Project Name Highlands Region Road Improvement Investment Program - Project 1
Project Number 40173-023
Country Papua New Guinea
Project Status Approved
Project Type / Modality of Assistance Loan
Source of Funding / Amount
Loan 2496-PNG: Highlands Region Road Improvement Investment Program - Project 1
Asian Development Fund US$ 71.20 million
Loan 2497-PNG: Highlands Region Road Improvement Investment Program - Project 1
Asian Development Fund US$ 28.80 million
Strategic Agendas Inclusive economic growth
Drivers of Change Governance and capacity development
Sector / Subsector

Transport - Road transport (non-urban)

Gender Equity and Mainstreaming No gender elements
Description The Investment Program focuses on the Highlands core road network (HCRN) of 2,500 kilometers (km) of major national and some provincial roads, which carry the bulk of the traffic in the region. The investment program will include (i) projects to improve about 1,400 km of the HCRN, to be funded through four or more tranches under this multitranch financing facility (MFF); (ii) design and supervision of road improvement works, preparation and administration of long-term road maintenance contracts for the entire 2,500 km of the HCRN, and capacity development of road agencies; and (iii) monitoring the socioeconomic benefits of the improved and maintained roads in the Highlands region. Support will also be provided for policies such as road user charges (to increase the resources available for road maintenance). In addition, technical assistance (TA) will be provided to support the Department of Transport to prepare a new National Transport Development Plan (NTDP) for 2011-2020.
Project Rationale and Linkage to Country/Regional Strategy

The Highlands region is a major contributor to the PNG economy through its agricultural and mineral exports. It is also home to 40% of the country's population, who rely almost exclusively on the road network for movement of people and goods. The road network is vulnerable because of the mountainous terrain, the fragile geological conditions, and the climate. The Government and its development partners have invested significantly in improving the road network, but a lack of regular maintenance has left the network in a poor condition. There is a need to (i) initiate a program of regular maintenance on all HCRN roads that are in good condition, and (ii) improve those HCRN roads that are in a poor condition and ensure that routine maintenance begins on these roads as soon as the improvement works are done.

The current NTDP provides a framework of policies and strategies for a sustainable road system in PNG. It has led to the establishment of the National Road Authority (NRA) with responsibility for maintaining the road network and a road fund financed through road user charges to finance road maintenance. The NRA and the road fund are managed by an independent board, with representatives from road users, the private sector, and the Government. There is a need to translate these initiatives into a workable system by (i) strengthening the NRA's capacity to plan and manage road maintenance works, (ii) seeking more financing for the road fund by rationalizing road user charges, and (iii) awarding long-term performance-based road maintenance contracts. With a functioning board and staff recruitment for the NRA underway, the Government is keen to support the MFF. It will help to enable implementation of the NTDP and to ensure a sustainable road system in the Highlands region. This initiative could serve as model for other regions of PNG.

Impact The proposed Investment Program will establish a sustainable road system in the Highlands region that will enable maximum use of its natural, mineral, and human resources. It will contribute to the Government's MTDS, 2005-2010 objectives of (i) export-driven economic growth; (ii) rural development, and poverty reduction; (iii) good governance; and (iv) promotion of sustainable agriculture, forestry, fisheries and tourism.
Project Outcome
Description of Outcome Improved accesibility and reduced transport cost in the Highlands region.
Progress Toward Outcome

The government requested the second loan extension for 12 months from 29 June 2015 to 30 June 2016. Overall, tranche 1 project is progressing satisfactorily and at 85% physical completion.

Both civil work contracts for Mendi-Kandep (M-K) and Laiagam-Pogera roads (L-P) ongoing and at average 96% physical completion. Revised completion dates for both contracts 24 July 2015. Subsatantial completion certificates were issued in the first week of September 2015. This will be followed by defect liability period of 12 months as per contracts.

Concurrent to the loan extension, DOW requested extension of consulting services after 30 June 2015, for design and construction supervision for the road improvements component due to lack of in-house capacities.

