Tuesday, October 19, 2010

State caught in 8-year-old K100m bill



THE state has to fork out nearly K100 million to pay a construction company because of the failure to settle a debt that has been growing through interest for eight years, The National reports.

Treasurer Peter O’Neill confirmed last night that the government would hold talks with representatives of Australian-based Downer Construction (PNG) Pty Ltd to settle a contractual bill for work done on the Ramu Highway eight years ago.

An internet publication reported yesterday that Downer Construction had indicated filing a lawsuit against the PNG government in Australia for failing to pay an outstanding contract bill of A$31 million (more than K80 million) for the Ramu Highway upgrade completed in 2002.

According to WAtoday.com.au, an online column, the move to file a lawsuit was agreed last Wednesday during Downer’s general meeting.

At the meeting, it was anticipated that Ramu Highway revenue was booked in Downer’s June accounts after the company was satisfied that the amount owed was measurable.

The sum was determined by an international arbitral tribunal last November.

The publication reported that “Downer’s delegation to Port Moresby last month came back empty-handed, and the chatter around Port Moresby is that Downer will have to sue – possibly in the Australian federal court”.

“Even if Downer takes this path, it is hard to predict just what steps will be required to enforce an Australian judgment against the PNG government.”

A company spokesman was quoted as saying: ‘“Downer is continuing its discussions with the PNG government and is confident of reaching an amicable resolution in the coming weeks.”

Collecting a A$31 million bad debt that’s eight years overdue was a top priority for Downer, who had two representatives sent to Port Moresby to negotiate.

The outstanding amount related to a 127km road upgrade completed between 1998 and 2002, when aid funding from the European Development Fund saw Downer engaged to work on the Ramu Highway.

Treasurer O’Neill told The National Downer had approached his office over a bill that had been allowed to escalate because “someone was not doing his job”.

“They have approached my office. We are in discussion. They (government officials) have allowed the bill to escalate to K100 million.”



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