Photo Credit: Papua New Guinea Today
Hon James Marape, the Prime Minister of Papua New Guinea, received an interim dividend payment of K100 million from Kumul Petroleum Holdings Limited (KPHL) in Parliament, which was delivered by the Board Chairman Prof Benedict Yaru and the Managing Director of KPHL, Wapu Sonk.
When the Prime Minister received the dividend check, he congratulated Kumul Petroleum's Board of Directors and Management for paying such a significant dividend in such a timely manner. The Prime Minister further stated that he expects the Company to pay an additional K200 million to satisfy the entire dividend of K300 million as stipulated in the National Budget for 2021.
He said, “My Government has come to recognise that active commercial participation and having a higher Equity interest by Kumul Petroleum as the National Oil Company (NOC) of Papua New Guinea is critical because it captures a significant portion of the lion’s share of the oil and gas proceeds for the country, which otherwise would normally go to the foreign commercial investors while the State waits to collect taxes and royalties which usually are further squeezed by concessions. Equity is King in any Project whether it be Mining or Petroleum or any other type of Projects, hence our push to have a higher stake in all new Projects, Porgera Gold Mine, Ok Tedi etc. “
The Prime Minister said, “Take back PNG is not a slogan without consequence; it is in fact a call to the people of this country to take control of the agenda for the economic betterment of this our country. Taking our nation back requires PNG to have control over its oil and gas sector from exploration through to production and development. This cannot be achieved under the current regime and without a fully empowered National Oil Company (NOC). That’s why my Government is committed to bringing about positive changes to the regime in the form of production sharing in line with international practice which the major oil and gas companies are already used to. This will be the game-changer we have been waiting for.”
To the company’s performance, the Prime Minister said, “Despite the setbacks caused by poor decisions by the past government with the UBS Loan which cost Kumul Petroleum and thus the country about AUD 362 Million (almost a billion Kina) in direct losses, the Prime Minister commended Kumul Petroleum for maintaining a high standard of corporate governance with “unqualified audit reports” for every year since the active operation in 2014. He said the company has every attribute to become like Petronas of Malaysia and make huge contributions to the country if it were left to operate independently like any other commercial entity and without undue interference by the government, which is also how Petronas operates”.
“I am pleased to know that after 696 LNG cargos by end of 2020, and from net proceeds of USD1.644 billion received in 2014 to end of 2020, approximately USD$1.119 billion has been passed onto the State; meaning KPHL has paid to the State the equivalent of 68% of the total distributions received from the PNG LNG Project”.
These remittances to the State are composed of USD$521,900,300 in direct dividends, USD$394,000,000 in return of capital payments (payments to State under Vendor Finance arrangement for Kroton Equity Option), USD$181,000,000 in various forms of taxes to IRC, and USD$23,000,000 on corporate social responsibility projects such as rural electrification projects in the country and the refurbishment and installation of new equipment
The Prime Minister further said “We also must not forget that Kumul Petroleum not only preserved the rights of the landowners and provincial governments to the Kroton Equity Option and provide the necessary vendor financing for those options, but Kumul Petroleum also had to accept a reduction of about US$600 Million in the offer price from US$1.0128 Billion, which was a significant dent to its balance sheet. So in fact, KPHL gifted US$600 Million to the landowners and provincial governments of the PNG LNG Project”.
The remaining revenues of KPHL have been re-invested in existing oil and gas fields it has cash call obligations to and other related facilities, a state-of-the-art live training facility for the Kumul Petroleum Academy, and retained for looming projects such as Papua LNG and Pasca Gas Project and related exploratory and studies.
Reference: PNG Facts (19 August 2021). “PNG Kumul Petroleum Holdings Limited Pays an Interim Dividend of K100 million to state”.
