The Highlands Region is home to about 40% of Papua New Guinea’s population and, through its agricultural and mineral exports, is a major contributor to the country’s economy. Its road network ─ which is almost exclusively responsible for the movement of people and goods and for providing communities with access to markets, health and education centers, and other social services ─ is vulnerable because of the mountainous terrain, the fragile geological conditions, and the effects of climate change. The government and the country’s development partners have invested significantly in improving the road network; however, regular maintenance has been insufficient to maintain the network in good condition.
Against this backdrop, the Asian Development Bank (ADB) approved a multitranche financing facility (MFF) for the Highlands Region Road Improvement Investment Program in December 2008. The program aims to improve and ensure the ongoing maintenance of the Highlands Core Road Network (HCRN), comprising 2,500 kilometers (km) of major national and provincial roads. The MFF was to be provided in three tranches. The first tranche, comprising two loans with an aggregate amount of $100 million and approved along with the MFF, was to finance project 1, which included (i) improvements to 211 km of national roads along the priority corridors identified in the National Transport Development Plan, 2006–2010; (ii) procurement support to the Department of Works (DOW) for the road improvements; (iii) procurement support to the National Roads Authority’s (NRA) for the maintenance of 2,500 km of the HCRN and the implementation of policies to improve road maintenance financing; (iv) contract supervision consulting services to the DOW and the NRA; (v) capacity development and the improvement of road transport services; and (vi) a socioeconomic monitoring study. Under the project, technical assistance (TA) to update the National Transport Development Plan, 2011–2020 was also to be provided.
Project 1 was negatively affected by the simultaneous development of the government’s Liquefied Natural Gas (LNG) mega project by the ExxonMobil in the Southern Highlands Province. Around the time the project commenced, the roads in the vicinity of the new LNG facility began to see significantly increased traffic volume. Prioritizing the LNG project, the government postponed the reconstruction of three of the five road sections under project 1, thus reducing its original scope. The LNG project’s vast demand for supplies drove inflation, triggering road construction cost increases. Meanwhile, due to the government’s huge financial commitments to the LNG project, its counterpart funding requirements under project 1, as with other donor-financed activities, were significantly affected.
Consequently, the project fell short of achieving its physical output targets. It was able to cover only 115 km in road improvements and put in place maintenance contracts for 462.76 km, below the 570-km target, of the 2,500 km core road network. To compensate for the scope reduction it requested, the government proposed the inclusion of 108 km in other areas under the project; however, as the cost estimates for these roads exceeded the budget for road improvements under project 1, the replacement did not materialize.
Road user charges have not been increased by 20% per year, as targeted; instead, the government has provided the DOW an annual budget for road maintenance. Capacity building of the key road agencies has been achieved. The National Transport Development Plan has been updated to cover 2011– 2020 but was approved only in July 2016, not by end-2010, as originally planned. A baseline survey was completed as part of the socioeconomic impact study; but the study itself was not completed, as tribal fights along the project roads prompted the international consultant to leave the country.
Because of output shortfalls, the project only partially attained its intended outcome of improved accessibility and reduced transport cost in the Highlands Region. The reduction of outputs occurred not because of a failure in the original design, but because of the government’s decision regarding the LNG project. The project’s design and monitoring framework should have been revised during implementation to address the reduced scope.
The DOW was the executing agency for the investment program and the implementing agency for the road improvement works. The NRA was the implementing agency for the road maintenance component.
