The Minister for International Trade and Investment, Richard Maru, says the proposed State acquisition of shares into Ramu Agri Industries (RAI) will be the most important agriculture deal in the country’s 51-year history.
“This is transformational- this investment will go beyond this generation,” he said.
The Minister made this statement during a dinner meeting yesterday with the Board and Management of New Britain Palm Oil Limited (NBPOL) and the Group Managing Director of their parent company, SD Guthrie, in Port Moresby. Details on the discussions held during Minister’s recent visit to Kuala Lumpur, Malaysia, was firmed up during this meeting.
Minister Maru said the Marape-Rosso Government was very serious about its proposed partnership with SD Guthrie to develop the agriculture sector of Papua New Guinea (PNG).
“The State’s interest to buy into RAI is for us to use the company as a vehicle to expand to other parts of the country. We (the Government) admit that we are not good at running businesses. We have learnt from the past. The PNGBC was a loss-making bank corporation when the Government ran it. When the bank was partially privatized (with the Government still remaining a shareholder), the services improved, it is recording profits in millions and getting dividends we never saw before, and it is now the leading bank in the entire South Pacific. With this experience, we want to let the private sector, in this case SD Guthrie, to run the business. The Government is only looking at a small stake in RAI to show our commitment so we can help the company mitigate the risks and expand the business. We want to see the business grow beyond RAI and NBPOL and expand to the Sepik Plains, and Central and Western Highlands Province where there is a lot of undeveloped land,” said Minister Maru.
The Minister confirmed that the State will use Kumul Agriculture Limited, a wholly-owned subsidiary of Kumul Consolidated Holdings Limited (KCHL), as its vehicle in the sell down. He said the State was prepared to put down K100 million as its equity in the proposed Joint Venture (JV).
It was agreed that a Non-Disclosure Agreement (NDA) would be signed between all Parties next month so independent valuations could be done before reaching a Project Development Agreement by the end of April this year for the purchase of shares in RAI by the State and other PNG shareholders.
“In the Agreement, the Government will commit to providing essential enabling infrastructure and an environment that is conducive for business – this includes services like power, sealed roads and bridges, strong police and security provision, and providing State land and mobilizing customary land for large scale agriculture development. The Agreement will also capture that all expansion projects through this partnership will operate as separate business entities so they can be developed in Special Economic Zones (SEZs), benefiting from SEZ incentives like tax holidays of 10 years and duty-free benefits for all materials and equipment used in the construction phase of the projects,” said Minister Maru.
Furthermore, the Group Managing Director of SD Guthrie, Mr. Mohd Haris Mohd Arshad, said the company was keen to partner the State through KCHL (Kumul Agriculture Limited) and Livestock Development Corporation (LDC), to develop the 20,000 hectares Urimo Cattle Project.
“PNG should be growing and exporting cattle. K240 million annual beef imports (mainly from Australia) is crazy. The quality of beef produced in PNG is amazing. We can work together with the Government to develop the cattle industry in PNG, bringing to the table our significant expertise from owning and operating the Numundo Beef in West New Britain and Ramu Beef in Madang. SD Guthrie has been in business for over 200 years and what we need now is growth. We don’t see growth in Malaysia and there is no potential growth for us in Indonesia. We see a pathway to grow in PNG in partnership with the Government, starting with the State’s acquisition of shares in RAI and we can build from there,” he said.
Mr. Arshad further stated that if the Government was serious about partnering RAI especially to develop the vast Sepik Plains, it should take responsibility to immediately construct an international wharf in Wewak and upgrade and seal the roads from Kusaun to Urimo so they could start on the cattle farm under the new partnership.
Present at the meeting yesterday was Secretary for Department of International Trade and Investment, Managing Director for KCHL, Chairman and Acting CEO of SEZA, LDC Managing Director, and Acting CEO for Securities Commission of PNG. They all pledged their support towards this exciting development that will transform the agriculture sector of PNG in the next 50 years as part of the ‘Reset Agenda’ of the Marape-Rosso Government.