The NRSC continue to undertake road safety awareness to the two road sections. NRSC will expand the awareness to other major roads in the 2 provinces.

New Project Director commenced on 09 Feb 2015. Former PD promoted to higher position within DOW.

DOW engaged the socioeconomic impact study consultant (FinnOC) in May and consultant mobilized and commenced asignment. Currently, the consultant is undertaking surveys along communities within the two road sections.

DOW completed contract negotiations with successful firm (FinnOC) and expects to sign the contract for the independent monitoring organization for the project's safeguards requirements towards end-Q3.

Implementation Progress
Description of Project Outputs

1. Improved core road network in Highlands region.

2. Sustainable maintenance arrangements for core road network.

3. Improved capacity of NRA to plan and manage long-term road maintenance contracts.

4. More efficient DOW organization to deliver road improvements.

5. A new National Transport Development Plan for 2011 to 2020

Status of Implementation Progress (Outputs, Activities, and Issues)

Two civil works contract with total road length of 115kms (Laiagam-Porgera and Mendi-Kandep) signed on 09 February 2012 and under construction. Both contracts are on average 96% physical completion and expected to be completed on 24 July 2015. Substantial completion certficates issued for the two contracts first week of September 2015.

Yet to start.

To be assessed after road improvements.

For Project 2, 3 civil works contracts with total road length of 118kms pending government approval.

Ongoing. Approx. 4.6% of HCRN awarded and commenced implementation in Y2012. These roads expected to be completed on 24 July 2015.

NTDP (2011-2020) Approved and launched in July 2013.

Geographical Location Papua New Guinea
Safeguard Categories
Environment B
Involuntary Resettlement B
Indigenous Peoples B
Summary of Environmental and Social Aspects
Environmental Aspects Climate change may lead to higher rainfall, so roadside drainage will need to be carefully designed. Low traffic volumes mean that vehicle emissions will be minimal. All five roads under Project 1 include improvements within the existing road corridor. No road sections are located in or pass through any protected areas or ecologically sensitve environment. The environmental impacts of road during construction and operation have been assessed, and can be mitigated to acceptable levels
Involuntary Resettlement A resettlement framework has been reviewed by the PNG Government to establish the policies and procedures for payment of compensation or lost or damaged assets. The land acquisition impacts, where they occur, will be minor. There will be no displacement of housing and the affected people will experience only small losses of crops, trees, fences or other secondary structures. Short resettlement plans have been prepared for Project 1 roads and these will be updated based on detailed engneering designs during loan implementation.
Indigenous Peoples The resettlement framework and plans will address specific actions favorable to indigenous peoples, if necessary, in dealing with the customary land acquisition.
Stakeholder Communication, Participation, and Consultation
During Project Design An extensive program of consultation has taken place. At the inception stage, a stakeholder analysis was carried out to identify the primary and secondary stakeholders; their interests in the proposed project, their perceptions of current problems related to road accessibility, mobility and transport services; and, the resources they could bring to the achievement of the goals and objectives of the project. Meetings have been held at the national level with DOW, Ministry of Transport (MOT), NRA, Department of National Planning and Monitoring (DNPM), Department of Land and Physical Planning (DLPP), Department of Community Development (DCD), National Aids Council (NAC) and National Council of Women (NCW); relevant development partners and international organizations such as Australian Aid for International Development (AusAID), UNDP, UNICEF, WHO, Population Services International (PSI), CAREAustralia); and consultants engaged in ADB, AusAID and other donor-funded projects relevant to the Program. Provincial and district authorities in Enga and Southern Highlands provinces have been actively consulted including provincial and district administrators; national and provincial works departments; provincial community development, health and education advisors; provincial AIDS Councils; and, provincial and district women's networks. Other regional stakeholders that have been met with include civil work contractors, trucking companies and representatives of major development enclaves in the Highlands region, e.g., Porgera JV and Oil Search. These provincial, district and regional stakeholders participated in consultation workshops held in the provinces along with other local stakeholders including representatives of the community sector (local NGOs, health institutions, radio stations, etc.) and the private sector (local business houses, bus/truck drivers, etc.). Along each road section, the views of the local population have been sought through surveys of households, market sellers, trade store owners, road users and vehicle operators, as well a program of community consultations and focus groups with village women.
During Project Implementation The government through the Dept of Works is coordinating and working closely with other key depts and lined agencies for a smooth implementation of the Project subprojects. The provincial authoirites (provincial governments and administrations) in the Project affected provinces, together with important provincial stakeholders are part of the project steering committee (PSC). The PSC meets every quarter to address and resolve issues related to the Project. The HRMG comprising staff of the DoW and consultants supervise and communicate directly with the contractor and roadside communities to maintain subprojects implementation progress.
Business Opportunities
Consulting Services

