State Enterprises minister blasts Mekere

MINISTER for State Enterprises Arthur Somare yesterday accused opposition leader Sir Mekere Morauta of using parliament to score cheap political points over the LNG project financing deal.
Somare said Sir Mekere had an opportunity to avail himself to facts, and the report on the financial deal involving Middle East firm IPIC, which were audited by the auditor-general, but chose not to. Instead, he had framed questioned and used parliament to ask them.
“It is cheap politics to use parliament to ask these kind of questions,” Somare told reporters at a press conference on the 11th floor of Pacific Place in downtown Port Moresby, where Croton No.2 is housed.
Sir Mekere had asked a series of questions about the US$1.6 billion loan that the Independent Public Business Corporation (IPBC) borrowed from IPIC under an exchangeable bond arrangement to fund the state’s equity in the PNG LNG project.
He alleged that there were rumours that parties negotiating the loan received a fee totalling US$500 million, and that the money was used by a company based in Dubai to buy a Boeing 767 which is now on lease to Air Niugini.
Sir Mekere asked who received the fees, and who owed the company in Dubai.
Somare said Sir Mekere had stooped so low with these questions which were not based on facts.
He said Air Niugini’s commercial transaction to buy or lease an aircraft was totally different from the IPIC deal.
“There are two different transactions here. They are not related. There are no crossovers,” Somare said.
He said IPBC retained global investment bank Goldman Sachs as its financial adviser, and Freehills as its legal adviser in the deal. Their fees were in the vicinity of US$12 million, and were audited by the auditor-general of PNG.
“We secured NEC decision for this deal. This is not a private transaction or one that we have concocted overnight. This went through appropriate processes in full view of the cabinet.”
Somare said it was a significant deal which allowed the state to take up its equity in the LNG project. The money has been released to a quarantines account in Singapore and, to date, US$525 million had been spent, the minister said.
He said there might be shortfall if the LNG project was delayed, or if Oil Search share price did not hit A$8.55 a share.
He said if this happened, IPBC was capable of covering this without the need to burden the state.
But, he said, he was confident the project would be commissioned on schedule, and the environment would be right for the Oil Search share price to hit the “strike price”.
He said as of June 30, the LNG project had spent US$2.4 billion on early works and other activities, employing more than 3,500 Papua New Guineans and contributing 3% of the economic growth rate of 7.5% this year.