To build or not to build: multibillion dollar Chinese project highlights Western Province’s dilemmas

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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.

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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.

Comments

  1. Augustine. Pious says

    Western and Gulf Provinces of Papua New Guinea will only develop if they stop listening to Australia’s criticism through their news statements about other developers from other countries or continents coming in.

    Just for greed and supremecy over the natural resources of the Two Provinces they are kept not to develop by Australia.

  2. John yongaman says

    This project is for China alone. A China base at the doorstep of Australia. They will build hybrid or dual purpose infrastructure to support both commercial and military activities.

    It will serve as both a commercial and military hub.

    PNG and Western Provincial Government must get the maximum out of this deal. This is cold war strategy by the Chinese to contain Australia. There will never be a real hot war. PNG must make or charge billions per year on rental. Should not be free. Chinese promises of future benefits are fake. Get k1 billion rental per year

  3. It should be interesting when the Australian government pulls foreign aid and scraps the ” handshake” deal allowing any fishing fleet from PNG into Australian waters.
    Interesting when for the sake of ” security ” a military base springs up with the obligatory navy infrastructure, , Fighter and bomber sqn and a suspicious landing craft and submarine fleet….
    Well PNG sell your soul and see…..

  4. We may think the Chinese are helping PNG building our resources but we have to be careful here. This is a tiger under sheep’s clothing. Just study the African nations. They are actually setting up their empire here and in a few short years PNG will weep and wail for no one will step to help us. Australia has invested so much in PNG over so many years and have not sent their police forcefully into our free democratic nation. Come on You SONS and daughters of this nation do more homework before letting this anti Christ nation come in. Over to you ok save man na Meri nogut bai tomorrow bai yumi krai.

  5. Frazer Koul says

    It is true what Sandy is saying, I agree. All these development in Western Province will come with a very high cost and one the locals will pay.

    It annoys me to see leaders of Western Province jumping at this glorious opportunity to bring development into their province when they are the very ones who were put into office to bring development and change to the people of this province. What happens to all the funds you are allocated in your term in office to develop the province. This seems like an easy way out but at what cost?

    As for PNG being “an independent state going into an agreement with another sovereign independent state” is true however, PNG is NOT FINANCIALLY INDEPENDENT and still receives financial support from Australia so let’s not be so quick to put on our big boy pants and march into an agreement that may well and truly bury ourselves in the enormous hole we are already in.

    • This is an opportunity the PNG Government must not miss in economically hard times. Thanks to China’s interest to bring in FDI. The Daru island had been the closest location to Australia, yet there is no significant developments (investments) there by Australia to show for Australia’s strategic and economic interests in PNG. Letting this project go could mean loss of business spin-offs and royalty benefits, and the status quo remaining. Views and opinions shaping public opinion on this proposed project should be based on the cost and benefit analysis done by Papua New Guineans based on PNG’s long term national interest. We need development, stop being skeptical and Sino-phobic just because of others’ fears. Surely this world will not be controlled by China, rather she is one other major player. We have international rules and norms. By the way, in the impending GLOBAL RESET post-COVID 19 being designed by the World Economic Forum the combined voice of the USA and EU is very loud-that translates to power and they will still dominate global political economy, China will be the major producer and powerful economy but will not surely dominate the world. So, why fear China. When China is offering to do business with us lets get in there and do business. There are real benefits a small business owner in Daru or Western Province will get through enhanced opportunity and economies of scale. The Government must not hold back this vital economic project just because of fear perpetrated by outsiders. LET THE ELEPHANTS FIGHT AND SHEET SO THE SHEET CAN MAKE THE GRASS GROW. We cannot succumb to one-sided view for far too long. Think outside of the box and pursue development when opportunity presents itself.

  6. Jack L Willie says

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

    Is the project to be owned by PNG?

    PNG has been neglectedc by Australians in its human and infrastructure development strategies including law and order to true independent nation. Australia is the reason to PNGeans current state meaning ‘allow’ PNG get independence at premature state. How on earth a country can develop yet 90% of population being in premitive life

    Well, let Australia to do what China willing to bring to Daru.

    How can thepeople of Western bring developments if they have not done any infrastructure developments and businesses in Western Province with the thousands of millions earned from the giant OK Tedi gold mine.

