Australia said it will grant A$31 million ($20 million) to Tonga to complete a vital port upgrade, boosting funds from the Asian Development Bank, as Canberra focuses on building climate resilient infrastructure.
The Pacific Islands region faces an infrastructure investment deficit of $12 billion through to 2030 as climate shocks including cyclones, tsunamis and volcanic eruptions damage roads, ports and telecommunications networks, a report by ANZ Bank said on Monday.
Last year, investment fell short of demand by $1 billion, it said.
Pacific Island leaders at the United Nations last week highlighted the need for greater access to climate financing to rebuild economies as they continue to suffer damage from climate disasters.
Australia's Minister for Pacific, Pat Conroy, said in a statement on Tuesday that the Nuku’alofa Port, which handles 98% of Tonga's imports arriving by sea, was in "urgent need for an upgrade to cope with the ever-increasing impacts of climate change".
The A$138 million ($88.46 million) port project is co-financed by the Asian Development Bank (ADB), which awarded the contract to New Zealand company McConnell Dowell, creating 80 local jobs.
Tonga's Minister for Infrastructure, Sevenitini Toumo’ua, said the port was "vital" for the country's economic recovery after a volcanic eruption last year.
Two-thirds of Tonga's debt is owed to Chinese banks who have previously been major infrastructure lenders.
Pete Connolly, adjunct fellow with the University of New South Wales and the Center for Strategic and International Studies, said Tonga's high debt to China may have contributed to Australia's decision to provide extra funding for the port.
Over 80% of ADB tenders for construction projects in another Pacific Islands nation, Papua New Guinea, were "dominated by Chinese firms using incredibly low bids", his research has found. Chinese state construction companies typically use Chinese labour.
"Australia is reinforcing Tonga's choice to have the quality and local labour force that it needs," he said.
In a speech at a Pacific infrastructure conference on Tuesday, Assistant Minister for Trade Tim Ayres said Australia will also co-finance a harbour upgrade in Tuvalu with the ADB, part of the A$1.25 billion ($801.25 million) Australia is spending on climate resilient ports, airports and undersea cables across the Pacific.
The United States on Monday pledged more infrastructure support at a White House summit for Pacific Island leaders, aimed at curbing inroads by China into a region Washington considers strategically crucial.
($1 = 1.5601 Australian dollars)
(Reuters - Reporting by Kirsty Needham; Editing by Kim Coghill)