In 2012, then Treasury Minister Don Polye, an ignoramus in economics and financing, was asked by then Finance Shadow Minister Joseph Lelang about the massive K6 billion Exim Bank Loan from China. He said: “The K6 billion (US$2.85 billion) loan is equivalent to 70% of the country’s total internal revenue and will increase PNG’s total public debt from K8.6 billion to K14.6 billion.” Polye, PNG's premiere political prostitute and Peter O'Neill's partner in crime at the time, replied that the loan was a sound investment.
Now we know better.
The Highlands Highway was the main target of the K6 billion Exim Bank loan and big political billboards picturing Peter O'Neill's face went up all along the highlands highway. But the only visible change that ever occurred was in the Markham Valley, the part of the Highlands Highway least likely to suffer landslips. Even the promised project there - a 4 lane highway from Lae to Nadzab, never even reached the midway point, and as typical for the O'Neill government, the initial cost projections for the improvement of that part of the highway was outrageous, in the hundreds of millions of kina. Where was all the money going? Undoubtedly into the pockets of the Prime Minister, his Works Minister Francis Awesa, and other cronies who secretly have ownership in construction companies getting the contracts or might have arranged secret kickbacks from other companies engaged in doing the work.
Even worse than that, relatively little the K6 billion went to fixing the Highlands Highway. It is indisputable that the Highlands Highway is the economic lifeblood of the nation. Its ability to grow the overall national economy is far bigger than using the loan money to build the NCDC City Hall in Port Moresby. But that's among the things the K6 billion was later said to be "restructured" to pay for, namely:
1. Lae – Nadzab 4 Lane Super Highway
2. Lae Wharf
3. NCDC new City Hall
4. 9 Mile to Baruni 4 Lane Super Highway
5. Confarm to Togoba 4 Lane Super Highway
6. Jacksons International Airport Redevelopment approved for K1.5 billion on 16/12/15
How can the above 6 items cost K6 billion, when the NCDC itself says that the new city hall was built with BSP loan money? Where on earth can anyone see a massive K1.5 billion worth of improvement in Jackson's airport, the construction contract given, of course, to L&A Construction owned by long-time gambling permit and biz partner crony Luciano Cragnolini, whose wife Yumei Ni Cragnolini is widely rumoured to be shared sexually between Cragnolini and O'Neill.
K1.5 billion spent and gone to rennovate Jackson's airport? Again, it's too hard to swallow. Money that could have gone to Highlands Highway rehabilitation.
Is there any money left from the massive K6 billion loan that the people of PNG are now having to pay back? We'll never know. Remember, we live in the Banana Republic of Papua New Guinea, where the government never tells us much of anything. What we do know is that the Highlands Highway is in a bigger mess than ever, full of landslides, with each landslide translated into higher transportation costs for goods going up and down the highway. Each landslide represents lost money which ultimately effects how much highlands people must pay for goods, and how much money they're paid for what they produce.
Peter O'Neill failed the country miserably and all the highlands provinces in particular by not fixing the Highlands Highway when he had the once in a lifetime opportunity to do it. Now the money is mostly or all spent and it's time to repay the loan, with interest. The opportunity is gone forever, another lost chance for PNG's development to add to the historical mountain of lost chances our country has accumulated.
It is fitting that people along the Highlands Highway have been tearing down signs that how the image of Peter O'Neill on them.
$2,437,392,628.65 to Papua New Guinea in 2012 | ID: 39380
Project Details:
Donor: China
Recipient Countries: Papua New Guinea
Commitment Year: 2012
Total Amount (USD-2009): $2,437,392,628.65
CRS Sector: Transport and Storage
Flow Type: Loan (excluding debt rescheduling)
Flow Class: ODA-like (Arbitrated)
Scope: Suspicious or inactive
Verified: Suspicious
Intent: Development
Status: Pipeline: Commitment
Sector Comment: Highway construction
$2,437,392,628.65 USD-2009 ($2,900,000,000.00 USD in 2012)
On December 12, 2012, Papua New Guinea and China signed agreements, under which China EXIM Bank will offer $2.9 billion USD (6 billion PGK) concessional soft loan to PNG for highway constructions and other infrastructures. PNG was to receive $200 million in 2013. PNG is also negotiating with Chinese companies for implementation aid. PNG government plans to repay the loan within 30 years. This project involved much political controversy and conflicting accounts. It was unclear why China would provide such a large loan facility, and the only references to the loan in Chinese were translations of articles printed in Papua New Guinea. According to a report by Australian National University, the loan was superceded when China committed 1 billion USD in concessional loans to the Pacific in 2013. The funding remains linked to two projects upgrading the Highlands Highway, however no funds have been disbursed to date.
October 24, 2012
Source: The National, Thursday 25th October, 2012
THE new government has targeted post-electoral stability with pledges to tame the budget deficit, boost infrastructure and curb expenditure.
However, the opposition says that the re-elected PM has not acted responsibly in his plans to seek a K6 billion loan from China’s Exim Bank to overhaul crumbling transport infrastructure.
While the government insists the loan is needed to improve links in the heavily forested, mountainous island, critics are asking how such a large loan will be managed, disbursed and repaid.
“The K6 billion (US$2.85 billion) loan is equivalent to 70% of the country’s total internal revenue and will increase PNG’s total public debt from K8.6 billion to K14.6 billion,”Joseph Lelang, the shadow minister of finance, told The National on Sept 27.
Don Polye, the treasury minister, responded by stating that economic conditions in the country were conducive for such investment capital and the loan could be used on sound investments to stimulate further economic growth.
