Opposition Leader Patrick Pruaitch has called for the immediate sacking of the Management and Board of Kumul Petroleum for acting against the national interest and refusing to cooperate with planned Parliamentary Accounts Committee hearings.
The Board and Management of Kumul Petroleum are behaving as though they are a law unto themselves and this should not be tolerated, Mr. Pruaitch said.
Mr. Pruaitch said there are at least six national interest grounds to support the sacking of the Kumul Petroleum Board and Management. Among them:
- Kumul Petroleum has made false and erroneous public statements and never reported satisfactorily to Parliament on its operational and financial status;
- In spite of its role as a State-Owned Enterprise, Kumul Petroleum has adversely impacted on the lives of all Papua New Guineans by hiding massive foreign exchange revenues in a Singapore-based banking account;
- Kumul Petroleum’s Board and Chief Executive, Mr. Wapu Sonk, have misled National Government Ministers and the public regarding its lack of support for the National Government budget;
- Although Prime Minister James Marape has decreed that Kumul Petroleum will report to, and come under, the jurisdiction of the Minister for State Enterprises, Mr. Sasindran Muthuvel, the company has failed to cooperate with the Minister;
- No government in any country would tolerate the stance taken by Kumul Petroleum as a State-Owned Enterprise that it is not answerable to the nation’s parliament, or for that matter, the Parliamentary Accounts Committee;
- It was ethically wrong for Kumul Petroleum to divert its LNG revenues to a Singapore bank account and to borrow funds from PNG banks in order to pay government dividends and for working capital. This has a highly detrimental impact on the PNG economy.
Mr. Pruaitch said among the untruths attributable to Kumul Petroleum are a recent July 3 statement by its chairman, Mr. Andrew Baing. He stated that since 2014 Kumul Petroleum “has delivered to the State over K4 billion in dividends, returns of capital, taxes and other strategic, social and community in the country. This represents 78% of Kumul Petroleum’s available cash flow.”
“As former PNG Treasurer from March 2014 to May 2017, I can testify that this claim is palpable nonsense. In 2016 Kumul Petroleum paid the government K200 million which it claimed was an ‘Advance to Government’.
“As I disclosed previously, corporate taxes paid by KP are far below payments listed in company annual reports, a difference of K500 million just for 2014 and 2015 alone.”
KUMUL PETROLEUM HAS IGNORED PROMISES MADE BY THE PM
In his statement, Mr. Baing promised that KP will present a full and comprehensive report on its financial affairs to Parliament in the first week of July. This never happened.
On that day, Prime Minister Marape told Parliament Mr. Muthuvel would submit a full report to Parliament on Kumul Petroleum. This also never happened.
Mr. Pruaitch said that in January this year Mr. Sonk had wrongly advised the PNG Treasurer, Mr. Sam Basil, in his former capacity as Minister to whom KP reported, that Kumul Petroleum has never made a loss.
However, KP’s 2016 financial accounts clearly show a loss of US$149.8 million even though total revenue in that year amounted to US$547 million with net revenue (after costs) totaling US$289.6 million or K964 million at current exchange rates.
“I’m sure the Prime Minister and the people of this country would like to know how a profit of nearly K1 billion could have turned into a loss of almost K500 million in 2016,” he said.
According to the 2017 EITI report, Kumul Petroleum’s revenue amounted to K2.1 billion in 2017. It paid K200 million in dividends and K13.3 million in company tax. “The public would certainly like to know where the remaining funds are held or, indeed, whether they have vanished,” Mr. Pruaitch said.
KP also claimed tax deductions of K35.9 million for Infrastructure Tax Credits even though Kumul Petroleum does not qualify for ITC as it is not the operator for any resources project, Mr. Pruaitch said.