By GYNNIE KERO
THE Government will pay for its 22.5 per cent stake in the US$13 billion (K43 billion) Papua LNG project after gas is produced, says Prime Minister Peter O’Neill.
He said the Government, unlike in the first PNG LNG project, would not have to seek loans to pay for its stake.
“It is a much better deal,” he said. The State’s 22.5 per cent includes the landowners’ two per cent stake.
O’Neill thanked the joint venture partners “for their understanding”.
“The sunk cost which we (state) are obligated to pay when participating in the project, (will be) deferred until after the first gas (is produced),” he said.
“So when we are in production, the country can start paying some of the costs that they have incurred which means we are not putting stress on our own resources. We do not have to go and arrange expensive borrowing overseas to fund this.”
He said with the first LNG (PNG LNG) project, “we had to go to Arab and other banks in the region to borrow money for our equity and sunk cost”.
“That is not going to happen in this project,” he said.
“We do not want expensive loans that are to the detriment of our country. We are paying very expensive prices for those loans.
“Our partners have agreed that they will carry us for at least 50 per cent of the equity until first gas (is produced).
“From the first gas, we will use the revenues to pay for the equity and the sunk costs that we are obligated under the law to pay.
“So this is a unique arrangement.
“We have a fixed interest rate of seven per cent that seven per cent is much lower than any commercial loan that any government entity or government has borrowed before.”
He said the project would provide job opportunities to more than 20,000 during the construction phase.
“We have negotiated for more royalties and more development levies to go to our landowners and our provincial governments and this project will deliver that,” he said.
“We have also introduced a new production levy, this is not provided in the Oil and Gas Act.
“This is necessary because we (country) must participate in the early takes (revenue) from the project unlike the first LNG when oil price collapsed we were not able to get any revenue out of that project for a while.”
On landowner identification in Gulf, O’Neill said he understood that most of them had been issued with identification cards “so that they are fully identified as genuine landowners”.
“We certainly do not want to repeat the mistakes of the past where even today our minister is trying to determine the real landowners in Hela and Southern Highlands.”
By GYNNIE KERO