Papua New Guinea: Lae Port Development Project - Additional Financing

Sovereign Project | 40037-043

Summary

The overall project will expand the cargo handling capacity of PNG's largest sea port at Lae, the capital of Morobe province. The overall project will also help improve the livelihood of project-affected people and reduce the prevalence of HIV in Lae and surrounding localities. This involves financing (i) construction of port facilities including a tidal basin, a multipurpose berth, and terminal works; (ii) resettlement and livelihood improvement and social improvement for affected people; (iii) consulting services for project management, construction supervision, financial management, resettlement, and socioeconomic monitoring; and (iv) gender-responsive programs for HIV awareness and prevention. Current project implementation preconstruction activities are mostly complete, including the relocation of 3,200 people from the project site.

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Project Name Lae Port Development Project - Additional Financing
Project Number 40037-043
Country Papua New Guinea
Project Status Approved
Project Type / Modality of Assistance Loan
Source of Funding / Amount
Loan 2803-PNG: Lae Port Development Project (additional financing)
Ordinary capital resources US$ 85.00 million
Loan 2804-PNG: Lae Port Development Project (additional financing)
Asian Development Fund US$ 4.12 million
Strategic Agendas Inclusive economic growth
Drivers of Change
Sector / Subsector

Transport - Water transport (non-urban)

Gender Equity and Mainstreaming Some gender elements
Description

The overall project will expand the cargo handling capacity of PNG's largest sea port at Lae, the capital of Morobe province. The overall project will also help improve the livelihood of project-affected people and reduce the prevalence of HIV in Lae and surrounding localities. This involves financing (i) construction of port facilities including a tidal basin, a multipurpose berth, and terminal works; (ii) resettlement and livelihood improvement and social improvement for affected people; (iii) consulting services for project management, construction supervision, financial management, resettlement, and socioeconomic monitoring; and (iv) gender-responsive programs for HIV awareness and prevention. Current project implementation preconstruction activities are mostly complete, including the relocation of 3,200 people from the project site.

As a result of input price increases, the devaluation of the US dollar against the kina, and design modifications, the total current project cost has increased from $154.0 million at appraisal in 2007 to $291.4 million in 2011. The current project rationale is valid and remains applicable. The current project scope has been revised to include some improvements to construction solutions. Additional financing is requested for 65% of the total overall project cost increase, the balance to be provided from government resources.

Project Rationale and Linkage to Country/Regional Strategy

Development Need. Lae port is PNG's largest, busiest, and most important port. It is a gateway linking world markets with PNG and a large hinterland containing 40% of PNG's population and half of PNG's economic capacity, including hydrocarbon and mineral resources. Lae port's cargo throughput has increased by 7.8% annually since 2006. In 2011, the cargo through Lae port is estimated to reach 3.3 million revenue tons, stretching the port to the limit of its capacity. PNG Ports Corporation Limited (PPCL) is increasing the operational efficiency of Lae port, which will help cope with the existing cargo traffic. However, the need for additional berth space is now critical. A larger and more efficient Lae port will ease a nationally significant infrastructure bottleneck that is impeding economic growth. The overall project is a high priority of the Government of PNG.

The Current Project. The overall project will expand the capacity of Lae port by building a tidal basin (700 x 400 meters [m]) northwest of the present port facilities with a dredged depth of 13 m below sea level, a multipurpose berth (240 m long and 45-50 m wide), and terminal works including all buildings, storage areas, roads, drainage, water, electricity, and sewerage services. The tidal basin and berth are designed to accommodate vessels with an overall length of 200 m, beam of 32.2 m, and fully laden draft of 12 m. The procurement of these works is at an advanced stage.

The overall project involves the relocation and livelihood and social improvement of about 3,200 people living on the project site. The government has financed and completed the relocation, and a Japan Fund for Poverty Reduction grant is now financing the livelihood and social improvement program. To minimize the potential risk of new HIV infections, the overall project includes support for an effective and sustainable response to the HIV epidemic in and around Lae port and Morobe province. The Lae Chamber of Commerce is the implementing agency and activities include (i) developing an HIV and AIDS code of conduct for businesses; (ii) improving seafarers' facilities; (iii) strengthening clinical institutional structures; (iv) strengthening nongovernment organizations, AIDS site committees, and the Lae police; and (v) caring for people with HIV.

