MINISTERS SPEECH

BY THE MINISTER FOR PETROLEUM & ENERGY

1. Mr. Speaker and Honourable Members of Parliament, I, as the Minister for Petroleum and Energy, by virtue of the powers conferred upon me pursuant to Section 136 (1) of the National Energy Authority Act 2021 (NEA Act) and Section 4 of the Essential Services Act 2002 (ES Act), and all other powers enabling me, and by National Executive Council Decision No. 215/2023 announced on behalf of the National Government a ‘Declaration of Emergency’ on Monday 31 July 2023.

2. Mr. Speaker, this Declaration of Emergency is made as a direct result of the current disruption in the supply and distribution of fuel and petroleum products in PNG and the on-going foreign exchange issues between the Puma Companies and Bank of PNG.

3. Mr. Speaker the decision to issue the Declaration of Emergency has been the subject of extensive considerations and decision of the National Security Advisory Committee, National Security Council and further ratified by an ‘exemplary’ meeting by NEC on 21st July 2023. The discussions raised grave concerns on the risks to national security associated with the rationing and restriction of fuel supply by PUMA Energy as per its letter dated 17th July 2023 and Press Statement dated 20th July 2023.

4. Mr. Speaker the Puma Energy indicated in their letter that it used the Force Majeure Clause under the Project Agreement between the State and Puma Energy to scale down, restrict or discontinue its production and supply of fuel or petroleum products. The reasons for PUMA Energy’s decision to ration or restrict fuel supply under Force Majeure is because of a shortage or lack of foreign exchange to purchase petroleum products and hence continue to produce or supply fuel. On the other hand the BPNG being the authorized supplier of foreign currency in PNG under the Central Banking Act 2000, has through its Board, refused to authorize the issuance of foreign exchange to Puma Energy.

5. Mr. Speaker there are obviously pending outstanding issues between PUMA Energy and the BPNG, but the immediate concern is the negative effect of the fuel rationing and restrictions on the people, their livelihoods, delivery of essential and basic services and businesses. The issue was considered of national interest and as well as required to be escalated as a matter of national security and if not dealt with may result in the following possible consequences:
a) the rationing or restriction on fuel supply by PUMA is most likely to disrupt and affect significantly the people and their livelihoods, essential and basic services and businesses. The risks include disruption to health care facilities, education and policing duties. It can entail or result in a significant negative effect to the economy, and bring about an escalation in law-and-order issues; and
b) It may result in legal liabilities against the government and private organizations, and place the economy in a state that can prove only challenging when it comes to restitution and or recovery.

6. Mr. Speaker, the Declaration of Emergency intends to deal with the outstanding issues and achieve two objectives, the first being an interim measure to maintain fuel and petroleum products supply in PNG and the second being the long-term objective to ensure that the county’s energy demand, including fuel and petroleum product, is permanently stabilised and is made readily available for the country.

7. Mr. Speaker, the 30-Days Declaration of Emergency sets out a Plan of Action to investigate, amongst other issues, the Bank of PNG’s 13 Allegations against Puma Companies.

The following Departments and Statutory Bodies’ Administrative Heads will constitute the Independent Body in the Roundtable Talks to review the 13 Allegations; Chief Secretary to Government, Managing Director of National Energy Authority, Secretary for NEC, CEO of Kumul Consolidated Holdings Limited, Secretary for Department of Petroleum, Director of Financial Assessment & Supervisor Unit (Independent body housed under BPNG), State Solicitor, Secretary for Justice & Attorney General, Commissioner General of Internal Revenue Commission, Secretary for Treasury, Chief Commissioner of PNG Customs, CEO for PNG Power Limited, Managing Director of Mineral Resources Development Company, Managing Director of Kumul Petroleum Holdings Limited and A/CEO for Air Niugini.

8. Mr. Speaker, the Government is aware of the Westpac and ANZ Banks closure of the Puma Companies operating accounts. Bank South Pacific’s (BSP) has issued a notice of intention to close all the Puma Companies operating bank accounts upon expiry of 90 days from the date of notice which if effected would be the 8th of September 2023. This action taken by the BSP is occurring independently of the Government and Bank of PNG’s influence and is purely a global banking and finance response.

9. Mr. Speaker, in response to the action taken by BSP, as Minister responsible I have instructed the Bank of PNG to provide the Authorised Foreign Exchange Dealers including BSP bank for access by all consumers including the Puma Companies’ bank accounts to be maintained and a continuous access to the supply of foreign exchange within the period of the declaration of emergency to enable unhindered production and supply of fuel and other petroleum products until the completion of the investigation.

10. Mr. Speaker, going forward the penalties stipulated of the Essential Services Act against any individuals and corporate persons fail or refuse to comply with directions issued under the emergency declaration. Take note, the Government through the Minister responsible will not hesitate to enforce those penalties.

11. Mr. Speaker, it is crucial and of national interest that the mentioned Heads of Statutory Organisations and SOEs attend and provide the relevant information and advice during the 30-Days Roundtable Talks to address this declaration of emergency.

12. Mr. Speaker and Honourable Members, I will offer my undivided support to the Minister for Treasury who is the Chair of the Independent Body and personally present the report back to Parliament the finds and resolutions of 30-Days Roundtable Talks.

13. Mr. Speaker, we that, on behalf of the National Government, and as Minister of Petroleum & Energy, I want to reassure all government institutions, business communities, investors, the general public and this honourable house that the Government is prioritising to resolve this energy supply crisis and ensure that normalcy is returned.

Thank you and May Our Good Lord have Mercy on us all.

HON. KERENGA KUA, MP
MINISTER FOR PETROLEUM & ENERGY