Reports that a Chinese company has put forward a multibillion dollar plan to develop several areas in Western Province have highlighted the lack of investment in one of Papua New Guinea’s most neglected provinces.

Daru Island. Credit: RNZ

Last November, PNG signed a memorandum of understanding to build a K540 million (AUD$200 million) ‘comprehensive multi-functional fishery industrial park’ in Western Province with China’s Fujian Zhonghong Fishery Company.

Earlier this month, a proposal from Hong-Kong based WYW Holding, came to light for a US$39 billion (K137.4 billion) industrial zone, seaport, business and commercial zone, resort and residential area for Daru Island in the province’s south.

Both proposals have brought Western Province into the spotlight, not least for the geo-strategic significance of two proposed Chinese investments on the doorstep of PNG’s closest neighbour, Australia.

‘Most neglected’

The province is PNG’s largest by area, consisting of almost 100,000 square kilometres. Its population of just over 200,000 makes it PNG’s most sparsely-populated province.

Speaking at a Lowy Institute Australia-Papua New Guinea network forum last week, University of PNG politics lecturer Patrick Kaiku described Western as ‘one of the most neglected’ provinces in PNG.

While it possesses significant rubber, aquaculture, forestry and fisheries sectors, its soils are not as rich as in some other parts of PNG and its economy is dominated by the massive Ok Tedi copper, gold and silver mine at its northernmost tip.

The problem faced by Western is that this mine is set to be exhausted by 2028. While Ok Tedi Mining’s CEO Musje Werror confirmed with Business Advantage PNG last year that work was ongoing to extend the life of the mine, its days are inevitably numbered.

Werror anticipates the people of Western will receive an estimated K27 billion in benefits from the mine over the next eight years. The challenge for Western Province’s leaders, including Governor Taboi Awi Yoto, is to find replacement steams of revenue, jobs and social benefits before the mine finally closes.

With this in mind, the governor’s brush-off of Australia’s reported objections to the fisheries park seems understandable, especially given no alternative investment has so far been proposed.

‘I will not let go of an opportunity to advance the aspirations of my people in my own land … We have an opportunity to carve out our own future,’ he said.

Prospects

So, what about the Daru industrial zone? In an April 2020 letter addressed to Prime Minister James Marape, WYW claimed its investment and development plan included ‘broad ranging ideas’ for the development of several areas of the province. The plan was to be ‘predicated on an agreed Sovereign Guarantee based on a long-term BOT [Build Operate Transfer] contract’ that would see the Chinese cede ownership to PNG after an agreed period.

However, National Planning Minister Rainbo Paita, said in an interview that the government has not been presented with any proposal.

PNG ownership

Patrick Kaiku teaches at the Political Science Department at the University of Papua New Guinea. Credit: Devpolicy

UPNG’s Patrick Kaiku said that there is some discontent in PNG with the Australian attitude towards Chinese investment in PNG.

‘One of the frustrating things is that it is a very Australian-centric way of looking at the problem, with the project being seen geo-strategically not in Australia’s interest. PNG is framed as if [Australia is] boss of their back yard, whereas PNG is an independent state, going into an agreement with another sovereign independent state.

‘I think that is where Australia and Papua New Guinea can agree: that Papua New Guinea takes ownership instead of a Chinese-led initiative.’

Kaiku said a more constructive option is to encourage PNG to take ownership of the project instead of giving it to the Chinese to manage. He believes this would be a ‘win-win’ situation, giving Papua New Guineans maximum benefit from its interest in the project.

‘I think that is where Australia and Papua New Guinea can agree: that Papua New Guinea takes ownership instead of a Chinese-led initiative.’

Hydrocarbons

As more that one commentator has pointed out, MOUs are signed frequently in PNG and don’t guarantee a project will go ahead. Ultimately, another resource entirely may underpin Western’s economic future: gas.

Now untethered from Total’s Papua LNG project, the Exxonmobil-led P’nyang gas project in the province’s far north has an estimated 4.3 trillion cubic feet of hydrocarbons, considered enough for an additional LNG train at the existing PNG LNG gas plant near Port Moresby. In a recent interview with Business Advantage PNG, Kumul Petroleum’s Managing Director Wapu Sonk suggested negotiations on the project could resume later this year.

There are other significant gas fields in Western, including the Elevala, Ketu and Stanley fields. The prospects for these fields are complicated by their remoteness and smaller size, however. Horizon Oil sold its interests in these fields to Arran Energy Group late last year.