PETER O’NEILL PLANNING TO RIP OFF PNG LNG LANDOWNERS - NOTHING COMING UNTIL 2019 - LEAKED SUBMISSION INSIDE
by JACK TOAPELIS
Prime Minister Peter O’Neill has broken his promise to PNG LNG landowners to support their purchase of 4.27% equity in the project.
A leaked policy submission by the Prime Minister, Treasurer Patrick Pruaitch and Finance Minister Jame Marape says landowners will have to go it alone and raise their own funds to buy the equity.
The Prime Minister had previously agreed to debt financing by NPCP/Kumul Petroleum for the landowners so they could pay for their equity.
This promise was effected in NEC decision 208 of 2015 – now the Prime Minister wants to rescind that decision through his new policy submission.
Virtually all the recommendations in the Prime Minister’s submission are in breach of the 2009 Kokopo Umbrella Benefit-Sharing Agreement.
Indeed the O’Neill Government has always been in breach of the Kokopo UBSA, notably in making agreed payments to the UBSA participants.
As Sir Michael Somare said in a statement late last year: “This government has not paid a toea in royalty payments to the landowners since the very first cargo was exported in the beginning of 2014; it has not paid a toea in development levy payments to provincial governments during that same period; it has not paid one toea in the free carry equity payments, and it has been absolutely negligent in not moving the equity acquisition conversation forward with landowners and provincial governments to realize their dreams of acquiring additional direct equity interest in the PNG LNG Project which were the primary outcomes of the Kokopo UBSA.”
LIKE EVERYTHING ELSE O’NEILL SAYS, HIS PROMISES TO LANDOWNERS ARE LIES
The O’Neill Regime has continuously engaged in delaying tactics, deception and misinformation, and Prime Minister’s submission is more of the same.
It also calls for the price to be renegotiated – the Government is virtually bankrupt and needs a higher price to repay the massive debt it has accrued.
The financial crisis caused by the Prime Minister’s mismanagement of the economy and cash flows also means that the landowners’ demand for tax-free status for their equity holding company will not be met.
The Prime Minister’s submission also raises the issue of leadership of the Beneficiary Group following the death of Hela Governor Anderson Agiru.
PM TRYING TO CORRUPT LANDOWNER BENEFICIARY GROUP
High-level sources close to the leaked submission say the Prime Minister is desperate to get one of his own cronies into the leadership to try and influence further negotiations in the State’s favor.
Finally, the submission also calls for the purchase option deadline to be extended beyond the agreed .
The Prime Minister’s submission says the National Government needs to reconsider its decision approving NPCP/Kumul Petroleum to raise debt financing for landowners.
KUMUL PETROLEUM IN FINANCIAL DIFFICULTY
It says Kumul Petroleum will be significantly stretched in meeting its payments for the UBS loan, worth K3 billion-plus, in the face of depressed oil and LNG prices.
One of the reasons for this is that the O’Neill Regime has stripped Kumul Petroleum bare by demanding a series of dividend payments and so-called “cash advances”.
The cash advances (the latest for K100 million several weeks ago) are nothing but legitimized theft organized by the Prime Minister, Pruaitch and Marape.
DESPERATE O’NEILL WANTS HIGHER PRICE FOR EQUITY – RIP OFF LANDOWNERS
The failure of the O’Neill Regime to make its debut sovereign bond issue, to get a $US500-million Credit Suisse syndicated loan and to borrow from the International Finance Corporation-World Bank shows that the landowners will find it hard to raise funds on their own account.
O’Neill’s corruption and financial mismanagement means Papua New Guinea is a laughing stock in international markets.
Our credit rating is below junk bond status after repeated downgrades by ratings agencies Standard and Poor’s and Moody’s.
LANDOWNERS WILL SUFFER FINANCIALLY FROM O’NEILL’S WASTE AND CORRUPTION
Therefore landowners are going to pay punitive interest rates on their borrowing – if they can find someone prepared to lend to them.
An indication of the interest rate can be gleaned from the 7% proposed by Credit Suisse in its recent $US500 million loan, which would have been made on the basis of a State Guarantee.
The interest rate for a private borrowing will likely be higher.
The nominal price for the 4.27% equity is $US1 billion, or $US240 million per percentage point.
At today’s exchange rate that is equivalent to about K3.3 billion.
But there is dispute about the basis for the price, and landowners and their representatives have put a value of as little as $US300 million for the entire 4.27%.
One indication of value might be that the $US240 million per percentage point was set when the oil price hit almost $US90 per barrel in late 2009.
Today the price is hovering just under $US50, indicating a value of just under $US500 million for the 4.27%.
The final price is also subject to speculation that Western Province and landowners around the P’nyang field may have to be included in the deal if the field is included in the PNG LNG project and a proposed third LNG train goes ahead.
O’NEILL’S CORRUPTION THREATENS LANDOWNERS’ LNG EQUITY DREAMS
Whatever the final equity cost is, one thing is sure – it will be inflated by the fact that O’Neill is recognized internationally as the most corrupt Prime Minister in the Asia-Pacific region and his Regime as one of the most corrupt in the world.
His policy submission is evidence of that, and evidence that he has done nothing to fulfill the promises he made to landowners under the Kokopo UBSA, and never intended to.
Now Peter O’Neill’s constant lying to landowners, his corruption and incompetence threaten to destroy landowner aspirations to equity partnership in PNG LNG.