED [FI
02164] ("the Holder`)
This Authority authorises the holder to carry out a large scale
forest clearance for commercial
agriculture or other land use development within the 90,000 hectares
of land area described, and
outlined in red on the map in Schedule 1 ("the Project Area") for
the term specified in Schedule 2
subject to the Act and to the following terms and conditions:
(a) the holder shall, within 21 days, lodge a performance bond' in
accordance with Section 98 of
the Forestry Act 1991 for the amount specified in Schedule 3.
(b) the holder shall comply with the terms and conditions specified
in the Schedules herein.
(c) the holder shall carry out the agriculture or other land use
project in accordance with the
approved land-use development plan and the approved
implementation schedule contained in
the holder's application for this Authority and as agreed to
and as may be varied by the Board
from time to time.
(d) the holder shall comply with the conditions of any Permit,
License or other Authority relating to
the project and with the provisions of all Environmental and
other relevant laws of Papua New
Guinea.
(e) the holder shall comply with such other conditions as are
specified in Schedule 4 hereto
Dated this 6th day of February 2017
For the Board.
1 If the Performance Bond is not lodged within 21 days and no
application under Section 98(6) of the Forestry Act has been made
within 21 days to the Board seeking an extension of time within
which to lodge the Performance Bond then this Forest Clearance
Authority is deemed void under Section 98(5) of the Act and thereby
cancelled
SCHEDULE 1 - Map and Description of Project Area. The Wewak-Turubu Large Scale Integrated Agriculture Project (Oil Palm Development Project) is located along the coast of Wewak and Turubu District of the East Sepik Province. The project area to be undertaken is classified as a Customary Land, traditional owned by 56 Incorporated Land Groups of Turubu LLG and Sausso LLG, Wewak District and Yangoru-Sausia District respectively. The gross area is approximately 105,400 hectares, of which only 90,000 hectares, is approved for forest clearance and conversion into agriculture and other Land-use development. No clearance and timber harvesting activities shall be undertaken outside the 90,000 hectares. The Land-use development program will comprise the establishment of Oil Palm Plantation within the above specified area. SCHEDULE 2 — Term and Commencement Date. i. The term of the Forest Clearing Authority is for a period of Thirteen (13) years commencing on the date this Forest Clearance Authority (FCA 11-03) is issued. ii. The FCA land use development program may be reviewed subject to satisfactory performance of the development program. SCHEDULE 3 — Performance Bond. The amount of performance bond is K595,000.00 (Five hundred and Ninety Five Thousand Kina only). The performance bond will be released on the authorization of the Managing Director of the Forest Authority after the holder has submitted a compliance report and such report has been found to be satisfactory and in accordance with the terms and conditions of the FCA. A forfeiture or release of the bond in full or partially shall be assessed against the performance and the rate of completion for each project activities.
SCHEDULE 4 — Other Conditions
1. All road construction including water crossings (bridges,
culverts, fords etc...) and the
establishment of appropriate processing plants must be
implemented in line with the
implementation schedule provided in the forest clearance
authority application initially lodged.
2. All conditions and obligations as contained in the Forest
Clearance Authority application
lodged under the Forestry Act 1991 (as amended) must be complied
with. This includes the
strict adherence to the specific plantation establishment
implementation schedules and
plantation management plan.
3. Release of subsequent areas for forest clearing operations for
agricultural establishment shall
not be allowed unless previously released 500 hectares or the
areas as approved have been
planted.
4. Construction and establishment of a seedling nursery or
nurseries, buildings and a water
reticulation system is caused to be established within 120 days
from the date of issuance of
the Authority;
5. The Holder shall keep the boundaries of the project area clearly
defined and visible.
6. The Managing Director after consultation with the Holder, may
object to and may request the
Holder to discipline any person employed by the Holder in its
operations who, in the opinion of
the Managing Director, is either incompetent or negligent, or
misconduct himself, and where
such person after having been discipline or continues to be
incompetent, negligent or
misconduct, the Managing Director shall direct the Holder to
terminate the employment of
such person.
