The proposed Kumul Petroleum Holdings Limited’s (KPHL) Vendor Financing on behalf of Provincial Governments and landowners impacted by the PNG LNG Project will create a huge debt burden and negligible returns.
Vendor Financing basically means KPHL will give the shares to the beneficiaries at no cost and will recoup the payment internally through the LNG revenue.
However, the President of the Peoples United Assembly Party Inc. (PUA) and a clan leader of landowners in the project areas of PDL 1 (Arua -Hiwa Block), PDL 8 (Block 1642 -Pureni), and PDL 9 (Humiya Block), Raymond Kuai said this arrangement will make a mockery of late Hela Governor Anderson Agiru’s decision to purchase 4.27% additional equity in the LNG Project.
“The poor returns from the KPHL proposal will practically hinder any meaningful wealth creation for more than 60,000 landowners, and end any prospect that the five Provincial Governments’ could use this revenue flows to generate growth and reduce poverty in these provinces.”
Kuai said the legacy that the late Governor Anderson Agiru had envisaged for the Hela people together with other landowners in Southern Highlands, Western, Gulf and Central was that they would become direct owners and beneficiaries of the PNG LNG Project.
“Instead KPHL is planning to retain this equity and, in return, to pay the Beneficiary Group a meager US$10 million a year or the equivalent of around US$3 a week for each landowner, leaving nothing left over for Provincial Governments.
He claimed that this Vendor Financing Proposal is an insult to the intelligence and goodwill of the Hela people and those impacted landowners or citizens that have partnered with them in the milestone project.
Kuai is calling on KPHL Managing Director, Wapu Sonk and Chairman, Frank Kramer and all other Board Members, including Larry Andagali (the former Deputy Chairman of KPHL), to explain the proposed vendor financing.
Meanwhile, Sonk told Loop PNG that these (Kuai) are people with vested interest with other motives trying to derail what is a very good offer by KPHL.
“Vendor financing basically means KPHL will give the shares to the beneficiaries at no cost and we will recoup the payment internally through the LNG revenue
“The terms we have offered will never be matched by any bank or financiers so either this people don’t understand what we are offering or they have other drivers other than getting the Landowners and Provincial Governments to exercise the option and close this matter out.”