Papua New Guinea : transport sector review

Document oi The World Bank FOR OFFICIAL USE ONLY FILE COPY CONFIDENTIAL Report No. 2819a-PNG PAPUA NEW GUINEA SECTOR REVIEW: TRANSPORT January 29, 1980 Transportation Division Projects Department East Asia and Pacific Regional Office This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its l'ontents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS WEIGHTS AND MEASURES ABBREVIATIONS ADT Vehicles per day AWM Area Works Manager CAA Civil Aviation Authority CAD Civil Aviation Division DTCA Department of Transport and Civil Aviation DTWS Department of Transport, Works and Supply DWS Department of Works and Supply NEC National Executive Council NPC National Planning Council NPEP National Public Expenditure Plan NPO National Planning Office PMV Public Motor Vehicle PNGHB Papua New Guinea Harbours Board PNGL Papua New Guinea Line PPD Policy and Planning Division PWM Provincial Works Manager  C46383/J55642/D2188/06 FOR OFFICIAL USE ONLY CONFIDENTIAL PAPUA NEW GUINEA TRANSPORT SECTOR REVIEW TABLE OF CONTENTS Page No. SUMMARY AND RECOMMENDATIONS i-ii 1. THE COUNTRY AND ITS TRANSPORT SECTOR ••••••••••••••••••••••••••• 1 Introduction .......•...•.............·.•...... �............... 1 Distinctive Features of the Sector •••••••••••••••••••••.••••• 2 Transport Coordination and Planning .......................... 5 Past Assistance from the Bank Group •••••••••••.••••••.••••••• 6 2. DESCRIPTION OF THE TRANSPORT SYSTEM, BY HODES •...••..••.•...•.. 7 Introduction ................................................ . 7 A. Road Transport •............................................ 9 . . . . . . . . . . . . . . . . . . . . ... . . . . . The Road Network •••••••••••••••••••••••••••••••••••..••••.• 9 Vehicle Fleet and Traf fic Levels 9 Repair and Maintenance· of Vehicles •••••••..•••••..•••••.•.. 10 Regulation of Road Transport •••••••.•••••.••.••.•.••••••.•. 10 Highway Administration, Staf fing and Training •••••••••••••• 12 Financing ..........................................·........ 13 Engineering ................................................ 14 Cons true tion ...•........................................... 14 Maintenance of Roads ••.•................................... 15 B. Shipping ...•.•......•...•..•............................... 16 The National Fleet ......................................... 17 The Coastal Fleet ......................... ................ . 18 Cargo Tonnage, Composition, and Load Factors •••••••••••.•.. 19 Over-capacity and High Costs ••••••••••••••.••••••••••.••••. 19 Proposals for Increased Ef ficiency ••••••••••...•..•.•.•••.• 20 Shipping Regulation .•...................................... 20 c. A.ir Transport .••...•.•..••..•...•.......................... 21 Traf fic 22 Tariffs .................................................... 23 3. TRANSPORT IN THE NATIONAL PUBLIC EXPE?IDITURE PLAN 1 1980-83 ••••• 25 Allocations by Development Objectives ••••••••••••••••••••••.. 25 This report is based on the findings of a transport sector mission which visited Papua New Guinea in the fall of 1978. Its members were: Albert Weckerle(Chief of Mission), Alice Galenson, Gabriel Roth, Kenneth Ewing, George Trnka and George Bain (visited Papua New Guinea in March 1978). The report was prepared by Robert Rafloski and George Baldwin and edited by Christine Morgan. This document has a restricted distribution and may be used by recipients only in the performance of their official duties.. IL! content! mav nat nth..rwi•'" hf' rticrlnc�...i withn11t Wn..Lrl R.fti,. ... ,i.�..;�.,;�ft C46383/J55642/D2188/07 - 2 - Page No. Major Projects in the Plan ................................... 25 Investments Planned by Autonomous Entities ••••••••••••••••••• 26 4. CURRENT IS SUES IN THE SECTOR •• ••••••••••••••••••••••••••••••••• 30 A. Transport Policy . • . . . . . . . . . . . . . . . . . • . . . . . . . . . . . . . . . . . . . . . . . 30 User Charges . . . . . . . . . • . . . . . . . . . . . . • . . . . . . . . . . . . . . . . . . . . . . . . 30 Deregulation ••••••••••••••••••••••••••••••••••••••••••••••• 31 Maintenance vs. Expansion Priority, and Related Issues ••••• 33 Share of Transport in the Public Expenditure Plan ........ 34 Balance Between Central and Provincial Transport Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . • . . . . . . . . . . . . . . . . . . 35 Balance Between Primary, Secondary and Tertiary Road Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Extent of Local Participation in Road Construction and Maintenance . • . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Establishment of Provincial Transport Institutions .....•• 36 Definition of a Modal Strategy ••••••••••••••••••••.•• , ••• 36 B. Design Standards . • . . • . . . . . • . . . . . . . • . . . . . . . . . . . . . . . . . . . . . • . . 36 ANNEXES 1. Summary of Experience with IDA/Bank Transport Projects 2. Background on User Charges 3. Desirable Data-base for Transport Planning TABLES 1. PNG Harbors Board Administered Ports 2. Volume of Exports 3. Road Transport Statistics by Provinces, 1976/77 4. Vehicle Fleet - Number of Vehicles on Register, 1963-78 5. Central Government Expenditure by Function, FY73-78 6. Expenditures on Roads, 1968-79 7. Road Infrastructure - Composition of Expenditure and Estimated Revenue from Road User Charges in 1976/77 8. Structure of Interisland Trade 9a. Air Transport - Passenger Movements at Principal PNG Airports Including All Regular Public Transport and Charter Services, 1976/77 9b. Air Transport - Freight Movements at Principal PNG Airports Including All Regular Public Transport and Charter Services, 1976/77 9c. Air Transport - Aircraft Movements at Principal PNG Airports Including All Regular Public Transport and Charter Services, 1976/77 10. Comparison of Air Transport Operations by Level of Service, 1976/77 11. Comparative Fares 12. Aircraft Fleets and Capacities as of June 30, 1977 13. Transportation Projects Proposed in the National Public Expenditure Program, 1980-83 14. Civil Aviation - Composition of National Government Expenditure and Estimated Revenue from User Carges in FY76/77 C46383/J55133/D2188/08 - 3 - CHARTS 1. World Bank 21086 - Organization of Department of Transport and Civil Aviation 2. World Bank 21018 - Organization of Department of Works and Supply MAPS 1. World Bank - Papua New Guinea - Major location of Cash Crops 2. World Bank - Papua New Guinea - Transportatiop C46383/J55642/D2188/ll PAPUA NEW GUINEA TRANSPORT SECTOR REVIEW S UMMARY AND RECOMMENDATIONS The Transport System 1. Land transport development in PNG is constrained by high investment, maintenance, and operating costs because of the extremely rugged mountainous terrain, extensive coastal swamps and widely dispersed population centers. Road transport is nevertheless growing and performs a vital social communication function and, in some areas, an important economic role. Aviation has played a significant role in the development of the country and will continue to do so. Coastal shipping is, in places, the only link between the islands and the mainland. There are no railroads. 2. The most important achievement in the transport sector in PNG in the past 15 years has been the upgrading of the Highlands Highway. This Highway runs for a distance of about 600 km from the main port at Lae through Mt. Hagen to Mendi providing an essential facility for the Central Highlands where over 40% of the population of PNG lives. 3. Road density per thousand population is high, exceeding most island economies, even those with higher per capita incomes; however, this reflects the country's small population (c. 3.0 million) rather than an extensive road network. Import volumes are higher than export volumes and there is excess trucking capacity in the export direction. There is also excess capacity in shipping and current regulations inhibit general aviation from fully utilizing airport capacity (paras. 2.56 and 2.61). All modes are heavily regulated through detailed licensing controls that go far beyond safety requirements. The Government appears to share the Bank's concern that all modes (in particular road and air transport) are over-regulated, denying consumers and producers the benefits of competition. All modes are subsidized; roads have the highest subsidy with user charges paying less than 30% of public recurrent costs. 