29 Nov 2013

Work on hotel in Port Moresby at standstill

5:38 pm on 29 November 2013

Work on a planned five-star hotel and casino in Port Moresby has come to a standstill with the Korean developers said to be out of money.

The hotel development has been controversial for the start with the lease on the land in the centre of the centre of the Papua New Guinea capital acquired through the then-Sir Michael Somare government. They gave the company land ear marked for the Works Department.

As our reporter Todagia Kelola, says, the then opposition leader, current prime minister, Peter O'Neill, described the Korean company involved as a road building firm that had failed to complete contracts in the Southern Highlands.

TODAGIA KELOLA: Despite all that, NEC approved the state lease, and they also approved a licence for the company to operate a hotel in the country.

DON WISEMAN: They also changed gambling laws, didn't they, to accommodate the casino planned?

TK: Just because of that proposed casino the tendency to amend some regulations to allow for casinos in the country. At that time, in 2006, there was only pokies, but a casino was a different matter. It was just allowed for that Korean company.

DW: Now, this company clearly hasn't achieved very much, because it's got just, what, the shell of a hotel in downtown Port Moresby?

TK: It's not a good sight to see.

DW:How much of the building is done?

TK: Well, the structure is already in place. I would say 60% of construction work on the building has been completed.

DW: Why has it stopped?

TK: They've stated that they've run out of money to continue and they're looking for other financiers to come in to help them complete the hotel.

DW: They've already received or had huge investments from land owning groups in the southern highlands - beneficiaries of the LNG project - and they've put millions of kina into this. I guess, the way it's looking, that money might all be lost.

TK: That's the scenario now. I'm pretty certain that those landowners are really angry. I don't know what's going to happen with the investment now.

DW: What is the situation with the hotel? They've been given a certain number of days in which they're going to make progress or what?

TK: The building board, which is the authority in charge of all the buildings in Port Moresby, they've sent an investigation team into the incomplete building. And when did the inspection they recommended to the board that the structure is very dangerous and that parts of the building structure have already... It's not safe for people to move in and it's likely to cause damage if people try to move into that building.

DW: What are the chances of the company finding enough money to carry on?

TK: It's going to be a really, really big ask. Because I'm pretty certain that Korean company executives who were in the country are in hiding because of the landowners who have invested. And they're still waiting for some form of feedback from them.

DW: The landowners are searching for them?

TK: They're basically looking for them, yes. They're also looking for answers as to what's going to happen to their investment now that work has completely come to a halt.