The governments of Papua New Guinea and Australia have signed an agreement worth USD435 million (AD580 million or PNGK1.48 billion) for Australia’s funding of the refurbishment and upgrade of ports in PNG.
The massive funding, to be executed through PNG Ports Corporation, is the biggest single investment by Australia in any sector and project in the history of the Australia Infrastructure Financing Facility for the Pacific (AIFFP), Australia’s assistance programme for the region.
The signing of the Memorandum of Understanding took place on Friday, 21 January 2022, headed by the countries’ respective leaders – Prime Minister Hon. James Marape in Port Moresby and Prime Minister Hon. Scott Morrison in Sydney – and televised livestream.
Under the AIFFP, the funding is being given as a combination of grant and low-interest concessional loan. PNG Ports Corporation says the USD70 million component is being given as grant while the balance comes as a loan to be repaid over a 35-year period. A grace period of six years is allowed as an “availability period” during which time, PNG must draw down on the funding.
Minister for State Enterprises Hon. William Duma, while giving a breakdown of monies, said major work will go into Lae port (Lae Tidal Basin) worth A$120million, Kavieng port A$27million, Kimbe A$30million, Oro Bay A$30million, Vanimo A$29million, Wewak A$20million, Lorengau A$19million, while the balance will go into the purchase of pilot boats for all the ports and the upgrade of other port infrastructure.
The agreement is the progression of two earlier agreements signed in June 2021 and August 2020 between the two countries under the new Comprehensive Strategic and Economic Partnership (CSEP) that sets out the plans that Australia and PNG want to achieve together – among them the development of strategic, quality, high-impact infrastructure in PNG.
In Port Moresby, Prime Minister Marape opened the high-level gathering at APEC Haus after Minister Duma presented a brief overview of the breakdown before letting the floor open to his Australian counterpart, Prime Minister Morrison, to comment on his country’s commitment and the remarkable bi-lateral friendship that exists between the two countries.
Prime Minister Marape thanked Prime Minister Morrison and Australia for their continuing support to PNG, not just in the maritime infrastructure sector – but in nearly all sectors including education, health, telecommunications, aviation, electrification and road development.
PM Morrison, in turn, gave credence to the efforts being undertaken by the Marape Government to connect rural PNG and economically empower its citizens.
He said: “You have brought the focus to where that support should go and this inspires a great deal of confidence in Australians – that the investment and support that we are giving is making a difference in the quality of life in PNG.
“As the support is put in place and economic opportunities are realised, the prosperity and the wellbeing of the people of PNG will rise. This has been about enabling and supporting the sovereignty, independence and self-sufficiency of PNG, and that has always been our absolute goal in all our intervention support and assistance.”
As the agreement gets operational, 30 percent of the monies will be used in the engagement of local contractors, meaning the injection of foreign capital into the country to help boost the PNG economy in this COVID-19 recovery period.
All port facilities in the country have been constructed by the Australian colonial administration in the ‘60s and ‘70s and have mostly fallen into disrepair because of lack of funding by PNG over the years, making this commitment by Australia a very important one because of the dependence of coastal PNG communities on shipping and PNG in its trade with the world.
The rehabilitation work by Australia directly complements Marape Government’s key economic driver policy, Connect PNG, which aims to achieve 100 percent connectivity of rural PNG by the year 2040 – something the Morrison Government has recognised and is acknowledging through this massive support.