Announcement of IDA Assists First Rural Development Project in Papua New Guinea on July 27, 1978

_.p., FOR IMMEDIATE RELEASE " 1, • ' •World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A. • Teiephone: (202) 393-6360 IOA NEWS RELEASE NO. 79/7 JULY 27, 1978 IDA ASSISTS FIRST RURAL DEVELOPMENT PROJECT IN PAPUA NEW GUINEA The International Development Association (IDA), an affiliate of the World Bank, has approved a credit of $20 million to Papua New Guinea for a rural development project to be implemented in the Southern Highlands province. The project is the first of its type to be supported by the World Bank and its affiliate in Papua New Guinea. The Southern Highlands is one of the poorest provinces in the country. It has a population of about 235,000 consisting largely of subsistence farmers whose way of life has remained unchanged since neo- lithic times. Basic needs such as food, education, health, clothing and shelter are less adequately met in the province than in almost any • other region in the country . The $32.2 million project has the long-term aim of bringing the subsistence farmers into the cash economy and thus integrate the reg!on with the rest of the country. The project will provide improved education and health ser- vices with emphasis on nutrition·, lay the foundation for improved agricultural practices, and raise cash incomes in the province. From the IDA credit, $3.6 million will be channeled through the Papua New Guinea Development Bank or the Papua New Guinea Banking Corporation to finance cash crop (coffee, tea, cardamom and silk) development. The project also includes the establishment of a unit to develop information about the subsistence sector so that its perfor- mance may be improved for the benefit of the p~~rest farmers in the region. Health and education services will be improved with the provision of a nursing school, three he~lth centers and two secondary schools. The IDA credit is for 50 years, including 10 years of grace. It bears no interest but carries a service charge of 3/4 of 1% per annum • to cover administrative costs . NOTE: Money figures are expressed in U.S. dollar equivalents. FORM NO. 1121 (5-76) T E C HN I CAL D A T A PROJECT: COUNTRY: Rural Development Papua New Guinea • TOTAL COST: $32.2 million I DA FI NANC ING : $20 mill ion, standard IDA terms OTHER FINANCING: Government of Papua New Guinea IMPLEMENTlNG ORGANIZATION: Department of Finance Post Office Wards Strip Papua New Guinea Telex FINANCE, NE 22312 PROJECT DESCRIPTION: It includes the establishment of an Agricultural Field Trials, Studies, Extension and Monitoring Unit, about 1 ,2ijQ ha of coffee, ~SO ha of tea, and the related processing and support services, 100 ha of cardamoms; the expansion of the infant silk industry; 60 km of electricity transmission line mainly to supply power to the coffee mill and tea factory; a nursing school and in-service training complex, three health subcenters, and support for a d a . collection and epidemiology unit; upgrading and construction of 138 km of main road, 40.5 km of feeder road, and the installation of small bridges and culverts on about 900 km of minor feeder roads; two secondary schools, and provision of materials to provincial primary and secondary schools and the teachers college; and strengthening the staff engaged in non-formal education. From the credit, $3.6 million wi 11 be on- lent through the Papua New Guinea Development Bank (PNGDB) or the Papua New Guinea Banking Corporation (PNGBC) to finance cash crops. PROCUREMENT: Since all commercial ventures, including smallholder development (26% of base cost), will be undertaken by Independent private, public, or mixed public-private enterprises, procurement will be decentralized and widely scattered. Consequently, international competitive bidding will not be generally feasible or appropriate. PNGOB and PNGBC will, however, re- quire, as a condition for making subloans, that at feast three bids be obtained from at least two countries for items of machinery and equipment costing in excess of $100,000. Construction of civil works, including roads, will be by force account but using hired plant, where appropriate. Contracts for materials and vehicles would be let In accordance with local procedures that are acceptable to the Association. CONSULTANTS: The services of a Coffee and Cardamom Supervisor and a Coffee Extension Specialist to work with smallholders will be required. ECONOMIC RATE OF RETURN: ESTIMATED COMPLETION DATE: 13% for coffee, tea, cardamom, silk and road components. 1983 • - 0 -