$400m to upgrade critical PNG ports

A deal between Australia and PNG will support upgrades of major ports under a $2bn strategy backing critical infrastructure projects.

Papua New Guinea's Prime Minister James Marape.

A $400m deal between Australia and Papua New Guinea will support upgrades of major PNG ports under a $2bn strategy backing critical infrastructure projects across the South Pacific.

The memorandum of understanding will provide Australian investment of up to $400m under PNG’s 30-year port infrastructure masterplan.

The critical maritime infrastructure agreement, announced by PNG Prime Minister James Marape and Public Enterprises Minister William Duma on Thursday, comes after Scott Morrison this month said Australia would back projects in developing nations with “no strings attached”.

Australia’s push for high-quality infrastructure in the region contrasts with China’s soft-power campaign in the South Pacific, which has delivered poorly built and undelivered projects in the region facilitated via Xi Jinping’s Belt and Road Initiative.

International Development and the Pacific Minister Zed Seselja said the MoU was another “demonstration that Australia is absolutely committed to working closely with our Pacific family on high-quality, sustainable and economically viable infrastructure projects”.

“Ports are essential to PNG for its trade and connectivity. Not only does the MoU support critical infrastructure for our neighbour, but it is also expected to bring economic and social benefits to PNG and its people,” Senator Seselja told The Australian.

Under Mr Morrison’s Pacific Step-Up strategy, the government established a $2bn Australian Infrastructure Financing Facility for the Pacific fund in 2018. Overseen by the Department of Foreign Affairs and Trade, it partners with Pacific governments and the private sector to design “high-impact, safeguarded projects”, with $1.5bn available in loan financing and $500m provided via grants.

Mr Marape said Australia was responding to PNG’s request to “support the renewal and upgrade of critical ports”. “Australia and Papua New Guinea share a strong and enduring bilateral partnership, and today’s agreement will further strengthen our co-operation set out in our Comprehensive Strategic and Economic Partnership,” he said.

In a speech earlier this month, Mr Morrison said infrastructure lacking appropriate standards or that is “too expensive, or isn’t environmentally sustainable or that comes with onerous conditions … just isn’t worth having”.

“To achieve this outcome, advanced liberal democracies have a profound shared interest in rebuilding the growth and dynamism of business-led growth in developing economies in the wake of the pandemic,” he said.

“Specifically, part of bolstering economic recovery in a post-Covid world should be a stronger offering when it comes to infrastructure investment, particularly in our region.

“Projects should be high-quality, affordable, and with no strings attached. They should meet real needs and deliver sustainable economic benefits. And they should not compromise countries’ resilience or sovereignty.”

At the G7 summit in Cornwall, US President Joe Biden and British Prime Minister Boris Johnson pushed for advanced liberal democracies to do more in supporting infrastructure, including climate change projects, across developing nations.

Mr Duma said the foundations of PNG’s ports were built during the colonial and Pacific War era by the Australians. “PNG Ports will continue to work in close consultation with Australia to ensure we can work towards … a proposal that will stand the test of time, as well as maximise benefits for the local community through jobs and community engagement.”

Under the agreement, co-signed by PNG Ports Corporation Limited, Australia will help design and prepare upgrades for priority ports, with project activities estimated to support investments of up to $400m.