Consulting services will be required for Investment Program implementation support and capacity development. Key tasks include (i) design of road improvement works; (ii) preparation of bid documents, procurement support, and supervision of road improvement and long-term maintenance contracts; (iii) Investment Program performance management; (iv) preparation of subsequent projects; (v) capacity development; and (vi) socio economic monitoring. The capacity development component will involve the strengthening of HRMG, establishment of PIU in NRA, financial/road maintenance contracting/road user charges for NRA, and road safety for NRSC.

Project 1 will require a total of 1,266 person-months (362 international and 904 national) of services from consulting firms. Additional consulting services, if necessary, will be procured under subsequent projects. The consulting services will be financed from the ADB loans. DOW will select and engage the consultants in accordance with ADB's Guidelines on the Use of Consultants (2007, as amended from time to time) using the quality- and cost-based selection method.

Procurement All ADB-financed procurement for goods and services will be carried out in accordance with ADB's Procurement Guidelines (2007, as amended from time to time). International competitive bidding procedures will be followed for all contracts over $3 million for civil works and $0.5 million for goods. National competitive bidding will be used for contracts under these thresholds. Shopping can be used for goods with contract values lower than $100,000, as appropriate. Contracts have been packaged to attract international contractors as well as promote the national contractors.
Responsible ADB Officer Muhammad Amir Ingratubun
Responsible ADB Department Pacific Department
Responsible ADB Division Papua New Guinea Resident Mission
Executing Agencies
Department of Works
Joel Luma
PO Box 1108, Boroko, NCD, Papua New Guinea
Concept Clearance 13 Jun 2008
Fact Finding 16 Jun 2008 to 30 Jun 2008
MRM 15 Aug 2008
Approval 22 Dec 2008
Last Review Mission -
PDS Creation Date 27 Jan 2010
Last PDS Update 23 Sep 2015

LoanĀ 2496-PNG

Approval Signing Date Effectivity Date Closing
Original Revised Actual
22 Dec 2008 19 Feb 2009 18 May 2009 30 Jun 2013 30 Jun 2016 -
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 71.20 Cumulative Contract Awards
ADB 71.20 22 Dec 2008 69.68 0.00 99%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 0.00 22 Dec 2008 64.51 0.00 91%
Status of Covenants
Category Sector Safeguards Social Financial Economic Others
Rating - Satisfactory Satisfactory Satisfactory - Satisfactory

LoanĀ 2497-PNG

Approval Signing Date Effectivity Date Closing
Original Revised Actual
22 Dec 2008 19 Feb 2009 18 May 2009 30 Jun 2013 30 Jun 2016 -
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 28.80 Cumulative Contract Awards
ADB 28.80 22 Dec 2008 28.14 0.00 97%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 0.00 22 Dec 2008 28.93 0.00 100%
Status of Covenants
Category Sector Safeguards Social Financial Economic Others
Rating - Satisfactory Satisfactory Satisfactory - Satisfactory

This project data sheet was generated from on 30 November 2015