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02 April 2014

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Francis, there is no obligation to acquire a stake in InterOil or the like. Unless due to another obscure commitment of the State.

The state has a right, not a mandatory obligation to acquire the 22.5% stake in local petroleum projects.

Francis, I agree with you. If you have evidence that the PM is such and can prove beyond reasonable doubt then you call a stone a stone.

The Ombudsman Commission and their rhetoric media releases does not give us the right to condemn the decision making process.

I disagree with Barbara's notion that all highlanders are supporting O'Neill. I support his decision because I think he was faced with a situation where he had to decide and he did. Regardless of the negatives I would like to be optimistic.

Until and unless the OC finds in its investigation that the Prime Minister or anyone else for that matter has breahed rules and regulations in the acquisition of the Oil Search shares, it is irrational, unfair and wrong for people to accuse or label Peter O'Neill as villain.

Gas and oil is a lucrative business and PNG is heading into an exciting gas and oil boom.

Total like Exxon Mobil is world leader in gas and oil business and its teaming up with high profile players like InterOil and Oil Search, the writing is on the wall that PNG is heading for unprecedented economic boom.

If these world leaders can take the risk then we can confidently and comfortably become their partners whatever the risk factor.

Acquisition of 10.01% share in OIl Search with K3 billion UBS loan is a bold and vital investment for the people of PNG however this is not enough.

The government still has to acquire the 22.5% mendatory stake in InterOil even if it means to borrow again to increase its equity and maximise benefits in this highly lucrative and booming economic sector.

I agree, Corney, the governance aspect is a muddying part, and it's a form human excrement that stinks worse than pig shit and piss, of which odors are not easily removed.

I can understand why some would choose to ignore it.

I will not.

Hope and trust, where the PNG government is concerned, has always been a high risk investment for the people of PNG.

Conversely, the one thing resource developers can trust in with confidence is the governments readiness to bend rules, re-write policy and perform philosophical backflips when it comes to making multi-million-kina-deals.

I cannot in good conscience support that kind of government.

Unlike you, Corney, I may be forced to work under the structure of the PNG government, but that doesn't mean that I have to like the people responsible for it.

I did comfortably assess it myself given the assessment from ADB and the ANZ Bank.

The Bank of PNG's assessment and that of the professionals at the Treasury Department is also positive one.

I would categorically reject any supposed assessment from any academic - the likes of NRI. This is not arrogance. This a case of objective assessment and being firm with that.

The governance aspect is a muddying part this.

A fair response Corney.

I admit to using the term 'futures trading' metaphorically and I don't doubt your capacity to assess the economic value of this deal based business practice far better than I could.

Indeed, that is a key point; the right people should have been allowed to argue for and against such a large deal with long term implications before it was struck.

I question the need to argue after the deal has already been struck.

I don't think the 'short time limit' is an appropriate excuse either.

PNG had a right to know about it before hand, i.e. before making this bold decision. We were ignorant.

This fact cannot and must not be ignored. It goes against a principle of good government and is simply not good enough.

I would be willing to give the government 'a fair go', if they were willing to follow the very rules and regulations of governing for which they are the caretakers.

I suppose Parliament may have debated the issue if they had more sitting days (who fixed that?) or if we had a real Opposition (who fixed that?).

But those issues are water under the broken bridge, until the next crisis looms.

LFR,

Value-based judgement and decision making is not for evaluating history.

It's for decision making as is and current basis. So not definitely something that should be consigned to academia.

Alone and Dom - The concept of 'value based judgement' belongs to the academics, as I see it. Those politicians in Waigani do not have a moment to talk about 'value based judgement' in their deals.

Because of 'value based judgement' at Panguna, Bougainville lost thousands of innocent people; because of 'value based judgement', dozens of mines in PNG have not produced progress for the poor and the state is falling apart before our very eyes.

I believe in what the majority sees as wrong whether they are the village men without proper education or with a bit of education; when all say it is wrong, then it is wrong.

Michael, good cut there. Appreciated.