4. The Government's 1980-83 development plan allocates about 16% of public investment to transport. Of that amount, 80% is for highways, the largest portion being for sealing (asphalting) the existing system. About 20% of the road allocation is for access and feeder roads. If present budget allocations for transport are an indication of future trends, even a modest 25% increase in the rural road network will take in excess of 15 years. In view of the local contracting industry's very limited capacity this allocation may be as much as can be absorbed. The industry needs help, which it has so far not received, to increase its capacity (see below). C46383/J55734/D2188/12 - ii - Policy Recommendations S. Finance. The Government should take steps to increase user charges in all three modes to cover at least public recurrent expenses. S ince expansion of the system is a high government priority, an increase in user charges to cover investments should also be considered to help meet these costs. Considering the rapid increases in maintenance costs, the Government should weigh the merits of earmarking road-user revenues for maintenance and administration of the road system instead of pooling them in general revenues, as currently done. The Government should also consider putting some of its user charges (e.g., fuel taxes) on an ad valorem basis instead of the current specific basis (para. 4.06). 6. Deregulation. The second recommendation is to deregulate all three transport modes except for safety regulations and regulations limiting damage to the system. The Government should undertake an immediate review of the Heavy Vehicle Act (1977), the Merchant Shipping (coasting trade) Act 1977, and the Shipping (Freight Rates) (Amendment) Regulation 1976, and the regulations governing competition in civil aviation (paras. 3.09, 4.04, 4. 0 5, 4.0 8, 4.0 9, 4.10 and 4.12) • 7. Assisting Domestic Contractors. The Department of Works and S upply should be strongly encouraged to assist in the development of the domestic construction industry. This can be done by temporarily arranging selective contract awards to allow domestic contractors to execute small packages of works under K 500,000 (US$700,000) (paras. 2.31 and 2.32). 8. Opening up More Rural Areas. The provision of transport to more rural areas is critical. Where extension of the road system may not be justified, the Government should develop a strategy for using civil aviation and coastal shipping to initiate development in the more inaccessible areas, building roads only when and if levels of production are reached that can justify their construction (para. 4.22). C46383/J55734/D2188/18 1. THE COUNTRY AND ITS TRANSPORT SECTOR Introduction 1.01 Papua New Guinea (PNG) is an island country of 3 million people located in the tropics about 100 miles north of Australia. It comprises the eastern half 9f the island of New Guinea (the mainland) and some 600 smaller islands of which about half a dozen are of major importance. PNG has a land area about the size of Spain. Both the mainland (comprising about 851; of the land area) and the major islands are dominated by high mountains. The central mountain range of the mainland, which forms a complete divide between north and south, is a complex s ystem of ranges separated by broad upland valleys. These valleys, with altitudes of 5,000-10,000 feet, form the Central Highlands •.LJ. The foothill zones have become deeply cut.by river s ystems, resulting in an intensely rugged topography. Volcanic areas of the mainland, which are limited to relatively small zones, have also produced difficult terrain. The islands of New Britain, New Ireland and Bougainville are also characterized by mountains with upland valleys; the latter are much less extensive, however, then those of the mainland. The main consequences of the rough, broken topography is that a very large proportion of the land is virtually unusable for agriculture and forestry, and difficult to traverse. (MI) 1.02 In addition to limitations imposed by the mountains, extensive s wamps cover large areas. On the southwest coast of the mainland, the great delta plain of the Daru coast is one of the most extensive swamps of the world. There are also large swamps on the northwest coast. From the mountains of the hinterland, the river s ystems carry heavy loads of alluvium which are building into deltas. There are extensive mangrove and nipa palm swamps at most of the river mouths. In addition, the large Sepik and Ramu Rivers flow for hundreds of miles through widespread riverine swamps of sago, bamboo and forest. Scattered settlements are found in the swamplands but the numbers are small. 1.03 These topogra.phic conditions and the numerous islands have created small pockets of widely dispersed population centers, often difficult to reach. These features explain the extremely high cost of providing and maintaining transport facilities to many parts of the country . Over 40% of the total population is concentrated in the Central Highlands and less than 15% of the total population is urban •.11 Although the Government has instituted a program of localization, expatriates still play a vital role in technical, adminstrative and business functions • .Ll Comprising the provinces of Eastern Highlands, Western Highlands, Southern Highlands, Enga and Chimbu. 11. Urban Center populations (1977) are:· Port Moresby, 105,900; Lae, 62,500; Rabaul ·33,200; !1adang, 21,500; Wewa k , 20,500; Kieta-Arawa­ Panguna, 19,700; Mt. Hagen, 14,900; and Goroka, 12,500. C46383/J55734/D2188/19 - 2 - 1.04 PNG's economy is characterized by relatively small employment in the modern monetary sector; the majority of the productive population is engaged in the traditional, largely subsistence, agricultural sector. The modern sector, dominated by a large open-pit copper mine at Bougainville, and the expatriate community which predominates in the government sector and a variety of small manufacturing and service establishments, contributes between 70-75% of GDP. Agriculture, forestry and fishing which employ 85% of the labor force, provide 25-30% of GDP, with over half of the sectoral output coming from subsistence agriculture. Cash agriculture is growing fairly rapidly, with production concentrated in three crops (coffee, cocoa and copra) for export. Table 1.1: MAJOR EXPORTS (K million) Annual growth FY68-77 FY68 FY71 FY74 FY77 (%) Copper 311.9 191. 4 Coffee 14.3 20.6 28.8 132.6 28.0 Cocoa 11. 8 13.6 23.3 s5.1 18. 7 Copra� 21.3 22.9 38.4 32.6 4.9 Timber 4.9 8.9 20.3 21.9 18.1 Total ExEorts £E. 59.1 77.4 459.3 484.5 26.0 /a Includes copra oil and oil pellets. /b Including other exports, such as fish, palm oil, tea, rubber and gold. Source: World Bank Report No. 2157-PNG. 1.05 Barring major oil discoveries, future growth of the economy is likely to be moderate (3-4% p.a. or less than 1% faster than population growth). While the Government wishes to increase economic growth, it places strong emphasis on avoiding rapid, disruptive changes in traditional modes of living. The prospects for mining appear good, but are much less favorable for manufacturing, where markets are small and transport costs high. Consequently an unusually high proportion of consumer goods will continue to be imported. Distinctive Features of the Sector 1.06 The distinctive features of the country's transport sector reflect - as they would in all countries - the country's geography, topography, the C46383/J55734/D 2188/20 - 3 - size and distrib ution of population, the level of economic development and the history of past investments in the sector. The influence of these factors can be seen in the following nine descriptive characteristics of the sector in PNG: (a) High Costs. Transport in the country is expensive by interna­ tional standards. Investment costs for sector in frastructure, which are borne by the Government, plus equipment costs, and the cost of fuel and spare parts (all of which must be imported), are high. Mountainous topography requires high investment costs in road construction and, with heavy rains and erosive soils, maintenance costs are also high. Scattered populations and a low level of economic development leads to low load factors in freight haulage and thus to high tmit costs. Load factors are also low in coastal and inter-island shipping. (b) Modal Development. The country has a relatively well-developed air transport ind ustry and fairly good coastal shipping serving the main islands and ports, but development of the road sytstem is at a relatively early stage. Because of their high cost, and high political and popular demand, roads account for some 80% of the country's transport allocation in the National Public E xpenditure Plan (NPEP). The road system will continue to develop as a collection of unconnected regional networks based on the needs of the relatively independent economies of the country's many islands and regions. It will be dif ficult to interconnect many of these separate systems, even on the same islands. The