CCP's 'Noble Center' abounds in faults and challenges PNG and international governance

The Noble Center development in PNG raises questions not only about the People’s Republic of China’s money diplomacy, but the due diligence and standards of transparency and integrity, applied to social development projects by international organisations like the Asian Development Bank.

The most prominent PRC construction company operating in Papua New Guinea is unquestionably the China Railway Construction Engineering Group (CRCEG).

It has enjoyed a dream run winning Asian Development Bank contracts, and Belt and Road contracts, ultimately funded by the PNG Government.

Some years ago China Railway Construction and Engineering announced it was planning to build PNG's tallest building, which it has named the Noble Center. It appears that CRCEG has built similar "Noble Center" complexes in a dozen or more countries which have signed up to the Belt and Road program.

The 23 floor complex near the Port Moresby waterfront ended up being a project undertaken in a joint venture with a state owned entity, PNG Ports Corporation.

As usual there is a total absence of transparency when it comes to the terms of the joint venture, but I am assured the Ports Corporation exposure to the project is relatively minor. As I will explain below it no doubt drew on its past experience with CRCEG in having a limited exposure.

It would seem the project cost around $200 million to "complete". It was finally "completed" a few months ago. PNG Ports moved into two floors as arranged – but promptly moved out a couple of weeks later!

PNG Ports has clearly been very unhappy with the construction by CRCEG of "Noble Center" for some time. It commissioned two independent mechanical engineering and air conditioning firms to carry out detailed inspections of key safety and other aspects of the building.

Both firms reported to PNG Ports that there were dozens of serious defects in the construction, many of them with significant fire safety and structural implications. They essentially recommended the building was unfit for occupation without massive repairs/adjustments being made. No wonder Ports PNG moved out!

Fortunately it seems that so far PNGs regulators agree with the assessment of the independent consultants. And there is real hope even the highest levels of the PNG Government (with some notable exceptions) will stand firm.

Let there be no doubt about it, this is a huge embarrassment for the Peoples' Republic of China, and for its largest operator in Papua New Guinea.

This is not the first time the performance and competence of CRCEG has been called into question in Papua New Guinea. But it might just be the first time anything has been done about it!

At about the same time as CRCEG announced its intention to build the Noble Center – as it has done in other developing countries – it was undertaking the very expensive re-development of the port of Lae, PNGs largest port.

This project was funded by the Asian Development Bank (ADB) with the agreement of the PNG Government.

To its credit, the ADB ordered an "independent" report into the work undertaken by China Railway. The comprehensive report declared the project a "failure" on a number of grounds, almost all related to the performance of the contractor.

But that is where the "credit" ends! I have seen no evidence the ADB has done anything to stop, or seriously review, its use of China contractors on the vast majority of the projects it funds in Papua New Guinea.

The argument that the tenders are now issued by the PNG Government through the National Procurement Commission is frankly weak and unbecoming of the ADB. It is providing the funding (concessional loans etc) so it ought to be insisting on both transparency and diversity in contracts for works it funds.

A normal lender would not advance money without seeing evidence from a quantity surveyor, as well as an architect, that stages had been completed successfully, but this necessary due dilligene appears to be completely absent in the process here.

The Australian Government is a senior member of the ADB, with a permanent representative at ADB headquarters in Manila. It is frankly equally weak that Australia seems to have done three-fifths of not much when it comes to giving Papua New Guinean, and Australian, contractors a fair and reasonable share of ADB contracts in Papua New Guinea.

So Ports PNG, given the Lae Port experience, is right to be very wary of what might happen with regard to the defective Noble Center.

I really urge the board and management of Ports PNG to not just stand firm, but to insist on all the recommendations of the independent experts being fully carried out by CRCEG.

There is welcome evidence the PNG Government will support it. But there is equally not the slightest doubt the management of CRCEG and the PRC Embassy in Port Moresby will push back and use its considerable influence within the PNG Government, and bureaucracy to do so.

To quote a former US President, "Australia does not have a dog in this fight". There are no Australian funds involved. But if the building is ever occupied it is inevitable that Australian citizens, and businesses, will work in it.

All Australia needs do is to urge the PNG Government, and safety regulators, to insist on all the safety and related recommendations being fully implemented. We might also offer to provide the technical expertise of fire services and engineering firms to help do so.

As I have said, Noble Center is China's flagship project in Papua New Guinea. It is consistent with what China has done in other countries which sign up to the Belt and Road agenda…..something PNG has enthusiastically done.

This is going to be a real test not just for the integrity of PNG's building regulators, but also the willingness of the national government of Papua New Guinea to protect the "PNG national interest" even if that causes friction in its otherwise harmonious relationship with the People's Republic of China.

Fortunately, and this is doubtless partly due to the robust and welcome stance by Ports PNG, the defects in the construction of Noble Center are well known in the Port Moresby business community. I am assured they are also well known in the highest levels of government!

Is it too much to ask that the Asian Development Bank might follow the excellent lead of Ports PNG when it comes to the most powerful PRC construction company operating in Papua New Guinea today?

Oh, and is it too much to expect the Australian Government, as a development partner with PNG, and a senior member of the ADB, to strongly encourage it to do so?

Noble Center is unoccupied, months after completion. Its fate is in the hands of Papua New Guinea's fire and safety regulators.

It is a fate many in Papua New Guinea will be watching VERY closely!