The Highlands region of Papua New Guinea is not merely the nation’s geographical heart; it is also a crucial contributor to the economy, yielding agricultural products, minerals and energy exports. Home to roughly 40% of the country’s 7m people, this region, PNG’s most densely populated, is comprised of the provinces of Simbu, Eastern Highlands, Enga, Hela, Jiwaka, Southern Highlands and Western Highlands along an east-west zone of mountains with elevations of more than 4000 metres. Its jagged peaks, inlaid by fertile valleys, produce many of the country’s most lucrative exports, including timber, coffee, cocoa, rubber, coconut, spices, gold, copper, nickel, petroleum and natural gas. Such resources mean there is no shortage of usable raw materials. The primary challenge to commercialising these resources has always been their extraction and transportation to market through the rugged terrain.
Past efforts to improve the area’s infrastructure have had mixed results and ultimately led to the current array of stop-gap measures, cobbled together until a larger, more efficient system can be put in place. This vision is likely to move a few steps closer to reality under recent government efforts to upgrade each component of the transport network – from the feeder road of the Highlands Highway (HH) down to the primary industrial seaport in Lae, from whence commodities are shipped to all corners of the globe. In the 2014 budget alone, the federal government allocated PGK1bn ($406.5m) for roads, including those in the Highlands region.
Vital Artery
Snaking its way through mountain passes as high as 3000 metres above sea level, the 700-km HH serves as the main artery between the agricultural hub of Mt Hagen, remote mines such as those in the Porgera Valley, and the oil and gas field supplying the PNG liquid natural gas project. It also connects to other major settlements such as Goroka, Kundiawa, Wabag and Mendi. Though maintaining this roadway is vital to both the inflow of labour and materials, and the outflow of products and commodities, the region’s challenging terrain, numerous bridges and harsh weather conditions have hampered previous efforts to keep it in top form. Earlier schemes such as the Highlands Highway Redevelopment Project (HHRP), funded by the World Bank, the PNG Road Maintenance and Rehabilitation Projects (PNGRMRP I and II), and ongoing state funding have thus far proved Sysyphean, as challenging conditions erode the highway as fast as workers can repair it.
New Efforts
The government has thus renewed its efforts. The latest round is a PGK400m ($162.6m) rehabilitation project signed in October 2013 by China Machinery Engineering Corporation. Encompassing engineering, procurement and construction, this contract entails upgrading and repairing a stretch of road from the town of Kisenepoi up to the Kaguel Bridge in the Southern Highlands province, and includes a 20-year warranty on the pavement and a 40-year guarantee on the bridge, according to the PNG Department of Works (DoW). Of the project’s funding, PGK150m ($61m) will come from the state and PGK249m ($101m) from China’s Exim bank.
Bridges are also getting an overhaul. Work is under way to upgrade or replace a number of these along the Ramu highway, which connects the Highlands to the coastal city of Madang. The Bridge Replacement for Improved Rural Access Sector Project, being executed by the DoW and part-funded by the ADB, is replacing decrepit two-lane Baily bridges along five of the 16 priority national roads, according to the ADB. As for cost, the ADB is furnishing $50m through the Asian Development Fund, $40m of ordinary capital, and another $800,000 from the Technical Assistance Special Fund, while the state of PNG will front $10.1m in counterpart funding. In a related project funded by the Japan International Cooperation Agency (JICA), 12 bridges are being replaced for PGK1m ($406,500) along the HH in the Eastern Highlands province, including those at Orompaka Dirty Wara, Nonompinka Siguya and Honeranka Yasifo. A JICA-funded, PGK84m ($3.4m) rebuild of the Markham Bridge, PNG’s longest, awaits retendering.
