Somare: IPIC funds safe

PUBLIC Enterprises Minister Arthur Somare yesterday gave a full disclosure of the government’s funding of the liquefied natural gas project, saying the money, in a quarantined account, is safe and payments are on track, The National reports.

The minister was forced to give the disclosure in a media statement released yesterday, following a story published in the Post-Courier on Wednesday.

Somare said there was absolutely no truth in the Post-Courier story, which said that the government had lost A$300 million recently because it converted US dollars to Australian dollars in relation to the exchangeable bond issue with International Petroleum Investment Company (IPIC).

“The story is pure fiction because, as pointed out to the Post-Courier before its report, IPBC has not made any currency conversion recently,” the minister said.

The Independent Public Business Corporation (IPBC) concluded an agreement with IPIC in November 2008 to raise A$1.681 billion.

The exchangeable bond deal with IPIC was approved by the national executive council.

The transaction was concluded in March last year, and the funds were deposited in a quarantined bank account in Singapore for use as and when payments were due for the government’s share of the LNG project.

Somare said most of the funds from the IPIC transaction were converted at the time to US dollars with a portion retained in Australian dollars to cover the interest costs of the loan.

A sum of A$1.285 billion was converted to US$828.3 million at the prevailing exchange rate in March last year.

PNG LNG equity payments to the present time had amounted to US$525.5 million, while interest earned on funds totalled US$0.287 million and A$20.7 million.

The cost of the exchangeable bond transaction was US$18.7 million while the “coupon” payments on the exchangeable bond totalled A$135.6 million.

The net balances remaining in the quarantined accounts following these transactions and payments were US$493.7 million and A$262.4 million.

Somare said: “The details of these transactions were audited by the auditor-general for the year 2009.

“This accounting process has already been undertaken for 2009 when the funds were first received and placed in an escrow account and government payments made for sunk costs in the LNG project as well as for ongoing cash calls.”

Somare said he considered it highly improper for the Post-Courier, and any other media, to make false claims on issues of national importance, but it was even worse when news stories were based on fictitious information and unreliable and uninformed sources.

He urged the national media to take a more responsible approach, especially when it came to issues that were critical to social and political stability and future economic growth and prosperity.