He added that the funds would be used for an overhaul of the Highlands Highway – a vital road link – and state-owned electricity provider PNG Power, as well as to develop port facilities and telecommunication services, reported The National.
Improving the ports and the transport network have been flagged as crucial to the nation’s long-term growth, which will allow PNG’s rural areas to share in economic progress.
“The weak condition [of transport] is often cited as a major constraint on economic growth and improved social service provision in PNG,” the Asian Development Bank (ADB) wrote in a 2011-15 sector assessment.
The ADB has said that in addition to transport, another priority area for reform is state-owned enterprises (SOEs), with the bank writing in a September report that the poor performance of SOEs, such as those delivering water, electricity, telecommunications and transport services, was having a significant impact on the country’s finances.
Pivotal to the success of post-election pledges to revitalise SOEs and for the future of the Chinese infrastructure loan will be how the country manages a sovereign wealth fund (SWF) established in February to invest and distribute resource revenues.
While a portion of the SWF will be allocated to the re-capitalisation of SOEs, it is widely expected to be used to repay the Exim loan.
While all future mining, oil and gas revenues will be deposited into an offshore stabilisation fund, critics suspect that this may not be enough to ensure revenues reach the population and boost development.
To make sure the SWF delivers on responsibilities, such as providing better services and lifting rural areas out of poverty, improving the functioning of ministries, tightening anti-graft mechanisms and fighting the temptation to over-spend will all be necessary. – Oxford Business Group
January 15, 2013
Source: The National,Wednesday 16th of January, 2013
LEADING Transport Company Trans Wonderland Ltd (TWL) has praised the government for securing the K6 billion Export Import (EXIM) bank loan from China which will help revitalise the deteriorating infrastructure in the country.TWL chairman and prominent Kutubu leader Mark Sakai praised the O’Neill government’s foresight which will see upgrading or replacement of infrastructure where the company operates to create more business opportunities.TWL owns and operates one of the largest trucking companies in the country.
Sakai said: “Infrastructure is vital to effectively channel government policy and drive the economy of the country and the trucking industry relies heavily on it to freight goods and services to the masses and business houses in the country.”Sakai, who is the principle landowner leader of the Kutubu oil and gas project areas, said without proper infrastructure, cost of goods and services would skyrocket and render the economy useless.
“The Highlands highway, for example, is the lifeline of the country and needs urgent upgrade.”
It needs immediate government intervention and I am relieved to note that part of the EXIM Bank loan will be used to upgrade this crucial highway,” he said.Using the Okuk highway is a nightmare for the trucking company not just because of the dilapidated state of the road but also the constant compensation claims by local people along the route. With the government’s announcement that a good portion of the loan will go to law and order is also news welcomed by Sakai.“We need a safe and good infrastructure which will have a rippling effect of bringing cost of goods and services down and easy on the pockets of our people who are mainly rural based,” he said.TWL is the leading transport and logistics contractor to the multi-billion kina PNG LNG project in Hela and Southern Highlands provinces.
On or around September 2012, immediately after Peter O’Neill was installed as the Prime Minister, he (O’Neill) took a huge delegate to China, organised by his sidekick, Ni Cragnolini. It was openly reported that a loan of K6 billion was obtained from the Chinese Export-Import Bank (Exim Bank) to fund certain rehabilitation of ailing infrastructures. One would have thought that PNG Powers rundown and incompatible power generation and distribution equipment would be first priority. NO!
The K6 Billion was never appropriated in the 2012 National Budget, nor was it captured in the subsequent budgets in 2013, 2014 and 2015. We really don’t know whether that loan was obtained and if so, did the money ever enter PNG?
One of the mandatory conditions of Exim Bank loans is that a Chinese multi-national corporation, mostly State owned enterprises, has to be nominated to deliver the projects identified by the recipient country. Under this arrangement, the funds remain in China. Only the project is delivered to the recipient country. The recipient country then repays the loan with concessional interests to Exim Bank.
It now appears more clearly that the Exim Bank loan of K6 Billion was actually signed and procured illegally –without the mandatory Parliamentary approval. It is believed that this is one of those so called “off balance sheet debts” that Department of Treasury is repaying.
Sources within government reveal that there was no debt financing plan to obtain this mega loan. That information seems credible because the loan is not covered in the Budget Strategy documents of 2012 – 2015. That is further cemented by the type of projects that this loan is used for and they are:
1. Lae – Nadzab 4 Lane Super Highway
2. Lae Wharf
3. NCDC new City Hall
4. 9 Mile to Baruni 4 Lane Super Highway
5. Confarm to Togoba 4 Lane Super Highway
6. Jacksons International Airport Redevelopment approved for K1.5billion on 16/12/15
The projects are never tendered and are being rolled out in tranches. The super highways are unnecessary. There is no traffic jams on the existing roads. Whoever did the feasibility studies, if any, to justify these projects must have lived in another planet and assumed the realities.
So if there was no plan and need for this loan, as it clearly seems now, then what was the real reason for this loan? When one organises a huge loan successfully like the K6 billion, you are looking at at least 5-10% Success Fee (Commissions). Who would have made that money?
After the loan, Ni Cragnolini is believed to be buying properties left-right-centre in Gold Coast and Brisbane in trust for PM.
The K3 billion loans from UBS Bank is another of those illegal loans obtained by PM O’Neill without Parliamentary approval, which does not benefit PNG in any manner or form. Imagine the kind of commissions/success fees made in that arrangement.
So for personal benefit, someone has mortgaged the future of this country in the pretext of infrastructure developments.
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