Impact Enabling environment for industrial and commercial development is created
Project Outcome
Description of Outcome Port bottleneck constraining trade is relieved
Progress Toward Outcome To be assessed after Project completion.
Implementation Progress
Description of Project Outputs

(1). New port facilities are operational.

(2). Livelihood of directly and indirectly affected people is improved

(3). HIV&AIDS incidence in Lae is reduced

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

1. NEW PORT FACILITIES ARE OPERATIONAL

(I) CONSTRUCTION SUPERVISION CONSULTANCY:

The recruitment and evaluation of the contract for construction supervision by international consultants is completed. The government's National Executive Council approved the awarding of contract to the first ranked firm on 7 July 2011. The contract was signed on 29 Dec 2011 and consultants mobilised in late March 2012. As at end Dec. 12, they have mobilised 60% of their staff.

(II) CIVIL WORKS-PORT FACILITIES:

The major civil works involving dredging and the construction of the wharf and the terminal facilities was grouped into one contract package to attract international bidders. Bids were issued on 19 Jan 2011 and closed 21 April 2011. The EA awarded the contract (K734 million) on 26 March 2012 to China Habour Engineering Company Ltd. The contractor China Habour Engineering Company Limited have mobilised to site and the ground breaking ceremony was held on 18 June 2012. Currently five dredging vessels are on site carrying out dredging works after ADB's clearance on the Contractor's Construction Environmental Management Plan. The current progress on the the civil works is, clearing/grubbing is at 77% complete, dredging is at 55% complete, while reclammation works is 20% completed.

As at 31 January 2013, overall completion rate of 25% was achieved and work is still progressing. The actual progress on the civil work activities is approximately two months ahead of schedule.

2. LIVELIHOOD OF DIRECTLY AND INDIRECTLY AFFECTED PEOPLE IS IMPROVED

There is good progress in the Social Infrastructure and Services component, where the Morobe Provincial Administration is currently undertaking procurement for improving the remaining four schools and four health facilities. Five out of eleven schools have been completed while two schools and four out of eight health facilities are under construction. The affected people's children are now attending these improved schools and the other children are also enjoying the benefits with the affected children.

Bris Kanda a local NGO has been contracted and is currently implementing this activity since March 2012. The project implementation activities were delayed due to change in key personnel from the Bris Kanda Inc and the national elections.

3. TO MINIMIZE THE RISK OF NEW HIV INFECTIONS AND IT INCLUDES A PROGRAM OF SUPPORT FOR EFFECTIVE AND SUSTAINABLE RESPONSE TO THE AIDS EPIDEMIC IN LAE.

The Lae Chamber of Comerce Inc. (LCCI) a community based organisation was engaged to carry out activities under this component. The LCCI has a consulting team who undertakes various programs including, peer educators' training and HIV&AIDS awareness and awareness on gender-based violence. The program is well received by the participants.

Geographical Location
Safeguard Categories
Environment B
Involuntary Resettlement C
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design
During Project Implementation
Responsible ADB Officer Muhammad Amir Ingratubun
Responsible ADB Department Pacific Department
Responsible ADB Division Papua New Guinea Resident Mission
Executing Agencies
Independent Public Business Corporation(IPBC)Level 4 Pacific Place
Cnr. Musgrave Street and Champion Pde.
PO Box 320, Port Moresby, NCD
Timetable
Concept Clearance 19 Jul 2012
Fact Finding 18 Jul 2011 to 12 Aug 2011
MRM 12 Sep 2011
Approval 10 Nov 2011
Last Review Mission -
Last PDS Update 21 Mar 2013

Loan 2803-PNG

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
10 Nov 2011 30 Apr 2012 21 Jun 2012 31 Dec 2014 31 Mar 2015 -
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 85.00 Cumulative Contract Awards
ADB 85.00 10 Nov 2011 84.98 0.00 100%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 0.00 10 Nov 2011 84.98 0.00 100%

Loan 2804-PNG

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
10 Nov 2011 30 Apr 2012 21 Jun 2012 31 Dec 2014 31 Mar 2015 -
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 4.12 Cumulative Contract Awards
ADB 4.12 10 Nov 2011 4.06 0.00 100%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 0.00 10 Nov 2011 4.06 0.00 100%

Safeguard Documents

See also: Safeguards
Title Document Type Document Date
Lae Port Development Project - Additional Works Environmental Assessment and Measures Oct 2011

Evaluation Documents

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No documents found.


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