22 Sep 2017

PNG government sells stake in Oil Search

7:51 pm on 22 September 2017

The cash-strapped Papua New Guinea government has sold its stake in the prospecting company Oil Search.

Papua New Guinea prime minister Peter O'Neill.

Papua New Guinea prime minister Peter O'Neill. Photo: PNG Blogs

The Australian reports the government ordered the sale of 31.3 million shares amounting to a 2.1 per cent holding in the company for $US162 million.

In 2014, the government controversially borrowed nearly $US1 billion from UBS bank to buy a 9.8 per cent stake in the firm which holds the rights to PNG's largest undeveloped gas fields.

Reuters reports that after refinancing UBS and JP Morgan held 149 millions shares for the government as security but gradually sold them down to hedge the debt as the share price fell.

Had PNG paid back the loan the banks would have bought back the shares but instead they sold the remaining stake to extinguish the government's debt.

The decision by Peter O'Neill's government to take out the loan led to the sacking of then-finance minister Don Polye, who refused to approve it.

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