Govt freezes deal on casino project

THE government yesterday announced the suspension of the Port Moresby casino project agreement with south Korean company CMSS because it was “not in a position to fund the project”.
Commerce and Industry Minister Charles Abel announced the suspension to allow for an investigation to determine “who has invested monies and how these funds have been expended”.
The state was a major player in the project because it provided state land for the construction of the casino hotel as well as waving customs duty on import of construction materials and ensuring a 10-year protection from granting another casino licence to a competitor.
The state then went to resources sector landowner groups and raised K11 million each from Petroleum Resour­ces Gobe and Petroleum Resources Moran to buy equity in the project.
Another participant, Papindo Group had not injected any funds in the project.
PRG chairman Philip Kende two months ago complained that the government “lured” him and his Moran landowners into investing their funds in the project and then left them high and dry.
He said then that he was hoping for a way forward and was working on a rescue plan.
Kende had preferred a PNG consortium to take control of the project with a variation to the project agreement and make the South Korean investor become a minor equity participant.
Abel said yesterday that his department had suspended the project agreement with the South Koreans following a show-cause letter delivered to CMSS demanding why its contract should not be terminated.
CMSS general manager Jimmy Kim had told this newspaper several weeks ago that he had responded to the show-cause notice.
Yesterday he refused to comment, saying he would seek legal advice today.
Abel said the show-cause letter asked CMSS to demonstrate why the agreement should not be terminated “after more than 12 months of inactivity”.
He said CMSS had provided a response that “would indicate that they are not in a position to fund the project”.
“While the State is in a position to terminate the agreement, we will allow an investigation to ascertain all facts first in case we unfairly prejudice any party,”  Abel said.
The minister also called for expression of interest from parties with necessary expertise and capital to take a majority position and complete the project after the “fact-finding” investigation.