Landowners support vendor financing

Former Kumul Petroleum Holdings Limited (KPHL )Deputy Chairman, Larry Andagali, says the ‘Kroton Equity option’ through the vendor financing arrangement is a very good deal the Government has given affected landowners of the PNG LNG Project.

He said this during signing of documents by the Governors Southern Highlands, Hela, Gulf and Central to exercise the option before the option lapses on  December 31, 2016.

Under the Umbrella Benefit Sharing Agreement (UBSA) of 2009, the Kroton Equity Option represents an option to purchase 4.27 per cent of the states 16.57 per cent equity in the PNGLNG Project, which is held by KPHL.

The state has offered 4.27 per cent of its shares for landowners to purchase for an indirect interest in the PNG LNG. A total of K3.34 billion must be raised by all beneficiary groups to exercise the option.

Andagali who is a landowner from the Hiwa Block of Hides (PDL 1) in Hela Province said getting a commercial loan to finance the option will leave the landowners in debt for decades.

He said the option provided by the Government was a safe option and the best alternative.

“If we go and get a commercial loan, after 20 years, we will still owe the bank

 $US562 million. That’s after 10 years. Even after 20 years, even after 30 years we would still owe the bank. And we have to make a decision to move forward.

“We are fighting among ourselves. Some consultants are teaming up with landowners, other consultants are teaming up with other landowners, (but) the state is providing an option that is a very clear message from the state (and) from the NEC that there is no extension. So which means our governors has taken a very responsible decision for us, for our people,” he said.

Andagali said many outstanding issues were yet to be ironed out and will be done in due course.

He commended Governors William Powi – SHP, Francis Potape – Hela, Havila Kavo – Gulf, and Kila Haoda – Central, for signing the financing arrangement with KPHL.

“So today it’s a milestone agreement. And I am very supportive of this, I was the signee at Kokopo and so many people disagreed like what we’ve done as you’ve seen here, but at the end of the day, those people who disagreed, agreed at the end, and we have a project.”

Author: 
Cedric Patjole