Clans accept vendor financing option
By SHIRLEY MAULUDU
FOUR provinces listed under the PNG LNG project beneficiary groups have accepted the vendor financing option offered by Kumul Petroleum Holdings Limited to purchase equity in the multi-billion kina project.
Yesterday in Port Moresby, the provinces represented by their governors – Francis Potape of Hela, William Powi of Southern Highlands, Kila Haoda of Central and Havila Kavo of Gulf – signed the financing agreement to purchase the 4.27 per cent Kroton equity in the project.
The only province missing is Western which currently does not have a governor.
KPHL managing director Wapu Sonk said vendor financing for the Kroton option had matured on June 30 and was offered to all the beneficiary groups including the provincial governments of Western, Central, Gulf, Hela and Southern Highlands.
It was however extended to December 31 “which is a few days away” to allow the provinces and other groups to seek funding to buy the 4.27 per cent equity. “There has been a lot of media statements, a lot of meetings, a lot of debate going on in different forums over the last few months,” Sonk said.
“It has come to this point that we are now realising that all the options that have been discussed and put forward at this time, when the oil price and LNG price has been subdued, is not feasible to do a commercial arrangement to finance the Kroton option. And Kumul just provided a safety net by issuing vendor notes.
“If the governors and landowners access the option, it does not mean that we are closing the door as well. The door is always open. You can go and get commercial financing. When the time is right, you replace those notes with actual cash.
“What we are doing is to making sure that the option is exercised through Kumul and it is parked inside Kumul. So the option can be exercised and closed up.”
Potape said the agreement was to make sure that the beneficiary groups did not miss out on the extra benefits of the project.
Powi said the important matter at hand was to accept vendor financing “as the deadline is drawing to a close”.
Haoda expressed similar support for the option.
Kavo while agreeing to the option noted that there were certain areas which needed to be re-looked at.
The provincial leaders had announced support for vendor financing option based on an independent assessment carried out by Clinton Capital Partners.
The firm is an Australian company carried out an independent assessment on different options (including vendor financing) provided to the beneficiary groups under the umbrella benefit sharing agreement (UBSA) for them to pay for the Kroton equity.
The Kroton equity is under the UBSA which provides that beneficiary groups are to be given a commercial option for 25.75 per cent shareholding in KPHL.
KPHL holds the State’s 16.57 per cent in the PNG LNG project. This will mean that beneficiary groups will have an indirect interest in the PNG LNG project of 4.27 per cent.