PNG LNG Equity Debate Sparks Heated Clash in Parliament

A fierce political showdown erupted in Papua New Guinea Parliament on Friday after the Marape-Rosso Government came under attack over its handling of the 4.27 percent Kroton equity option linked to the PNG LNG project.

Prime Minister James Marape faced sharp criticism from Opposition figures, including former Prime Minister Peter O'Neill and Sinesine-Yongomugl MP Kerenga Kua, who accused the government of moving away from the financial arrangements agreed to under the 2009 Umbrella Benefits Sharing Agreement.

 PNG LNG Equity Debate Sparks Heated Clash in Parliament/Photo : PNG Parliament speaker

Mr Kua questioned why Cabinet had approved a move to renegotiate the share price despite the original agreement already setting the cost at US$240 million per one percent equity.

Under the agreement, the total value of the 4.27 percent stake was estimated at around US$1.02 billion, or roughly K3.5 billion.

“The NEC decision says they must negotiate the price again,” Mr Kua said in Parliament. “Why does the government reject the contractual agreement which was signed by all parties and stakeholders on the agreed price?”

The Opposition MP also raised concerns over the creation of a Special Purpose Vehicle to manage the shares, saying the arrangement risked placing public wealth under political control.

“The money belongs to the people and it's a concern when such big amounts of money are managed by politicians,” he said.

Prime Minister Marape responded by saying the share arrangement had been shaped by policy decisions made during the National Alliance era and argued that the actual value of the equity had shifted over time as the PNG LNG project paid down much of its original debt.

He said nearly 70 percent of the project’s bank-financed capital costs had already been retired since gas production commenced in 2014.

“That US$240 million price tag included that 70 percent bank-financed element,” Mr Marape said.

The Prime Minister told Parliament that Kumul Petroleum had retained the equity while earning more than K12 billion in revenue distributions between 2014 and 2026.

According to Mr Marape, previous administrations failed to assist landowners and provincial governments from Hela, Southern Highlands, Western, Gulf and Central provinces to secure financing for the shares.

Mr O’Neill interrupted the Prime Minister’s explanation through a point of order, accusing him of misleading Parliament about the original intention of the agreement.

“In 2014, we made a decision, realizing that the landowners and the provincial governments could not afford it. We discounted it to US$150 million per share,” Mr O’Neill said.

“Nobody was stopped from going to raise the money. Today, the Prime Minister is free gifting these five provinces and the landowners at the expense of the entire nation.”

Mr Marape later defended the government’s interim structure, saying governors and landowners would eventually determine how the shares should be independently managed in the future.