7. The Holder shall not in the course of its land clearing and
development program -
i. conduct timber harvesting or clear-fell in areas over 20
degrees slopes;
ii. conduct timber harvesting or clear-felling within 50
meters of permanent running water
course;
iii. conduct timber harvesting or clear-felling within 500
meter of any inhabited villages;
iv. conduct timber harvesting or clear-felling in areas not
planned for agricultural
establishment:
v. obstruct, skid and haul timber across or through permanent
running water courses;
and
vi. pollute any streams or permanent water course with oil,
fuel or any other wastes and
pollutants;
8. Any Forest Officer may enter upon the project area for the
purpose of measuring, survey and
inspection of the Holder's operations. The Holder shall not
obstruct or hinder any Forest
Officer in the exercise of his powers under this clause and the
Forestry Act 1991.
1. Interpretation.
1.1 In this Forest Clearing Authority —
"Act" means the Forestry Act 1991.
"Authority" means this Forest Clearing Authority.
"authorized harvesting area" means the area in respect of
which harvesting is from
time to time authorized under this Authority.
"holder" means the registered forest industry participant
named in this Authority.
"processing plants" means a processing mill or a factory with
ancillary services for
the processing or further processing of oil palm fruits,
cocoa beans, timber, or any
other raw material of agriculture or forestry in origin,
obtained or produced from the
approved land-use development program activities prescribed
in this Authority;
"project area" means the area described in Schedule 1.
"resource owners" means the customary owners of the land,
timber and other forest
produce in the project area, and includes any person named
as owners in the Land
Leases or the Sales and Purchase Agreement.
1.2 Words and phrases have the same meaning as in the Forestry
Act 1991.
2. Condition Precedent
2.1 This Authority is subject to and conditional upon the
fulfilment of the following conditions
precedent within 90 days of the date of issuance or such other
date as the parties may
mutually agree:
(a) The holder shall draw up an implementation Schedule for the
complete agricultural or
other land-use project showing the precise areas and proposed
rate of harvesting to
be carried out and successive land-use development approved
in writing by the
Departmental Head of the Department for Agriculture &
Livestock including detailed
start and completion dates of all activities associated with
the project within the
90,000 hectares, and whereas -
1) the forest clearance operation area of 90,000 hectares
shall be divided in four
(4) phases of 22,500 hectares; and
ii) each phase (22,500 hectares) shall represent
approximately one quarter of the
total area to be cleared under the forest clearance
authority; and
iii) each quarter (22,500 hectares) shall be further
subdivided into blocks for
clearing of a maximum 500 hectares unless the Board
considers that the
maximum of 500 hectares is inappropriate in the
circumstances in which case it
may increase or decrease the maximum clearance figures;
and
(b) The Holder shall cause and ensure that twenty five percent
(25%) of the total project
capital investment must be held with a recognized on-shore
commercial bank and
such documents relating to this transaction shall be provided
to the Managing Director
of the Forest Authority.
2.2 The lodgment of the required Performance Bond as prescribed in
Schedule 4, within 21
days from the date of issuance of this Authority.
2.3 In the event that any of the conditions precedents under sub-
clause 2.1 has not been
satisfied the Forest Authority shall immediately terminate the
Authority in writing without
notice.
3. Termination
If at any time the Holder's registration as a forest industry
participant is cancelled or where the
Holder is a foreign enterprise within the meaning of the
Investment Promotion Act and the
approvals for the activity authorized by the forest clearing
authority are cancelled, then this
Authority shall be cancelled.
4. Harvesting
4.1 Subject to the terms and conditions of this Authority, the
Forestry Act 1991 and any
agreement entered into by the holder with the resource owners,
the Holder may exercise
timber rights within the authorized harvesting area during the
term of this Authority.
4 2 In order to ensure that the planned land use by the Holder
actually takes place, the forest
clearing operation shall be authorized in four phases. Each
phase
(a) shall represent approximately one quarter of the total
area to be cleared under this
Authority, and
(b) shall contain such conditions as are determined by the
Board, and
(c) shall be subdivided into blocks for clearing of a maximum
500 hectares unless the
Board considers that the maximum of 500 hectares is
inappropriate in the
circumstances in which case the Board may increase or
decrease the maximum
clearance figure.
