Kumul Petroleum Holdings Limited (KPHL) plans to pay the Government’s 22.5% share worth US$1.1 billion in the Papua LNG Project with the money it gets from local banks through loan arrangements by Bank South Pacific (BSP), and from what it makes from the PNG LNG Project. KPHL will not use money from the National Budget to pay the government’s share.
In a statement released today, KPHL Chairman Ambassador Isaac Lupari reiterated that people must understand the difference between KPHL’s own share payment and the money needed for the whole Papua LNG Project.
“KPHL is financing the State’s participation through its own commercial resources and domestic lenders. The US$1.1 billion package supports our equity commitment; it is not the total financing requirement for Papua LNG Project,” Mr Lupari said.
He explained that US$300 million will come from local banks through a loan arranged by Bank South Pacific (BSP), while US$800 million will come from money KPHL makes from its 15.1% share in PNG LNG Project from 2026 to 2032.
“We will use these funds progressively to meet our share as payments, known as cash calls, fall due. The US$800 million will be generated over that period; we are not saying that the full amount is held in cash today.”
“We have already secured US$180 million ready for our first cash call following FID,” Mr Lupari said.
The Chairman Ambassador added that using KPHL’s own money and local borrowing means there is no need to use National Budget, which further allows the Budget money for health, education and infrastructure. This plan is also made to not break World Bank borrowing rules.
On benefits, Mr. Lupari explained that during construction, the project will pay wages for PNG workers and pay local suppliers. Once production begins, PNG will receive foreign exchange, taxes and royalties.
“For the first time in the history of our country, the Government, through KPHL, is financing the State’s participation in a major resource project through domestic sources,” he added.
Mr. Luapri thanked Prime Minister James Marape and urged leaders to be careful when commenting publicly, as wrong information can scare investors.
