Currently, the only way of bringing bulk agricultural produce out of Papua New Guinea’s fertile Highlands is down the Highlands Highway to the port city of Lae. A new study has identified a faster second route – through Gulf Province. Business Advantage PNG investigates.

Rehabilitation of the Hiritano Highway, Gulf Province. Credit: DevPolicy/Matthew Dornan

‘One of the biggest challenges in Papua New Guinea is transportation—it’s slow, unsafe and expensive,’ explains the IFC’s Christian Reichel.

‘The Highlands produces beautiful fresh fruit and vegetables, but bringing them down to Port Moresby [POM] quickly requires a plane, which is very expensive.

‘Shipping via Lae can incur delays, which often affects the quality of the produce.

‘It is very difficult, especially for micro, small and often medium enterprises to access markets in POM.’

‘This route could reduce transport costs by up to 50 per cent and travel time by up to 80 per cent.’

The 2018 pre-feasibility study, supported by the governments of Australia and New Zealand under the IFC PNG Partnership, found that setting up road and ferry connectivity in Gulf Province would sharply reduce travel times. For example, produce from the Highlands to consumers in Port Moresby could be there in two days rather than 10.

Reducing time and cost

Reichel says the IFC initially spoke to oil and gas companies Total, Oil Search and ExxonMobil to understand what was being done with the barges and service roads through the Gulf Province, where they operate.

Gulf Province is the host province for the PNG’s second gas project, Papua LNG.

‘We saw an opportunity and got a consulting team on board. Our study identified that it would be feasible to run a commercial ferry service from Port Moresby to Kikori, then run refresher containers from Kikori up to the Highlands by road to Mendi and beyond.

‘This route could reduce transport costs by up to 50 per cent and travel time by up to 80 per cent.

We also analysed the transport cost reduction on the route and it is very favourable.’

‘It creates enormous opportunities. Transport time, which is essential for small entrepreneurs who have maybe 300 to 400 kilograms of fresh produce, will reduce.’

The possibility of a Southern Highlands-to-Gulf route is reflected in PNG’s Medium Term Development Plan III 2018-2022 (MTDPIII), the National Road Network Strategy (NRNS) and transport sector plans. There is also private sector interest in the ferry service.

‘The government has asked the World Bank, IFC and the Asian Development Bank (ADB) to cooperate on delivering the project,’ he says.

‘The ADB is interested in looking and developing the wharf needed to move goods, and the government has asked the World Bank to look at the road.

‘What is clear is that strong partnerships will be key to delivering this project for the people of PNG.’

Corridor

IFC’s Christian Reichel. Credit: Peter Rae

Reichel believes providing transport from the Highlands to Port Moresby would change the economics of agribusiness in the country.

The route would not only improve the efficiency of transport logistics of goods from the Highlands; it would facilitate the delivery of essential services to communities in Gulf Province and the Highlands.

‘It creates enormous opportunities. Transport time, which is essential for small entrepreneurs who have maybe 300 to 400 kilograms of fresh produce, will be reduced. 

‘Shipping refrigerated containers is expensive. You might still lose some quality produce, but it is much cheaper to use this route, so they can afford the losses and provide better prices for the consumer market in Port Moresby.’

Huge impact

Following a request from the government to explore the route, in May 2019 the World Bank and ADB commenced a scoping mission to begin identifying the parameters for the project, to identify costs, and other issues for further consideration.

‘The corridor could have a huge impact on the country, with plenty of potential upsides, not least because right now the Highlands relies on one main road [the Highlands Highway] and port [Lae].’

‘The project partners, including the government, are working on the second stage of feasibility assessment for the Gulf corridor—a project that all partners believe could reduce poverty and boost investment and economic development for communities across the country.’

Christian Reichel will be speaking during a special session on the development of Gulf Province at the 2019 Papua New Guinea Investment Conference in Sydney on 19 and 20 August. For further details, visit www.pnginvestmentconference.com.