Tag Archives: KPHL

Please review appointment of new KPHL chairman

Ivan Gordons | YuTok, Post Courier | August 5, 2019

Just recently I wrote a letter that was published in the local daily questioning the appointment of Andrew Baing as the chairman of KPHL on whether he was the same person who was found guilty by the leadership tribunal years back on misappropriation grounds and dismissed from holding public office.

I simply stated that this was not right for someone with such a record to be appointed to such an office that was dealing with public monies especially of such magnitude.

A reply was published also from a person saying that he was grateful for the last Prime Minister for the appointment and that he was going to prove the country proud or something along those lines.

Not much was said after that.

Fast forward to this present day and we all can see for ourselves. It is ridiculous how KPHL has addressed this saga to date.

Yes they can rant on about this law and that, this Act and that but with all that aside they are dealing with public funds.

Just provide the information to the PAC and explain yourselves to the people of this country where their money from the 500 shipment of gas has gone. There are many stories out in the public domain on the abuse and misuse of these funds benefiting the well off while the people are struggling.

I have faith and trust in our new PM honourable James Marape that he will not let his people down.

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Deputy PM Orders KPHL To Go Under PAC Scrutiny

Isaac Nicholas | Post Courier |  August 5, 2019

Kumul Petroleum Holdings Limited must do the right thing and respond to the summons of the Public Accounts Committee, Minister for Justice and Attorney-General Davis Steven said on Friday.

“I want to clarify to the people of Papua New Guinea and to the KPHL Board and management that the powers of the Public Accounts Committee are quite clear under the Constitution,” he said in a statement.

Mr Steven said there had been arguments raised questioning and challenging the PAC mandate that the oil company was separate from the State-owned entities and was not subject to processes, including scrutiny of its financial affairs by the Permanent Parliamentary Public Accounts Committee.

“These arguments, in my view, are erroneous and misleading to the general public as to the intention of the law,” Mr Steven said.

“The fact that the State owns the interests in petroleum projects and the KPHL is a nominee of the State to hold its interests for and on behalf of the people of PNG, this brings the KPHL under the jurisdiction of the Public Accounts Committee.”

He said the PAC is the body that the Constitution has mandated with that responsibility by giving it a broad mandate to examine and report to the Parliament on the public accounts of Papua New Guinea, and on the control of and on transactions with or concerning, the public moneys and property of PNG.

“It is not in PNG’s national interest and has always not been the intention of establishing the KPHL that it should not be open to public scrutiny of its financial accounts, where such requests made by the Public Ac- counts Committee.

“KPHL must now do the right thing and respond to the summons of the Parliamentary Accounts Committee,” Mr Steven said.

“I am concerned that State institutions and businesses like KPHL are questioning the authority of the Parliament. KPHL including the Mineral Resources Development Authority (MRDC ) are trust companies holding the interests of the citizens of Papua New Guinea.

“I therefore urge all government departments, agencies, SOEs to answer to the demands of our people and work together with the political leadership and the relevant bodies established by the Constitution to change PNG. Our people demand that.”

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Yalo: KPHL answers to Parliament

The National aka The Loggers Times | August 2, 2019

KUMUL Petroleum Holdings Ltd (KPHL) is answerable to the legislature, former judge and lawyer Nemo Yalo says.

“The legislature, like the judiciary, has the ultimate oversight role on the executive arm and its agencies,” Yalo said in a statement.

“KPHL chief executive and the board are appointed by and are answerable to the executive arm.

“Therefore, by extension, KPHL is answerable to the legislature.

“Who does the KPHL board and CEO ultimately declare and present dividends to?

“To themselves or to the people through their executive government?”

Yalo said he was only expressing his opinion on the matter.

He said only the National Court and the Supreme Court could settle the issue of whether or not KPHL was subject to the Constitutional oversight powers and functions of the legislature.

Yalo said the Supreme Court, in the case MRDC vs Ombudsman Commission SC931 (August 2008), ruled that MRDC, a company registered with the IPA and of which the prime minister was the sole shareholder holding shares for and on behalf of the State, was subject to the scrutiny of the Ombudsman Commission (OC), in particular its CEO being subject to the Leadership Code, including the ex-officio board members, who by virtue of their substantive offices, were also declared as being subject to the same law.

He said the committee on public accounts was a Parliamentary committee performing the role of the legislature when it was not in session.

Those very roles and functions each Parliamentary committee was obligated to perform.

“If one were to buy the KPHL’s legal proposition, it is amazing that an Act of Parliament passed by the Parliament itself restricts its own ultimate power to supervise the executive.

“Was the Parliament blind to the doctrine of separation of powers when it passed laws to tie its own hands behind its back?

“It is immaterial that KPHL, or any state-owned enterprise was registered with the IPA,” Yalo said.

“The Parliament through the PAC has power to review and probe the Auditor General’s reports, OC reports and others, and compel relevant persons and entities to give information.

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Massive K1.5 Billion Loss For State Owned Kumul Petroleum

Post Courier | January 4, 2019

STATE-owned oil and gas company Kumul Petroleum Holdings Limited made a massive loss of K1.5 billion in the 2017 financial year, according to its annual report.

And when the Government was asked to comment yesterday, there was no response as of late yesterday, over the document that has been made public.

It also showed that after receiving LNG revenue totaling K1.8 billion in 2016, Kumul still recorded a massive K481 million loss for the year.

These figures were yesterday highlighted by the opposition leader Patrick Pruaitch, who described them as “scandalous” citing the O’Neill government’s K3 billion UBS loan as the cause among others. He said that Kumul’s consolidated accounts disclosed that following the 2016 loss, the UBS collar loans were extinguished in 2017 at a cost of US$842,423,000 (K2.8 billion), part of which could have been offset by the prevailing value of the Oil Search shares.

