The Minister for State Enterprises, Hon. William Duma, MP today presented a Kumul Consolidated Holdings (KCH) dividend of K80 million to the State, represented by Prime Minister, Hon. James Marape, MP and Treasurer, Hon. Ian Ling-Stuckey, MP.

“KCH is mandated to pay annual dividends from the profit earned by assets and investments held in the General Business Trust (GBT),” said Minister Duma.

Minister Duma said. “This is the first dividend from KCH since 2015, which makes today a momentous occasion. From 2019 onwards, dividends were deferred to enable KCH to support SOEs heavily affected by Covid-19 restrictions and more recently, the inflationary pressures from the impact of the war in Ukraine”.

“KCH maintains oversight of the GBT. It must ensure that the state-owned assets are properly monetized, SOE business performance is tracked, proposed targets are achieved, and projects executed. SOEs are grappling with stretched balance sheets, rising interest rates and substantial supply chain issues. These are a consequence of the global pandemic, spiraling inflation and the war in Ukraine”, said Minister Duma.

“KCH has provided more than K300 million in financial assistance packages to Air Niugini, PNG Power, Telikom and the other SOEs,” said the Minister.

“The SOEs that had comprehensively committed to the restructure and reform program endorsed by the Marape Government in October 2019, were now showing profits and paying dividends,” declared the Minister.

He commended the Board of Directors of KCH led by Chairman, Moses Maladina, the KCH Managing Director, David Kavanamur, and the KCH staff, for their tireless work and commitment to SOE reform.

The Minister indicated that PNG Ports Corporation Ltd has maintained strong operating performance, driving profitability – this has led to a Kl .4billion investment in nationwide port redevelopment. While Air Niugini is recovering from unprecedented global pandemic restrictions, it faces volatile fuel costs, aviation supply chain issues and increased cost of capital. The aviation industry will take at least another year to fully adjust to a post pandemic environment. That said high yields and reasonable passenger numbers are driving strong profits. The communication companies and MVIL have also paid dividends.

Minister Duma noted that 7 percent of the KCH dividend will be deposited directly into the Sovereign Wealth Fund (SWF), with the balance to Treasury for general budgetary expenditure. He also said this would be the first deposit into the SWF, with more to follow as the Marape Government consolidated the performance of the SOEs.

The Minister acknowledged that some of the SOEs still have a substantial journey to undertake before they return to their full-service competency, accessibility, and reliability. There are many challenges brought about by the pandemic and the increased cost of doing business, and the impact on operations is substantial. These elements are being addressed to improve services but will continue to affect dividend expectations for the foreseeable future.

Minister Duma acknowledged that PNG Power Ltd has had difficulties in ensuring that there was consistent reliable power supply for the Port Moresby, Ramu, Gazelle and provincial Grids due to the absence of effective and competent management of internal and external environmental challenges over the years.

“This is about to change as both PPL and the shareholder KCH, under my leadership, are taking drastic steps to reconfigure the business through rigorous cost management and towards more involvement of the private sector in power generation, operations and maintenance, transmission and distribution, and billing”, stated Minister Duma.

“Apart from supporting SOEs undergoing unique financial and operating stress, KCH directly funds strategic development projects of substantial national importance. In the past year, KCH has spent K300 million to fund rural electrification projects around the country, assisting the Government to progress toward its goal of 70 percent households energised by 2030.

KCH is continuing to employ innovation and new technology across its business in an effort to bring superior efficiency and reduce costs to drive improved returns on investment.

The Minister said, “all members of the Kumul family have their instructions to contribute to the SWF, per the endorsed dividend policy. This contribution will be the first of many made by a Kumul company toward the newly operationalised SWF. The Minister noted KCH’s contribution is the inaugural payment to the Sovereign Wealth Fund.

 Approved for release.

Hon. William Duma MP

Minister for State Enterprises