By Andrew Pascoe

The state’s controversial Pacific Marine Industrial Zone (PMIZ) project – a USD$235 million proposal to develop a free trade industrial zone in Madang – is officially on hold.

Madang Court today ordered all progress on the PMIZ project to cease until the court makes a decision on whether the proposed development has sufficient legal grounds to proceed.

The decision put an immediate freeze on a US$200 million Chinese loan to develop the project – just a week before the PNG Government was to access $3 million from the loan to progress development of the PMIZ.

Lawyers representing aggrieved customary landowners will seek to have the loan agreement put on ice permanently when they return to court next month.

Twivey Lawyers will argue the loan agreement, signed on 31 May 2011 by then Minister for Commerce and Industry Gabriel Kapris for the purpose of building the PMIZ, is illegal and unconstitutional.

They will argue the contract jeopardises PNG’s sovereignty because it states that the laws of China, not Papua New Guinea, will apply in the event of any dispute, and that any dispute is to be resolved in the courts in China.

“By attempting to oust the jurisdiction of the laws of Papua New Guinea as well as the National and Supreme Courts of PNG, the loan agreement is contrary to the Constitution, which states that the National and Supreme Courts have unlimited jurisdiction in Papua New Guinea,” Twivey said.

“Therefore the loan agreement is illegal and invalid.”   

The lawyers also believe Kapris did not have the authority to sign the contract, because PNG laws declare only the Head of State can sign agreements involving K5 million or more.

On the basis of these and other alleged illegalities – including that Madang is not a province that is subject to the Free Trade Zone Act, and because the development of the PMIZ has not been accounted for in the National Tuna Fisheries Management Plan – the lawyers will seek an injunction on the PMIZ project on November 15.   

Today Judge David Cannings issued a court order prohibiting the state from accessing the $200 million loan until a decision has been reached regarding the application for an injunction. In effect, this means no further progress on the PMIZ project can take place until at least December.

The decision is a win for landowners to be impacted by the massive project, who claim they have not been adequately consulted about the implications of the development of the PMIZ.

 The PMIZ is a proposal for a free trade zone on 217 hectares of land at Vidar situated on the Madang Lagoon, and is planned to contain 7-10 new fish canneries, a fish port complex, container handling facilities, a waste water facility, power plant and other industrial developments. The project’s backers say it will require 30,000 jobs, to be supported mainly through unskilled foreign workers.

• Andrew Pascoe is a freelance journalist currently based in Madang, Papua New Guinea.