BPNG had no knowledge of funding details, says Bakani

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GOVERNOR of Bank of PNG (BPNG) Loi Bakani yesterday told a commission of inquiry that he and the bank had no knowledge of or involvement in the State’s initial PNG LNG project-related equity financing arrangements with Independent Petroleum Investment Company (IPIC) or Union Bank of Switzerland (UBS) to finance the purchase of shares in Oil Search.
He said based on a National Executive Council decision 479 of 2013 and the terms of reference, BPNG was required to and did independently evaluate, advise and made recommendations to then-State Enterprises Minister Ben Micah on various funding proposals received from initially Citi Bank and the UBS.
Bakani recalled receiving letters about the refinancing of IPIC exchangeable bonds.
“The state through various NEC decisions to repurchase the IPIC exchangeable bonds it issued in 2009 to finance its equity in the PNG LNG project,” he said.
“The state had received four proposals on the matter that were deliberated on by the IPIC refinancing committee.”
“NEC determined a terms of reference for central bank to make commentary and a recommendation on the proposals.”
Bakani said central bank had clear skills in providing advice to the state so it was required to give an independent view based on the terms of reference provided to confirm the best financing proposal for the state.
However, NEC in its decision said no consultation with IPBC, National Petroleum Company or the Department of Public Enterprises and Treasury should be sought in the process.
Bakani will return today for further cross-examination by Chief Commissioner Sir Salamo Injia.
Meanwhile, former chief secretary to the O’Neill government Isaac Lupari told the inquiry that he didn’t play any role in securing the loan.
He said he was aware of the discussions surrounding the transaction but was never directly involved with the details of the discussions.
The commission also noted that he didn’t have a very good recollection of the UBS transaction/ UBS events. Lupari will appear again on Monday.