I am sure you'd do a better proposition in so far as economics and the value proposition of a piggery is concerned.

I grant you that your accountant will throw in a caveat that may make you think a little more on any business idea in that industry too.

On the macro level, in so far as the country is concerned, the "positive "credit risk" is a big deal. It tells a lot of stories.

Big industry players and big countries pay attention to factors like this.

When you glance through the performance of Oil Search share price over the last ten years, you will see for yourself that positive trend there. Factor in the potential that they hold, not only in PNG but in other economies as well and assess it for yourself.

Futures Contract is a proven method of covering financial risks. It's nothing new that PNG just dreamed up.In fact, customers are secured using this sales contract method.

For your information, the PNG LNG Projects secured customers from China and Japan using this approach.

If one would dare to do a quick "solvency test" for our national economy, I can grant you that, it will come out positive -and by big numbers.

So it is very important that, PNG takes some bold decisions to make big decisions on areas where we can derive maximum benefit from in the long run. That K3 billion loan is manageable. It's not really a big loan. We're capable of getting even more bigger loans for infrastructure development to accelerate our development phase.

The "country's ability to execute" in service delivery should not be confused in this discussion. That's a separate matter.

It's one thing to read research papers and commentaries from institutions like our National Research Institute, and yet another to read commentaries from real industry players like the big banks, the ANZ Bank, ADB and others.

Mind you, I also have a good number of years of experience in reading and analyzing real balance sheets and financial statements from my industry and that of others too. So, my commentary is not merely a blind statement in support of politician's decisions. It's based on careful reading of key economic data, financial statements and major industry trends. It would be a professional insult on myself to be blindly supporting every single big decisions. I pick my fights wisely.

I also know from experience of planting new pandanus nut trees whilst harvesting from others in their "prime production years".

The oft-repeated mantra of castigating politicians' decisions just because they have made some bad decisions in the past without assessing the key underlying facts that they are basing on now to make critical decisions is sadly wrong.

In PNG I notice that when you get in an argument about politicians' and the government's illogical, inappropriate and illegal behaviour, people love to defend their politicians.

That's fair, and people have that right. The right to be wrong methinks.

But someone has to explain to me why this is so, because I can't understand why if we were all ignorant of the government's decision, we feel that it's all right to guess at their agenda.

Guess at their agenda for our future? What is this futures trading?

It seems to me that the politicians don't give a rat's arse about the same people who defend them, unless they are related or in business/cahoots together.

This we may call 'Melanesian democracy': It appears to work because the right noises are echoed through government statements, e.g., Vision 2050, MTDS etc, but it is non-functional, because no-one really wanted to follow through with the plan anyway, e.g. NADP, SABL's etc.

They decide to do something else and we don't know what they decide until it's too late.

Knowing what our government decisions are is part of what is called transparency.

Transparency is noticeably absent in Melanesian democracy. Instead we go by faith in our politicians value-based judgements, economic and otherwise.

I just wonder about those values.

But I'm just an assistant pig keeper and I've found better value in pig manure.

Value based judgements are OK. But surely all major financial decisions for a country, like billion dollar loans, should not be based on the value based judgements of a few but by all the parliament.

When a government, or the leaders of a parliament, try to take on the role of a businessman, such as an entrepreneur, they will run into trouble. Entrepreneurs often have to take big gambles with their money. Governments should not be gambling with the people's taxation money.

Value based judgement is a key term here.

A lot factors/variables are considered in this kind of judgement in decision making process.

Some of these variables are taught in economic schools - and many that real industry players pick and learn with a good mix of guts and make bold decisions are not obvious to the casual observer

With the amount of explaining and arguing about this loan, even a six year old could tell that there was something naughty about the deal.

Shame on you PM! And your friends in government too, still trying to stick up for you.

You should all get a smacked on your naughty little bumbums.

