Managing Director of KPHL, Wapu Sonk after his fourth appearance at the Royal Commission of Inquiry into to the UBS transaction puts on record that in 2008, Kroton Limited was created and was only a shelve company under IPBC and had no part in the IPIC loan deal.
“Prior to KPHL’s Authorisation Act 2015, IPBC (now Kumul Consolidated Holdings) was the parent company of Kroton Limited which later became National Petroleum Company of PNG (NPCP) at that material time when the UBS transaction was put together.
NPCP was name changed to Kumul Petroleum Holdings Limited in 2015 during the passage of its own Act, the Kumul Petroleum Authorisation Act 2015.
“As a Subsidiary of IPBC in 2014, all UBS transaction related communication was held between the Treasury Department, IPBC (NPCP parent Company) and National Executive Council (NEC) which directed Kumul Petroleum Holdings Limited to follow instruction in providing payment directions for the initial UBS loan deal and later to novate the State UBS Loan deal to KPHL in late 2014.
“Kumul Petroleum was handed over the UBS collar loan together with the Bridge loan by the Sate as the State couldn’t afford to keep the liability any longer as interest payments on the bridge loan started escalating,” Mr Sonk clarified.
He stated that as all board meeting minutes and other evidences provided to the UBS COI proves, Kumul Petroleum Board reluctantly accepted the novated UBS Loan and paid off the Bridge Loan from the early revenues received from the PNGLNG Project.
“The national oil company (KPHL) explored ways to exit the UBS Collar Loan, refinance with more traditional loans etc… right from the start in 2015 knowing that the type of investment (shares) was not the mandate of the Company nor was it a profitable investment.”
Mr Sonk reiterated that the company was finally given the approval through NEC (Decision #306/2015) to deal with the UBS Collar loan in the best commercially viable manner, including unwinding the Collar Loan and exiting from the Shareholding in Oil Search Ltd.
“Shares we divested in September 2017, under the direction and approval by the Trustee shareholder and NEC through Decision #NG29/2017 which ratified and approved all divestment and dealing of the transaction close-out in October 2017,” Mr Sonk said.
According to Kumul Petroleum Holdings Limited Authorization Act 2015, which came into effect in October 2015, KPHL Board has the power to make decision under K10m limited for investments, divestments and all other dealings of the Company.
Mr Sonk also told the COI that all decisions above K10 million limit rests with the Trustee Shareholder and NEC approval are granted through KPHL ‘s Annual Operating Plans (AOP) or from time to time specific approvals are sought through NEC under separate submissions.
However, Mr Sonk admitted that at the end of the transaction, Kumul Petroleum’s net loss was AUD$ 362 million, which ultimately is PNG people’s money which could have been saved and gone to Government as dividend or used by KPHL for reinvestment in the oil and gas business.