The Asian Development Bank is pushing ahead with its efforts to fund the development of Papua New Guinea’s road network. There will be about US$2 billion (K7 billion) in its investment pipeline over the next three years, according to David Hill, Country Director for ADB’s PNG Resident Mission.

Sustainable Highlands Highway Program. Credit: Asian Development Bank

The ADB’s main focus in PNG is on the transport, energy and the health sectors.

‘In the makeup of the portfolio, transport is by far the largest sector in which we work,’ the Country Director for the ADB’s PNG Resident Mission, David Hill, told the recent 2021 Business Advantage Papua New Guinea Investment Conference. ‘It is approximately 51 per cent, followed by health and public sector management which now equate to about 39 per cent.

‘There is no current overland road project from Lae to Port Moresby. This project will change all that.’

‘We have an indicative amount of lending available. For the period of 2021-23 this is set at approximately US$800 million (K2.8 billion) in terms of the loans we have available, both in terms of concessional lending and our ordinary capital reserves.’

The ADB makes us of a multi-tranche financing facility (MFF) in order to develop projects in phases.

Major road projects

Credit: ADB

Hill pointed to ‘three new major road projects’ the ADB has in the works, all part of PNG’s broader Connect PNG infrastructure program.

The first is the Northern Region Road Corridor (NRRC) project, along northern coastline of PNG’s mainland.

‘The NRRC is being structured as an MFF using a time slicing approach,’ he said. ‘We will break off part of the project first and then a second part and a third part to keep it manageable.’

‘Currently, most of the bridges on the Highlands Highway are old, outdated single lane bridges. So we will be constructing new bridges with dual lanes.’

The project, according to Hill, is being prepared for an approximate amount of US$1.2 billion (K4.2 billion), with tranche one due to be allocated in 2023.

‘Phase one is due to cover the road section from Wutung to Wewak [then] Wewak to Angoram and the next phase Angoram to Madang. It is envisaged that this work will take approximately 10 years to do. Whether this comes to fruition or not will depend on the due diligence.’

Highlands

The second project is phase two of the Highlands Region Road Improvement project. Hill says there will be three tranches overall.

‘We are estimating an approximate value of $US720 million (K2.5 billion). The idea is to connect Highland communities principally west of Mount Hagen to the Highlands Highway. This builds on work that we have already done in the Highlands with regional feeder roads. Of course it also links to the ongoing work that we are doing with the Highlands Highway.’

Hill says tranche two, which is $US325 million (K1.14 billion), became available last August. It will involve the construction of 71 bridges. ‘Currently, most of the bridges on the Highlands Highway are old, outdated single lane bridges. So we will be constructing new bridges with dual lanes.’

Game changer

The third project is the Trans-Island Highway Project from Lae to Epo in Gulf Province. Hill says this will eventually be a ‘game changer’.

‘There is no current overland road project from Lae to Port Moresby. This project will change all that. We are thinking we will do about 50 per cent of that and the AIFFP (Australian Infrastructure Financing Facility for the Pacific) will do the other 50 per cent.

‘I think it will be a very difficult project because, unlike some of the other projects, there is no existing road, so it is going to take a lot of concerted effort.’

Hill said the allocation for the initial phase is expected be $US200 million (K707 million), to be available in 2023.

Electricity and SOEs

In addition to spending on roads, the ADB is also allocating US$305 million (K1.07 billion) this year for much-needed support for better transmission and distribution of electricity in the country, and a further US$400 million ($1.4 billion) over the next two years to ‘improve the operational performance and financial sustainability of state-owned enterprises (SOEs) and help strengthen service delivery’.