Kroton equity an option: Sonk

Business, Normal

The National,Monday March 7th, 2016

 THE Kroton equity under the Kokopo Umbrella Benefits Sharing Agreement (UBSA) executed in 2009 is an “option” and can be exercised or not, according to Kumul Petroleum Holdings Limted.

KPHL managing director Wapu Sonk said this when clarifying recent misconceptions on the Kroton equity options.

Sonk was responding to beneficiary landowner groups and provincial governments which queried the Kroton equity issue during a forum last month in Port Moresby that discussed outstanding issues relating to the PNG LNG project.  

He said the options for Kroton equity for provincial governments and project area landowners was stipulated under the 2009 Kokopo UBSA.

“The option is for purchase of 25.75 per cent stake in the PNG LNG project special purpose vehicle Kroton No 2 where Kroton No 2 is the nominee in the project, hence the option offered is an ‘indirect’ interest in the project by virtue of exercise of the share options given to them under the UBSA in 2009,” Sonk said. 

He said the Kroton option could be exercised or not.  

“It’s not a must for any group to exercise that option if the price is not right or if the economic conditions are not right,” he said. 

“At the end of the day, it’s not free; hence a commercial decision need to be made by the beneficiaries that have the option rights.” He said the price of the Kroton equity was agreed to in the Kokopo UBSA and there was no review clause to allow for reconsideration should economic conditions change. 

Sonk said the State had the prerogative to make any changes and urged the beneficiary groups to discuss any proposed changes to the UBSA with the Government. 

“The Kroton equity is additional equity offered over and above what the State has already offered; free carried two per cent in the PNG LNG Project now held by MRDC.”

He said that 25.75 per cent of Kroton No 2 or indirect interest of 4.27 per cent was not tied up in any loan.