Prime Minister Peter O’Neill, says the government is not taking any new loan; the UBS loan is replacing the IPIC loan.
He says this will not increase the debt to GDP ratio, as widely speculated.
O’Neill described the UBS loan, taken to buy a 10.1 per cent stake in Oil Search, as the best deal any government has ever entered into.
Prime Minister O’Neill was responding to Opposition Leader Belden Namah’s concerns, that the K3 billion loan from the UBS Investment bank, would raise the country’s debt to GDP ratio.
In a media conference today, flanked by senior cabinet ministers, Mr O’Neill said the UBS loan would only replace the IPIC loan.
He said when PNG first entered into agreements with IPIC to obtain 1.6 billion Australian Dollar loan from IPIC in 2008, it was agreed that the shares would be bought back by the PNG government on March 6, 2014, at a minimum price of 8.55 dollars per share.
He said the government went out to secure a loan of K3 billion from the UBS bank, to buy back those shares.
However when the government wrote to IPIC to buy back the shares at the agreed price of 8.55 dollars per share, IPIC did not accept this offer, but opted to keep the shares and further asked the government to make an additional payment of 70 million US dollars.
Prime Minister O’Neill said the government refused to pay this additional amount, and given that PNG had no shares in Oil Search, took a deliberate decision to use the finance from UBS bank to purchase shares from Oil Search.
Yesterday, Opposition leader Belden Namah said the UBS loan would increase the country’s debt to GDP ratio.
He said officials are keen on refinancing this loan in the next 24 months.
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