Minister should identify the individuals responsible for the decisions that have led to losses of over K375 million.
If there is zero culpability and zero transparency taxpayers can expect they will continue to get fleeced.
Post Courier | September 12, 2019
The government has put a blanket ban on exploration investments after it was dealt a major blow in losing K375 million in the very risky Solwara 1 project.
Its attempts to recoup some money, at least US$50.8 million (K172m) has been constrained so far as Solwara 1 joint venture partner Eda Kopa Limited (Kumul Minerals Holdings Limited subsidiary) had the claim disallowed by the British Columbia Supreme Court appointed monitor PricewaterhouseCoopers (PwC) Canada last month.
KMHL was seeking an unearned contribution claim during the Nautilus Plan of compromise and arrangement process catered for under the Canadian Companies’ Creditors Arrangement Act.
Minister for Public Enterprise and State Investment Sasindran Muthuvel in an interview with Post Courier has told Kumul Minerals and Kumul Petroleum to stop such exploration investments.
He said the deal started from the time of the previous government.
“They went through arbitration and in 2015 they decided to pay upfront US$120 million (K375 million) which was obtained purely as a loan and then we entered into this highly risky project,” Minister Muthuvel said.
“Now we stand to lose all of these monies… the Canadian Court in the process of the developer Nautilus Minerals sought creditor’s protection from (the) British Colombia court in Canada and they appointed PriceWaterHouseCoopers as their administrator.”
“We put our claim for US$50.8 million to retrieve some money back but unfortunately there is very little room or chance for us to get back any funds because they have exhausted all the funds.”
“We stand to lose this major funding which is really a major blow for us.”
Minister Muthuvel said that was a very tough lesson to learn as a Government not to enter into very risky investments.
“This has shown that not necessarily we as a government must embark into every exploration investment.
We should look at our tax regime, we should look at our royalty regimes whereby how we can generate some of the revenue of these tax regimes rather than insisting on equity, especially on this kind of scientific or research project where there is uncertainty to it.”
“To tell you the truth, from day one the project was carrying negative rate of returns, that means we knowing very well that this project is not going to yield any positive income, we knowingly agreed to go into this project with a negative investment or negative rate of returns, which is highly risky and it’s again guaranteed by State.”
Minister Muthuvel also revealed that the investment was not carried out in the books of Kumul Mineral.
“I am appealing to both Kumul Mineral and Kumul Petroleum to stop all kinds of exploration investment, to slow down, and to take stock of what we have and also to help government at this tough economic time.”
As of last week, September 5, according to PwC’s update on the process currently underway, Eda Kopa and the Nautilus Group have individually led applications for the September 10, 2019 Court hearing in Canada.
“Eda Kopa is seeking to set a schedule to have the validity of their claim (the “Eda Kopa Claim”) determined.
“The Nautilus Group is seeking to have the validity of the Eda Kopa Claim determined on September 10, 2019, or as soon as reasonably practical afterwards,” PwC Canada stated in its last update on the process.