PORGERA NEEDS A FRESH AGREEMENT LANDOWNERS WERE DUPED.


by RICHARD KUNA

By the read of commentary by PM, it is becoming more apparent that the structure established for Porgera is a company and not an unincorporated joint venture like before.

If that is the case, our leaders and so-called advisors have again cheated us.

In a company, a shareholder only gets a return through a dividend. Dividends are usually paid 3 to 4 months after year-end provided there is sufficient retained earnings and cash flow. 

Here we have an aging mine with Barrick the Manager. How confident are we that dividends will be forthcoming in the first 5 years when Barrick has been talking up ridiculous amounts of start-up costs???

Operations under a company will get far less scrutiny compared to an unincorporated JV where the management committee comprised of the owner's representatives always meets monthly to go through the finer details of operations. There is much oversight and accountability over the Manager of the mine.

The landowners of Porgera must rise up and demand change. This terrible outcome, which we will call a mistake, for now, has to be corrected as a matter of life and death.

For if we don't this structure will suck money out of PNG, where so much rhetoric and grandstanding will amount to nothing.

Porgera must remain an unincorporated joint venture like before.

51% of an unincorporated joint venture is what PNG should and must have. It gives you 51% of cash from sales every month. 51% of sales every month coming to the hands of PNG is an insane amount of money we have never had. In addition to meeting cash flow requirements at Porgera, it will provide sufficient cash flow for government budget support, fund sovereign wealth fund, and many others much the same as Kumul Petroleum.

And yes, an abundance of foreign reserves every month which will, once and for all, settle all our FX requirements.

We are in control on day 1 in a JV. Large projects owned by more than 1 party is never done through a company. Look at all our Oil and gas projects. A JV gives us cash flow in the first month of operation. Not wait 5 years in the current Porgera deal. 

This mistake will be one of the worst, if not the worst ever.

This write-up is for those so-called advisors in government now. 

Your country must mean more. Our PM needs your guidance.  There is time to change. Make it happen for the future of your children and the love of your beloved PNG.

Let's stop the nonsense and return Porgera back to an unincorporated Joint Venture.

The author is President CPA PNG and a Board member of the Bank of PNG

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