Loan needs House okay

Reports by MALUM NALU
STATE Solicitor Daniel Rolpagarea had advised the Treasury Department to get Parliament’s approval before getting a US$1.2 billion (K3b) loan from the UBS Investment Bank.
Prime Minister Peter O’Neill signed the documents for the K3 billion on Tuesday in his capacity as acting Treasury Minister. The loan was needed to fund the State’s 10.1% stake in Oil Search.
According to a letter, Rolpagarea wrote to acting Treasury secretary Dairi Vele dated March 5, he said it was a requirement under Section 209 of the Constitution that Parliament approval be obtained for such “bridge-and-collar” loans.
“I am sure you are aware of this constitutional requirements and further advise that you take appropriate steps to facilitate this process,” he said.
He advised Vele that the recommendations “should include clearly the fact that the State and the National Petroleum Company of PNG will direct all PNG LNG equity
cash flows to be paid to UBS to be applied to prepayment of the bridge loan”.
“I am aware that the Organic Law on the Sovereign Wealth Fund provides that all revenue from the PNG LNG project will flow into the Sovereign Wealth Fund,” he said.
“This, in my view, is a major decision to be taken by the State and NEC must approve it although it is acknowledged that the Treasury Department is the State’s lead agency in this regard and may take a decision.
“Some, or if not, most of the recommendations to NEC for approvals require approvals/authorisations specifically from the State’s relevant agencies acting independently pursuant to their respective laws, but of course, taking into consideration the Government/NEC decision.
“I, therefore, advise that the relevant approvals be sought from the State’s relevant agencies after NEC consideration and approval of the financing transaction.”