markets for consumer good s and agricultural products are typically local, not national, and export cash crops must be bulked at ports before export. A great deal of production-oriented transport depends on the relationship between ports and their agricultural hinterlands. This is notably true of the Central Highlands where 40% of the population is concentrated. (c) Weak Economic Justification. The low level of production in the economy and related low population densities, combined with high investment costs, frequently make it dif ficult to justify road construction on economic grounds. The increments in production that can reasonab ly be expected and/or the savings in transport costs, often fail to generate a positive return on the resources invested in road construction. However, the demand for road connections has wide political and popular appeal; thus some part of the future road construction programs will have to be justified on least-cost grounds alone, a weaker test than the normal rate-of-return criterion. (d) A Tradition of Regulated Entry. For many years the Government has carefully regulated the number of carriers allowed to operate on the roads, in the air and in shipping. This policy of restricted entry has naturally tended to moderate price competition and has tended to protect the profit margins of existing firms. C46383/J55734/D2188/21 - 4 - (e) Financing Transport. In all three modes, the users of transport services pay for a relatively low percent of total sector costs. The balance must be paid by the Government as subsidies (grants from the bud get). This situation is now under revi ew; it is expected that t�e Government will increase many user charges to strengthen the sector's financial vi ability . It will probably take several years, however, before staged increases in user charges in any of the modes (and particularly roads, much the largest sector) cover the mode's maintenance and administration costs. (f) Early Stage of Institutional Development. Although port authori­ ties and air transport institutions are well developed, road transport institutions are not. There are two fairly strong central agencies, but major responsibility for planning, designing, building and maintaining provincial and tertiary roads has recently been transferred from the Central Government to the provinces as part of the general decentralization of government functions that began in 1977. Inadequate provincial road institutions are a major constraint on s ystem expansion. (g) Weak Local Contracting Industry. In the past, almost all roads have been built by foreign contractors. While the latter will continue to build almost all primary and secondary roads for the next few years, there are five or sL� domestic firms which could be encouraged to build tertiary (rural) roads. These half-dozen firms have an annual construction capacity of less than 100 km of roads per year. There is some tradition of self-help construction by villagers, but it is not known how many km a year are currently built by this method. (h) Transport Components in Enclave Projects. A few large mining and agricultural projects have developed transport facilities to serve their own requirements and a few more such facilities will be developed in future. These are of little or no significance except to the projects themselves and can generally be excluded from a consideration of the country's transport sector. (i) Low Cost Road Standards. PNG's major produc tion centers are now connected by road to export points. Future expansion of the road system will be needed to connect scattered pockets of population to the present s ystem or to airfields to provide these pockets with access to markets and for basic comurunications needs. Because of the estimated limited economic production potential in these pockets and their probable low economic justification, these roads should be constructed to the least cost standard for the conditions of the area. At present the lack of data concerning maintenance costs and practices make it difficult to adequately balance capital costs for low cost roads and subsequent maintenance costs. These maintenance costs should be minimized since they affect budgetary alloctions on an annual basis. Further,roads bu ilt to too low standard usually have C46383/J55734/D2188/22 - 5 - shorter useful lives and require early reconstruction or rehabilitation. They also have higher vehicle operating costs hence increasing total transport costs. Current practices of undertaking low cost road construction without examining the impact of subsequent maintenance, useful life, and vehicle operating costs should be reconsidered. Until adequate data on costs are available design for low cost roads should be on a project-by-project basis. Transport Coordination and Planning 1.07 Prior to 1977 the Department of Transport, Works and Supply (DTWS ) was responsible for the planning and execution of all civil works in the sector. Within DTWS, the main functions of the Office of Transport were: (a) to develop policy for land, sea and air transport throughout the country; (b) to undertake the necessary economic studies and surveys related to all modes; (c) to prepare, evaluate and revise as necessary the capital and cur­ rent expenditure plans for all modes to meet the requirements of consumers, transport operators and the Government; and (d) to regulate and administer each of the modes. The Office of Works was responsible for the execution of all capital works. 1.08 In 1977, eight years after a UNDP study of the transport system, a new Department of Transport and Civil Aviation (DTCA ) was established. The Works and Supply section of the old Ministry was reconstituted as a new Department of Works and Supply (DWS). Both departments were responsible to separate Ministers. DTCA has responsibility for setting policy, planning investments, coordinating and regulating carriers in all transport modes. The four main divisions of DTCA are: (a) the Policy and Planning Division, which decides broad investment strategy and policy on all major transport questions; (b) the Civil Aviation Division, responsible for the licensing of internal air service operations, for approving airline timetables and for setting fares and freight rates; (c) the Maritime Division responsible for provision and maintenance of navigation aids and the administration of shipping regulations; and (d) the Division of Land Transport responsible for the regulation and licensing of road traffic. C46383/J55734/D2188/23 - 6 - There are two other transport agencies worth noting, both autonomous. The PNG Harbours Board (PNGHB) exercises complete jurisdiction over the planning, construction and administration of all major harbors. A Civil Aviation Agency, founded by a tied grant from the Australian Government, is responsible for all safety aspects of air transport. The semi-autonomous Coastal Shipping Corporation manages the Government fleet and hires out its vessels to government agencies. Past Assistance from the Bank 1.09 The Bank Group has given 100re assistance to the transport sector than to any other. Technical assistance began when the Bank acted as executing agency for the UNDP-financed Transport survey of 1968/69. The Group has subsequently financed two highway and two port projects and a third highway project has been appraised. All three highway projects involve the development of the country's one trunk road, the Central Highlands Highway which provides a connection between the region's major population center and producing area and the major port at Lae. In addi­ tion, 38% of the US$20 million 1978 Credit for Rural Development was earmarked for road building and road improvements. The First Ports Project expanded capacity at three existing ports (Kieta, Port Moresby and Lae) and created a new deepsea port at Alotau. The Second Ports Project expands f acilities at Port Moresby and at Samarai. Total Bank Group assistance in the four transport projects amounts to US$40.7 million. The two highway and f irst ports projects were financed as IDA credits; the second port project was financed as a Bank loan. A summary of experience under these four projects will be found in Annex 1.  