PORT MORESBY - On 21 September 2017, Kumul Petroleum Holding Limited, a state owned company, sold 149 million Oil Search shares it held on behalf of the eight million people of Papua New Guinea.
The shares were purchased in March 2014 by the O'Neill government for K3 billion by securing a loan from the Union Bank of Switzerland’s Australian branch.
Last year, with PNG unable to service the loan, O'Neill was forced to sell the shares at a significant loss, using the proceeds from the sale to repay the balance owed.
On 24 September The National newspaper published a misleading report suggesting the government had made a gain from the transaction.
"The government has sold its shares in Oil Search Limited, making around K100 million from the transaction," the report stated.
It went on to quote Kumul Holdings chairman Moi Avei saying that the company made K87.33 million as a result of the sale.
“So we’ve waited for the right moment when the share was trading at the right price and we’ve made the decision to divest the shares with Oil Search in this transaction,” Sir Moi claimed.
He added that this did not mean cutting off all ties with Oil Search.
It will go down in history as one of the dumbest investments in PNG's history.
This deal was never about the people of PNG's interest, it was about the interest of those who put the deal together and those that benefited from it.
Who were they? Oil Search. UBS Bank. Morgan Stanley Bank, Lawyers Norton Rose Fullbright who represented PNG and Ashurst who represented UBS. Pacific LNG Group purchased by Oil Search for K2.25 billion. Oil Search institutional shareholders who acquired the 149 million shares following the sale.
The biggest loser was the eight million people of PNG represented by an incompetent and reckless prime minister who used his office to ensure the deal was done.