I've noticed that lots of highlanders seem to approve of what the Prime Minister has done but many Sepiks do not approve.
________________

UBS loan: the biggest and most expensive lie to the people of PNG yet by the O’Neill Dion government

By Vincent Moses (with kind assistance from Baptist Kafafi)

The following is a transcript of the Forum held at UPNG on Friday 28 March 2014. The O’Neill Dion Government sent their key ministers, MPs and bureaucrats to inform UPNG students and the general public about the government’s latest transaction, the K3 billion loan from the United Bank of Switzerland (UBS).

Ben Micah, Minister for State Enterprise, James Marape Minister for Finance, Don Polye, former Treasurer, Labi Amaiu, MP Pom North East, James Gau, MP Raicoast, Dairi Vele, Acting Secretary Treasury, Ken Ngangan, Acting Secretary Finance and Isaac Lupari Chief of Staff to PM.
As many commentators have already commented widely on the IPIC financing arrangement and the UBS loan, this will just be a summary of the main points at the UPNG forum.

BEN MICAH – Minister for Public Enterprise and State Investments

1. 2002 State owned company Orogen Minerals was merged with Oil Search Limited (OSL) by the Morauta Govt. The value of Orogen was estimated at A$600 million and this translated to about 15% shares in OSL.

2. May 2008 PNG Government made a decision under the Oil & Gas Act that PNG will have automatic share of 22.5% in Oil & Gas projects which it will have to find money to fund.

3. 2009 - Arthur Somare, then State Enterprise Minister went and borrowed $A 1.6billion (K4billion) to finance the State’s share of 22.5% in the PNGLNG project from the Abu Dhabi based IPIC, through an exchangeable bond arrangement. This was done through the mortgaging of the State’s shares in OSL, including all of the shareholding through the General Business Trust in IPBC (our State Owned Enterprises such as PNG Power, Telikom PNG, Water PNG, ANG and shares in BSP etc.).

4. 2013 – State begins the process of buying back the exchangeable bond from IPIC. As it didn’t have the money to do so, it had to borrow yet again to buy back its shares in OSL which were held by IPIC. The State advertised for Banks and Financial Institutions both domestic and foreign to express their interest in loaning money to PNG. A shortlist of four bidders (Citibank, UBS, ANZ Barclays Consortium and Helmsley Capital). Eventually, it was decided that UBS’s offer was the best and so the State entered into a loan agreement with UBS for a loan of A$1.6billion (K3billion) to buy back its OSL shares held by IPIC.

5. 2014 – PM wrote to Sheikh Mansour Chairman of IPIC 3 weeks before maturity of the exchangeable bonds. 6 March was the date of maturity of the exchangeable bond. State delegation travels to Abu Dhabi (UAE) before that date with an A$1.6billion cheque to buy back the shares, but IPIC exercises its option to keep the shares and refuses to sell. PNG thus loses its OSL shares to IPIC.

6. Re-financing arrangements did not work out so decision to invest in OSL took place between Peter O’Neill and two of his close Ministers Ben Micah and James Marape. Don Polye admitted he did not know about the plan until much later.

7. After state loses its shares, IPIC took over and now owned 14.64%. Other major shareholders in OSL are:

Shareholder Units %

1 HSBC Custody Nominees (Australia) Limited 295,098,604 21.97

2 JP Morgan Nominees Australia Limited 232,556,848 17.31

3 Independent Public Business Corporation 196,604,177 14.64

4 National Nominees Limited 148,214,706 11.03

5 Citicorp Nominees Pty Limited 77,147,525 5.74

8. IPBC was the 3rd largest shareholder in OSL with 14.6%. Now that IPIC has kept the shares, it automatically becomes the 3rd largest shareholder. Whether the fear of a corporate takeover is justified from the above shareholding we cannot tell but it seems an unlikely and unjustified fear. Is it an acceptable justification for the state to purchase 10.1% additional shareholding in OSL?

BEN MICAH

“Mi papa blong UBS loan, ino Peter O’Neill, ino James Marape, ino Don Polye, I was the Minister tasked to raise money to buy back OSL shares from IPIC.

JAMES MARAPE – Minister for Finance

1. We may all see things from different angles and perspectives but we must find common ground and common ground is the interest of our people. We have borrowed up to about 11 Billion Kina since Independence.