4.3 The Holder shall comply with the approved implementation
schedule determined by the
Department responsible for Agriculture and Livestock matters
or other relevant
Department, and as determined by the Board.
4.4 Any further phase under this Authority may only be granted by
the Managing Director for
the same purposes of forest clearance where all conditions
relating to the agriculture plan
or other land use implementation schedule have been satisfied.
4.5 The rights under this Authority may be suspended where the
planned land use by the
holder is not progressing according to, or meeting the set
standards of the Department
responsible for agriculture and livestock matters or other
relevant Government
Department, agency or instrumentality's approved
implementation schedule.
5. Associated Rights
5.1 In carrying out the terms and conditions of this Authority the
Holder may exercise rights
within those parts of the project area in which harvesting is
authorized to -
(a) enter onto and pass through land (but not private
premises);
(b) make fire breaks, roads, tracks, bridges, culverts, and
similar works;
(c) prepare and construct loading and storage sites for forest
produce;
(d) extract, remove, convert and use mad making materials for
the purpose of any
activities in paragraphs (a) to (c) above carried out
within the project area subject to
payment of any royalties or fees fixed under the land lease
or sub-lease, or the
Sales and Purchase Agreement or under the Act;
(e) use, keep land transport vehicles, machinery, plant and
equipment;
(f) use and maintain existing roads and waterways;
(g) conduct and and resource assessment surveys (including
aerial surveys) and
inventories.
5.2 Subject to this Authority and the laws of Papua New Guinea
the holder may export
harvested timber under this Authority.
6. Environmental and Forest Management Standards
6.1 The Holder shall comply with all environmental laws of Papua
New Guinea and in
particular, the terms and conditions prescribed in the
environment permits granted over
the project area.
6.2 Where required, the Holder shall at all times comply with and
observe all such standards
and practices as determined from time to time of the PNG
Logging Code of Practice or
any replacement document thereof.
7. Rights of Resource Owners
7.1 In carrying out its rights under this Authority the Holder
must not interfere with the
customary user rights of the resource owners to pass through
the Project Area and to
enter their customary land outside the project area to —
(a) hunt;
(b) fish;
(c) gather plant food;
(d) gather traditional materials for making clothing,
artifacts, tools, utensils, and
houses;
(e) collect firewood;
(f) plant, maintain and harvest subsistence gardens.
7.2 Nothing in this Authority shall be taken as authorizing the
Holder or its employees to
make food gardens, hunt, or fish outside the project area.
7.3 Compensation for any breach of this clause may be determined
by agreement between
the Holder and the resource owners or fixed by the Valuer —
General if no agreement is
reached, and any such compensation shall be paid within the
period of time specified by
the Managing Director.
8. Payment for Timber
8.1 The Holder shall pay revenue to the resource owners at the
rates fixed in the Project
Proposal or the Sales and Purchase Agreement or under the Act
and such revenue shall
not be less than the rates required to be paid for timber
permit operations existing at the
time of harvest in respect of all timber felled and scaled
within the project area. For
royalty rates payable, refer to Annexure One under Item (1.0)
listing.
8.2 In addition to payments made to the resource owners, the
Holder shall pay to the
PNG Forest Authority and other relevant Agencies any levies
and benefits, as entailed in
Annexure One under Item (2.0) to Item (8.0) which are agreed
to between the resource
owners and the holder, or fixed by the Board or the Minister
from time to time which are
applicable to forest clearing authorities.
8.3 Payment of a Forest Monitoring Levy on log harvest to the
Forest Authority based on
invoice on a monthly basis, as prescribed in Annexure One,
item 6.
9. Roads and Bridges.
9.1 The Holder shall construct all roads and bridges required for
its operations within the
project area.
9.2 The Holder shall maintain all roads and bridges to a standard
sufficient to carry
laden logging trucks and at all times during the term of this
Authority shall ensure that all
roads which are in use for the logging operations are in a
trafficable condition.
9.3 Any roads constructed by the Holder which are in trafficable
condition shall be permitted
for use by the public without charge.
10.0 Land and Buildings.
10.1 The Holder shall construct and erect buildings, houses, or
any other fixtures within the
project area for the purpose of this Authority.
