Kumul Petroleum Holdings Ltd has begun a comprehensive review of the Kumul Tower project following concerns over its procurement governance, management arrangements and expenditure exceeding US$120 million (about K500 million).
KPHL Board Chairman Ambassador Isaac Lupari and Acting Managing Director Luke Liria recently inspected the project site, where China State Construction Engineering Company has completed significant excavation, ground stabilisation, piling and foundation works.
However, the board said the inspection raised concerns about the governance of procurement and the project's management, including oversight by the external project manager.
An independent external auditor's recent forensic audit has confirmed the board's concerns regarding governance and accountability for project expenditure, KPHL said.
A detailed report outlining the audit findings and recommended actions will be submitted to the government.
“The Board has a duty to protect KPHL and the State. Before we make any further major commitment, we must establish clearly what has been delivered, whether the design remains appropriate, and which delivery and financing structure will provide the strongest long-term value,” Lupari said.
As part of the reset, KPHL will reassess the project's scope, design, cost and commercial viability.
The review will include consideration of reducing the proposed building from 27 storeys to a 15-storey development that the board described as more commercially viable.
KPHL will also engage independent project architects to review the building's design, engineering, functionality, constructability and cost.
The board will consider a mixed-use model incorporating hotel and office accommodation, while potential delivery and financing structures include a build-own-operate-transfer arrangement or a joint venture consortium involving local and international entities.
Lupari stressed that no delivery model had yet been selected.
“Any proposed option must undergo independent technical and commercial due diligence, demonstrate value for money, allocate risk appropriately, and comply with all governance and approval requirements,” he said.
KPHL said it remains committed to ensuring any future development of Kumul Tower is transparent, commercially sustainable and aligned with the long-term interests of the company, the State and the people of Papua New Guinea.
