Nambawan Super Limited (NSL) has issued a final letter of notice to the State seeking payment of its outstanding rental arrears.
This comes after the State’s failure to consistently make scheduled payments for its current rental invoices and arrears amounting to K113 million as at Tuesday, 1 August 2023.
The rental arrears have been accrued over several years by the State Departments occupying NSL’s Revenue Haus, Vulupindi Haus, Eda Tano Haus, Treasury Haus, AOPI Centre and NSL Haus in Lae.
In 2023, the State has only paid K20 million for the January and February installments and has fallen behind on its payments by six months as it is yet to pay the remaining K60 million for March, April, May, June, July and August.
Last year, NSL and the State reached an agreement, whereby the State would settle the remaining balance of its rental arrears in K10 million monthly installments.
The installments include, K5 million for clearing the balance previously accrued and K5 million to pay its current rental invoices.
NSL has given notice to the State advising that if the agreement is not upheld with the payment of the K60 million accrued in 2023 before Friday, 4 August 2023, with further consistent monthly payments then NSL will look to conduct another lockout of several State tenancies occupying NSL buildings.
NSL says this is in the interest of protecting Nambawan Super Members' from further undue losses.
The States non-payment of its rental fees impacts the profit given to Members each year, in a number of ways.
- Firstly, accounting provisions are made against long outstanding debts, which are passed through the profit and loss statement as an expense, thereby reducing profits and ultimately the interest to Members
- Secondly, Nambawan Super is an active investor and continues to reinvest its assets to generate an income. By not receiving the rentals on time, the Fund forgoes the opportunity to reinvest these funds thereby reducing income to Members. This is called opportunity cost; and
- Finally, the Fund is at risk of losing value on these properties as valuers presume that they are incapable of generating revenue due to the lack of rentals received.
As a result the unrealised losses from valuations directly reduce the profit distributed to Members each year that these arrears remain unpaid.
NSL is reluctantly considering this option especially as the workers impacted by the lockout are Members of the Fund, however, this action is a result of many broken commitments for settlement of the arrears over several years
NSL endeavours to avoid locking out the Department of Health based on humanitarian grounds, recognising the critical nature of the services that it provides.