K3 billion UBS Loan a gift to Oil Search, says former PNG Treasurer

 Former Papua New Guinea Treasurer  and Aitape-Lumi MP Patrick Pruaitch  has told a commission of inquiry in Port Moresby that  the  Peter O’Neill government’s Union Bank of Switzerland (UBS) loan transaction in 2014 was simply a gift of US$900 million (K3bil) to Oil Search Ltd. 

Pruaitch told the inquiry that Parliament had not approved the loan as required under the Constitution. He said Oil Search used the funds to procure PRL15, the Elk and Antelope fields.

Aitape-Lumi MP Patrick Pruaitch
Aitape-Lumi MP Patrick Pruaitch 

The former treasurer under the O’Neill-Leo Dion government said “UBS transaction was not a good idea.”

When questioned about the consequences of the UBS loan, Pruaitch said “We lost Oil Search shares and ended up with nothing”.

“Sadly, the 10.01 per cent Oil Search shares which we bought have been sold so today we have zero shares on Oil Search share register,” Pruaitch said.

“In effect, Oil Search Holdings Ltd got out A$1.2 billion (K3bil) whilst the people of Papua New Guinea got nothing and yet we are stuck with a debt burden of A$1.2 billion plus an unidentified array of losses.

Pruitch said under Section 209 of the Constitution, it was mandatory for any loan sourced outside the budget process to be passed as a law by Parliament.

“As a minister in the O’Neill government back in 2014, I can confirm that Parliament did not approve the UBS transaction,” Pruaitch said.

“The National Parliament had no part in facilitating the UBS loan.”

“It was the Department of Prime Minister and National Executive Council that facilitated the NEC submission that approved the UBS loan.

“The proper process would have been for the submission to be initiated by the Treasurer and Department of Treasury, and screened and vetted by the Ministerial Economic Committee prior to the matter being considered and approved by NEC,” he said.

O’Neill told the inquiry last month that seeking parliamentary approval for loans had not been practised in the past

When asked by inquiry chairman Sir Salamo Injia of his understanding of Section 209, O’Neill responded: “It reflects on the government’s annual budget, that government puts to parliament about raising of capital, raising of loans and of course raising of revenue and expenditure of the national government.”

The loan was to buy shares in Oil Search, which was one of the partners in the PNGLNG project, but the company’s share prices fell sharply following the purchase, amid declining prices for commodities.

Pruaitch’s appearance was adjourned to Aug 3.

The National / Pacific Mining Watch

Next : Oil Search to open for merger proposal favouring shareholders

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