Key provinces finally cross Kroton Bridge

Governors link hands to signal signing with KPHL.

By MATTHEW VARI

Sunday, January 1, 2017 (Sunday Chronicle, PNG)



FOUR of the five provinces affected by the PNG LNG project took the vendor financing option in the State’s 16.57% Kroton equity in the PNG LNG project to take out the 4.27% of the equity as indirect shareholders in the LNG Project on Tuesday, December 27.

Governors (Acting) Francis Potape (Hela), William Powi (Southern Highlands), Kila Haoda (Central), and Havila Kavo (Gulf) were on hand to give effect the acceptance of their provincial governments and their affected landowner interest through Kumul Petroleum Holdings Limited (KPHL).

A pleased Managing Director of KPHL, Wapu Sonk, said with all announcements, debates and meets made in regard to the option had led to decisions made by the provincial leaders three days shy of 31st December extended deadline.

“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 the LNG price is not feasible to do a commercial arrangement to finance the Kroton option and Kumul basically provided a safety net by issuing vendor notes,” Mr Sonk said.

“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 where you can go and get commercial financing when the time is right and replace those (vendor) notes with actual cash and the government also needs that money. So you can always come and replace it.”

Vendor notes are a type of debt instrument used in particular type of short-term loan agreement in which the seller of goods, in this case KPHL, sells them to the buyer, but also provides financing for the buyer in the form of a vendor note.

“What we are doing is to make sure that the option is exercised through Kumul and it is parked inside Kumul so the option can be exercised and closed out.”

Present to witness the signing were landowners from petroleum development licence areas to the pipeline segments.

In his remarks on the signing, Southern Highlands Governor William Powi, expressed to those present that the decision to sign was not a simple one- but was one that exhausted all other option to buy in directly into the multibillion kina LNG project.

“This decision did not just come from the blue. We have engaged competent reliable authority in the market through all the options that are available funding options including commercial option from the banks whether we could go out there and secure finance to acquire these things so most of these options were thoroughly assessed by that authority and we went through a lot of briefing process where we realised that we have now come to an understanding that vendor financing option is the optimal option that is available to us a beneficiaries,” Governor Powi said.

“What we have decided is the best view for our people, and I am confident and happy that I have been able to make this milestone decision in relation to the people I represent.”

“I have formalised this by a provincial executive council resolution last week. Three days before the deadline we are now taking ownership of the 4.2% offered by the State.”

With the current upheavals experienced in the Western Province- an official from KPHL confirmed that talks were underway with the province’s deputy governor Abini Gesele that could see the province get its 1% stake in the option before yesterday’s deadline.