National Development Bank still waiting for K130m allocation

By MALUM NALU

National Development Bank has not received a toea of the K130 million allocated to it in the 2012 national budget, despite all the accompanying publicity and massive interest, The National reports.

 In the 2012 national budget handed down last December, the NDB Bank got a huge recapitalisation of K130 million in the budget, however, managing director Richard Maru revealed yesterday (Thursday) that nothing had been forthcoming to date.

NDA managing director Richard Maru…still waiting for the K130 million budget allocation.-Nationalpic by MALUM NALU

 The budget allocation of K130 million would be broken down as follows: Agriculture credit support – K100 million; Tourism credit support – K5 million; Local business guarantee scheme – K10 million; Small Medium Enterprises development programme – K10 million; and Fisheries credit support – K5 million.

 One of the initiatives the NDB wanted to introduce this year under the K100 million submission was the re-introduction of the Stret Pasin Stoa concept.

 This is where a husband and wife team manage a shop (mini-supermarket) built by NDB and later own it after NDB has recovered its cost.

 Maru said they had received hundreds of applications since the beginning of this year but they could not be processed unless funds were available.

 “NDB had not received 1t as yet,” he said.

 “Everyone’s lining up but we have not got a toea.

 “The NDB is concerned that all our programmes are being delayed.

 “We are disappointing our people, because politicians have raised their expectations, but we can’t meet these expectations.

 “We have had meetings with finance and treasury and we are just waiting.

 “We are hoping that this month, we will receive the first tranche.”

 Maru said the government had given the responsibility for approving agriculture loans to NDB, after the failure of the controversial National Agriculture Development Plan (NADP), where millions of kina was swindled by “paper farmers”.

 He said this was because NDB was one of the best-managed state-owned enterprises and government departments in the country.

 It last month announced a record after-tax profit of K9.4 million - after having gone through three insolvencies.

 This compares to a mere K1.5m profit in 2010 - a record 620% increase in profit in one year.

 It is the biggest profit the bank has recorded since 1967.

 “It is no surprise that the government has decided to park funds here,” Maru said.

 “They realised that they must stop the squandering

 “Up to K400 million has been squandered (under the NADP).”

 “Where are the projects?

 “Where is the impact?”

K700 million contract awarded for Lae port development

China Harbour Engineering Company Ltd has been awarded a contractor worth more than K700, 000 for a major expansion and redevelopment of Lae port.

An aerial view of the busy Lae port with mv Pacific Navigator at berth.-Picture by PETER BOYD of RIBACK STEVEDORES

The contract was approved by the national executive council.

Public Enterprises Minister, Sir Mekere Morauta, said yesterday (Thursday) that China Harbor Engineering was the lowest bidder for the contract, worth K734, 343,882.

The project is being funded 70% by Asian Development Bank and 30% by the national government.

“This is a very significant contract for the nation, and especially for the Momase-Highlands region,” Sir Mekere said.

“Lae port cannot meet current demand, and is becoming an impediment to the economic development of the region.

“Redevelopment and expansion of the port is urgently required so that many large regional projects, including the LNG project, can be built on time and at a competitive cost.

“It will also spur other economic development in the region, including agriculture, by helping to lower the cost of taking goods to local and international markets as well as reducing the transport costs of inputs.”

Sir Mekere said the NEC decision also required China Harbor Engineering Company to agree to have a significant proportion of national labor in its workforce and to employ PNG sub-contractors.

The main element of the project is the construction of new port facilities including a tidal basin, a berth and a terminal.

Work is expected to start in the middle of this year and finish towards the end of 2015.

“Lae port accounts for more than 60% of Papua New Guinea trade, so the completion of this project will have a very beneficial impact on our national competitiveness, and will help to limit increases in the price of goods and services across the Momase-Highlands region,” Sir Mekere said.

“It is one of the most-significant national projects to go ahead under the O’Neill-Namah government.”

LNG project funding audit finds hundreds of millions wasted

Hundreds of millions of kina borrowed for state equity in the LNG project have been squandered, according to Public Enterprises Minister Sir Mekere Morauta, The National reports.

He said yesterday (Thursday) that the national executive council had considered an audit of the International Petroleum Investment Corporation (IPIC loan) that is being used to pay for the state’s equity in the LNG project.

“Independent experts have audited the transaction, under which Papua New Guinea, through IPBC, borrowed $A1.68 billion from the Abu Dhabi Government’s International Petroleum Investment Company,” Sir Mekere said.

“The independent audit has revealed just how bad the transaction is for Papua New Guinea. It was conducted by the former Minister for Public Enterprises, Arthur Somare, and his former Independent Public Business Corporation (IPBC) management.

“The audit found that the transaction was neither transparent nor appropriate, and that other options had not been explored.

“The initial borrowing was enormously wasteful – the funds became available to IPBC eight months before they were needed, resulting in IPBC having to pay interest of $A56 million for absolutely nothing.

“Then the Australian dollars had to be converted to US dollars, leading to another loss of $A300 million.

“The result of this financial incompetence is that the national government has had to borrow a further K900 million to ensure that Papua New Guinea can retain the level of equity that it wants in the LNG project.

“Finally, the audit and other investigations have found that the transaction imposes many restrictions on how the state’s revenues can be managed, and how public enterprises are administered.”

Sir Mekere said NEC had decided to explore the possibility of refinancing the loan.

“This does not mean that it will automatically be refinanced, but this is one option that should be looked at,” he said.

“Refinancing could provide an opportunity to obtain more affordable and fairer finance and remove restrictions on the government’s ability to manage its own revenue and its own public enterprises.

“It is essential that we maintain our level of equity in the LNG project, but at the same time ensure that we get the best deal for the people of PNG.”