Kumul Petroleum suffers loss, says Pruaitch

KUMUL Petroleum suffered a loss of more than K400 million in 2017 because it took out loans to pay dividends demanded by the Government, Opposition Leader Patrick Pruaitch, pictured, claims.
Pointing to Kumul Petroleum’s annual report, he said the company borrowed US$139 million (K314 million) in 2016 and US$136 million (K458 million) in 2017, representing an outstanding loan of K451 million from BSP.
The loans were used to pay a dividend of US$93.4 million (K314 million) in 2017 and US$30.75 million (K103 million) in 2016, Pruaitch said.
They were also used for working capital, general corporate purposes, interests reserve accounts and for fees and costs related to the BSP loan, he claimed.
Pruaitch said the report also showed that after receiving LNG revenue totalling K1.8 billion in 2016, the Government-owned corporation still recorded a massive K481 million loss for the year as a result of the Government’s K3 billion UBS loan.
He said Prime Minister Peter O’Neill and Treasurer Charles Abel promised in Sept 2017 that Kumul Petroleum would disclose full details of this transaction in Parliament, but that had not happened.
Pruaitch does not believe the losses indicated by the 2017 Kumul Petroleum annual report represented the total financial losses because it excluded the original transaction costs prior to responsibility for the purchase of 149 million Oil Search shares and UBS loan liabilities being passed on to Kumul Petroleum.
“The losses disclosed by Kumul Petroleum in its 2017 annual accounts are available on KP’s website (www.kumulpetroleum.com/annual-reports),” Pruaitch said.
“It does not show interest costs involved in the transaction for 2014, 2015 and 2017.”
Pruaitch said Kumul Petroleum was the only State-owned enterprise that reported to the prime minister.
Kumul Petroleum’s 2017 annual report also disclosed that at the end of 2015, the loan with UBS had a principal amount of A$1098 million (K2593 million) with 149 million Oil Search shares held as collateral at an interest rate of 4.95 per cent annually.
In Feb 2016, it was renegotiated to avoid regular payments from the following month until July 2016.
The distress sale of the Government’s Oil Search shares took place in 2017 to avoid the burden of having to meet principal and interest payments in 2018 and 2019, Pruaitch claimed.