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Maru calls on PNG PM Marape to Explain why his govt is supporting Air Niugini Share purchase in PNG Air

Both Air Niugini and PNG Air, and other third-level airlines are likely to be facing bankruptcy over the next 12 months. This will happen unless there are significant cost-cutting measures and the Government comes to their rescue.

The Minister for State Enterprises, on 12 June 2020, proposed that the Government provide a relief package of K300 Million for Air Niugini. The Minister said the airline is ‘currently facing liquidity issues and is in dire need for more capital injection and also support to mitigate the economic slowdown.’

Alarmingly, at this critical time when Air Niugini desperately needs a K300 Million bailout, the government appears to be facilitating a deal for Air Niugini to buy out NASFUND’s shares in PNG Air. This is at a time when PNG Air is about to go bankrupt and Air Niugini will likely take over existing routes.

To any independent observer, this proposed transaction appears highly suspicious, makes no business sense and is perceived as a potentially corrupt deal by people with vested corporate interests.

Concerns are being raised as to whether there is any validity in these claims of conflict of interest for decision makers at Air Niugini in relation to their private business interests as well as partnerships with NASFUND.

The question must be asked why is this purchase just for shares held by NASFUND, and not shares held by other investors such as MRDC and private shareholders?

This potentially corrupt scandal must be dealt with immediately while the Government takes an immediate diagnostic assessment of the viability of the airline industry, followed by a cost reduction strategy and a rescue package for the industry including Air Niugini.

James Marape must explain where the Government, on behalf of Air Niugini, is getting the money to buy out Nasfund interest in PNG Air. This is particularly important to understand at a time when Air Niugini itself will go belly up if the Government does not come to its rescue with the K300 Million that it desperately needs.

As the Opposition, we call on the Prime Minister to come out this week from his slumber and let the country know of the following questions we need answers for:

1. Will the Marape Government provide the K300 million rescue package Air Niugini as announced by the State Enterprises Minister on 12 June to keep Air Niugini afloat and flying, and where is this money coming from?

2. Does his Government support Air Niugini subsidiary Link PNG buy-out of Nasfund’s shares in PNG for K76 million, and where is the money coming from?

3. If the Marape Government has a new policy of paying and taking over bad investments by private investors like Nasfund in PNG Air Niugini.

4. If so, then can the Marape Government also extend the same helping hand to all other investors in the troubled PNG Air like MRDC and the people of PNG who have invested in the unprofitable and near-bankrupt PNG Air?

I call on my brothers in the NEC, to wake up your sleeping Prime Minister for him to take decisions now to safeguard Air Niugini from going belly up and reorganises the Airline industry.

Cabinet Ministers have a responsibility to keep our airlines safe and flying so as to mitigate the loss of income to the industry due to the economic slowdown which is very adversely impacting on the travelling public and the airline industry in PNG and the world over.

The people of Papua New Guinea need urgent answers to our questions from the Prime Minister and he has a duty to inform the country of his Government’s plan to support Air Niugini keep flying as owner and sole shareholder of Air Niugini under KCH.


1) There is no doubt that the global airline industry is facing the greatest challenges ever since commercial flying began, as a result of the Covid-19 pandemic shock.

2) Qantas is laying off workers and asking for Australian Government funding, Virgin’s future is in question, American and European Airlines are asking for massive bailouts, and closer to home, the very successful Fiji Airlines has terminated the jobs of almost 800 Fijian citizens and is also seeking K700 million in government support.

3) This deal for the National Government, as the owner of Air Niugini, comes at a time when we all know PNG Air is headed for bankruptcy with its long-term financial problems now compounded by the impact of the Covid19 pandemic.

4) This is in addition to providing a bail-out package to the industry to keep planes flying to service the needs of our travelling public and the business community, in the light of the pandemic impact on the airline industry in PNG and around the world.

5) Air Niugini is effectively the PNG Government, thus must serve the interest of the people of Papua New Guinea.

6) As quoted in the Post-Courier, 22 June 2020, Nasfund is PNG Air’s largest institutional investor with 39.29 percent ownership of PNG Air. Nasfund’s total investment in PNG Air is K76 million comprising of K31 million in equity and K45 million in loans provided PNG Air in a financial rescue package given between 2016 and 2017.

7) Nasfund has not received a single dividend payment from PNG Air Air since it took up equity along with many institutional shareholders and many of our citizens in 2008. The share value of PNG Air started trading k1.00 and declined to K0.12 when it was declined in the Port Moresby Stock Exchange.

8) The National Newspaper on Monday 22 June reported NASFUND CEO announcing Air Niugini’s move to buy NASFUND’s shareholding in PNG Air. NASFUND described PNG Air as a “non-performing, illiquid and non-yielding investment for the fund”. Nasfund owns 39.29 percent of PNG Air.

9) PNG Air has not made profits nor paid dividends to its biggest shareholders MRDC and Nasfund, as well as many of our ordinary citizens.

10) What an irony! PNG Air, a private airline that has not made profits nor paid any dividends since it started in 2008 years ago as a publicly listed company, now all of a sudden has an interested buyer of Nasfund’s shares when this year is expected to be the worst financial year in the company’s history due to the prolonged impact of the Covid 19 pandemic by non other than the Government of Papua New Guinea through our Air Niugini subsidiary Link PNG.

11) The Government does not need to spend any money to buy any shares in PNG Air as it is going bankrupt anyway. It doesn’t make commercial sense for Air Niugini subsidiary Link PNG to take over the an unprofitable and near-bankrupt PNG Air.

12) Air Niugini itself is in dire need of K300 million package to continue operating as announced by the Minister for State Enterprises.

13) While the airline industry in PNG and the world is going through its most difficult times in global history, Marape and his Government seem oblivious to the fact, and are in slumber.

14) Certain Board Members of Air Niugini who have long-term business association with Nasfund, and with conflict of interest as we all know, have used their position in Air Niugini to get Link PNG to buy out Nasfund’s interest in PNG Air.

15) This is despite there is no commercial rationale for the purchase we all Air Niugini has to do is take wait till PNG Air goes bankrupt over the next 12 months which we all expect given the prolonged impact of loss of business due to Covid 19 and Link PNG can take over the routes and the business left behind by PNG Air.

16) The timing is very suspicious when we all know PNG Air without external support is going to bankrupt anytime now as it cannot service its mounting liabilities made worst by the Covid19 impact.

17) The Prime Minister needs to inform the country if the Marape – Steven Government has a new policy of buying shares of private investors like Nasfund who made bad investment decisions like investing in PNG Air which has not paid a dividend to Nasfund since taking up shares in PNG Air.

18) We understand Nasfund has also provided substantial loans to PNG Air for which it is struggling to get repayments because of the business downturn.

19) If the Marape Government has decided to support Air Niugini purchase shares in Airlines PNG, then the Prime Minister must also tell the nation whether his Government will also bail out all other investors in PNG Air like MRDC who own 40 percent of Airlines PNG and our mums and dads who own the rest of the shares. Why is special consideration given to only Nasfund?

20) Air Niugini has been struggling after recording an operating loss of K133 Million in 2018 and an operating profit of K500,000 in 2019. With the Covid-19 shock, it should not surprise anyone that Air Niugini will record losses of over K200 million in 2020 and wind up operations unless there is a major Government bailout to the tune of K300 million as requested by the Minister for State Enterprises.

Statement by Hon. Richard Maru

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