Papua New Guinea: Road Maintenance and Upgrading (Sector) Project (Supplementary Loans)

Sovereign Project | 32124-023

Summary

The supplementary financing is in line with the impact and outcome of the previous loan as approved by ADB. It aims at scaling up the impact of the Project on PNG economic development and social integration by financing more road sections to improve road access to the private sector and communities, reduce their travel cost and time to major commercial and service centers, and enable them to tap economic and social opportunities in the Highlands region. It will support the Government's efforts to enhance export-led economic growth, generate income for local communities, and reduce poverty. The outcome will be increased economic activities and social improvement in the region.

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Project Name Road Maintenance and Upgrading (Sector) Project (Supplementary Loans)
Project Number 32124-023
Country Papua New Guinea
Project Status Closed
Project Type / Modality of Assistance Loan
Source of Funding / Amount
Loan 2242-PNG: Road Maintenance and Upgrading (Sector) Project (Supplementary Loans)
Ordinary capital resources US$ 35.00 million
Loan 2243-PNG: Road Maintenance and Upgrading (Sector) Project (Supplementary Loans)
Asian Development Fund US$ 18.00 million
Strategic Agendas Inclusive economic growth
Drivers of Change
Sector / Subsector Transport - Road transport (non-urban)
Gender Equity and Mainstreaming
Description The supplementary financing is in line with the impact and outcome of the previous loan as approved by ADB. It aims at scaling up the impact of the Project on PNG economic development and social integration by financing more road sections to improve road access to the private sector and communities, reduce their travel cost and time to major commercial and service centers, and enable them to tap economic and social opportunities in the Highlands region. It will support the Government's efforts to enhance export-led economic growth, generate income for local communities, and reduce poverty. The outcome will be increased economic activities and social improvement in the region.
Project Rationale and Linkage to Country/Regional Strategy

There are three main justifications for the supplementary financing of the Project. First, the Original Loan was able to finance only a total length of 305 km roads consisting of 130.75 km of road upgrading and 174.25 km of road rehabilitation. It constitutes only about 46% of the total length of the roads targeted in the original project scope (670 kilometers including 220 km for road upgrading and 450 km for road rehabilitation). The reduced project scope, if not remedied, will certainly compromise the achievement of the intended purposes and objectives as initially conceived in the Project. With the additional proposed subprojects (corresponding to road sections) financed by the Supplementary Loan, the total length of roads financed by ADB will reach 575 km (including 211.75 km for upgrading and 363.25 km for rehabilitation), enabling to achieve 86% of the originally targeted road length. The high cost of upgrading and rehabilitating works in PNG, the implementation capacity of the HRMG, and the capacity of PNG construction sector, are major constraints preventing the original target from being fully achieved.

Secondly, the deteriorating transport infrastructure is a particular concern for PNG. The proposed financing of subprojects is in line with the Government Medium Term Development Strategy (2005-2010), according to which the improvement of transport infrastructure is a top priority expenditure area to achieve its overarching development strategy of export-driven economic growth, rural development and poverty reduction. The Highlands region is indeed strategically important for the country, as it is richly endowed with natural and tourism resources and eco-conditions for farming and is home to almost half of the population. The development of the infrastructure network in this region will have significant impact on PNG's overall economic and social performance. The country's most significant road-Highlands Highway runs through this region, bringing copper, coffee and tea which are the country's major export items to Lae port and distributing imports ranging from heavy machinery to food products to the region. The Government has set aside K225 million for the next four years to upgrade and rehabilitate the Highlands Highway. The Government is also planning to invest in Lae port and has officially requested ADB's assistance in expanding Lae port capacity. It would be timely for ADB to support the additional financing to upgrade and rehabilitate roads that connect major farming areas, resource and population centers, and tourist sites in the Highlands region to the Highlands Highway. The additional financing will also complement the Government and ADB's efforts, particularly with respect to the development of Lae Port.

Thirdly, it has taken two years for the Project to set up a functional project implementation unit, HRMG. With on-the-job and formal trainings provided by international consultants, and learning by doing, HRMG has strengthened its capacity and has eventually become a fully fledged project implementation office consisting of a designing arm and construction supervision team. It is capable of implementing more subprojects, including engineering design, preparation of bidding documents, tendering and contract award, and construction supervision, without incurring substantial start-up cost. HRMG is currently implementing the Project efficiently. It is expected that it will be able to implement additional proposed subproject in the same fashion. This will result in start-up cost savings of minimum of $2 million.

