Last weekend, the Australian's Foreign Affairs and Defence Writer, Ben Packham, revealed details of an agreement between Papua New Guinea and the Peoples Republic of China giving "conditional" approval to the Ramu2 Power Project.
The project will be financed by an Exim Bank loan of around K6 billion (six billion kina) the equivalent of over $A2.3 billion. The loan will be guaranteed by the state owned PNG power authority with a guarantee that will end up being the responsibility of the PNG Government.
The Australian Government had lobbied hard against the project during both the O'Neill and Marape Governments. But its efforts have been comprehensively unsuccessful, to say the least!
Given the limited size of the planned power station this is an expensive project and it adds significantly to PNGs already substantial total debt burden. The debt burden to China has grown considerably since PNG signed up to China's "Belt and Road": agenda in 2018.
It would ordinarily be reasonable to criticise this latest agreement. But when you look at the question – what has Australia done in practice to offer alternative projects – then it is harder to criticise it, despite the added debt burden and the projects doubtful "economics".
With much fanfare during APEC 2018 in Port Moresby Prime Minister Morrison, together with the Japanese and New Zealand Prime Ministers, and the United States Vice President announced a joint program to try and deliver affordable electricity to 70 per cent of the people of PNG by 2030.
A worthy goal but a herculean one given just 15 per cent of the people of PNG today have access to affordable electricity!
The Australian Government set up the Australian Infrastructure Financing Facility (AIFF) to help deliver Australia's contribution to infrastructure in PNG and the Pacific. One of its first "approved" projects is a solar power station in the Markham Valley in the same areas as Ramu2.
If you go to the AIFF website you will be disappointed. The project is there, but the AIFF contribution has not been determined and effectively NOTHING has happened! That is despite bold assurances made 28 months ago!
I have no doubt the Chinese Ambassador, who was embarrassed when Prime Minister O'Neill invited the four countries to work with PNG to "Power PNG" has been working doubly hard to get Ramu2 over the line. And as usual he has been very successful.
If Australia seriously wants to not just match, but counter, China's rapidly growing influence in Papua New Guinea we will have to lift our game and go "big and bold" without delay.
Firstly, the Prime Minister should appoint an regional infrastructure "czar" to cut through the red tape and bureaucratic processes and get infrastructure promises under the Pacific "Step Up" program, and the much heralded agreement with Japan, New Zealand and the United States (and Papua New Guinea) to deliver electricity to 70 per cent of the population.
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