    My thoughts

  7. Kuipa Tonny says

    I think why not the Chinese? PNG is all about taking back PNG and Australia is all about boomerang type assistance. Western Province is being neglected. Chinese is willing to invest, make the most of it by being smart to share the same table if give the opportunity.

  8. Emmanuel Ginis says

    China will not make such investments if it is not within their greater interest/goal for world dominance in trade. They are setting up strategic trade routes for themselves across the globe. With such an investment made to an island that has not seen any development over the years, we can conclude that Daru is sold to the Chinese, the government of PNG will not have any say or control over such projects, our legislations allow for and protect such investments to occur. These legislations were drafted during the colonial era which serves the interests of the colonial masters at that time and still apply in this day and age. Such examples as 99year lease on land, tax holidays for companies making huge investments.. while such legislations may encourage investments, it also limits the government and land owners to have their say over implications that such investments may have over the environment and the society. We want development, this is the risk we have to manage.

  9. Tony Azzopardi says

    The western people are only interested in lining their pockets. I say let them give their sole to the Chinese and suffer the consequences, not a brain in their heads too stupid to watch Taiwan Philippine Vietnam or any thing happening in the south china sea.

    If they think Australia will bid on this poker game then it confirms PNG are fools. They could very well get egg on their face and Australia removes itself from foreign aid altogether.

    Who will then fill that 400 million black hole.

  10. Henry Riyong says

    Any thinking PNGs should not in mad rush to sign any deals with these Chinese business, what we now see is almost all business in PNG is dominated by these people living little room for us to participate in any scale. Tingting tasol.
    Henry R.

  11. pamgbaro says

    Local inhabitants along coastline the of Western Province in PNG rely heavly on the marine resources for a living. The local skillful divers have vast knowledge of their under water world,sadly will loose these zone to the giant company who will be interested in financial gain only . The many islands on PNG side have no land for subsistence farming so marine is their only livelihood where as trans Torres straits are well taken care of by Australia. People there are already affected by the pollution from ok tedi and these so -called development will further displace them and the future generations. Furthermore PNG government have never developed the province that shares two international geopolitical borders. So therefore the project need alot of consultation and awareness.

  12. kanit vue says

    This investment by China will benefit the western people and PNG into the future..Chinese developer is tapping into resources that has been neglected by the png and Australia governments since independence. The Chinese government through the developer have the resources in terms of money and technology to develop the projects in Daru and parts of the vast underdeveloped land in Western. Western go for it..

  13. For the sake of development it is PNG’s views that matter with regards to this development zone. It should not be based on Australia’s interest. The issue at stake here is that if China is genuine to develop this project by submitting a sound proposal outlining a time for hand over to back to PNG ownership then let the project start. The Daru island had been the closest location in PNG to Australia and there has never been any significant developments there to show for Australia’s geopolitical and economic interests in PNG. Letting this project go could imply business spin-offs and other benefits foregone and status remaining. PNG resources and development priorities should always be considered through cost and benefit analysis done by Papua New Guineans rather than listening to advice from external sources. PNG needs development and we must not let go of any foreign direct investments because of fears of the unknown based on foreign sources.

    • There are examples in sri lanka where memorandum signed and land just taken by chinese, hambantota for example. Port deep enough for nuclear sub!! Takeover was planned all along.

      PNG needs ownership from day 1, forever. Without that there will be some loophole where PNG may be forced to cede sovereignty without payment etc.

      Look at the environmental damage in murray darling basin in Australia re chinese owned cotton farms. I am ashamed to say i understand there has been some environmental damage via ok tedi mine i think in past which is very regrettable.

      PNG needs to own it and control it from day 1.

      Re the fishing proposal, chinese fisheries are unsustainable via their practices. It is depressing travelling to china and see them not return any of the baby fish. It is so short sighted. If they return fish project to PNG after say 15 years, there wont be any fish left after 15 years of pillaging.

      That is why chinese fleets are travelling far away to unsustainably fish other nations oceans. Travelling to China and see how they manage their own fisheries is best argument against chinese control.

  14. sandy patton says

    Just like the Island of Australia, the Chinese are forcing locals out.
    They will have to leave, you are getting into bed with people who don’t give a damn about the locals or their heritage.
    Going into this is a disaster waiting to happen

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