Representatives of the Wellhead and Facility areas of the PNG LNG Project are asking Kumul Petroleum Holdings Limited to pass a solvency test so that the true level of debt is revealed.
The representatives, claiming to stand in for PDL 1 (Hides), PDL 2 (Kutubu), PDL 7 (Hides 4) and, PDL 8 (Angore) said they refuse the option by KPHL alleging that the company is in a debt of more than $ US3 billion (K8.98 billion).
They have also called on the Investment Promotion Authority (IPA) and the Ombudsman Commission to check the real solvency or current debt liability of KPHL.
The representatives say KPHL and two of its subsidiaries, have a combined debt of $US 3.157 billion (K9.454 billion). They say this represents debt that is 50 per cent of PNG’s overall General Government debt stock.
"As such it is not in our interest to buy into a company with such a significant debt burden and it is highly improper for the State to force this proposition upon its own people. We need to know whether KPHL has declared at their meetings with landowners their exact liability position. As it is KPHL's lack of transparency is deplorable,” says Dickson Ango, a representative of PDL 1.
He added: "Accepting KPHL’s vendor financing proposition would mean an erosion and significant financial stripping of wealth and development value for more than 60,000 landowners and five Provincial Governments that have already secured their benefits with the Government in 2009 by agreement under UBSA in the PNG LNG Project.
KPHL Managing Director, Wapu Sonk, in an email to Loop PNG says the landowners have been misled to say things they don’t fully understand and the statements made by them paints a wrong picture of the company.
“The level of debt in Kumul and its subsidiaries can be questioned but what about the questions of the value of the Assets it owns?”
“You can’t assess a company just from the debt alone and this seems to be the case here. Did they disclose what the Company is worth and what its cash flow position is in the same year?
“KPHL has a strong balance sheet and is a very solvent Company so this misleading statements by people that have no idea what they are talking about should not be entertained. It is simply designed to tarnish the good name of the Company and also to scare the beneficiaries that have accepted the Vendor Financing by KPHL,” he said.
In a follow up email to Loop PNG from Sonk states that the data used by the landowners from the IPA does not include financial data from 2016 which is currently being audited by the Auditor Generals office.