However, they will still educate beneficiaries on the option and provide it to them if they wish to exercise it.
Kumul Petroleum Holdings Limited Managing Director, Wapu Sonk, announced the government decision following disagreements from beneficiaries.
“We had a push back from different groups so were allowing them to go and finance the option before the 31st of December then we’ll put our option back on the table again if the beneficiaries haven’t found the financing.
“But at the moment we want to step aside and allow the beneficiaries to go and find the finance and pass it onto government in exchange for the shares that will be given to beneficiaries from Kumul,” he said.
KPHL made public the ‘Vendor Financing Option’ two months ago in a meeting with beneficiaries.
The option allows the beneficiaries to purchase the 4.27 per cent commercial interest in the PNG LNG Project which the Government has off loaded from its 16.67 per cent stake in the PNG LNG Project.
KPHL’s view is that the 4.27 per cent commercial interest is an indirect stake in the PNG LNG Project through Kroton, which is the subsidiary of KPHL and who looks after the states shares in the PNG LNG project.
Certain beneficiaries however claim that the 4.27 per cent is a direct interest and that the entity Kroton was never a signatory to the Umbrella Benefit Sharing Agreement (UBSA) in Kokopo in 2009 and therefore cannot have control of the 4.27 per cent commercial interest off-loaded by the Government.
Given that the deadline for the financing of the 4.27 per cent commercial interest lapses on December 31, 2016 and the opposing views, beneficiaries have threatened to shut down the PNG LNG project within two weeks if their demands are not met.
The petition also asked for the 2.27 per cent free-carry equity and a renegotiating of the UBSA.
“As far as I’m concerned the petition is contrary to the UBSA Agreement. what the petition asks for is a direct interest in the project. Our view is that it is not direct it is indirect through the purchase of shares in Kroton,” said Sonk.
“And the petition also talks about free carry, those are issues that are not within our mandate so we withdraw and allow the beneficiary group to talk to the government because we feel that is renegotiating the UBSA.
“As far as we understand the UBSA has no review clause and there are no clauses for review. Only the LBSA has review clauses and not the UBSA.
“So what their asking for is outside our scope, our mandate so were stepping aside so they can negotiate with state.”
Picture credit: Loop PNG file picture