He said this was mismanagement of the country’s economy by the O’Neill government through a series of bad and corrupt decisions, the latest of which included the airlifted importation of the Italian-made Maserati cars.

“More money has been lost in this foolhardy transaction that the entire annual budget for either health or education and yet there has been a zero level of accountability,” he said. He said that K2-3 billion in APEC expenditure has also not been accounted for even though the 2018 Budget accounts had been closed.

“It would take many years to recover from a loss of that scale. Prime Minister Peter O’Neill and Treasurer Charles Abel both promised in September 2017 that Kumul Petroleum would disclose full details of this transaction in Parliament, but this has not happened,” he said.

Mr Pruaitch said he did not believe the losses indicated by the 2017 KPHL annual report represented the total financial losses because it excluded the original transaction costs prior to responsibility for purchase of 149 million Oil Search shares and UBS loan liabilities being passed on the company. There have been suggestions these transaction costs, which had no oversight from either Treasury or the Attorney General’s Department, could have been as much as A$200 million.

“The government wants to hide the truth, and the extraordinary level of losses, caused by these transactions,” Mr Pruaitch said, noting that Kumul Petroleum was the only State-owned enterprise that reported to the PNG Prime Minister.

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Benefit Sharing Resonated At 2nd Petroleum And Energy Summit

Protest over the sharing of benefits from the PNG LNG project

Post Courier | March 22, 2018

The 2nd Petroleum and Energy summit in Port Moresby concluded yesterday with many local presentations condensed around the need for better benefit sharing arrangements for PNG.
Several industry players in the country including Kumul Petroleum Holding Limited (KPHL), Mineral Resources Development Company (MRDC) and the Gas Project Coordination office called for greater benefits for gas landowners, host provincial governments and the State to reflect the equity sharing arrangement in the mining industry.
Also in line with the greater benefits is the opportunity for domestic market obligation to be made mandatory, a lesson learnt from the PNG LNG project to help in the growth and development of the Nation.
In relations to equity and royalty distribution, the State is entitled to 22.5 percent from gas while in the mining the State’s equity is 30 percent.
From the 22.5 percent equity, a two percent draw-down is offloaded to landowners, important stakeholders in terms of project security while in Mining five percent is offloaded to landowners.
In this distribution arrangement, the state has to cater for the overall population of the country, while the landowners’ benefits are then subdivided and shared among the different beneficiaries.
During the recent Petroleum and Energy Summit, director of the Gas Coordinating office, Peter Koim said the 22.5 per cent is insufficient.
He said: “I think the state equity in petroleum projects is insufficient, I think there is a room for 30 percent equity by Government, or if not, put five percent on market for other PNG companies to buy to all the rest of PNG to participate and benefit from their resources as stipulated in the constitution,” he said.
Managing director of MRDC, Augustine Mano agreed that the two percent free carry from the State equity for the landowners is insufficient and when distributed among the beneficiaries, it is insufficient.
He said there is a need to change the equity percentage distribution for equal footing benefits by increasing the percentage.
He added that provincial governments have been excluded in the equity benefits sharing arrangement and the change should also look at including the provincial government as beneficiary and equity participant and also to increase the equity benefits for the landowners, something the state and the development partners can sit and discuss.
While the monetary benefits are not enough for the beneficiaries including the State, there is also a need in all agreements to capture domestic market obligations (DMO) for the benefit of the country.
It is a decision that the Government will maintain to ensure there is provision for DMO in any future agreements, Communication and Energy Minister Sam Basil told potential investors during the summit.
Minister Basil said if there is no DMO in a project agreement then there will be no project. If any investor that wants to invest does not agree with the DMO, then they are not welcome.
Kumul Petroleum Holding Limited managing director Wapu Sonk said his company is committed and would want the country to benefit from its resources through the development of further LNG in PNG.
He said to meet the Government’s policy as captured in the Vision 2050, about 70 percent of the country’s household should be powered but so far only 15 percent is covered.
Therefore he said KPHL believes in gas reserves to allow for clean and cheap gas for energy to supply the domestic market to meet the vision of the Government.
KPHL as the mandated entity to deal, manage and negotiate on behalf of the State on all petroleum developments issues, will need to diversify the use of LNG for energy needs in the country.
He said besides the household energy needs, industrial development is critical for the long term to provide employment and open up opportunities and the diversification for the extractive industries through the DMO.
Although there is no policy provision catered for domestic market obligations, the new White Paper gas and energy policy submission would cater for the inclusion of it in all future projects.
This includes the third party pipeline access, an opportunity for the state company to develop LNG stranded fields to use existing pipeline for the domestic consumption for energy and other petroleum products.
Mr Sonk said a recent study carried out shows that they can optimise the opportunities to serve the domestic needs.
Out of 10 industries, the basic industries (mostly agricultural) needs more energy usage and the role of KPHL is to look at domestic market to have enough gas to underpin development using gas from stranded fields, by accessing the existing pipeline (third party pipeline access).
Mr Sonk said so far KPHL with a joint partnership argument with Oil Search are building a 57.8 MW gas power supply plant in Port Moresby, through their joint venture company NiuPower to meet the energy needs in the city.
He added that the two companies have entered into another joint venture to distribute domestic LNG throughout the coastal towns of PNG, also through NiuEnergy.
According to Sonk, they hope to invest in a domestic LNG vessel to distribute fuel and other domestic LNG throughout PNG to meet local demand.

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