C46383/J55734/D2188/30 - 7 - 2. DESCRIPTION OF THE T RANSPORT SYSTEH, BY HODES Introduction 2.01 PNG's geography, topography and early stage of economic development has affected the state of the transport s ystem (M2). There is no railway in the country and roads do not yet reach a majority of the population, many of whom remain isolated, except by foot or air. Air services have long played a major role in PNG as the only means of providing transport links over the mountainous terrain. The country's two largest cities, Port Moresby and Lae (only 300 air km apart) are not yet connected by land because of intervening mountains and good air and shipping connections. Coastal and interisland shipping is chiefly used for delivering agricultural produce to exporting ports and for distributing the imported goods .on which the country relies. The small population (3.0 million) is scattered over the numerous islands and separated by high mountain ranges on the mainland, which results in extremely high investment and operating costs for all modes of transport. 2.02 With the country's heavy dependence on foreign trade, it is not . surprising that imports and exports generate much of the largest volume of freight traffic for both road haulers and coastal and interisland shippers. Imports account for nearly four times as much tonnage as exports, not counting copper and timber (Table 1). All the copper and much of the timber are handled on "captive" (project-built) facilities that are not part of the country's transport s ystem . 2.03 Because of the high disparity between import and export volumes, substantial unused freight capacity exists in the export direction. The rapid growth of the main export crops over the past decade, plus ample transport capacity to handle much higher volumes, suggest that lack of transport has not held back agricultural development, which is more dependent on market prices and other factors than adequate transport facilities (Table 2). Changes in the mode of transport are important, however, in bringing down costs and thus in determining the strength of export prices on producer incentives. Changes in modes have caused major shifts in cargo flows, notably in the important Central Highlands; prior to 1965, for example, almost all freight into and out of this area·was moved by air. With the opening of the Highlands Highway in that year, airfreight dropped dramatically and is now practically nil. Since then, production volumes of export crops have increased dramatically . 2. 04 Studies of the transport s ystem and the government's goals for the country's development indicate there are two main needs to be served: the economic n eed to provide farmers with access to markets and lower the present high transport costs, and the social and political need to improve rural welf are by making it easier to provide education, health and other government services as well as increasing personal mobility. C46383/J55642/D2188/31 - 8 - 2.05 These two needs will frequently overlap where large populations are involved. Thus, to be economically justified, most transport facilities should be located in areas with relatively high population densities, which would often add a social justification that could pass a test of reasonable per capita costs. However, the high cost of providing transport facilities in the rugged mountainous terrain of the highlands and the swampy lowlands militates against using PNG's scarce resources for transport investments with low or negative economic returns, no matter how eloquently they may be advanced on other grounds. Some idea of the constraint that low population density has on road development can be seen in Table 2.1 below, which p resents data from ten countries. Table 2.1: ROAD DENSITIES AS A FUNCTION OF LAND AREA AND POPULATION IN SELECTED ISLAND COUNTRIES RANKED BY PER CAPITA INCOME Km Km GNP Popu- road road per Popu- lation per per capita Area lation density Km sq km 1,000 income ( '000 (mln.) per roads land popu- (1976) sq km) (1976) sq km ('000) area lation New Zealand 4,200 269.0 3.1 11.52 92.0 0.34 29.68 Trinidad & Tobago 2,190 5. 1 1.1 215,68 6.4 1.20 5.81 Jamaica 1, 150 11.0 2.1 190.91 15.9 1.40 7.57 Malaysia 830 332.8 12.6 37.86 24.5 0.07 1.94 Dominican Republic 790 49.0 4.8 97.96 10.0 0.20 2.08 Papua New Guinea 450 462.0 2,8 6.06 18.4 0.04 6.57 P h ilippines 420 300.0 43.2 144.00 119.6 0.40 2.76 I ndonesia 280 1,492.0 130. 9 87.73 110.0 0.07 0.84 Haiti 220 28.0 4.7 167.86 3. 1 0.66 0.66 Madagascar 200 590,0 9. 1 15.42 28.0 0.05 3.08 2.06 PNG has the lowest number of kilometers of road per square kilometer of land area of the countries shown in Table 2.1, yet it has the third highest number of kilometers of road per 1,000 population. This fact is important since it is the population which must ultimately support the system. Those countries with higher kilometers of road per 1,000 population have substantially higher per capita incomes. The already high km-to­ population ratio makes it important to be concerned about the affordability of the road program, both in terms of investment and maintenance costs. For the two other transport modes, PNG has over 50 ports and 400 airports and airstrips serving her population of 3.0 million. No major investments in new ports or airports are needed at the present time. C46383/J55642/D2188/32 - 9 - A. Road Transport The Road Network 2.07 The road network in PNG comprises just over 18,300 km of vehicular roads of which approximately 1,000 km are in urban areas (Table 3) •.Ll Only 500 km are sealed (asphalted); 97% of the roads have dirt or gravel sur- f aces. 2.08 The Government classifies the roads into three categories: (a) arterials which are trunk roads mainly servicing interregional or long-distance transport (also national and provincial roads) numbering about 4,800 kms; (b) collectors which provide transport between main population and/or commercial activities and connect to arterials; and (c) locals, which serve a local area sometimes connecting into the collector roads. Collectors and locals number about 12,600 kms. For administrative and budgetary purposes, roads are classified into national and provincial roads for purposes of administering construction, improvement and maintenance programs. Despite regionalization, the Central Government will continue to provide major funding for maintenance and construction of the road system. However, the provincial governments are responsible for the maintenance of all provincial roads to national standards, which may be done through the Central Government's Department of Works and Supply (DWS), or through their own Public Works Departments. Ve hicle Fleet and Traffic Levels 2.09 Because of the low level of development and the concentration of population in isolated pockets, particularly around the coast, road traffic volumes are generally low, both for passengers and freight. In 1977, the whole country was serviced by some 43,700 vehicles (Table 4). The vehicle growth rate from 1968 to 1977 has been about 5.5% p.a. However, the supply of highway transport among the provinces varies greatly - in the Central Province there are 98 vehicles per 1,000 population whereas in the Gulf Province there is only one per 1,000 population (Table 3). The most popular vehicles are the multi-purpose "Public Motor Vehicle" (PMV) which are usually owned in villages, but operate to and from urban centers carrying passengers and freight. Most road traffic is short distance; long distance passenger traffic between main centers is chiefly by air, and by sea for freight. An important exception is the Highlands Highway which runs for a distance of about 600 km from the main port of Lae through Mt. Hagen to .Ll Based on the 1975 road network inventory. C46383/J55642/D218 8/33 - 10 - Mendi providing an essential facility for the Central Highlands, where 40% of the population of PNG live. One of the branches of this highway connects to Wabag, t he center of the important agricultural district in Enga Province. The Highlands Highway carries a substantial average traffic volume in excess of 600 vehicles per day (ADT), of which over 40% are trucks and buses. Because of the improvements to the highway, there has been a gradual shift from trucks of 5 to 7 tons capacity to 12 -ton trucks with 10-ton trailers, used particularly on the long-distance runs. 2.10 The main constraint on the development of the road-transport industry is the limited extent of the road network. Other constraints are: (i) difficulties in repair and maintenance of vehicles, and (ii) restrictive regulations. Repair and Maintenance of Vehicles 2.11 The useful lives of vehicles outside the urban area are short, on average about three years, and many vehicles are inoperable for long periods. This is due mainly to inadequate maintenance and repairs and absence of spare parts. Many inexperienced truck owners do not yet understand the advantages of preventative maintenance, do not know how to get the spares they need, or else are unable to pay •.Ll Regulation of Road Transport 2.12 Road transport is controlled by DTCA's Land Transport Board, which is required under the Passenger Transport Control Board Act (1968) to "exercise general supervision over licensing of public motor transport in PNG in the interests of the public, with a view to its greater integration, safety, efficiency and economy." More importantly, the Board, aside from examining procedures in the licensing of hire vehicles and their accident and safety records, must also assess the supply of, and demand for, t he services of such vehicles and review the conditions of their operation. The Board also carries out the provisions of the Licensing of Heavy Vehicles Act (1977). 