Funding for the DoW in the 2014 federal budget includes earmarks for “missing link” highways to connect the Highlands to coastal regions. Among them are the Western Highlands-Madang Highway and the Gulf-Southern Highlands-Hela Highway. In addition, the government has set aside PGK61.4m ($25m) for infrastructure at Mt Hagen, the Highlands region’s agricultural centre, including PGK40m ($16.3m) for new and existing roads in town, and PGK20m ($8.1m) to redevelop Mt Hagen Hospital.
Maintaining Momentum
One big challenge to ensuring that road improvements achieve their intended results has been the task of constant upkeep. In the past, many such efforts have been underfunded, leading to a losing battle with the elements and normal wear and tear. Now, however, increasing government investments, together with the roll-out of substantial support from international donors, should provide the momentum needed to keep the road network operating at full speed.
To ensure this, several programmes have been launched in recent years. They take the form of ongoing work contracts, where companies carry out recurring maintenance along both the HH and the 2500 km of core road network feeding into it. The Highlands Region Road Improvement Investment Programme, supported by the ADB and now entering its second phase, targets 1400 km of roadway and awards long-term maintenance contracts for the entire 2500 km. In its current phase, which begins following a consultancy period set to wrap up in mid-2014, the DoW will tender certain contracts for improvements on 118 km of priority roads, and others for maintenance on 500 km of roads. Over its lifetime, the project is estimated to cost $750m, of which the ADB will cover $400m through loans and grants, the government will take on $200m, and other external financiers will cover $150m, according to the ADB. In 2014 the government allocated PGK163.3m ($66.4m) for the project’s first two phases, compared to PGK130m ($52.8m) in 2013. Other ongoing maintenance and upgrade projects in the Highlands include the $113m HHRP, the PNGRMRP I and II and the PNG-Australia Transport Sector Support Programme by the Australian Agency for International Development. This last led to two, three-year contracts being signed in December 2012 by Covec PNG and Shorncliffe to complete road maintenance on 187-km and 168.8-km stretches of the HH. It therefore looks like contractors will be steadily employed for years, if not decades, to continue to build, repair and maintain the Highlands roads.
Port Of Lae
Meanwhile, the primary port serving this region, located in Lae, is in the midst of one of the most expansive infrastructure projects in the country. Since it serves both as the entry point for goods destined for the Highlands and as the primary logistics hub for the country’s agriculture and mineral exports, the port has been getting a multi-phase makeover. From the initial appraisal price of $154m in 2007, the project’s cost reached a total of $291.4m in 2011. When finished by end-2014, the upgrade is expected to boost the port’s capacity by 50%.
The project was awarded in March 2012 to China Harbour Engineering Company, which began construction in June of the same year. Through the end of 2013, the company completed the excavation, dredging and reclamation of the tidal basin expansions project, and had finished roughly 95% of its work on the 320,000 sq metres of new wharf space, 30% of slope protection works and 5% of the new container and terminal yard. As of April 2014 the company was on track to complete the project by the end of 2014, in spite of a two-year delay in order to relocate an informal settlement within the proposed expansion zone. Upon completion, the project will increase the port’s annual handling capacity by 1.4m tonnes and is expected to boost the number of ship visits from 600 to 900.
While most of the funding for this is sourced from ADB loans and grants, the state is also making a substantial contribution. Out of the PGK437.4m ($178m) allocated in the 2014 national budget for infrastructure in the city Lae, PGK411.3m ($167.2m) was earmarked for port expansions, including PGK270m ($109.8m) for development of the tidal basin.
Funding steered towards Lae has not been limited to the port, but is broadly meant to develop Lae into PNG’s industrial base, according to the 2014 budget report. Other infrastructure construction and refurbishment outlays in Lae for the year include PGK100m ($40.7m) for new and existing roads and PGK65.2m ($26.5m) to rebuild Angau Hospital. Some of this funding will be used for the PGK470m ($191m) Lae-Nadzab road upgrade project awarded to China Railways International in March 2013. Expansion of the highway from two to four lanes began in late 2013 and is expected to be completed by late 2015.
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