2. All past Govts of past PMs have borrowed money. PNG is among a few countries in the world that have never failed to meet our annual debt obligations and we have NEVER defaulted on our debt obligations.

3. IPIC loan was done in secret with only a few in Treasury and IPBC knowing about it. The report has never been tabled in Parliament.

4. 2008/9 was a period of Global Financial Crisis and PNG was having difficulty securing funding for equity in PNG LNG

5. Country has been borrowing since independence – we borrow because we do not have enough to fund govt priorities.

6. PNG is now looking at passing laws to own and not pay for our participation in Mining & Petroleum projects. Mining projects (25+5%) 30% and Petroleum/gas (20.5%+2%=22.5%)

7. Commend Arthur Somare because it was a risky gamble but it paid off.

8. All documents will be tabled in May Parlt sitting. We never saw other loan documents of past govts being table in Parlt.

9. Come back to me in 2017 and tell me if OSL shares have not appreciated from $8.20 and trading well and then you can judge O’Neil and Marape.

DON POLYE – Kandep MP (Former Treasurer)

1. I will tell you the many things that were wrong in this loan and the very few things that are right.

2. We all go to the same church but they have not told you the truth because they don’t know the truth. Only few people know the truth about UBS loan and these are; Secretary Vele, UBS, OSL and Prime Minister O’Neill (he is PM so will know).

3. What is special about Oil Search? OSL is just another investor like other investors in other industries. Every other pioneer long serving company is equally as important as OSL! What about other companies like NBPOL and others involved in our other industries like Agriculture, fisheries, forestry, tourism etc? If we see fit to invest in one company, why have we not invested in others?

4. Govts are not here to buy shares but to invest in deteriorating social services and infrastructure

5. IPIC Loan is provided for under Oil & Gas Act where state has to fund its 22.5%. UBS Loan is a speculative investment without any provision in our laws to justify it.

6. Let’s wait for Elk/Antelope and purchase our 22.5% as it is acting within the provisions of the Oil & Gas Act whereas UBS Loan is completely outside this provision and is a speculative investment in a private company.

7. Bad boys/naughty boys (like a little boy sent to the shop, the item he was sent to buy is not there so he used the money to buy something else)

8. PM O’Neill is claiming it is a “best deal” but we fail to hear anything to justify it as the best deal. Where are the due diligence and other reports to justify it as the best deal?

9. 2014 Appropriation Bill (Budget) set the debt (already a deficit at 2.3 billion). It is not prudent economic management but foolishness to borrow again outside of the Appropriation Bill and incur additional unplanned and unbudgeted debt.

10. We have to cut back/reduce the nation’s 2014 development budget within 6 months to pay for the interest on the UBS loan when it falls due.

11. Don Polye based on expert advice predicts OSL shares will not go beyond $9.90.

12. Bridge loan is $A335m – meaning this loan (totally unsecured) is bridged to the flow of LNG revenue and will be repaid from oil proceeds earned from LNG revenue. Our first earnings from LNG Revenue and will not go into SWF as originally designed but will be used to pay interest and eventually the principal, thus delaying the flow of funds to SWF.

13. Term of bridge loan is 6 months. Interest rate Start at 5.5% and increases by 1% every 3 months, at 3 months it’s 6.5%, 6 months it’s 7.5%, 9 months it’s 8.5%, 12 months 9.5%

14. Breach of constitution Section 209 of constitution. Marape’s claim of ratification of the loan “after the fact” of borrowing is still wrong and a breach of S209.

15. 7 Pillars of vision 2050 say nothing about Govt buying shares and going into business

16. Borrowing was based on State balance sheet and not on Petromin or NPCP Balance Sheets as claimed by PM O’Neill. PM has lied to the nation. Treasury is now working around the clock to re-finance the loan and transfer it from State Balance Sheet onto Petromin Balance Sheet. Currently, loan still sits on State balance sheet. Neither Petromin nor NPCP are in a position to guarantee such loans!

