Papua New Guinea : Lae Port Development Project

Project Name

Lae Port Development Project

Project Number

40037-013

Country / Economy

• Papua New Guinea

Project Status

Closed

Project Type / Modality of Assistance

• Grant
• Loan

Source of Funding / Amount

Grant 0102-PNG: Lae Port Development Project: Mobilizing the Private Sector to Respond to Gender and HIV/AIDS Issues (funded by the Cooperation Fund for Fighting HIV/AIDS in Asia and the Pacific)

Source	Amount
Cooperation Fund for Fighting HIV/AIDS in Asia and the Pacific under the Health Financing Partnership Facility	US$ 750,000.00

Loan 2398-PNG: Lae Port Development Project

Source	Amount
Ordinary capital resources	US$ 60.00 million

Loan 2399-PNG: Lae Port Development Project

Source	Amount
Asian Development Fund	US$ 40.00 million

Loan 8237-PNG: Lae Port Development Project

Source	Amount
OPEC Fund for International Development	US$ 6.00 million

Strategic Agendas

• Inclusive economic growth

Drivers of Change

• Gender Equity and Mainstreaming

Sector / Subsector

• Transport / Water transport (non-urban)

Gender

Gender equity theme

Description

The objective of the Project is to expand the cargo handling capacity of Lae port, improve the livelihood of those directly or indirectly affected, and reduce the incidence of HIV/AIDS in Lae.

Project Rationale and Linkage to Country/Regional Strategy

Ports have been important in the logistic chain for international trade. They are particularly critical for an island economy like Papua New Guinea (PNG), which depends greatly on exports. Lae port is PNG's largest, busiest, and single most important port. It is a gateway linking the world market with a large hinterland--half of the territory--where about half of the population lives.

Since 1995, Lae port has witnessed an average annual increase in cargo of 131,000 tons, with containerized cargo growing at more than 5% per year and general cargo at 2.5%. In 2005, the volume of cargo through Lae port reached 2.4 million revenue tons, stretching Lae port to the limit of its capacity. Frequent congestion at the port imposes high costs on its users and hampers both international and domestic trade. The situation is expected to worsen, as the country's economic prospects remain strong and the hinterland of Lae port is experiencing a boom in development.

Instead of simply improving the port, the Project will build new facilities, for three reasons: (i) the terminal area at the existing port is not large enough for efficient operations; (ii) the existing berths are built on a steep foreshore with increasing threat of geotechnical instability, heightening the financial risks of any port improvement project; and (iii) opportunities to extend the existing berths are limited, whereas the Project allows additional berths to be built at relatively low marginal cost.

ADB's country strategy and program for PNG (2006-2010) supports the Government's development goals, strategies, and priorities stated in the Medium-Term Development Strategy (MTDS) for 2005-2010 and focuses ADB's interventions on 4 strategic areas: (i) public financial management, (ii) private sector development, (iii) transport, and (iv) health and HIV/AIDS.

Impact

The Project is expected to catalyze industrial and commercial development and promote trade for PNG.

Project Outcome

Description of Outcome

Bottleneck constraining trade is relieved

Progress Toward Outcome

The Phase one construction work has been completed in line with the construction schedule. The contractor has completed 97% of the planned works (site clearance- 100% completed, wharf- 100%, excavation/dredging/reclamation-100%, slope protection- 81% complete and container terminal /yard or land works is at 100% complete).

Implementation Progress

Description of Project Outputs

1. New port facilities are operational.

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

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.

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

PROCUREMENT OF MAJOR CONTRACT PACKAGES:

(I) CONSTRUCTION SUPERVISION CONSULTANCY:

The National Executive Council approved the awarding of contract to Korea Engineering Consultants Corp. (KECC) on 7 July 2011. The contract was signed on 29 Dec 2011 and consultants mobilised in late March 2012.

PORT FACILITIES: The major civil works involving dredging and the construction of the wharf and the terminal 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 commenced work on 30 June 2012.

The Phase one construction work has been completed in line with the construction schedule. As at 30 November 2014, the contractor has completed 97% of the planned works (site clearance- 100% completed, wharf- 100%, excavation/dredging/reclamation-100%, slope protection- 81% complete and container terminal /yard or land works is at 100% complete).

A completion ceremony for the phase one was held on 17 December 2014.

(III) ADDITIONAL FINANCING: Due to costs increase, additional financing of $89.12 million was approved by ADB on 10 Nov 2011, the Loan and Project Agreements were signed on 30 April 2012 and the loans were declared effective on 21 June 2012.