2.13 It is doubt ful whether the granting or withholding of a particular license by the Board is always in the public interest. The private interest J.1.. One short-term solution to this situation might be for the hire purchase firms to adopt a system which requires buyers to include with their monthly payments a sum suf ficient to cover at least the routine service charges and, possibly, an allowance for expected repairs. Routine ser­ vicing bills could then be presented directly by the service stations to the hire purchase firms and the buyers, having paid for servicing, would have a financial incentive to get their servicing done. The amounts held by the firms for repairs could be placed in accounts earning inter­ est and returned to the vehicle owners at the conclusion of the contract i f not used for repairs. C46383/J55642/D2188/34 - 11 - of existing firms is often easier to identify than "the public interest" (which is not defined in the law). The Board has delegated some of its powers to provincial governments, which will probably increase the restrictiveness of licensing by allowing each province to exclude vehicles that do not bear their licenses. The Central Government should ensure that these powers do not extend to regulating interprovincial transport. 2.14 The Licensing of Heavy Vehicles Act (1977) was discussed with the Bank prior to its passage. Government representatives assured the Bank that the intention was not to limit competition but rather to promote the sound development of an efficient and competitive industry within certain administrative regulations. A principal objective of the Act was to expand opportunities for indigenous truckers by permitting them, but not expatriates, to upgrade their vehicle capacity. However, the Act also restricts entry by limiting the number of licenses the Board may issue (existing licenses must be reissued by the authorities every 12 months). 2.15 Government officials report that many expatriates who had formed companies have now sold the controlling shares to nationals. The expatriates, however, retain management control of the companies. They make long-term contracts for cargo and subcontract peak loads to nationals who have invested in trucks. There appears to be only limited competition for the bulk of the cargo moving in and out of the Central Highlands. As volumes grow, t he transport supply will be restricted by the number of licenses and freight charges will rise above even the present rates. A recent government study on vehicle operating costs suggests that current tariffs between Mt. Hagen and Lae are over 40% higher than the estimated resource cost (including overheads).L!_ The benefits accruing to improving the highway, while perhaps helping to hold down future increases in costs, are not expected to reduce the present tariff levels, which would distribute the benefits to shippers and consumers. Further, official tariffs are indexed to a formula based on the cost of fuel, spares, tires, etc. However, it does not consider road improvement savings. Thus if road improvements brought about a 10% saving in running costs, but the unit input costs went up 10% dµe to higher prices for fuel, spares, etc., the truckers would get a tariff increase reflecting the higher input costs. In effect, road improvements would provide windfall profits to the truckers. The combination of restrictive licensing and the tariff formula make it improbable, therefore, that the users of the transport services will receive the benefits from any proposed improvements. 2.16 The DTCA, in its tentative transport policy paper, has recommended a review of the existing regulations concerning the operations of carriers L!. Part of the price di fference may be attributed to the high incidence of cargo theft on the highway. Also, this cost does not reflect the high underutilization of trucks on many journeys because of imbalance in the inward and outward freight volumes. C 4 6383/J55642 /D2188/35 - 12 - for hire. The Government should be advised by the Bank that DTCA's proposed study of existing regulations of the industry should be undertaken as soon as possible. 2.17 Since there are few economies of scale to be obtained from operating large numbers of trucks, the local industry is fragmented and consists mainly of one-vehicle firms. However, there are economies in the bulking and scheduling of loads and this has led to the emergence of firms that are essentially freight forwarders, i.e., freight brokers. Through the Licensing of Heavy Vehicles Act (1977) the Government had hoped to assist indigenous vehicle owners in providing more efficient, less costly trans­ port. It has, however, apparently resulted in expatriates' controlling the freight forwarding companies and subcontracting surplus freight to indige­ nous operators. Thus the expatriates no longer risk underutilization of their trucks, while the indigenous operators who have invested in the larger capacity vehicles are subject to heavy losses when their trucks are underutilized. 2.18 The Land Transport Division of DTCA has recently been strengthened to include a full-time traffic counting unit. However, this unit is unable to meet the demand for traffic statistics. Most of the unit's work is on an ad hoc basis and there is a need to increase its capacity to carry out more systematic programs of traffic counts. The lack of such basic information seriously hinders transport planning, including the planning of maintenance operations and will be remedied in the proposed Third Highway Project through technical assistance and the provision of mechanical traffic counters. Highway Administration, Staffing, and Training 2.19 Under the reorganization in 1977 the Department of Transport and Civil Aviation (DTCA) and the Department of Works and Supply (DWS) were established, each reporting to separate Ministers. 2.20 The Department of Transport and Civil Aviation (DTCA) under the Minister for Transport and Civil Aviation is responsible for national transport policy and planning as well as for the administration and regulation of transport activities (Chart 1). Specific duties involve the assessment of transport demand, including undertaking traffic surveys, and preparing statistics and forecasts. DTCA is also responsible for economic studies and the preparation of projects for funding through the National Public Expenditure Plan (NPEP). Under the present government organization, the DTCA, through its Division of Projects and Coordination, is specifically responsible for the planning of the national road system. The DTCA also advises Government concerning national financial assistance to rural transport development. 2.21 The Department of Works and Supply (DWS) (Chart 2) under the Minister of Works and Supply is responsible for the technical investigation, design and construction of national road projects as well as the maintenance of national roads. All other road construction and maintenance activities C46383/J55734/D2188/36 - 13 - come under the authority of the various provincial governments and town councils although these bodies generally engage DWS, on an agency basis, to carry out the required work. DWS is a general purpose works organization which deals with water supplies and sewerage, government buildings and aerodromes, in addition to roads. It directly handles all major works, both capital and recurrent, through its field organization which consists of five Area Works Managers (AWM) with offices in Port Moresby, Madang, Lae, Rabaul and Mt. Hagen and 20 subordinated Provincial Works Managers (PWM) with offices in each province. 2.22 Both DTCA and DWS remain largely dependent upon expatriate staff to fill their technical positions. In late 1979 the Works Division at DWS had 154 professional posts of which 98 were filled, 86 by expatriates. The Government is continuing active recruitment overseas, including the UK, New Zealand and Australia but since the introduction of revised salary scales and terms of contract at the beginning of 1979, results have been disappointing. The deficit in skilled personnel has been made up by short­ term engagement of consultant staff for key positions. The departments continue to pursue training programs designed to accelerate staffing with qualified nationals. However, it is acknowledged that it will take many years to train local staff for all senior positions. 