The National – Thursday, September 29th 2011
A RESCUE plan to salvage the financially crippled Port Moresby Casino project is being etched by the Mineral Resources Development Company, it was revealed last night.
The MRDC has engaged a structural engineering firm, Kramer Ausenco, to conduct a structural engineering audit of the incomplete structure – standing in the middle of Boroko – and ascertain its engineering and design integrity.
The MRDC’s managing director Augustine Mano said the developer – Korean company CMSS (PNG) Ltd) – and the government had “lured” local investors to put up K22 million in the project but the investors’ component of US$72.8 million (K175 million) for a 90% equity was still outstanding.
He said landowner companies – Petroleum Resources Gobe and Petroleum Resources Moran – were “lured into investing in the project as a result of very attractive investment incentives provided in the project agreement” between the State, the National Capital District Commission and CMSS.
Amongst the incentives were a 10-year corporate tax exemption, double deduction for export market development in tourism and staff training expenses and zero rate on GST.
Under the agreement, CMSS was to “build, complete and deliver the project,” he said. MRDC manages landowner funds and was instructed by them to invest their funds in the
Mano said it was done before he was appointed to the top post.
“Almost more than four years have passed and the project is still not delivered.
“That raises serious issues in relation to breach of the project agreement and the JV shareholders agreement,” he said.
“Construction works came to a sudden stop in mid last year and that was attributed to lack of funding from CMSS Korean, the parent company of CMSS Ltd,” Mano said.
Some of the issues that confronted MRDC were:
l CMSS made false promises to deliver the project on time;
l MRDC’s attempts to get independent experts to investigate and report on construction works were not granted by CMSS; Project agreement did not allow MRDC to have any say or control over the project;l PRG and PRM were only minority shareholders (5% each);
l No proper financial records were kept; and
l Compliance with building board’s requirements were not checked.
“Though MRDC has signed indemnity against investing in this project, it has now embarked on strategies to rescue the project,” Mano said.
Under the rescue plans, Kramer Ausenco will investigate and determine if the structure standing was done according to the building design approved by the city authority, and check out if the building is structurally sound and review the electrical, civil and hydraulic components of the building.
A quantitative assessment would determine cost of the existing structure and the cost to complete the casino hotel.
Mano said based on the quantitative engineer’s report, a project valuation would be undertaken to establish the current market value of the building.