In summary, the supplementary financing is necessary to maintain the original project scope, increase the road connectivity and impact on poverty. It is the most expedient and cost-effective way at this stage to support the Government's drive to improve road infrastructure. The Supplementary Loan will focus on road upgrading and rehabilitation, project implementation, and performance monitori

The supplementary financing is consistent with ADB s Country Strategy for PNG, as documented in the Country Strategy and Program Update 2005-2006 and in discussions on the Country Strategy and Program (CSP) 2006-2010, currently under preparation. Programming discussions have agreed the transport sector to be one of four priority sectors/themes for the upcoming CSP 2006-2010, with ADB support to focus on the roads and maritime sub-sectors.

Impact Increased economic activity and social improvement
Project Outcome
Description of Outcome Improved rural access to market centers
Progress Toward Outcome Ongoing. DoW to assess impacts of subprojects during EA's PCR preparation.
Implementation Progress
Description of Project Outputs 1. Improved road conditions for villagers and businessmen to access market opportunities, social services, and imported daily necessities 2. Baseline data and performance monitoring and evaluation system for the Project established 3. Socioeconomic impacts of the Projects assessed
Status of Implementation Progress (Outputs, Activities, and Issues)

(1) Total 107.1 kms of both priority national and provincial feeder roads improved providing access for major rural population areas. Remaining 46 kms of work in progress and uncontracted 107.7 kms of road length have been transferred to the government for financing using its resources.

(2) Full loan utilization expected by close of loan on 30 June 2012.

(3) Project impact assessments expected to be done during preparation of final project completion reports by EA and ADB.

Geographical Location Five Highlands provinces in PNG
Safeguard Categories
Environment B
Involuntary Resettlement C
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects None.
Involuntary Resettlement None.
Indigenous Peoples None.
Stakeholder Communication, Participation, and Consultation
During Project Design
During Project Implementation The Project is carried out in consultation with and with the participation of the key government departments of National Planning & Monitoring, Finance & Treasury, Works, Transportation, Provincial Governments and administrations, Provincial Police, Provincial AIDS Councils, local NGO & FBO, local suppliers and contractors, and local roadside villages and communities.
Business Opportunities
Consulting Services

The services of Renardet SA engaged under Loans 1709 was retained under the supplementary loan to undertake detailed engineering designs, preconstruction activities, construction supervision and project performance monitoring and evaluation and training on road safety, maintenance, and STI/HIV/AIDS prevention.

The services of the current project implementation consultants was retained to ensure continuity and save project costs.

Procurement The supplementary loans will finance upgrading and rehabilitation of approximately 270 kilometers of road sections: Raipinka-Okapa, Goroka-Lahame, Kamaliki-Move, Kindeng-Kondopina, Banz-Dona, Gewa-Gembogl, Kerowagi-Dona, Korinige-Kerowagi, Warumanda-Laiagam, Ialibu-Kagua, and Ialibu-Pangia.
Responsible ADB Officer Muhammad Amir Ingratubun
Responsible ADB Department Pacific Department
Responsible ADB Division Papua New Guinea Resident Mission
Executing Agencies
Department of WorksJoel Lumajluma@daltron.com.pgPO Box 1108, BOROKO, NCD, PNG
Timetable
Concept Clearance 30 Jun 2006
Fact Finding 26 Feb 2006 to 13 Mar 2006
MRM 31 Mar 2006
Approval 29 Jun 2006
Last Review Mission -
PDS Creation Date 12 Apr 2006
Last PDS Update 05 Oct 2012

Loan 2242-PNG

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
29 Jun 2006 13 Sep 2006 09 Nov 2006 30 Jun 2010 30 Jun 2012 07 Feb 2013
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 45.00 Cumulative Contract Awards
ADB 35.00 29 Jun 2006 34.42 0.00 100%
Counterpart 10.00 Cumulative Disbursements
Cofinancing 0.00 29 Jun 2006 34.42 0.00 100%

Loan 2243-PNG

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
29 Jun 2006 13 Sep 2006 09 Nov 2006 30 Jun 2010 30 Jun 2012 07 Feb 2013
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 18.00 Cumulative Contract Awards
ADB 18.00 29 Jun 2006 17.55 0.00 100%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 0.00 29 Jun 2006 17.55 0.00 100%

Safeguard Documents

See also: Safeguards

No documents found.

Evaluation Documents

See also: Independent Evaluation
Title Document Type Document Date
Papua New Guinea: Road Maintenance and Upgrading (Sector) Project Validations of Project Completion Reports Jan 2015

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