17. Borrowing was against/outside of Govt Policies of the O’Neill Dion Govt. and the National Development Plan and Medium Term Fiscal Strategy (MTFS)

18. Collar loan $904m (collateral – money up-front) is tied to the 10.1% shares (OSL shares do not belong to the state yet but still with UBS until all loans are repaid in full). If state does not pay the bridge and collar loan properly, UBS will sell the 10.1% shares and recoup its money. If share prices fall below the collateral value (A$8.20), state will have to pay the balance (shortfall).

19. Collar loan (secure around a particular (share) price - $8.20) will be repaid from budget appropriations, further reducing our development budget. Our recurrent budget cannot be touched but it is our development budget that will be affected by loans as debt servicing takes priority over development.

20. Only few people knew and decided, even Don Polye did not know. Even Board members of Petromin and NPCP did not know. Loan does not serve the interest of PNG but the business interests of a few. Decision was made and later imposed on boards and management of Petromin and NPCP.

21. Loan is illegal and is not commercially viable.

22. Term of loan is 2 years (24 months) if share price stays within the collar, it does not cost us anything, except the interest. Interest rate is 4.95%.

DAIRI VELE – Acting Secretary Treasury

1. We followed the rules according to State Solicitor as the Legal Advisor to Govt. I am not a lawyer and not a politician so I cannot comment on S209 but Ombudsman Commission is investigating.

2. The decision made was based on “value judgement” either we do or we don’t invest in OSL shares. 2 schools of thought should or should the Govt not involve in business. There is no right answer or wrong answer, no text book will say you invest or you don’t, it’s a value judgement which is made by cabinet.

3. Theoretically, Govt should not get involved in business but let free market decide. That is okay in developed economies but not PNG which is a developing country/economy. That is why Govt gets involved by purchasing 22.5% in Oil & Gas and 30% in Mining which it then shares with landowners (2.5% and 5% respectively).

4. Importance and significance of 10.1% is that State can prevent a Corporate Takeover.

5. Central Bank as chair of working committee on selection of financier selected UBS.

6. Collar loan – Secured at $8.20. If share price goes below this price, UBS pays us money and if it goes over this price, we pay UBS money. If share price stays within the collar during the term of the loan, we pay only the interest. Interest is 4.95%.

7. State team is halfway through re-financing the loan to take it off state balance sheet onto Petromin balance sheet.

8. PNG has a clean balance sheet with a manageable debt to GDP ratio, unlike many other countries.

9. We don’t have a SWF yet, it is about 9 to 12 months away.

From the above transcript, it appears that Prime Minister Peter O’Neill has told a number of lies to the people of PNG yet again. There are many lies and half-truths but we will just take three examples.

1. He lied that the loan was obtained on Petromin’s balance sheet when the truth is that the loan was obtained using the State’s balance sheet. The loan does affect our debt to GDP Ratio until it is re-financed successfully and taken off the state’s balance sheet onto Petromin’s balance sheet.

2. He also stated the loan was approved by Cabinet. That is not true because Don Polye as a Cabinet Minister then did not know about the secret deal to invest in OSL shares. That decision was made between Peter O’Neill, Ben Micah and James Marape.

3. Prime Minister has said OSL share purchase was the “best deal” for PNG. It is now clear this is purely a business decision taken to protect the “best” corporate interest of OSL and not for the best interest of the people of PNG. At the current Dividend Rate of K0.08 (8
toea) per share, PNG will be lucky to receive sufficient dividends from OSL “if” the Board of OSL decides to pay dividends at all in any year!

Question: Was this a genuine investment made with the best interest of the 7.8 million children, women and men of PNG at heart or was it a hasty opportunistic business deal done behind closed doors that enriched a few politicians, bureaucrats and consultants with tidy fees, commissions and kickbacks?

If the government has made calculations as apparent, it is reserving it's mandatory 22.5% shareholding in InterOil's Elk and Antelope gas fields to be acquired later and maximised its interest by acquiring the 10.01% shares as an additional stake indirectly through Oil Search when the opportunity presented.