2.23 Through its local government branch, DWS provides an engineering advisory service to many local government councils throughout the country. This branch also conducts training programs for council staff which teach the basics of low-cost road construction and maintenance, bridge construction and water management. 2.24 In July 1974, the Government set up a Plant and Transport Authority which assumed responsibility for the procurement, maintenance and operation of all government transport and mobile equipment. The Plant and Transport Authority has since become the Plant and Transport Branch of DWS. There has been considerable progress to date in the efficiency of this organization, which operates on a full cost-recovery basis by charging national or provincial clients for services provided. Financing 2.25 Financing for the construction, improvement and maintenance of national roads is provided through general revenues from the Government's annual budget. In addition, provincial governments fund works on major provincial roads through their untied grants and other internal funds or through tied grants appropriated through NPEP. 2.26 In 1979, the Government allocation for road works was about K 33 million (US$46.2 million), which is exclusive of provincial untied grant funds used for such activities. Of this total, about K 16 million (US$22.4 million) was for capital works and about K 17 million (US$23.8 mil­ lion) for maintenance works. No figures are available for provincial expenditures. C46383/J55734/D2l88/37 - 14 - 2.27 The Government's annual expenditures on roads increased substantially during the period 1968/69-1974/75, from some K 12.0 million (US$17.0 million) to about K 32.0 million (US$45.0 million). As a percent of total current expenditures road expenditures have averaged about 14% p.a. (Table 5 ). Since 1974/75 total expenditures on capital improvements and maintenance have ranged from K 30.0 million (US$42.3 million) to K 36.0 mil­ lion (US$50.8 million) (Table 6 ). Maintenance costs for the national system have remained at about K 17.0 million (US$24.0 million) p.a. Although the highway system has not increased substantially over this period, DWS reports that maintenance costs are rising appreciably and on some sections have reached about K 6,000/km (US$8,500/km). With rising unit costs and a constant amount for maintenance, some roads must be receiving a reduced maintenance allocation. 2.28 Revenues from the use and ownership of vehicles (road user charges) are low and amount to less than 20% of the total national expenditure on roads and about 30% of the maintenance and operating costs (Table 7 ). The Policy and Planning Division of DTCA has completed a study that proposes much heavier reliance on user charges for financing the road system. The results of this study have been discussed within the Government and the DTCA has prepared a draft paper on transport policy, taking into account comments from the several ministries involved. Although the provincial governments have some taxing authority, their tax base is very limited and the Central Government will continue to provide the bulk of f inancing for highways from the general budget. The present high subsidy for road transport raises questions of ef ficiency (overuse of goods priced below economic cost) and diversion of resources from other sectors. The Bank should encourage the Government to increase road user charges, aiming, say by FY85, to cover the costs of maintenance and administration. Engineering 2.29 DWS is responsible for the engineering of roadworks, and has formulated design standards for various types of roads and terrain conditions, which are currently under review to extend their practical use. The lowest design standards are considered by DWS to provide the lowest cost for construction of maintainable roads. A large proportion of design work on roads is carried out for DWS by consultants, most of whom are subsidiaries of foreign, mainly Australian, firms. In the past two years the Roads and Bridges Section of the DWS undertook the design of some major projects, namely the section of the Highlands Highway between Erap and Kassam Pass (112 km), and the New Britain Highway (48 km), in addition to other minor projects. Some minor road and bridge works are designed in Area Works Maintenance of fices. The quality of engineering is satisfactory, but this work is done almost totally by expatriate st3f f. Construction 2.30 All major road construction works have been carried out by foreign contractors, especially where the projects have been externally financed. C46383 /J55642/D2188/38 - 15 - Some minor road construction works have recently been carried out by force account. Since the provincial governments were established, DWS either constructs or calls contracts for the construction of provincial and village roads on an agency basis in all but a few provinces. Some improvements of village roads are carried out by manual labor (self-help), but also sometimes with equipment, usually supplied by DWS, which also provides technical assistance to the local government councils. Minor improvements to roads are usually executed by force account on both national and provincial roads either directly by DWS or on an agency basis for provincial governments. 2.3 1 Civil engineering contracts in PNG are not of the magnitude, either in scale or frequency to support a large domestic construction industry. Local contracting firms can be divided into three categories: (i) domestically owned and managed; (ii) domestically owned and expatriate managed; and (iii) subsidiaries of overseas contracting companies. The f irms in category (i) tender only for plant-hire contracts (they rent their equipment for the work), while the firms in category (ii) are able to bid f or smaller civil engineering contracts. Only firms in category (iii) have the capacity to execute major construction works. 2.32 The Second Highlands Road Improvement Project included a component providing technical assistance to domestic civil engineering contractors. U nder this component, a consultant has drafted a contractor's manual and concentrated on field training for a small number of domestic firms in category (i) which had been identified as already owning a basic equipment fleet and having the entrepreneurial spirit necessary for further development. However, the relative shortage of small civil engineering or maintenance contracts (K 500,000, US$700,000 p.a. and less), which were suitable for these contractors to undertake, did not allow sufficient opp ortunity for training. These limits also give an indication of the number of kilometers the firns could construct on an annual basis - i.e., at K 30,000 per km about 15 km p.a. The Government should be encouraged to consider, as a temporary arrangement, the possibility of selectively awarding some of the DWS national highway maintenance contracts to these domestic contractors so ·that they can further develop their experience. 2.33 Major construction projects which are externally financed are usually supervised by the consultants who design them. Otherwise contracts are supervised from DWS headquarters, Area Works Maintenance or Provincial Works Maintenance offices. The quality of suervision is normally satisfactory. Maintenance 2.34 Maintenance of national roads is carried out by DWS through its AWM and PWM offices. So far, DWS has not established a Maintenance Operations Section at its headquarters. There may be a need for technical assistance to DWS to achieve this purpose. The technical standard of maintenance on national roads is on the whole satisfactory and the roads are C46383/J557 34/D2l88/39 - 16 - being kept passable all year round. Emergency situations such as landslides, culvert washouts, and brid ge abutment erosion receive prompt attention. However, the cost of road maintenance is high, due to extremely adverse topographic and climatic conditions, and to some extent, due to the past choice of road design standards. Most of the 5,000 km of national and provincial roads were built in stages, some were started as tracks, and only 500 km are p aved. Haintenance requirements are also increasing as a result of traffic growth. So far, adequate funds have been provided by the Government for maintenance of the national road network . It is understood that the Government intends to continue allocating sufficient funds for maintaining national roads to a satisfactory standard. It is also committed to a program of sealing selected roads to reduce maintenance costs. 