THE ILLEGAL UBS LOAN MATURES ON 13 JUNE 2016


THE LNG LANDOWNERS OPPORTUNITY TO BUY 4.22 % EQUITY FROM THE STATE ENDS ON 30 JUNE 2016;
WILL PETER O’NEILL FIND THE MONEY TO MEET THE OBLIGATIONS?
by ANDRE BILAK STEVEN

PNG is already having a serious cash flow problem, and nothing can be more evidenced than the Minister for Finance James Marape’s statement few weeks ago that all MPs (who supposed to receive K15m DSIP funds) will receive K1 million each for this year. The cash flow crisis is affecting business houses, government departments and households like never before. The Bank of Papua New Guinea has about less than US$1.4 billion in reserves against pending foreign exchange orders of around K4 billion plus and the situation is not improving any sooner. The endless cue for sending funds overseas is unbearable and killing many import reliant businesses in this import-reliant economy. Many learned experts in economic management have advised O’Neill, since early signs of doom emerged, to take remedial actions immediately including passing of supplementary budgets and cutting down on unnecessary costs. These fell on deaf years and O’Neill recklessly continued to captain this ship (PNG Economy) despite the obvious signs of mechanical failure. To heedless O’Neill, we just have to continue to sail until we breakdown and sink and this fate is not far. Against this economic distress, PNG economy is now on its way to the slaughterhouse –thanks to economic imprudent O’Neill. Wednesday 13 June 2013 is already marked out and Wolfish UBS Bank is already counting the numbers. THE UBS K3B LOAN AND ITS BENEFITS The UBS loan does not benefit Papua New Guinea by measure. In fact we made a loss on the day O’Neill signed the deal. The collar forward-sale of about a fifth of the Oil Search shares meant that we lost about $18 million (K42m) on the day it was signed. See SMH report. Well over K40 million was made available by Secretary Daire Vele to pay for consultants including himself through his company, Petusio Capital, and Jimmy Maladina’s law firm –Pacific Legal Group. Then there is this bridging loan of A$330 million (K770m) that National Petroleum Company (NPCP) to pay UBS and at the same time, around January 2015, K415 million was borrowed by NPCP to pay for ‘advance dividend’ (a financial concept unique to O’Neill) to the State when the country faced financial shortage at the beginning of 2015. See SHM report. The O’Neill Government purchased 10% of Oil Search shares at A$1.2billion. Today, the State stake in Oil Search is valued less than A$800 million. A loss of more than A$400 million (K933m) just by being on the stock market for more than two years. Thanks to O’Neill’s economic witlessness. So what was the real benefit the State of PNG was poised to derive from this deal that that State has made a loss of State K2.2billion (42+40+770+415+933) so far? A short answer to this question will be provided later on. That loss of about K2.2billion excludes the A$1.2 billion principal amount of the loan plus the interest at 13.3% p.a. That is due on 13 June 2016 and according to well-placed sources, the State does not have the money for refinancing arrangement. The Oil Search announcement to purchase Interoil was yet another impossible stunt by O’Neill and Botten to see if that would improve the financial situation. The State had already committed the proceeds of the LNG to UBS through a Singapore escrow bank account. Under the collar arrangement, the Oil Search Shares had been used as collateral. As an Investment Bank, UBS is likely to takeover these shares come 13 June. So is PNG likely to be deprived of the Oil Shares plus the funds in the Escrow account? Yes. That means that we have already made a loss of K2.2billion and now we will be making a staggering loss of the proceeds of LNG and Oil Search Shares. Given that the Oil Search prices is lower than forecasted, imagine how much more can it be? Again did the State benefit from this deal? NO!!!! Fugitive Daire Vele (has a pending arrest warrant on him) when explaining the Oil Search share purchase back in February 2014 said “The State looks forward to maintaining a material shareholding in Oil Search with a view to participating in the additional upside of Oil Search's existing projects and the Elk-Antelope project.” O’Neill’s explanation to the NEC when presenting the submission said Oil Search was a largest employer of Papua New Guineans. Well, just a couple of months back, Oil Search laid off more than 200 Papua New Guineans and where was O’Neill????? Nowhere! This deal benefited O’Neill (who collected a lot of commissions and structured payments) and his cronies like Maladina, Vele etc. Oil Search secured itself against a potential takeover bid from the IPIC and mostly UBS AG. The destructive effects of this controversial deal has and will continue to undermine any economic recovery process. THE LANDOWNERS 4.22 % EQUITY PURCHASE Under the PNG LNG Project Umbrella Benefit Sharing Agreement, the affected landowners and provincial governments can exercise their option to acquire 25.75% of the State’s stake in the LNG project. This is equivalent to 4.22o/o indirect interest in the PNG LNG Project. The "option price" per percentage is US$240 million, which is valued at USl.01 billion (US$240 million x 4.22o/o). The period in which the affected landowners and provincial governments can exercise their option is between 1 January 201 6 and 30 June 2016. The US$1 .01 billion will be paid to IPBC and these proceeds will be used to repay the loan. We are only two weeks away from the 30 June 2016 and there is no indication that the landowners will have the funds to purchase that stake. Firstly, the landowners’ royalties and equity share from the PNG LNG proceeds had been tied to this same UBS loan hence “all” the funds are diverted to this escrow account. BPNG (Bakani), O’Neill and Marape have lied to their people by saying that the funds are safely kept in a trust account. To avoid the pressure, they continue to drag an unusual landowner identification exercise headed by a judge of the National Court.
Secondly, O’Neill tried to hijack the fundraising exercise by instructing Augustine Mano (MRDC) and Wapu Sonk (NPCP) to assume the role of landowners in seeking the funds in the capital markets. That was vehemently opposed by the landowners (ably supported by late Anderson Aigiru) in a court case and the whole arrangement failed. Failing that, O’Neill sponsored convicted criminal, Francis Potape to overthrow late Anderson as the Governor of Hela so that Potape would facilitate the landowners deal. That again failed when Anderson challenged it in court successfully but came at a prize –Anderson’s death. When Hon Kerenga Kua asked Peter O’Neill in Parliament about the landowners proceeds, Peter O’Neill, as usual with a total shameless demeanor rose to answer the question. As he stood up, Late Anderson rose and stormed out of the Parliament –clear sign that Agiru didn’t want to hear O’Neill’s lies. That was the last time he was seen and that was the cause of his death. With the limited knowledge, the landowners demanded the LNG funds together with late Anderson’s body but the sugary leaders of Hela and SHP watered it down. The date is fast approaching and given that nobody in the global financial markets trust O’Neill and his government, the chances of raising the finance to assist the landowners purchase the 4.22% are very limited, if not nil. A big letdown of the landowners –his own people, if ever he truly identifies himself with them.
O’NEILL FAILED THE ECONOMY O’Neill failed the country by not raising the IPIC refinancing when the maturity date was approaching. He had all the opportunity to raise the finance to repay the IPIC loan but he failed miserably and IPIC took over State’s Oil Search Shares. There was no need and economic viability for PNG in obtaining the loan in UBS to buy Oil Search shares. None at all!! The State and its peoples’ resources had been used by O’Neill to benefit O’Neill himself, his cronies and his crony companies. O’Neill is again failing the country big time by not raising the funds to refinance the UBS loan. He is again allowing the loan to mature so that UBS would take over State assets. So one wonders why was the State used to borrow this huge loan. It seems a one-way traffic to benefit these corporate vultures. He is again failing the Landowners of the LNG project. The Landowners are now positioned to be mere spectators in the project that they had so much hope. How shattering it is. Meanwhile O’Neill continues to triumph with total impunity. He is not worried at all that his actions are causing substantial financial ruin to the country.
The Sydney Morning Herald story contains the details of the UBS deal. Please read to understand further on this.

