Australian taxpayers have spent around half a billion dollars to fund the expansion of Papua New Guinea's Lombrum naval base — well over double the $175 million price tag originally flagged by the federal government.
The Defence Minister Richard Marles revealed the cost blowout after joining PNG Prime Minister James Marape at a rain-soaked ceremony on Manus Island to celebrate the return of the strategically critical asset.
The high-profile project has been hit with delays due to the COVID-19 pandemic and disputes with local landowners, and Mr Marles told the ABC that an elongated timeline explained the inflated cost.
"There have been a number of factors which have led to the cost, and part of that is the time that has been taken to deliver the project," he said.
"But ultimately we're really pleased with what has been delivered — at $500 million this is the biggest infrastructure project that Australia has ever undertaken in the Pacific."
The original estimated cost of $175 million was reported in June 2021. However, tender documents published later show the initial contract was valued at $228 million.
Mr Marles also insisted the massive investment would also pay strategic dividends for both Papua New Guinea and Australia, saying the new port was a "great asset" and a "tangible expression" of the growing defence ties between the two nations.
"This place at the end of the second World War was one of the largest US naval bases outside of the United States," he said.
"It was always understood then that what this represented was a gateway to the Western Pacific — and we've always understood this … as being a really strategically significant place for Australia and obviously Papua New Guinea."
A 'sovereign asset for Papua New Guinea'
Tuesday's handover comes just weeks before Australia and PNG are due to sign a landmark new defence treaty on the 50th anniversary of PNG's independence on September 15.
While neither government has yet laid out exactly what's in the agreement, both PNG and Australia have flagged it will be used to give defence forces' in both countries easier access to the others' military facilities.
Mr Marles told the ABC that the newly expanded Lombrum base was a "sovereign asset for Papua New Guinea" — but stressed that Australia's navy would be able to operate out of it under the pact.
"We want to be able to be able to operate out of each other's facilities, that's what the defence cooperation agreement will provide," he said.
"What we're building here is a base that's a great asset for PNG but also an asset that can also ultimately be used by Australia.
"You look at what we're about to sign [with PNG] and then you look at this base, you put it together, and this is a really big strategic step for our nation."
All up, the project created more than 700 jobs in PNG, including more than 350 jobs in Manus.
Lombrum base a 'strategic investment'
The Lombrum Naval Base redevelopment was first announced in 2018. It includes an extension of the WWII-era wharf, as well as substantial improvements to the road and power network, along with new accommodation blocks.
PNG has previously said the expansion would allow it to double the number of military personnel at the Lombrum base, reaching roughly 400 in total.
The United States has also ploughed money into the redevelopment, although at a smaller scale — delivering $25 million to fund a new facility for PNG Defence Force small boats and a new training facility.
The US is also expected to gain access to the Lombrum naval base, along with multiple other PNG defence facilities, under the defence pact it signed with Port Moresby in 2023.
The federal government has long talked up the strategic benefits offered by Lombrum, suggesting it will allow the Australian navy to project power more effectively into the region.
Although the extended wharf at Lombrum is still not large enough to accommodate larger Australian naval vessels, Mr Marles told the ABC those ships could sit easily out in the deep water harbour, where they could be reached by launch vessels.
