Econet Wireless has commenced court proceedings against the government of Papua New Guinea, claiming US$ 524 million in damages over the cancelled sale of Telikom PNG.

Econet's action follows last month's decision by PNG's National Executive Council (NEC) to cancel the sale of 51% of Telikom for 150 million kina (US$ 48 million) to a consortium of Econet and Altech. Prime Minister Michael Somare's office said there was no legal basis for Econet's breach of contract claim.

The NEC has the authority to approve or reject any transaction involving the Government. If the NEC does not enter into a contract, then the Government could not be held accountable, Somare's office said.

The claim for 1.637 billion kina (US$ 524 million) is based on Econet's calculation of the enterprise value of the Telikom transaction to Econet over a period of 20 years at today's value. An Econet statement said that Econet lawyers would argue that the NEC failed in its duty to approve or reject the Econet transaction and that the termination of the contract and the privatisation process were motivated by politics.

Papua New Guinea’s proposed sale of Telikom created a heated political debate. Somare fired State Enterprises and Information Minister Puka Temu before a parliamentary resolution opposing the transaction was passed.

Intelecon Research & Consultancy Ltd 25/01/2005
Source: The Courier-Mail