China’s strategic land acquisition right on our border

The immediate question is – what would K80 million deliver for China in return?

To me the answer is quite simple. It gives China an effective veto when it comes to foreign investors interested in the project! It was not made clear in the announcement how the K80 million will be spent.

But whatever it is used for, there can be no doubt China has achieved quite cheaply a strategic advantage on our northern border, and in an undeveloped PNG Province which has enormous untapped gas, and probably oil, resources.

And just how strategically important China regards this "investment" can be measured by a comparison with the proposed Pacific Marine Industrial Zone near Madang. For that proposal, China gave PNG a loan of K200 million, which it has been repaying ever since even though there has been zero development on the site.

So Madang gets a loan – Ihu-Kikori gets a non-repayable grant!

It is clear that as Australia's relations with China have deteriorated, China has shifted its focus to the Papuan Provinces closest to Australia – Western Province (Daru) and nnow the Gulf Province.

As I wrote last December, a major Chinese fishing company, strongly supported by the PRC Government and Embassy in Port Moresby, has been in discussions with the national government, and the Western Provincial Government, for the establishment of a major "fisheries facility" on Daru, the PNG community nearest to the Australian islands in the Torres Strait.

This project, far-fetched though it may seem, is most definitely not dead. Discussions continue, and no doubt the first priority will be the construction of a wharf of Daru capable of berthing Chinese naval vessels!

Exactly what will happen at Ihu and Kikori will depend on whether the ambitious plans being promoted by the local MP and the company he effectively heads that claims ownership of the project is able to attract substantial investors. China will most likely seek to strengthen its initial modest contribution by building yet another substantial wharf! Right on our doorstep!

But there are yet two other reasons why Australia must be watching this project – and frankly why our apparent refusal to examine whether we should have engaged with the Foreign Minister and his community on the project in even a scaled-down form is just hard to explain.

Firstly, Kikori-Ihu are very close to the Purari River. Some years ago Origin Energy was interested in the development of a major hydro-power project on the river. Extensive work that confirmed its viability was undertaken by reputable Australian engineering firms. The work demonstrated that a staged hydro scheme could deliver electricity to the whole of Papua New Guinea, and with further development provide cheap and green energy to North Queensland.

Sadly the proposal has stalled, with Origin losing interest, and the PNG Government quite unable to afford the estimated $5 billion plus construction cost.