In recent weeks, factually misleading statements and assertions have been made by a particular NGO Activist regarding Ownership, Responsibilities and Transparent operations of Petromin PNG Holdings Limited.
Petromin would like to take this opportunity to clarify any misconception and confusion that this publicity has created amongst our stakeholders and the general public.
Ownership and Legal Structure
Petromin is a company incorporated under the Papua New Guinea Companies Act 1997 (Companies Act) and is 100% owned by the People of Papua New Guinea, as the Beneficial Shareholders.
The People are represented by both the Prime Minister of the day as Trustee Shareholder and the Minister of Treasury of the day as Beneficiary Shareholder. The Trustee Shareholder and the Beneficiary Shareholder do not have any direct or indirect control over the management and affairs of the Company. As with any other Company, powers of the Trustee Shareholder are restricted to the Shareholder powers set out in the Companies Act and the Petromin Constitution.
Furthermore, the Trustee Shareholder is assisted in the exercise of his shareholder powers by three Independent Trust Managers compromising the State Solicitor of PNG, the President of the PNG Law Society and the President of the Certified Practising Accountants (PNG) under the Petromin Trust Deed. The individuals who form the Trust Managers are independently appointed by the respective professional bodies based on the positions they hold.
The Petromin Trust Deed guides the roles and responsibilities of the Trustee Shareholder and Trust Managers of Petromin. It ensures that shareholding in Petromin is always managed in the best interests of the People of PNG. The three independent Trust Managers make independent resolutions in vetting the Board’s investment and management decisions.
The role of the Prime Minister of the day as Trustee Shareholder is not a new corporate structure and has been used in other companies such as Mineral Resources Development Company Limited (MRDC).
The Petromin concept was based on the successful experience of other countries where state-owned companies were created for the benefit of their people such as Petronas in
Malaysia. Some of these companies contribute immensely to the national income of their respective countries.
Does Petromin Generate Revenue for the People of Papua New Guinea?
Since Petromin’s incorporation in March 2007, the company declared K7 million in Dividends for its first two years of operation. Under the Petromin Trust Deed, all Dividends must be paid to the Department of Treasury on behalf of the People of PNG. Petromin has complied by paying all Dividends into the National Government’s revenue account, managed by the Department of Treasury. The Department of Treasury, through normal budget processes, decides how Dividends from Petromin are to be used for the benefit of the People of Papua New Guinea through the Annual Budget process.
Does Petromin Pay Taxes?
There have been allegations that Petromin is not liable for “Taxes, Duties or others”. This is not correct. Petromin is required to pay taxes. As a responsible Corporate Citizen, Petromin and its employees pay their taxes at the normal rates on time. Petromin enjoys no special privileges from the State. Petromin has already paid over K67 million in 2007 and K71 million in 2008 to the State in taxes, bringing the total to K138m. And Petromin will continue to pay its taxes. This is all a matter of public record and details can be independently ascertained from the relevant authorities.
Is Petromin treated differently in the industry?
Petromin is not treated differently from the rest of the companies in the mining and petroleum industry. It was established to hold, manage and maximise benefits to the People flowing from the State’s interests in mining and petroleum projects. To establish Petromin the State’s mining and petroleum assets had to be separated from landowner interests and other non-mining and petroleum interests.
Any provision in the Petromin PNG Holdings Limited Authorization Act 2007 (the Petromin Act) for assets to be transferred to Petromin are consistent with the purpose and intent of creating Petromin; that is to separate landowner interests held by MRDC from those of the State. This was done at the creation of Petromin in 2007 where the State’s interest in Eda Oil Limited was acquired for a consideration by Petromin from MRDC. Other non-mining and petroleum interests held by the Independent Public Business Corporation (IPBC) were not affected. With respect to shares held by IPBC in Oil Search, the State has already decided to use these shares to acquire its equity in the PNG LNG Project. Therefore these were not acquired by Petromin.
Petromin does not garner any special treatment from State regulators or within the industry. Any commercial investment is made purely on the basis of Petromin’s balance sheet, after required due diligence has been carried out and on commercial terms. The Petromin Act and Petromin Trust Deed ensure that investment decisions are made strictly in compliance with governing laws and investment principles.
Purchase of Tolukuma Gold Mines
The purchase price for the Tolukuma Gold Mine is also a matter of public record, which can be confirmed through a company search of Tolukuma Gold Mines Limited at the Investment Promotion Authority. Since acquiring the Mine, Petromin has (together with the 600+ employees at Tolukuma and with the moral support of the Goilala people) stabilized cost and increased production.
In its short history as operator of the mine, Petromin has turned the Mine around through increased efficiency from a Company heavily in debt into a going concern within the past eighteen months. It was purchased at an opportune time and no public funds were used to purchase the Mine. Tolukuma is worth a lot more today then when it was purchased.
Further, the Mine was bought from a publicly listed Australian company and that company has also reported the acquisition price to the Australian Stock Exchange.
Does Petromin practice Transparency?
For us to participate and drive the Company in the interest of our shareholders, we strive to provide timely, meaningful, reliable disclosures about our financial operations, including performance to the People of Papua New Guinea and other stakeholders.
Although Petromin is outside of the Government’s normal systems of checks and balances (accounting and audit), we are subject to the Companies Act, which has higher accounting, audit, and reporting requirements as well as a stricker penalty regime. The company has therefore developed very high transparency and governance standards, statutory and otherwise.
Details of financial and business performance are presented to the public, through the Trustee Shareholder, each year during the Annual General Meeting. The AGM is witnessed by various stakeholder representatives, including the State, regulators, NGO’s, tertiary institutions and the General Public. Our financial records are audited by an international accounting firm each year and are registered as a matter of public record at the Investment Promotion Authority. Annual audit is a requirement of the Petromin Constitution and the Companies Act and to date, Petromin is fully compliant.
You can find scanned copies of our audited financial statements available on our website (www.petrominpng.com.pg ) together with information on our shareholding structure. Our shareholding structure can be independently confirmed by undertaking a company search of the public records at the IPA.
Also you can visit our website www.petrominpng.com.pg to learn more about the company. You can also download our Financial Report from the website.
Protecting our Commercial Interests
Petromin is a company and any misleading statements can undermine our business activities and bring injury to our standing or commercial interests. Furthermore, circulation of any misleading statements by any medium, whether by the author or otherwise, may give the Company an action in damages. We therefore urge all our stakeholders including the general public not to be easily misled but instead conduct independent searches on our website and at the Investment Promotion Authority, instead of purposely inflicting injury to our reputation and commercial interests.
WE THEREFORE ADVISE THAT THE PLANNED RALLY ON 5TH NOVEMBER, 2009 IS BASED ON DECEPTIVE AND MALICIOUS INFORMATION AND SHOULD NOT BE PERMITTED TO TAKE PLACE.
Joshua R. Kalinoe, CSM, CBE
Managing Director & CEO
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