Popular posts from this blog

HIGHLANDS FRAUD F*CKS RUNNING GOVERNMENT AGENCY,,,

Image
A Fraudster and unqualified person has been shortlisted for NEC submission for the position of CEPA Managing Director. The candidate in question is Jude Tukulyia. His academic credentials are subject to scrutiny. Further investigation is required to verify the authenticity and legitimacy of his qualifications, particularly the reported diploma in accounting, Bachelor of Laws, MBA from Divine Word and UPNG respectively. It is very suspicious and unprofessional  when the Minister for Environment Conservation and Climate Change, Hon Simo Kilepa, wrote to UPNG Vice Chancellor asking to confirm Jude’s questioned education qualifications. This very due diligence work is the core responsibility of the Public Service Commission and Department of Personnel Management. What authority does the portfolio minister have to write to the Universities? Dumbfounding indeed if one asks. Ulterior motives written all over the letter. This amounts to  Questionable Academic Qualifications of Mr Tukulyia.    
Read more

MARAPE & PAITA ABOUT TO SIGN AWAY PNG GOLD

Image
By: Andrew Arthur Prime Minister Hon. James Marape and his planning minister Reinbo Paita are the parties behind the theft of all Papua New Guinea’s gold for the next 100 years! They have given approval for the STATE of Papua New Guinea to sign away all gold rights to an Australian paper company in Refinery Holdings PTE LTD. First, they have done the deal with a paper company even before there is a LAW that says they have the right to do the deal. We see how the real manipulation works out. Marape and Paita now need to get the law passed by Parliament. The law is before the Parliament to set up Papua New Guinea’s first National Gold Corporation. The National Gold Corporation Bill first surfaced in 2012 but successive Government of Sir Michael Somare and Hon. Peter O’Neill, in their wisdom, had refused to pass this Bill as there have been some sinister motives and constitutional issues associated with the Bill. The new bill will allow Refinery Holdings LTD PTE to own 70% of the National
Read more

