Govt earns K100mil from sale

National

THE State will make around K100 million from the sale of its stake in Oil Search Limited, Prime Minister Peter O’Neill says.
He was responding to comments by Moresby North-West MP Sir Mekere Morauta over the decision by the Kumul Petroleum Holdings Limited, on behalf of the State, to divest its shares in Oil Search Limited.
Sir Mekere claimed that the total cost to the people of PNG over the sale of the State’s 10 per cent stake in Oil Search “is likely to be more than K1 billion”.
He said the Government had bought the shares at $A8.20 (K21) and sold them at $A6.55 (K16.80) per share.
But O’Neill said the State’s investment in Oil Search was the “right decision at the time”.
“It helped maintain confidence in the oil and gas sector, but was undermined by unforeseen global factors,” O’Neill said.
“This has been a business decision based on anticipated return on investment, and has delivered the most prudent outcome for the State, considering the consequences of the earlier energy price lows.
“Terminating the collar arrangement has resulted in a recovery of the remaining prepaid interest on the loan. The balance from this deal will likely be a K100 million gain for PNG.
“The reality is that the Oil Search arrangement did not cost the State a toea from Treasury in repayments or interest.
“Repayments were made through the collar and the sale of shares was scheduled overtime to repay the loan.”
O’Neill said in early 2014 that action had to be taken to protect the interests of the State and investment in the largest resources firm was the right move.
“We were at risk of a situation where shareholding in one of the largest firms in the country would fall into the wrong hands,” he said.
“The government’s intervention to buy shares in Oil Search boosted investor confidence in PNG.”