If the government does acquire 22.5% stake in Elk and Antelope in future as expected, effectively the people of PNG through the government will hold 32.51% shares and that should answer the question why the government did not directly buy InterOil shares and instead indirectly through Oil Search.

Like any investments there are risks involved. But maybe we can take heart in the fact that Oil Search currently is the flagship company in the Oil and Gas extraction industry in PNG.And maybe there is promise of good returns on this investment (the shares).

Whether relevant laws have been broken and protocols not followed, we should know soon enough.

However, on the flipside I cannot be overly optimistic on the benefits that will accrue to the majority of the people. Past experiences tell me that even with big windfalls from Oil, Gas and other extractive industries we have always come short of ensuring that the benefits are equitably and fairly distributed. That has been for a long time.

We have to keep working at it! (So maybe early days to even talk about benefits)

Debt is not necessarily a bad thing. Given the timing and the potential that Oil Search has and upon learning that the government's shares are unrecoverable as per the contractual terms agreed to in the IPIC loan deal, the government stands to be commended for what they did with the UBS Bank loan of K3 billion. It is manageable.

Allow me to echoe the sentiments raised by those who have expressed differing views to Francis' article.

My main concern, after reading other articles, is whether O'Neil's unilateral decision to purchase the Oil Search shares by securing the UBS loan is uncostitutional. If so, then his actions are tantamount to dictatorial behaviour and he should deservedly feel the wrath of the Ombudsman's powers.

Furthermore, much has been written about the merits of his decision to purchase the Oil Search shares.

However, the sad fact is that O'Neil has committed PNG to service the loan from future revenue to be earned from the LNG project, effectively making the much hyped Sovereign Wealth Fund redundant (at least for the period that PNG has to repay the loan).

It also is a mystery whether O'Neil and his cronies in the NEC even considered the economics of whether it was more viable to purchase lesser shares in Oil Search but buy the designated/mandatory 22.5% stake which will be offered to the Govt in the InterOil Project.

Regardless of the answers to these questions, I can't help but feel that O'Neil has sold this country and the the only real winners are UBS, Oil Search and Pac LNG.

I think the problem lies in the fact that the PNG parliament lacks a strong Opposition. The discussion and debate on this topic that has been going on at DWU and on this blog and no doubt, in many other places of learning in PNG, should have taken place in the PNG Parliament House before any money was used to gamble with government income and borrowings. O'Neill sounds as though he is very proud of his ability to know what is right for his country.

Pride comes before the Fall. I hope O'Neill's pride does not bring the downfall of all PNG.

Francis - I think you are contradicting yourself. Your other article described Peter O'Neill as a despot and now your are supporting the UBS loan he took. What are you really saying?

Are you implying that Peter O'Neill is bad for the country but the UBS loan will benefit PNG?

Thank you Murphy for the historical information from Kramer. Simply put, in the IPIC deal, the PNG government used the $1.7 billion proceeds and invested them in PNG LNG and the investment is now worth $5 billion - a triple gain. Isn't that a good investment?

Wait until May session of Parliament and we will know the full terms and conditions of the current deal. The interesting question is why the government did not buy the shares in Elk and Antelope directly from InterOil and instead through Oil Search.

More on the upside, the possibility of the PNG government selling its interest in Oil Search in future at higher share price and make a gain should not be discounted.

There are three key aspects to this deal:

1. The legality (or otherwise) of methods through which this deal was secured.

2. The actual terms of the Loan agreement between PNG & UBS.

3. The terms defining how we access and realise benefits (if any) from the purchased shares.

I think the discussion could have been better rounded if all three aspects could have been addressed to an acceptable degree. Otherwise, using a superficial glance to advocate a position in support of the deal is akin to religious faith.

Bryan Kramer makes an interesting discussion of point number 3 on the Masalai Blog here http://masalai.wordpress.com/2014/03/31/brian-kramer-gives-a-comparison-of-the-ipic-loan-vs-ubs-loan/

It would be helpful if some verifiable critique was provided of Kramer's assertions.