AUGUSTINE MANO PNG'S PREMIER CORPORATE CROOK

Image
by  MICHAEL J. PASSINGAN In a significant setback for Mineral Resources Development Corporation (MRDC), the Supreme Court of Papua New Guinea has dismissed the company's appeal to stop criminal investigations into its dealings with landowner funds held in the Pacific Balance Fund (PBF). The court ruled that MRDC's appeal was an "abuse of process" and ordered the company to pay costs of the proceedings. MRDC, a unit holder in PBF, had taken legal action against the National Court's decision to dismiss its case, arguing that the court had no jurisdiction to hear the matter. However, the Supreme Court disagreed and held that MRDC's appeal was nothing more than an attempt to interfere with the police's criminal investigative process. The court found that MRDC had no authority to conducted its own investigation into the activities of the Melanesian Trustee Services Limited (MTSL), the fund manager of PBF, and that its actions were in violation of the Trust Deed
Read more

PNG, VERY RICH YET STILL A VERY VERY POOR COUNTRY

Image
by GARY MONDULAME Papua New Guinea (PNG), a nation blessed with abundant natural resources, continues to grapple with economic challenges that belie its potential wealth. The nation's economic narrative is a paradox—rich in resources yet burdened by poverty. The explanation for this paradox lies not only in economic mismanagement but also in deep-seated corruption that has permeated the political landscape since independence in 1975. Following its independence from Australia, PNG was entrusted to leaders who lacked a vision for a holistic national development. This absence of foresight is evident from the lack of long-term development plans that could have distributed the country’s wealth fairly across all regions and communities. Successive governments failed to establish foundational strategies such as building satellite townships or creating robust rural housing schemes. Instead, they resorted to short-term, reactive measures that did not foster sustainable growth. The nascent l
Read more

James Marape's Missteps Openly Exposed at Australian Forum

Image
by  MICHAEL J. PASSINGAN  In a recent event that highlighted the complexities of international diplomacy and governance, Papua New Guinea's Prime Minister, James Marape, faced a challenging situation during his appearance at the Lowy Institute in Sydney, Australia. The Lowy Institute, known for its role as an independent think tank focusing on international policy, particularly in the Asia-Pacific region, provided a platform for a candid assessment of Marape's governance. Following his formal address, Marape engaged in a dialogue with Dr. Michael Fullilove AM, the Executive Director of the Institute. Dr. Fullilove, a respected figure in public and international policy, scrutinized Marape's past promises and statements, contrasting them with the current state of affairs in Papua New Guinea (PNG). The discussion took a critical turn as Dr. Fullilove revisited Marape's 2019 speech at the same venue, where Marape had outlined his vision for PNG in a speech titled “A New Boo
Read more

A Call for Local Ownership and Fairness

Image
by JUSTIN PARKER In recent discussions surrounding the establishment of a gold refinery in Papua New Guinea (PNG), concerns have been raised regarding various aspects of the proposed project. Spearheaded by foreign investors, the initiative has sparked debates over ownership, exclusivity, tax concessions, underwriting, management rights, control over currency, legal protections, and historical failures. These concerns, if unaddressed, could potentially undermine the interests of PNG and its people, particularly the hardworking alluvial miners who form the backbone of the nation's mining sector. At the heart of the issue lies the question of ownership. The proposed ownership structure, favoring foreign investors with a substantial 70% stake, raises eyebrows, especially considering PNG's past experiences with failed ventures like seabed mining. Instead of ceding majority control to foreign entities, many argue that PNG should assert full ownership over the refinery. With the coun
Read more

BLIND LEADING THE BLIND, WHY THE PNG ECONOMY STILL SUCKS

Image
Elizabeth Genia, Acting Governor Bank of PNG (BPNG) by MICHAEL JOSEPH PASSINGAN The economy of Papua New Guinea (PNG) is at a crucial juncture. Despite some signs of recovery, the country faces several structural challenges that continue to impede its economic progress. The March 2024 Monetary Policy Statement from the Bank of Papua New Guinea sheds light on these issues, providing a comprehensive overview of the economic landscape and the policy responses being implemented to navigate through these turbulent times. In 2023, PNG's economy grew by a modest 1.4%, a significant slowdown from the 5.2% growth witnessed in 2022. This tepid growth is largely attributed to delays in major projects and ongoing economic issues that have not been fully resolved. The anticipated growth for 2024 is around 3.0%, buoyed by the resumption of production at the Porgera gold mine. While this marks an improvement, it remains subdued compared to the potential of this resource-rich nation. One of the mo
Read more