Firm refunds K31.5mil

 By JEFFREY ELAPA

THE controversial K39 million failed public service housing scheme at 8-Mile outside Port Moresby has been terminated with the contractor Auspac Panel refunding K31.5 million to the state.

The national executive council (NEC) at its meeting on May 1 decided to terminate the contract of Auspac Panel. 

The contract was awarded in 2008 through the Central Supply and Tenders Board (CSTB) when Prime Minister Peter O’Neill was then the public service minister in the Sir Michael Somare regime.

The company was contracted to build more than 200 homes for public servants at the 8-Mile estate. Only 14 houses have been built at the site. 

According to instruments from the prime minister, based on the NEC decision, the contract (CSTB 1785) valued at more than K39 million was terminated and that K31.5 million was to be returned to the state yesterday.

A deed of release was signed between Governor-General Sir Michael Ogio and the directors of Auspac Panel Sir Fredrick Reiher and Sir Lourdenadin Mogan at Government House yesterday.

Reiher said the refunding of the K31.5 million was based on a mutual consensus.

He said his company was prepared to deliver the project on the fixed price at that time of the awarding of contract but it could not do so because of the increase in the cost of goods and services caused by the PNG LNG project.

“We would not be able to sustain the project on the fixed price contract as the actual price increased because of the PNG LNG project,” Reiher said.

“I’m not complaining or would not take the matter further as we agreed on a mutual consensus that we repay the money to the state.”