Former Central Bank Governor, Loi Bakani has clarified that Puma Energy buys Kutubu crude oil outside of PNG in USD like any overseas buyer.
“So Puma needs USD to buy Kutubu crude and that's exerting pressure on PNG banks and BPNG to supply USD to Puma.”
Mr Bakani was responding to this newsroom for clarification on the recent fuel saga between Puma and Bank of PNG which affected the supply of JET A1 fuel to airplanes and a cancellation of flights.
Bakani told this newsroom that there is no agreement between Puma and supplier of Kutubu crude oil for purchases in Kina by Puma.
He stressed that this is one major area that needs to be reviewed for Puma to purchase Kutubu crude oil in Kina.
Secondly, Mr Bakani explained that Puma exports some oil products and the USD proceeds are kept offshore, approved by BPNG.
“These USD are used by Puma to purchase Kutubu crude oil amongst other offshore expenses.
“BPNG and Puma can agree for Puma to use all these USD proceeds held offshore to pay for crude oil so it can reduce its demand on USD in domestic market,” he said.
Finally, the former Governor said in the allocation of USD by banks to Puma and other priority areas, BPNG can and does in the past decide on the allocation of USD that it gives to commercial banks each month as part of its intervention to support the market, to give a higher percentage to fuel sector which includes Puma.
Bakani added that there are few operational arrangements already in place to support the domestic market with USD.