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Prime Minister Peter O’Neill has just cost Papua New Guinea almost K1.5 billion because of his reckless, corrupt and unnecessary borrowings. The loss is on the refinancing of his illegal K3 billion UBS-Oil Search loan.

The deal was done in secret in Sydney earlier this month to avoid having to reveal the massive loss that the Prime Minister, UBS and Oil Search have inflicted on the nation. Details of the deal were not revealed when Kumul Petroleum MD Wapu Sonk announced it over the weekend. 

Mr O’Neill’s secret loss comes at a time when the Government is virtually bankrupt, unable to pay public servants and cutting spending on essential services such as health, education and power generation. 

It will add to the record and illegal levels of debt already incurred by the Prime Minister. It will contribute to further worsening of the living standards of ordinary Papua New Guineans. The refinancing of the UBS-Oil Search loan is even worse than the original illegal deal. And it is just as illegal because it does not have the required approval of Parliament. 

According to leaks from the PM’s Department and the banks, led by UBS, that have made millions from the deal, the refinancing is for a total of about $A1 billion (K2.10 billion). But only about $600 million (K1.26 billion) has gone towards the refinancing itself. 

The balance of about $400 million (K840 million) is a PENALTY - payable to UBS and its agents - imposed on the PNG Government for not being able to settle the original deal by the due date. 

Under the original sweetheart deal, personally arranged by the Prime Minister and Oil Search CEO Peter Botten, the State’s 150 million shares were bought in March 2014 for $8.20 each. At the time the deal was agreed to, on or about February 13 Oil Search shares were worth $6.65. So the State has also lost about $232.5 million (K488 million) on the shares themselves. 

There is a further foreign exchange loss of K143 million, so the total kina loss is about K631 million. When the K631 million losses are added to the PENALTY, the total cost to Papua New Guinea is K1.47 billion. The only people to benefit out of this illegal and corrupt deal are the Prime Minister and his cronies, UBS and Oil Search. Ordinary Papua New Guineas have been left to bear the burden of their greed.