10.2 Subject to the terms and conditions of the land leases or
agreements any buildings,
plants, or fixtures constructed in the project area for the
purpose of this Authority are
severable and may be removed by the holder within 90 days of
the expiration or
cancellation of the Authority without doing any damage to
the land.
11.0 Measurement and Recording of Forest Produce.
11.1 All forest produce harvested in the project area shall be
scaled and numbered in
accordance with directions given from time to time by the
Managing Director
11.2 Subject to any directions which may be given under Clause
11.1 timber harvested in the
project area shall be scaled, recorded and declared in
accordance with the PNG Forest
Authority's Directions for Scaling.
12.0 Marketing.
The Holder shall endeavor to obtain the best price for the timber
harvested under this Authority
and shall in all cases obtain arms length prices. For the purpose
of this clause, a price is an
"arms length" price if it is equal to or greater than the price
which would have been obtained on
an arms length sale on the same terms and conditions of sale than
other price.
13.0 State Purchase Option
The Holder shalt grant to the Forest Authority commencing from
Project Year 1 to purchase up
to twenty-five (25%) of the holder's annual log export volume.
The Forest Authority's rights shall
be exercised in the following manner —
i) on the first day of the third month of each quarter of each
project year the Holder shall, in
writing, offer to sell at least one-sixteenth 11/16) of that
project year's log export volume to
the Forest Authority for delivery within one (1) month from
the date of offer and on
payment terms substantially consistent with those in effect
with respect to the Holder's
customers;
ii) the offer will include details of the size and grade of each
log, by species, with prices
differentiated by size, grade and species;
iii) the offer or part thereof may be accepted or rejected in
writing by the Forest Authority
within fifteen (15) days of its receipt, and where the offer
is rejected, the Forest Authority
will forgo the right to purchase that amount of logs for
that quarter under this clause;
iv) logs purchased under this clause will be on a free-on-board
basis, and the price paid by
the Forest Authority shall be the price accepted pursuant to
paragraph (iii) of this clause
less any duty payable on the export of the said logs.
14.0 Force Majeure
The Holder may apply to the Managing Director giving notices of
the occurrence of force
majeure after becoming aware that such force majeure will affect
the performance of its
obligations, and the Managing Director may grant in whole or in
part, or refuse any relieve of its
obligations as the case may be
For purposes of this Authority, force majeure means wars,
insurrections, civil disturbances,
sabotage, blockades, riots, embargoes, epidemic, volcanic
eruptions, earthquakes, storms,
cyclones, floods, tidal waves, explosions, fires, lightning,
military operations of any character, or
prolonged adverse weather conditions, prolonged land disputes,
prolonged depressed market
conditions or any other circumstances or occurrence beyond the
reasonable control of Holder
or the Forest Authority as the case may be.
The Holder shall immediately upon the cessation of force majeure
advice the Authority in writing
of such cessation.
15.0 Compliance with Laws.
The holder shall observe the conditions of the Authority, or
license or any other approvals
granted relating to the project and the provisions of the
Forestry Act 1991 as amended and all
other laws of Papua New Guinea.
ANNEXURE ONE
MONETARY BENEFITS
MANDATORY BENEFITS
ITEM 1.0 Royalty
The Holder shall pay royalty for all logs harvested within the
90,000 hectares at the current rates
as per Minister of Forests variation of the 08th of May 2008, and
tabulated below;
Species/Groups , Rate (K/m3)
Kwila 35.00
Species banned for export in log form 35.00
Pencil Cedar, Walnut 20.00
All other group 1 species 15.00
Group 2,3,4 species 10.00
ITEM 2.0 Project Development Benefit - Log Export
The Holder shall pay a Project Development Benefit (PDB) for all
logs exported that have
been harvested from the project area at the following rates;
FOB Export Log Prices - Kina/m3 PDB Payment - Kina/m3
K91-K110.00 2.00
Kill -K130_00 5.00
K131 - K150.00 8.00
K151 -- K200.00 13.00
Over K200_00 13.00 + 7.5 of FOB prices
over K200.00
Such payments to be fees based on the free on board (FOB) price of
exported logs at the rates
specified above, which may be amended from time to time in
accordance with the Act.
