COVID-19 cases increase worldwide so PNG must remain vigilant says Manning

The Papua New Guinea Government plan, through Air Niugini, to buy-out Nasfund’s shares in PNG Air makes no sense from a business perspective, is not in the national interest and raises serious corruption and conflict of interest concerns.

Deputy Leader of the People’s National Congress party, Hon. Richard Maru, MP, said well before the COVID-19 spread all three airlines, Air Niugini, Link PNG, and PNG Air, were running at losses and now the government wants to prop-up all three as separate entities that are competing on the same routes.

“Why is the government buying into a failing airline that it will prop up with public funds and take on its liabilities, that it will then run as a competitor on the same routes and place further financial strain on Air Niugini?

“It makes no sense at all when Air Niugini is asking for hundreds of millions of Kina in bailout funds itself and cannot pay its debts, so we need this SOE Minister and this government to come clean on the true financial position of Air Niugini and Link PNG.

“It is also highly suspicious that the proposed purchase is only to buy Nasfund’s shares, and not shares held by MRDC and Papua New Guinea investors.

“Is there collusion involved between certain Directors in Air Niugini and Nasfund, because the minister has refused to deny this claim.”

Mr. Maru said the State Enterprises Minister has failed to provide satisfactory responses to serious questions he directed to him on these matters, and he must come clean:

• Is the government providing a 300 million Kina rescue package to Air Niugini?

• Does the government support Air Niugini paying 76 million Kina for paying out Nasfund’s shares and loans in PNG Air?

• Why is the government specifically buying Nasfund’s shares in PNG Air and not buying the shares held by other investors such as MRDC, and is this a sweet deal between individuals with serious conflicts of interest in Air Niugini and Nasfund?

“The SOE Minister has failed to reveal the true financial position of Air Niugini, and he cannot continue to brush aside our concerns and hide behind the corporate veil.

“Keeping Air Niugini flying safely is paramount to our national interest. Air Niugini is a lifeline for our people and the economy, and as the flag carrier of the Nation, is the pride of Papua New Guinea representing us around the world.

“PNC will not stand by and let Air Niugini’s future be compromised by the selfish business interests of a few people in collusion with the Marape Government.

“Right now, this Government should be trying to fix the economic disaster that it has created in just twelve short months that was made worse the COVID-19 situation.”

AIR NIUGINI BAILOUT

Mr Maru further asked, if the amount of 300 Million Kina is needed for re-fleeting and retiring Air Niugini’s accumulating debt, where will Link-PNG, through Air Niugini, get the money to buy out the Nasfund shares.

“Link-PNG is as a subsidiary of Air Niugini and there has been very little transparency into its current debts and true financial position.

“It remains to be seen how will Air Niugini pay off its own and Link-PNG debts as well as take on the liabilities of PNG Air that is a failing and unprofitable airline?

“Both the Prime Minister and his SOE Minister have admitted on record that currently Air Niugini owes the National Airports Corporation 94 million Kina in fees and lease charges.

“Air Niugini is in no financial position to pay this mushrooming debt, so the Government has had to step in and pay this money on an installment basis.

“I call on the Minister to inform the 8 million citizens of this country, who are the real owners of Air Niugini, if the airline has in place real and management plans to trade its way out of this terrible financial position, particularly with the impact of COVID-19.

“The Minister must make a commitment to the travelling public and the business community that it will not cut costs and compromise the safety of air travel in PNG.”

PNG AIR DEBTS

Mr. Maru said it is public knowledge that PNG Air has been unprofitable since its inception.

“As a publicly listed company on PNG Stock Exchange (PNGX), the share value of PNG Air (CGA) has fallen from K1 per share to 12 toea or less today.

“So why is Air Niugini keen on buying into PNG Air which also has significant debt from aircraft leases and other creditors including the National Airport Corporation where PNG Air currently owes 17 million Kina.

“Why would this government and Air Niugini go out of their way to buy another debt-ridden company like PNG Air during a time of economic recession.”

WHY NASFUND SHARES ONLY?

Finally, Mr. Maru said it is highly questionable as to why the Marape Government suddenly has a new policy of bailing out individual private investors like Nasfund who made bad investment decisions in investing in PNG Air.

“Why is this decision to use public funds only related to Nasfund and not other shareholders like MRDC and the ordinary people of PNG who bought shares in PNG Air?

“Why are Marape and Muthuvel rescuing Nasfund only and not other Papua New Guinean investors?

“The Prime Minister and the Minister have an obligation to answer the claim that this deal is to advance the interests of Directors of Air Niugini who have a serious conflict of interest because of their long-term business association and relationship with Nasfund.”

Statement

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COVID-19 cases increase worldwide so PNG must remain vigilant says Manning