Disbursements from additional financing loans commenced in August 2013 and have since been fully utilized as at the completion of phase one.

No longer relevant due to change in resettlement plan

No longer relevant due to change in resettlement plan. Three schools in locations where project affected people have resettled have been improved and work on others are in various stages of implementation.

No longer relevant due to change in resettlement plan

Eight health facilities will be expanded under this program, four health facilities have been completed and the remaining four are currently in progress.

Bris Kanda a local NGO was contracted to implement this activity and is now negotiating with ADB funded Nationwide Microbank to assist in implementing this activity.

Bris Kanda has ceased operation and the alternative arrangement will be made.

ADRA (NGO) was engaged to implement the income improvement program for the APs and Labu people. ADRA has since identified trainings for the different income improvement activities which include: (i) Cocoa Development; (ii) Inland Fish Farming; (iii) Mud Crab Fattening; (iv) Chicken Farm; and (v) Fish Aggregating Device).

2,000 copies of guidelines on good practice on HIV and AIDS at workplace were printed and being distributed to LCCI member companies and interested stakeholders.

There is good progress in capacity building of NGOs, through trainings carried out by the subcontracted Adventist Development Relief Agency (ADRA) PNG. The participants are satisfied and happy with the training delivered. Port Users Peer Education Program on Access to HIV and AIDS Information was conducted by LCCI. Other Community Service Obligation (CSO) trainings conducted by LCCI were on Leadership & Conflict Resolution, Governance, Financial Management, Project Management, Proposal Writing, Disaster Mitigation & Prevention, Basic Computing, Small Business Management, Introduction to HIV and AIDS Counseling. Contractors for the five (5) clinical structures have been selected for the maintenance works. However due to lack of understanding disbursement arrangement stipulated in the contract within LCCI consultants team delayed accesing the project funds to do renovation work on the identified clinics.

A relocatable building (donger') donated by a contractor (Lae Builders and Contractors), for a separate women's and children's help post was stationed at the Lae Police Station to help promote HIV and AIDS and educate the victims. This donger will be utilized during and beyond the project, but is not an Integrated HIV and AIDS Resource Center. Enhancing the Outreach//impact of Lae Port Aids Site Committee: The members of the Lae Port AIDS Site Committee who received peer education training testified that their work places and their communities were receiving effective support from the Gender and HIV component, including logistics support for workshops and messaging events.

Only executives and few members of the Morobe Network of Positive Living (MNOPL) received capacity building and empowerment training, more awareness on this support to more areas around Lae have recently been carried out in the last quarter of 2011 and early 2012, and this will reach more PLWHA .

This component was considered not feasible.

Geographical Location

Lae

Safeguard Categories

Environment

A

Involuntary Resettlement

A

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

Business Opportunities

Consulting Services

International and national consultants will (i) support the PMU in port engineering and contract management, financial management, resettlement, and socioeconomic monitoring; (ii) supervise construction and monitor the environment; and (iii) undertake resettlement and livelihood and social improvement activities. The consultants will be hired according to ADB's Guidelines on the Use of Consultants. They will be selected through QCBS, individual consultant selection, consultants' qualifications selection, or other methods as appropriate. A total of 729 person-months of consulting services, including 291 person-months international and 438 person-months national are budgeted for these purposes.

Procurement

The procurement of civil works will follow ADB's Procurement Guidelines (2007, as amended from time to time). The major civil works, involving dredging, berth, and terminal construction, will be grouped into one contract package to be awarded through one-stage, one-envelope international competitive bidding with prequalification. For the resettlement and livelihood improvement activities, which will involve contracts of various sizes for works, national competitive bidding and shopping will be used as appropriate.

Contact

Responsible ADB Officer

Hill, David J.

Responsible ADB Department

Pacific Department

Responsible ADB Division

Papua New Guinea Resident Mission (PNRM)

Executing Agencies

Independent Public Business Corporation(IPBC)

Timetable

Concept Clearance

22 Sep 2005

Fact Finding

12 Mar 2007 to 03 Apr 2007

MRM

17 Aug 2007

Approval

18 Dec 2007

Last Review Mission

-

PDS Creation Date

17 Oct 2008

Last PDS Update

23 Sep 2015

Funding

Grant 0102-PNG

Loan 2398-PNG

Loan 2399-PNG

Loan 8237-PNG