Papua New Guinea: Multitranche Financing Facility - Highlands Region Road Improvement Investment Program

Sovereign Project | 40173-013

Summary

The National Transport Development Plan 2000-2010 (NTDP) was prepared by the Department of Transport (DOT) and endorsed by the National Executive Council (NEC). The NTDP is in two volumes, the first setting out sector policy and plans for institutional and legislative reforms, and the second volume providing a 10-year program of infrastructure investment. The plan covers all modes of transport in Papua New Guinea - road, sea and air.

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Project Name Multitranche Financing Facility - Highlands Region Road Improvement Investment Program
Project Number 40173-013
Country Papua New Guinea
Project Status Approved
Project Type / Modality of Assistance Loan
Technical Assistance
Source of Funding / Amount
MFF Facility Concept 0029-PNG: Multitranche Financing Facility - Highlands Region Road Improvement Investment Program
Asian Development Fund US$ 277.00 million
TA 7214-PNG: The National Transport Development Plan (2011-2020)
Japan Special Fund US$ 700,000.00
MFF Facility Concept: Multitranche Financing Facility - Highlands Region Road Improvement Investment Program
Ordinary capital resources US$ 123.00 million
Strategic Agendas Inclusive economic growth
Drivers of Change Governance and capacity development
Sector / Subsector

Transport - Road transport (non-urban)

Gender Equity and Mainstreaming Some gender elements
Description The National Transport Development Plan 2000-2010 (NTDP) was prepared by the Department of Transport (DOT) and endorsed by the National Executive Council (NEC). The NTDP is in two volumes, the first setting out sector policy and plans for institutional and legislative reforms, and the second volume providing a 10-year program of infrastructure investment. The plan covers all modes of transport in Papua New Guinea - road, sea and air.
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 The Investment Program will improve access to ports, markets, and livelihood opportunities, and reduce travel time and transport costs in the Highlands region.
Progress Toward Outcome
Implementation Progress
Description of Project Outputs

The Investment Program focuses on the Highlands core road network (HCRN) of 2,500 km of major national and some provincial roads. The HCRN carries the bulk of the traffic in the region. The Investment Program will include (i) investment projects covering improvements to about 1,400 km of HCRN (Appendix 4) to be funded through four or more tranches; (ii) consulting services for (a) preparation of investment projects for ADB approval and design and supervision of civil works, and (b) preparation and administration of long-term road maintenance contracts for the entire 2,500 km of HCRN;

(iii) support for capacity development, resource mobilization for maintenance funds, and improving road transport services; and (iv) monitoring the socioeconomic benefits of improved and maintained roads in the Highlands region. In addition, technical assistance is provided to support the DOT to prepare a new National Transport Development Plan (NTDP) for 2011-2020.

Status of Implementation Progress (Outputs, Activities, and Issues)
Geographical Location Papua New Guinea
Safeguard Categories
Environment B
Involuntary Resettlement B
Indigenous Peoples B
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design
During Project Implementation
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 Transport, Energy and Natural Resources Division, PARD
Executing Agencies
Department of WorksP.O. Box 1108
Boroko, NCD
Papua New Guinea
Timetable
Concept Clearance 13 Jun 2008
Fact Finding 16 Jun 2008 to 30 Jun 2008
MRM 15 Aug 2008
Approval 16 Dec 2008
Last Review Mission -
PDS Creation Date 03 Jul 2008
Last PDS Update 21 Jul 2008

MFF Facility Concept 0029-PNG

Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 477.00 Cumulative Contract Awards
ADB 277.00 - 0.00 0.00 %
Counterpart 200.00 Cumulative Disbursements
Cofinancing 0.00 - 0.00 0.00 %

TA 7214-PNG

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
16 Dec 2008 17 Jan 2009 17 Jan 2009 31 Dec 2010 31 Dec 2011 -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
700,000.00 0.00 175,000.00 0.00 0.00 0.00 875,000.00 16 Dec 2008 688,581.50

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