Post Courier 15/11/12
The much glorified PNG LNG project, with its mega-buck promises, has now come to haunt Papua New Guinea.
That is the immediate reaction from the Shadow Minister for Public Enterprise and Kundiawa-Gembogl MP Tobias Kulang, following media reports of a further K6.9 billion equity injection needed to bring the project into fruition.
“This is a scam, concocted by Exxon Mobil knowing absolutely well the vulnerable position PNG is in. The announcement unfortunately comes just a week away from the handing down of the country’s 2013 National
Budget, putting further strain on it, and the Government must reject it outright,’’ he said. “Where would PNG look for the extra K1.3 billion to meet such unplanned and ill-forecast announcement when it is just about to borrow heftily from the EXIM Bank of China to fund its development agendas?”
The MP fears that Papua New Guinea will now be forced to further reduce its 19.4 per cent stake in the project, which was a reduction from the mandatory 22.5 per cent State equity during the initialling of the project agreement in 2009, with serious ramifications on local participation, not mentioning the local economy.
“Furthermore, the State had to fork out additional K900m in the 2012 Budget to cover for shortfall in the $A1.68 billion Abu Dabi IPIC loan, a transaction completely mishandled by the then Somare government to fund the
State’s stake in the PNG LNG project,’’ Mr Kulang said.
“We must also note that as per the existing terms of the loan, the loan has to be repaid in full by March 2014, which is way before the project starts producing significant revenue. Now with additional capital call and extension in time, PNG is really placed in a difficult position.’’
Mr Kulang said this would force the Government to forego or shelve certain development plans, to the detriment of ordinary Papua New Guineans that was completely unfair.
“The Opposition may be forced to withdraw support from the passage of the 2013 national budget should any unplanned borrowings or expenditures to do with the PNG LNG project, are factored into the money plan,” he cautioned.
Mr Kulang said what was astonishing was that the then Attorney-General Dr Allan Marat had admitted to not being a party whilst the State Solicitor did not review the LNG agreement respectively before it was executed.
Mr Kulang is angry in that Exxon Mobil, a leading international oil and gas developer, was not prudent, by not ascertaining PNG’s future liabilities during the negotiation stage, in case the situation changed, and when knowing all along that the country’s economic environment was vulnerable.
Furthermore, landowner issues and weather conditions were known issues affecting resource development projects in PNG and for a reputable operator like Exxon Mobil to say at this stage of the project that they did not anticipate accurately was lame and very suspicious.
“They did not have any problems when they allowed the State five hours only to review the agreement so they should now cover for the State for their professional oversight and negligence.”
He is concerned that PNG should be looking forward to enjoying the benefits of the project starting 2014 as promised by proponents of the project proponents, but it will now be locked further into liabilities. Mr Kulang also urged Papua New Guineans not to be complacent, but to read deep into the latest PNG LNG development and speak up because the project scenario may have now changed either for worse or better