Somare's last laugh

FORMER State Enterprises Minister Arthur Somare has responded to critics of the PNG LNG project funding arrangements he secured for the Papua New Guinean government during the onset of the global financial crisis in 2008.
Somare's last laugh Somare's last laugh Somare's last laugh Somare's last laugh Somare's last laugh

Under the deal the Abu Dhabi government-owned International Petroleum Investment Corporation agreed to provide about $US1.68 billion cash upfront to PNG state-owned enterprise Independent Public Business Corporation.

In exchange, the IPBC would transfer its 196.6 million Oil Search shares to IPIC in early 2014.

However, the deal was importantly based on a target of Oil Search shares reaching $A8.55 each by the time IPBC transferred them to IPIC and any shortfall in the value would be paid by IPBC to IPIC.

The deal consequently looked a lot more questionable three years later with Prime Minister Peter O'Neill's coalition predicting a potential 900 million kina shortfall in 2014 when Oil Search shares were around $6.30.

But the shares recently hit a milestone by surpassing the $8.55 level last week - a price that removes the need for PNG to pay IPIC any cash shortfall.

"Obviously, the IPIC deal is not such a ‘bad or stupid financing deal' after all," Somare said according to the Post-Courier last week.

"I am pleased to say that today PNG can move forward without the burden of imaginary debts and repayments."

Somare lost his East Sepik seat in the 2012 election.

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