The Asian Development Bank (ADB) is providing a 100-million-U.S. dollar loan to expand Lae Port, the largest and most important port in Papua New Guinea (PNG), the bank said in a press release on Thursday.

    The Lae Port Development Project involves the construction of port facilities including a tidal basin, a multipurpose berth and terminal works including buildings, storage areas, roads, drainage, water, electricity and sewerage services, said the multilateral development finance institution.

    The port sector is particularly critical for Papua New Guinea since 15 out of 20 provinces in the Pacific island nation are on the coast and more than 60 percent of its 6 million people are widely dispersed. There is no national rail or road network.

    Lae Port serves as a gateway linking the world market with a large hinterland, which comprises half of Papua New Guinea. Since 1995, the port has experienced an average annual increase in cargo of 131,000 tons, with containerized cargo growing more than 5 percent and general cargo by 2.5 percent annually. Frequent congestion at the port results in high costs for users and hampers international and domestic trade. The situation is expected to worsen as the country's economic prospects remain strong, the lender said.

    "Unless Lae port is expanded, and capacity increased, Lae port will become a binding constraint to the continued economic prosperity of this island nation," said Philip Erquiaga, Director-General of ADB's Pacific Department.