Bernard and Francis, I differ with you both on principle. I am not an accountant or an economist qualified to talk about the stock exchange.

But just this – no amount of an accountant’s risk or an economist’s cost-benefit analysis can justify for me the commitment of the people’s money (particularly borrowed money) on the stock exchange.

As an individual accountant, economist or CEO of his own private company, O’Neill can do the cost-benefit analysis, borrow and make the commitment of his own private resources however he sees fit. Perhaps sack a few people along the way if they stand in the way.

He can make the debt-financing and mortgaging decisions for his private company however he fancies in the secrecy and privacy of his board room. PNG is not a private company!

No matter how noble your greater ownership ideals are, or how much you tell me that Exxon and Oil search are winning horses, committing the peoples’ money and future on a speculative endeavour, is simply wrong. Subjecting our future generations to loan obligations in the manner it was done is simply wrong.

Bernard - I'm surprised that you should think that the Prime Minister alone had the right to make such a far reaching decision on behalf of not 7.2 million people, but their children's children.

Again we are accepting the convenience of unconstitutional expedience.

It is far better to err on the side of caution.

Does PNG really need to go down this path?

That is a fundamental task of government.

Such decisions must be made with discussion, debate and consensus in the house whose doorway that once bore the carved heads of all Papua New Guineans.

How clearly can you see the symbolism now?

This is what it means in reality:

Papua New Guineans, know now that we have been divested of our right to decide our future and that of our children.

Our future has been gambled by one man.

But this is nothing new.

Francis, we have been debating this issue hotly on our staff broadcast here at DWU.

I give the benefit of doubt to the government and share your views.

Regardless of what others have said the PM was in a position where he had to make a decision and he did. I am pretty sure as an accountant he did his risk analysis and cost-benefit analysis before making this huge decision which will affect the lives all Papua New Guineans.

Thank you for sharing your knowledge, if we stage a verbal debate, I will no doubt quote you in support of the UBS loan.

Francis - thank you for your reasoned opinion.

However, I find your opinion truly disturbing.

I won't pretend to fully understand the economics but I sincerely doubt that the rural poor will benefit from this deal.

Experts at the NRI, INA and the Ombudsman have spoken against this deal and I trust their expertise.

If history offers anything to learn from, we should heed their advice.

They are responsible organisations with the professional ability to assess and advise.

I don't believe the problem with economic development in PNG is simply to do with ownership of mining companies. I believe the problem is what the goverent does with the earnings.

On a more important note, this decision was made in secrecy, hidden from the public view by one man.

For this reason alone we should utterly reject it, or admit that this democracy no longer exists.

It is too far fetched for me to believe that yet another deal which gambles away portions of the future earnings from the countries resources is an option worth pursuing.

Thank you Francis for your views on the recent huge borrowings of the PNG government. I'm glad you have faith in the final outcome of this undertaking.

I've heard that the world's demand for oil and gas is thought to be secure but I still feel that, for a young country like PNG, to be relying on this, is a worry. There could be some big surprises in store for all of us. China is a "big worry" in my mind and Australia will also suffer if China's economy crashes, as some suspect may happen in the near future.

I was brought up to try to live within my income, hence I have not been a gambler and I am not wealthy in the eyes of many. During my lifetime I have watched as many have invested heavily in certain industries which have failed and they have lost everything and their lives have been ruined.

I would like to see more appropriate investment in PNG at the village level. I would like to see more use of your resources for the use of the people of PNG, rather than just being exported.

So much government money seems to have been wasted. So many people seem to be disillusioned by the way the government is running the company. The professors of medicine are worried at the NDOH's handling of money and the lowering of health standards thoughout the country, as you well know. The universities are worried at the dropping of standards in the high schools and their intake students are "way behind" in so many ways.

It is good to know that the Prime Minister is a UPNG accountancy graduate and he feels capable of handling these billion dollar loans to make the country rich. But to me, he sounds a bit like these people I know down here who go into the investment world and lose all their family's savings and end up penniless.

I hope you are right and I am wrong.

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