2.35 Maintenance of provincial and local village roads is the responsibility of provincial governments. Except for two provinces (Chimbu and North Solomons), maintenance is being carried out by DWS as an agent of the provincial government, which must allocate the funds. The situation on the maintenance of provincial and local village roads varies from pro vince to province. Some provinces allocated sufficient funds for the purposes of road maintenance while others allocate none and concentrate on building new roads. The standard of maintenance on provincial and village roads therefore depends on the attitud e of the particular provincial government and is not controlled by DWS. 2.36 As mentioned above, DWS has not yet established a �aintenance Section at its headquarters to plan, direct and monitor the road maintenance operations and check on their cost. Under current practice actual maintenance expenditures are not verified against bud gets, and they are inflated by the cost of nonmaintenance work such as minor new construction and reconstruction. Costs are not recorded or analyzed, even on a sample basis, by road standards and conditions, or traffic levels and compo sition. Lack of these data limits the scope for adequate control over maintenance spending levels, road standards and road rehabilitation. B . Shipping 2.3 7 For inter-island and coastal traffic PNG relies heavily on water transport. Of some 50 ports of various sizes in the country, 16 are managed by PNG Harbours Board (Lae, Port Moresby, Kieta, Rabaul, Madang, Wewa k , Kavient, Kimbe, Samarai, Alotau, Daru, Lorengau, Oro Bay, Aitape, Bu ka and Vanimo; only the first 10 handle overseas trade). Imports and exports handled at the major ports totalled 1.9 million tons with an estimated value of over K 900 million in 1978 (Table 1). These volumes do not include the exports of copper concentrates or timber which are shipped from special ports at Bougairrville, Madang and Morobe. The volume of these two commodities is practically equal to the total volume of all imports and all other exports combined (Table 2). C46383/J55734/D2188/40 - 17 - The Government Fleet 2.38 The "Government Fleet" consists of some 90 vessels that serve remote coastal points and island groups which are not normally visited by commercial vessels. This service is supplied to National Government Departments, the Provincial Governments and Area Authorities, as well as to private firms and persons. Since January 1, 1979 the Coastal Shipping Corporation has taken over the management of the fleet and will hire out its vessels (as needed) to official, national and provincial bodies. These users will be charged average rates per hour, day, etc., sufficient to cover: (a) the annual amortization charge for capital equipment purchased from the beginning of 1978 onward; and (b) running costs (fuel, maintenance, repairs, surveys, etc.). 2.39 The introduction of these charges will encourage economy by making users of the government fleet more responsive to the costs incurred. But it is probable that the same services could be provided more efficiently by private operators. In the case of specialist government services (such as maintenance of navigational aids and spraying of rivers to combat malaria) the ships could be operated directly by the agencies concerned or contracted by them from the private sector. The existence of the Coastal Shipping Corporation, charging rates that do not cover costs, cannot but inhibit the development of coastal shipping on a commercial basis (para. 4.10). Establishment of District Shipping Centers 2.40 The large number of secondary ports in PNG constitutes a major obstacle to their being served by direct connections to main provincial ports. Entry to a difficult port can take up a whole day's shipping time and be quite uneconomical if only small quantities of cargo are there. The provinces should be encouraged to set up "District Centers" at selected secondary ports, where goods could be bulked and consigners·paid for their cargoes. Such centers could be "fed" by local boat or road services, and visited on a regular basis by ships capable of connecting with other district centers and with provincial main ports. 2.41 The government-owned Papua New Guinea Shipping Corporation Pty. Ltd., which trades as Papua New Guinea Line (PNGL) was incorporated on February 10, 1977 and commenced trading in July. PNGL presently charters the three ships it uses, mainly in service between PNG and Australia, the country's main trading partner. One of the ships is a small container ship which is operated jointly with two Australian lines. The service is managed from Port Moresby and provides a ten-day service from Melbourne, Sydney and Brisbane to Port Moresby, Lae, Madang, Wewak, Rabaul, Kavient, Kimbe and Kieta, as well as to Honiara in the Solomon Islands. The vessels utilized were specially built for the purpose and are crewed by 11 Chinese and 13 Papua New Guineans, supervised by British officers. C46383/J55734/D2188/41 - 18 - 2.42 As part of its overall operation and in conjunction with the New Guinea Australia Line and the China Navigation Company, a training school is maintained by PNGL in Port Moresby. A resident bosun operates a continuous training program involving trainee crews and the crews of the three overseas vessels. This training program is now being extended to involve coastal vessels. All trainees entering this school have an equal opportunity to progress through the examination for certificates of competency either in coastal or international trade. 2.43 On March 1978, PNGL agreed to establish a stevedoring company in conjunction with Burns Philp (New Guinea) Ltd., Steamships Trading Company Ltd., and Robert Laurie-Carpenter Pty., Ltd., in order to provide the necessary equipment and facilities to undertake stevedoring at the container terminal in Port Moresby. The Coastal Fleet 2.44 There were approximately 334 privately owned coasting vessels of over 10 m length in the PNG coastal fleet, according to records available in mid-1976. By late 1979, after annual ship surveys were required (para. 2.52), there were only 210 coasting vessels licensed to trade. No data are available on capacity or age, however over half are less than 15 m in length. These vessels are divided into two general trades - the inter-main port trade of larger craft (25 m and over) and the feeder trades which operate into very small coastal and island harbors from the main coastal ports where cargos are transferred. Distributive services between villages and feeder ports are undertaken by small open boats of about 10 m length. The coastal fleet also includes a few tankers, tugs, fishing vessels and several small li quid petroleum gas tankers. 2.45 The total registered tonnage of coastal shipping in 1976, measured in cubic meters of cargo of the type usually carried, was 25,250 tons.11 The inter-main port trade is dominated by four firms, not closely associated with the country's largest trading companies, having 15,850 tons. The feeder trade is dominated by four firms, associated with the large trading companies, having 6,640 tons. These companies operate ships for distributing their products to coastal villages and to collect copra, coffee and other produce. The balance of the coastal tonnage (2,760 tons) is owned by at least 40 small firms. Several ships owned by the main companies, and some owned by other companies are old, in a poor state of repair, and often out of commissi on. With the commencement of regular surveys by the G overn­ ment in 1978, many of these older ships were scrapped or laid up for repair. 2.46 The feeder trades are carried out by small ships of up to 200 tons and by landing-craft type ships. The area to be served is so great, the number of islands so many, and the commercial possibilities so few that many 11 Usable cargo space (rather than volume) was estimated by the consultants to be 17,319 tons. C463 83/JSS642/D21 88/42 - 19 - of the smaller ports or anchorages receive only intermittent, unpredictable service. Many places receive no commercial ship calls and must rely on the government fleet for all outside contact. The major trading companies, now about 25% government-owned, some chu rch-owned companies and church missions provide regular service to the larger coastal and island population centers. The major companies operate mainly in the distributive trade to and from small ports and do not compete with the inter-main port carriers. Cargo Tonnage 2.47 In 1977 the PNG Shipping Association engaged consultants to analyze the present volume and composition of coastal trade and to make projections for the future. The consultants estimated the tonnage of interisland trade (i.e., excluding coastal trade within the same islands) for the year ending June 30, 1977, at 420,000 tons. The origin and destination of this trade, by type of port, was distributed as follows: Main port to main port •••••••••••••• 71 % Main port to feeder port •••••••••••• 16 Feeder port to main port •••••••••••• 13 Between feeder ports •••••••••••••••• (0. 