Case 1.5 – 5 Star Mountain Plaza Hotel
In the lead up to APEC 2018, the city of Port Moresby underwent major transformations that changed the face of the nation’s capital. New infrastructure and roads were constructed and projects were introduced as investors in partnership with the National Government made preparations for the APEC summit which was held in November, 2018. The Star Mountain Plaza Project was a major project developed during this period and the Hilton Hotel and Kutubu Conference Centre were two of several venues used during the summit for accommodations and meetings.
In September 2015, the Mineral Resources Development Company (MRDC) entered into an agreement with Hilton Worldwide to construct a 5-star hotel to be known as the Hilton Port Moresby (National, 2015). The hotel is part of the Star Mountain Plaza, which the project proponents have hailed as PNG’s first integrated commercial development.
The Star Mountain Plaza, according to the project’s page on a website belonging to Australian firm Ignite Architects, is a joint venture company owned by landowner companies Mineral Resources Star Mountain (MRSM), Mineral Resources Ok Tedi (MROT), and Petroleum Resources Kutubu (PRK). The three entities come under the trusteeship of the MRDC. The project costs a total investment of K1.5 billion and will support the National Government to host the APEC 2018 (Architects, 2017).
Prime Minister Peter O’Neill praised the development stating that the project will create more than a thousand jobs for Papua New Guineans during and after construction (The National, 2015). During the construction of the Hilton Hotel, the Managing Director of MRDC, Augustine Mano said that 400 local residents will be employed to work on the Star Mountain Plaza development as the site workforce expands by 60 percent (PNG Today, 2017). The construction of the project brought employment opportunities to around 800 workers, a feat praised by Mr Mano describing it as a legacy asset for future generations of Papua New Guineans which gave the local workforce an opportunity to be trained in a variety of trades (Loop PNG, 2018). Apart from providing free meals, bottled water and Workers Compensation Insurance, the project also helped the local workers and their nominated family members receive health benefits such as free vision testing and electrolyte supplements to prevent dehydration (Post Courier, 2018).
The project consists of three stages. The first stage of the project is the development of the 5 star Hilton Hotel, the Kutubu Convention Centre and the car park structure which was completed and officially opened on October 12, 2018 and subsequently used as accommodation for the leaders and the delegates of Russia, Chile and Indonesia attending the APEC meeting in Port Moresby (James, 2018). The second stage is the construction of 160 luxury apartments, a club, restaurants and other facilities while the third stage involves the establishment of a retail precinct, commercial offices and the building of a second 4 star business hotel.
In March 2017 Prime Minister Peter O’Neill announced that the National Government will invest K316 million in the project and become a shareholder, taking a 20 percent stake to leave the landowners with 80 percent (Kero, 2017). But the participation of the landowners through the MRSM, MROT and PRK should cause alarm and compel landowners to ask whether the custodian of their funds (MRDC) undertook a consultative process before committing them to the project. Also what is the track record of the MRDC in similar hotel projects using landowner funds? Has there been good returns on investment for landowners in projects such as the Pearl Resort in Fiji where the MRDC reportedly invested K107 million (Kero, The National, 2015)?
The announcement by the Prime Minister of the investment amount of K316 million compels one to ask whether Papua New Guineans are now shareholders in the project and when can the people expect a return on their investment? Although the country saw a successful completion of stage 1 of the Star Mountain Plaza project, questions still remain on the lack of transparency relating to the acquisition of the land that now hosts the project also raises questions about who its legitimate owners are and whether they were rightfully compensated. The people and landowners are yet to fully benefit from their investments and time will only tell whether stage 2 and stage 3 of the project will eventuate now that Papua New Guinea’s major international event APEC is over.
The question still remains: how will the landowner companies involved in the deal be redressed for the K22 million loss incurred as a result of the bad business deal that had transpired between the parties involved? And being that the board of CMSS is still active (given their representation in the CMSS case in the national court), how can these landowners companies recoup their loss from MRDC or CMSS? Shouldn’t CMSS be subject to civil proceedings regarding the non-performance on their part of the agreement, and shouldn’t MRDC be an additional party to these proceedings being the trustee for the two landowner companies?
~ Reference/Bibliography ~
Project to create more jobs, PM says. The National. Retrieved from https://www.thenational.com.pg/project-to-create-more-jobs-pm-says/
James, D. (2018, November 13) Hilton Hotel opening in Port Moresby a ‘key story’ for Papua New Guinea says MD. Business Advantage PNG. Retrieved from https://www.businessadvantagepng.com/hilton-hotel-opening-in-port-moresby-a-key-story-for-papua-new-guinea-says-md/
Star Mountain Plaza Development to Expand Local Workforce by 60%. (2017, August 1). Papua New Guinea Today. Retrieved from https://news.pngfacts.com/2017/08/star-mountain-plaza-development-to.html
PNG Workers and Families to Benefit from New Healthcare Initiative. (2017, September 25) Post Courier. Retrieved from https://postcourier.com.pg/png-workers-families-benefit-new-healthcare-initiative/
PNG’s APEC Venue on Track. (2018, June 15). PNG Loop. Retrieved from http://www.looppng.com/png-news/png’s-apec-venue-track-77395
Credit: Star Mountain Plaza, Photo Credit: ww3.hilton.com