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Governors sign Kroton Option

Staff Reporter | 1:31 PM |
The Governors of Southern Highlands, Hela, Central and Gulf Province signed documents today exercising the ‘Kroton Equity Option’ through the vendor finance arrangement with Kumul Petroleum Holdings Limited (KPHL)

The signing by the Provincial Governments now entitles them to the 4. 27 per cent indirect interest in the PNG LNG Project.

The Governors include William Powi – Southern Highlands, Francis Potape – Hela, Kila Haoda – Central, and Havila Kavo – Gulf.

The signing was witnessed by landowners representatives from the Petroleum Development License and Pipeline areas.

The signing alsocreates a safety net for the Provincial Governments and landowner groups whom if they decide to, can commercially finance the Kroton Equity Option even after the option lapses on December 31st.

KPHL Managing Director, Wapu Sonk, said the Government through KPHL was providing a back stop position by issuing vendor notes.

“If the Governors and the landowners exercises the option, it does not mean we are closing the door. The door is always open. You can always go and get commercial financing when the time is right and replace those notes with actual cash. And the government wants money. So you can always come and replace it. What we are doing is to make sure that the option is exercised through Kumul and it is parked inside Kumul, so the option can be exercised and closed out,” said Sonk.

Governor Powi said consultants ‘Clinton Capital Partners’ thoroughly assessed financing alternatives to secure the ‘Kroton Equity option’ and concluded that the Government vendor finance option was the optimal option available for them.

The Southern Highlands Provincial Government through an Executive Decision unanimously agreed to take the vendor financing option.

“This is a milestone decision we are making and we are now taking ownership of the 4.27 per cent offered by the state,” he said.

Hela Governor, Francis Potape, said many other outstanding issues remained which will be deliberated on in the next two weeks.

This was seconded by Gulf Governor, Havila Kavo, who said one of the outstanding issues was the price of the 4.27 per cent which had conflicting amounts with different stakeholders .

Kavo is one of the detractors of the UBSA agreement in Kokopo who did not sign in 2009.

“Seeing that the principal resource owners and provincial governments have gone ahead, I have no other option but to support what they are doing.

“They have signed and ill also sign, but other issues that are pending, our professionals will sit together with the provincial government and also wit affected landowners to look at the figures and the calculations.

Central Governor, Kila Haoda, called on all landowners to work together to reach an amicable solution so that they receive the benefits fro the PNG LNG Project.

Sonk thanked the Governors for signing the agreement which he believed was the best option available to them.

Also exercising the Kroton Equty Option was PDL 2 (Kutubu) Representative Sakai Kei and PDL 5 (Moran) Chairman, Pape Punga. LoopPNG