Pruaitch Welcomes Equity Distribution

National Alliance leader, Patrick Pruaitch has welcomed resolution of the additional 4.27 percent equity granted to the PNG LNG Project’s five provincial governments and landowners’ through distribution of dividend payments by Kumul Petroleum.

“Aspects of the settlement may not be fully in line with the spirit and letter of original government plans, but it is heartening that decade-old issues can finally be put to rest so policymakers can concentrate on future growth and prosperity,” Mr Pruaitch said.

He said when late Grand Chief Sir Michael Thomas Somare laid ground rules for negotiation of the PNG LNG Project, foremost among these was his determination not to sell down the PNG government’s project equity, he had the national interest at heart.

Pruaitch, who chaired the Ministerial Economic Committee during negotiations for the PNG LNG Project, said: “Under the Oil & Gas Act 2.7 percent of equity was accorded to landowners and associated stakeholders and paid for by the National Government.”

He said the additional 4.27 percent equity was the outcome of direct negotiations conducted by the late Anderson Agiru, in his capacity then as Southern Highlands Governor. It was agreed this equity would be purchased from the overall shares held by the National Government.

“There was no expectation that this equity would be a ‘gift’ as that could potentially breach the PNG Oil & Gas Act requirement that a maximum 20 percent of net benefits should flow to landowners and local stakeholders in any oil or gas project”.

“In that way 80 percent of net benefits could flow to the nation for benefit of people throughout the nation. This was seen to be extremely fair to landowners”.

At heart, this meant that 20 percent of benefits from the PNG LNG Project would flow to around 1 percent of the total population, while the additional 80 percent benefitted the entire nation, including people within the project areas.

“Late Sir Michael appreciated that the PNG LNG Project only becomes a reality because people who owned most of the natural gas resource, particularly in Hela and Southern Highlands, were happy to share their benefits with stakeholders in Gulf and Central, who are an important part of the PNG LNG Project,” Mr Pruaitch said.

He said the reality today is that almost 50 percent of all direct employees at the PNG LNG Project come from local communities in the five impacted project areas – Hela, Southern Highlands, Western, Gulf and Central provinces. This is where most landowner businesses have benefitted from contracted work.”

Pruaitch said it was sad the UBS loan affair has adversely affected potential returns to landowners and that there has been no proper accounting and auditing of this factor.

“Hopefully, remaining issues regarding distribution of royalties to landowner groups can be expeditiously resolved,” he said.

He said the timing of the PNG LNG Project and as its scale as an undertaking involving five provinces, has had a tremendous beneficial impact on the PNG economy.

Adding that this contributed to doubling the size of the economy and since 2014, has made the resources sector the largest contributor to Gross Domestic Product.

Freddy Mou