The PDB shall be paid in accordance with the attached Schedule
hereto, and will be collected
on a shipment by shipment basis.
The PDB will be distributed as follows;
I. Cash Premium
The Holder shall pay to the PNG Forest Authority (as trustees
for the landowners) a premium
calculated as being forty (40) percent of the total PDB. The
Managing Director of the PNGFA
511011 pay to all !and 9i-o•Lips within the forest area.
For the purpose of this clause, the PNGFA may, from time to
time, by not less than one month
notice in writing to the FCA holder, nominate an alternate
trustee for the landowners.
II. Project Area Development Fund
Sixty (60) percent is to be distributed on developments approved
by a committee representing
the resource owners, the East Sepik Provincial Administration,
the Company and the Authority
or their nominee. Such a Committee is to be formed and is subject to
such rules as
determined by the Authority.
ITEM 3.0 Domestic Processing Benefit
The holder shall pay a project Domestic Processing Benefit (DPB) on
all timber processed
by the holder that have been harvested from the project area, at
rates specified below,
FOB Export Log Prices - Kina/m3 Project Payment - Kina/m3
1000 - 2000 5% of FOB price (s)
Over 2000 10% of FOB price (s)
Such payments to be fees based on the free on board (FOB) export
price of processed timber
at the rates specified above, which may be amended from time to time
in accordance with the
Act.
The DPB shall be paid in accordance with the schedule hereto, and will be collected on a shipment by shipment basis; and The DPB will be distributed as follows; I. Cash Premium The Holder shall pay to the Authority (as trustees for the Landowners), cash Premium calculated as being 40 percent of the total DPB. The Managing Director pays to all Land groups within the project area, with the sharing arrangement based on the proportion of landowners by each land group. For the purpose of this clause, the PNGFA may, from time to time, by not less than one month notice in writing to the holder, nominate an alternate trustee for the landowners_ II Project Area Development Fund Sixty (60) percent to be distributed on developments approved by a committee representing the resource owners, the Provincial Administration, the Holder and the Authority or their nominee, such committee to be formed and subject to such rules as determined by the Authority. ITEM 4.0 Domestic Sales and Log Transfer Benefit The Holder shall pay a Domestic Sales and Log Transfer benefit of K1Oim3 (FOB) on all logs harvested from the project area and sold to other Forest Industry Participant within Papua New Guinea. ITEM 5.0 Log Export Tax A Log Export Tax is payable as prescribed on export of all natural forest logs except for plantation logs as defined in the Customs Act. ITEM 6.0 Log Export Development Levy A Log Export Development Levy is payable on export of all natural forest logs under the
Customs Act except for plantation logs as defined in the Customs
Tariff Act 1990. A fixed rate
of K8_00 per cubic meter is applicable on the export of natural
forest logs.
ITEM 7.0 Other Mandatory Levies
The Holder will pay specified levies on all logs harvested for the
implementation of the Cocoa
and Coffee Plantation within the approved 90,000 hectares. Such
payments to be at the rates
specified within 14 days of submission of log returns on all logs
harvested from within the
earmarked 90,000 hectares, and as prescribed below,
No. Levy Rate (Kina/m3) of Log
Recipient
Harvest
1 PNGFA Forest 1.00 PNG Forest
Authority
Management Levy
2 FCA Monitoring Levy 2.00 PNG Forest
Authority
TOTAL 3.00
ITEM 8.0 NON—MANDATORY BENEFITS
The Holder will pay the following levies to the Landowner Company as
agreed upon by the
holder and the resource owners as prescribed below;
No. Levy Rate (Kina/m3) of
Recipient
Log Harvest
1 Agriculture Levy 1.00 Landowner
Company - Limawo
Holdings Ltd
2 Infrastructure Levy 1.00 Landowner
Company - Limawo
Holdings Ltd
3 Business Development 0.50 Landowner
Company - Limawo
Levy
Holdings Ltd
4 Spiritual Levy 0.50 Landowner
Company - Limawo
Holdings Ltd
5 Educational Levy 0.50 Landowner
Company - Limawo Holdings Ltd
6 Local Level Govt. Levy 0.50 Local Level
Govt.
TOTAL 4.00
