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PM announces restructure of all State owned petroleum and mining assets and SOEs

For Release – Friday 5th March, 2013

Prime Minister Peter O’Neill today announced the restructure of all the State’s investment in petroleum and mining assets, and the state owned enterprises in the country.

This follows a decision by the National Executive Council last week to restructure and consolidate investment by the State in petroleum and mining ventures, and all the State Own Enterprises (SOE).

The Prime Minister said the restructure is a major decision by government to provide more transparency and accountability, and more focus in the way the State’s investment in mining and petroleum assets, and SOEs, are managed.Under the restructure, Petromin PNG Holdings Limited (Petromin), and the Independent Public Business Corporation (IPBC) will be wound up and their assets and interest transferred to new Kumul entities to be set up.

All mining assets and interests for the State will be transferred to a new entity known as Kumul Mining Holding Limited (KMHL).

This includes the State’s interests in Bougainville Copper Limited (BCL), the Ok Tedi Mining Limited, and the State’s interest in Ramu Nickel project, currently held by Mineral Resources Development Corporation (MRDC).

Also to be transferred to KMHL are the State’s interests in Tolukuma Mines, which are currently held by Petromin.

All petroleum asset and interests owned by the State will be transferred to an entity known as Kumul Petroleum Holding Limited (KPHL).

This include the State’s interest (16.575%) in the PNG LNG project currently held by Kroton, a subsidiary of IPBC; 0.2% interest in the PNG LNG project held through a Petromin subsidiary called Kumul LNG Limited, the State’s interest in Eda Oil currently held by Petromin, and exploration licences and other assets/interests held by Petromin.

Dept. of Prime Minister & NEC, PO Box 639, Waigani, Port Moresby, Papua New Guinea

PRIME MINISTER’S OFFICE

MEDIA UNIT

The IPBC will be wound up and all the state owned enterprises will be transferred to a new entity called Kumul Corporation Holding Limited.The Prime Minister said the restructure and consolidation of these state-owned assets are necessary to remove inefficiencies, and duplication and overlapping of participation.

“Through this restructure we are creating a commercial framework that is cohesive and focused. It will result in efficiency that will maximize benefits that will flow to the State,” he said.

The Prime Minister said Petromin is a good example of what was tested globally by oil and gas majors, found wanting, and discarded.

“Oil Search shed mineral assets in Porgera Gold Mine to concentrate on oil and, and look at where it is now.

“Petromin bought into Tolukuma Gold mine in 2008, but continues to make a loss from this venture. Its total losses (in sales) stood at K45 million as at Dec 2012.

“The State’s position is not made any better with duplication and overlapping of participation in the PNG LNG project, with Kroton holding 16.57% in the project, while Petromin holds 0.2%, both for the State.

“This is not only confusing, but it also creates an environment for Kroton and Petromin to compete for nomination which is undesirable,” the Prime Minister said.

On IPBC, the Prime Minister said the organisation has not delivered its core mandate since its inception in 2002.

“IPBC was created for a specific purpose and not to be involved in risk taking commercial ventures, and the financing of the LNG project through IPBC is an example of how this entity’s conduct has strained the State’s resources, and incurred additional costs to the State.

“The restructure of IPBC will ensure that the focus is on rehabilitation through a public private partnership for our state owned businesses like Air Niugini, Eda Ranu, PNG Power and PNG Ports Corporation so the delivery of the services they provide improves at a cost affordable to our people. This is the mandate of IPBC,” the Prime Minister said.

Under the restructure, a Trust created will be known as the Kumul Trust. The serving Prime Minister will hold a special share called the Kumul Share (having veto power), while all the former prime ministers will jointly hold an ordinary share.

Dept. of Prime Minister & NEC, PO Box 639, Waigani, Port Moresby, Papua New Guinea

“By having our former Prime Ministers as shareholder/trustees, we will be drawing from their wisdom and vast experience. I’m confident this structure will have political and commercial integrity,” the Prime Minister said.The Kumul Trust will be managed by independent and highly professional managers.

“Today’s announcement delivers on my commitment that the government’s investments, on behalf of the people, will be managed in a transparent, competent and accountable way.

“I’m certain these changes will be welcomed by the people of Papua New Guinea, and especially landowners in resource development areas. I’m also certain they will be welcomed by companies we are partners with in the development of our mining, oil and gas resources.

The Prime Minister said all staff of Petromin and IPBC will be redeployed to the new entities, and will not suffer any loss of entitlements.

He said legislations to give effect to the new structure are now being prepared for Parliament to approve.

Authorized by

HON. PETER O’NEILL, CMG MPPrime Minister

Dept. of Prime Minister & NEC, PO Box 639, Waigani, Port Moresby, Papua New Guinea