Leaked fuel letter attracts ire of KPHL

KUMUL Petroleum Holdings Limited (KPHL) has only been negotiating with Puma Energy on a long-term fuel supply because the latter could not sell spot cargo, says KPHL managing director Wapu Sonk.
“For example, when we brought in a cargo of eight million litres of JetA1 from ExxonMobil in early June, they didn’t want to buy it because we hadn’t signed their proposed long-term supply deal – one that was for almost US$800 million (about K3.08 billion) over 24 months at today’s prices.”
Sonk criticised Puma for leaking contents of a commercially-sensitive letter written to the prime minister and senior ministers, without the courtesy of informing or consulting KPHL or its trustee delegate Minister William Duma, who were deliberately not copied on the letter.
“The inference in the letter is that KPHL has not been cooperative. This is in fact far from the truth. The cargo arrived on June 1 and after Puma’s refusal to accept, despite having the capacity at Napa Napa, the ship sat in Port Moresby harbour for three days then continued its journey to other PNG ports.
“Puma eventually agreed to purchase the JetA1, at a discount, to be unloaded in Lae from June 17.
“That is why Puma is transporting JetA1 from Lae to Port Moresby, and the Air Niugini flight cancellations.
“The end result is that KPHL has lost money due to demurrage costs and having to accept a lower price from Puma for this shipment,” Sonk said.
“It concerns me that KPHL has stepped in to assist the country and fill the gap left by Puma, and yet Puma is attempting to transfer the blame to KPHL.
“KPHL, acting at the request of the NEC, has brought in three fuel cargoes in recent months, taking on the role of financial institutions, the commercial banks and BPNG, as financier for Puma, a significant financial commitment, to the detriment of our foreign reserves and operational requirements, in order to assist the country address the fuel crisis.”
In the letter to the prime minister, Puma chairman and managing director Hulala Tokome said: “Following your direction and mandate to KPHL to work with Puma to fund a sustainable solution, we have engaged with KPHL in good faith over the past weeks and this ultimately resulted in a signed term sheet capturing a mutually beneficial structure which we believe would solve the majority of the issues currently facing the country’s fuel supply.
“The structure of the deal was that Puma would take all supply, pricing and logistics risks and left KPHL only to manage the foreign exchange risk, for which they would receive substantial compensation in return. Unfortunately, for reasons which are not clear to us, KPHL has subsequently informed us that they do not wish to proceed with this deal.”
In regards to the allegations, Tokome yesterday said it was a shame that such confidential letters get leaked.
“As a result of this, we now find ourselves in a world where it is likely we will have a fuel crisis once a month as we do our best to buy spot cargos each time with no firm long-term agreement in place.
“As you would no doubt be aware, there are no credible international suppliers in the market who have indicated a willingness to supply into PNG as a result of the challenges in getting paid as a result of the prevailing foreign exchange challenges.
“We remain very keen to sign the long-term deal with KPHL and would request you encourage them to do so, in order to bring much needed stability and security for the country.”
In regards to the allegations, Tokome yesterday said it was a shame that such confidential letters get leaked.