This week saw the announcement of AUD$580 million (K1.45 billion) in financing support from Australia for Papua New Guinea’s ports. PNG Ports’ Managing Director Fego Ota Kiniafa outlines how the money will be spent and how the state-owned entity has managed the challenges of the past two years.

Lae port. Credit: ICTSI

‘Despite the challenges of COVID and the restrictions on global trade, we have seen growth through our ports,’ Fego Ota Kiniafa, Managing Director, PNG Ports told the recent 2021 Business Advantage Papua New Guinea Investment Conference.

The state-owned company, which manages PNG’s 16 gazetted ports, saw a three per cent rise in vessel port calls to July 2021 and a 12 per cent growth in vessel port calls. It has seen a 15 per cent grown in containers over the same period.

‘We have tried to make it so our ports remain open despite the challenges of COVID,’ Kiniafa says. ‘We understand the critical role of keeping ports open and the fact that ports being shut down can result in problems that are much bigger than COVID itself.’

Investing in safety

PNG Ports’ Fego Ota Kiniafa

In order to stay open, PNG Ports has been working close with ICTSI, the international terminal services company that has the contract to operate PNG’s two busiest ports – Motukea and Lae’s South Pacific International Container terminal – to plan for worst-case scenarios and keep the ships coming.

Support from international donors has also been instrumental.

‘The Australian government has recently contributed about AUD$10 million (K26 million) in security and safety for all our ports,’ says Kiniafa.

This investment has resulted in 375 staff being upskilled and trained, with K580,000 spent on training and protective workware. Australia has also invested heavily in palisade fencing, solar lights, vessel tracking cameras and CCT cameras.

‘A lot of our infrastructure has reached the end of its useful life, PNG Ports has invested in Lae and Port Moresby where there is commercial return but now there is a need to improve and invest in our regional ports.’

Investment program

Australian support is also going to play an even more important role in the future development of PNG’s ports, following the announcement this week of AUD$580 million (K1.45 billion) in financing ‘to support the repair and upgrade of several key ports’.

Notably, the Australian support includes a substantial tranche for the development of Lae’s Tidal Basin. According to Kiniafa, the aim is to expand Lae’s port with additional mooring, bollards and a deeper draft to attract larger container vessels, thereby increasing capacity to 9000 containers.

Last September, delegates at the 2021 PNG Investment Conference received an early briefing on the intended Australian support from Robert Jauncey, Chief Investment Officer for Australian Infrastructure Finance Facility for the Pacific (AIFFP).

‘Our first cab off the rank will be Oro, where I expect tenders will be out very early next year [2022],’ he said. ‘Then, we will be working on Kavieng, Kimbe, Lae, Manus, Weewak and Vanimo, with tenders progressively rolling out over the course of next year and early 2023.’

Lifeblood of the regions

PNG Ports’ annual revenue was K300 million in 2020, with nearly half of it coming from the port of Lae (43 per cent), followed by Motukea (Port Moresby) with 26 per cent. In October 2021, it paid a dividend of K21 million to its sole shareholder, the PNG State, for the 2020 financial year, making it one of PNG’s most profitable state enterprises.

Deteriorating port infrastructure Credit: PNG Ports

The Australia-financed overhaul is part of PNG Ports’ new 30-year infrastructure master plan, unveiled last year.

‘A lot of our infrastructure has reached the end of its useful life. PNG Ports has invested in Lae and Port Moresby, where there is commercial return, but now there is a need to improve and invest in our regional ports,’ Kiniafa says. ‘They service Papua New Guineans, they provide an essential linkage to the flow of goods and services into and out of these regional ports.’

The initial focus will be on ports with potential for growth, whether that be in agriculture, mining or oil and gas. The master plan will look at each regional port and assess what businesses use it and the state of the infrastructure. There are also plans for five new pilot vessels over the next 18 months and for an inland freight hub to service the Highlands.

‘We also looking at the greenfield port in the Gulf,’ Kiniafa adds.