Japan, US and Australia begin own 'Belt and Road' in South Pacific
Three countries plan $1bn loan for LNG project in Papua New Guinea.
Japan, the U.S. and Australia have picked a liquefied natural gas project in Papua New Guinea as their first case for joint financing in the Indo-Pacific region, planning to lend over $1 billion, Nikkei has learned.
Three government-backed lenders -- Japan Bank for International Cooperation, the U.S. Overseas Private Investment Corp. and Australia's Export Finance and Insurance Corp. -- plan to issue a statement on Tuesday regarding their joint infrastructure efforts.
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 U.S. and Australia discussed the project with the government in Port Moresby in April. Plans will be finalized 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, which is helping to develop a naval base on the island nation, worries that military intelligence could be leaked to Beijing through the network. U.S. Vice President Mike Pence said in November that Washington will help its Australian ally with the naval base.
Elsewhere in the Pacific, Beijing is assisting Vanuatu with building a port, while China and Australia are competing over defense cooperation with Fiji.
Japan, the U.S. 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 three countries will abide by the Group of 20 principles for quality infrastructure investment, drafted at a meeting of finance ministers and central bankers in early June. The principles are expected to be formally adopted at the G-20 summit in Osaka later this week.
Washington will establish a new agency, the U.S. International Development Finance Corp., as early as October to absorb OPIC. The new lender will have a $60 billion portfolio cap, nearly double OPIC's limit.
Canberra is launching the Australian Infrastructure Financing Facility for the Pacific in July with 2 billion Australian dollars ($1.39 billion) in funding, while expanding EFIC.
Combined with Japan's JBIC, which lends out 1.7 trillion yen ($15.8 billion) yearly, the countries will be able to tackle even larger projects in the future.