Japan, US, Australia plan US$1bil loan for LNG in PNG

TOKYO: Japan, the United States and Australia have picked a liquefied natural gas (LNG) project in Papua New Guinea as their first case for joint financing in the Indo-Pacific region, planning to lend over US$1 billion (K3.3bil), Nikkei has learned.

Three government-backed lenders – Japan Bank for International Cooperation (JBIC), the US Overseas Private Investment Corp (OPIC) and Australia’s Export Finance and Insurance Corp (EFIC) – plan to issue a joint statement.
The three countries agreed in November to join hands in financing infrastructure projects in the Indo-Pacific to offer an alternative to China’s Belt and Road initiative.
The LNG project in Papua New Guinea marks the first project in this three-way cooperation.
A team from Japan, the US and Australia discussed the project with the government in Port Moresby in April.
Plans will be finalised over the next two to three years.
Additional assistance for power plants and communications infrastructure could follow.
Papua New Guinea has picked China’s Huawei Technologies to build its internet infrastructure.
But Australia worries that military intelligence could be leaked to Beijing through the network.
Beijing is also assisting Vanuatu with building a port, while China and Australia are competing over defence cooperation with Fiji.
Japan, the US and Australia also see other Pacific nations such as the Solomon Islands and Palau as candidates for joint infrastructure financing.
They plan to send a delegation to members of the Association of Southeast Asian Nations to examine potential projects.
The countries will abide by the G20 principles for quality infrastructure investment, drafted at a meeting of finance ministers and central bankers held in early June.
The principles are expected to be formally adopted at the G20 summit in Osaka, Japan.
Washington will establish a new agency, the US International Development Finance Corp, as early as October to absorb OPIC.
The new lender will have a US$60 billion (K198bil) portfolio cap, nearly double OPIC’s limit. Canberra is launching the Australian Infrastructure Financing Facility for the Pacific in July with A$2 billion (K4.6bil) in funding, while expanding EFIC.
Combined with Japan’s JBIC, which lends out US$15.8 billion (K52.3 billion) yearly, the countries will be able to tackle even larger projects in the future.– Nikkei

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