By MALUM NALU
THE proposed US$2 billion (K6.3bn) ethane-power transmitting plant in Madang will be solely funded by American investors, according to project documents.
The Government will take up a 20 per cent stake in the project through Kumul Mining and PNG Power Ltd.
A Government team from the Department of Public Enterprise and State Investment negotiated a deal with American Ethane in the power purchase agreement “so that American Ethane and its partners take 100 per cent of the technical and cost feasibility of the project”.
“If PPL (PNG Power Ltd) enters into the agreement, American Ethane will be bound to produce power from the project for the amounts set forth in the PPA, regardless of cost,” the documents stated.
“Furthermore, based upon the financial strength of the project, and revenue that is expected to be gathered by PPL, the Ashmore Group, a US$60 billion (K187.5bn) emerging market investment fund, has expressed interest to underwrite US$1 billion in PNG Government bonds.
“The offer contemplates that 36 per cent of these funds can go to the financing of the project, and provide the Government with a 20 per cent ownership stake in the project through Kumul Mining and PPL.
“It is envisaged that the balance of the funds, of US$640 million, may go towards the PNG Budget.”
By MALUM NALU