1 %) Cargo Composition 2.48 Eighty percent of the coastal trade is concentrated in eight classes of comm odities. General cargo and basic food account for 26% of the trade, with beer and empties for another 25%. Fuel and copra have 8% each, while building materials, earthmoving equipment and small boats have 6% each. The balance of 19% is miscellaneous cargo (Table 8). These are overall averages; on some routes, beer accounts for 60-70% of all cargo. 2.49 Overcapacity and High Costs. New ships are being added to the commercial fleet even though there appears to be chr onic overcapacity in the coastal trade. Statistics on ship numbers and their capacities have only recently begun to improve, however,.L!. so that it is difficult to tell how much scrapping is occurring to offset new registries. There is little doubt that there is overcapacity in the existing coastal fleet. Overall, the average load factor was just under 60% for the year ending June 30, 1977.J1.. The average vessel averaged about 21 voyages a year. With additional vessels known to be on order, there is little prospect that the present overcapacity will be worked off in the near future. PNGL's consultants .L1.. A new Merchant Shipping Act became effective in 1977. This provides for better registration of vessels, plus periodic surveys (inspections) of individual ships. 1.1. Load factor (ratio of actual to capacity tonnage for voyages made) is only one of two principal determinants of a vessel's annual performance on a given route. The other is the number of trips made. C46383/J55642/D2188 /43 - 20 - concluded in 1977 that little freight was being carried at the authorized maximum rates, indicating competition on many routes. They also concluded t hat overcapacity had pushed up unit costs in recent years and that the industry faced financial difficulties unless old, inefficient ships are moved from service. Proposals for Increased Efficiency 2.50 The substantial overcapacity on the main routes calls for an at- tempt to rationalize coastal shipping. The Government is paying more attention to the industry than in the past, and has already begun to intro­ duce measures designed to make coastal shipping more efficient. Among these a re: (a) g1v1ng longer term licenses only to more cost-efficient vessels and reducing the chartering of foreign vessels; (b) helping to raise finance for new, more efficient vessels; (c) improving nautical training; (d) improving hydrograpic charts and navigational aids; and (e) improving port and freight-handling facilities. Some progress has been made on items (a), (b), (c) and (d) thro ugh new regulations and tec hnical assistance from expatriate experts and on (e) through the creation of a Harbors Board and two Bank-financed port improvements. y- 2. s1 In addition, the Government, in the hopes of inceasing competition in the inter-main port coastal trade has purc hased control in one of the larger shipping companies (Mainport). Further, PNGL estim ates that half of the total inter-main port trade could be carried in five small ships of a new type successfu lly operating in Europe and proposes that all five ships be built at one time. Equipment and spares would be interchangeable, allowing for greatly improved maintenance sc hedules. PNGL proposes that the s hips be introduced on inter-main routes in competition with existing companies. However, no decision has yet been taken to go ahead with this project. Shipping Regulations 2.52 A comprehensive set of shipping regulations, b ased on United Kingdom regulations and law, has been developed by expatriate experts and was enacted as the Merchant Shipping Act (1977). Annual surveys are now required and after an initial attempt to carry out a survey of all vessels of 10 m or more in length, the Marine Department has concluded that many regulations cannot be sensibly applied to vessels of under 15 m length. While all vessels will be required to carry approved life-saving devices, C46383/J55642/D2188 /44 - 21 - other regulations covering, for example, radios and hull structure will not in future be applied to small vessels. Further sensible deviations from the letter of the regulations are under consideration. 2.53 The shipping regulations pr ovide for narine inquiries of accidents. Several investigations into fires and sinkings have been carried out efficiently and their findings, which are widely publicized, have created a feeling of confidence in the Government's maritime operations. 2.54 The Government does not directly regulate entry into coastal s hipping. It has, with the advice of the Coastal Trade Committee, which represents shipping interests, used the licensing system to keep down the size of the shipping fleet. The Government's recent interest in marine s afety has had an important indirect effect on industry capacity. Owners of s ome ships unable to qualify for licenses following surveys have scrapped vessels rather than spend additional funds to retain them in service. Thus the economic impact of government regulations apears less protective of owner-interests than has been tr ue either in road haulage or civil aviation. The Bank believes that the regulations concerning ship surveys need some modification to enable Government to adequately enfor ce the regulations essential to safety. Further, the Government should review its licensing of commer cial vessels with a view to promoting competition. A lso, Government should not undertake services which compete with the private fleet. Where financially unrewarding services are deemed necessary in the public interest by Government, these services would more appropriately be put up for competitive bi�ding to the private services or by direct government service in the dis trict concerned. Regulations concerning tariffs, maxima or minima, are dif ficult to enfor ce. These regulations should be reviewed, keeping in mind the limited resources available to enforce them. c. Air Transport 2.55 Air transport has long played an unusually important role in the country's transport system, mainly because of the dif ficult topography, which has made road building costly, and the long distances between many of the major towns. In the 1920s, PNG led the world in pioneering the movement of freight by air; until 1965, when the Highlands Highway was opened, the development of the Central Highlands was almost entirely dependent on air t ransport. Today, there are 414 airports and airstrips, probably the highest density of landing facilities anywhere in the world. Many of these facilities are small, although over hal f can handle air craft takeoff weights of 5,700 kg. 2.56 Air transport is dominated by a government-owned national carrier, Air Niugini, which was established by the National Airline Commission Act of 1973. This Act gives Air Niugini a monopoly on the routes reserved for it, and requires the airline to earn a profit. Although profits have been low, and have recently turned to losses, Air Niugini costs and fares are among C46383/J55642/D2188/45 - 22 - the highest in the world (para. 2.59). There are at least three other private airlines (Talair, Bougainville Air Services, and Douglas Airways) plus a large number of general aviation craft owned by private organizations and individuals. The industry is closely regulated by: (a) the Civil Aviation Division of IJTCA, which controls entry to the industry, allocates routes, and controls the type of aircraft which each carrier (other than Air Niugini) may own and operate; (b) the National Airline Commission, which acts as a Board of Direc­ tors for Air Niugini; and (c) the Civil Aviation Authority, a nearly autonomous unit of IJTCA which is responsible for all aspects of safety, from the issue of airworthiness certificates, to the operation and maintenance of all navigational aids, and the operation of airport control towers. The CAA has nearly 1,000 employees and is funded almost entirely by the Australian Government. It has fulfilled admirably its central function (safety), but at high financial cost. Tra ffic 2.57 The principal airports in PNG show a fairly stable level of tra ffic from 1972/73-1976/77 as can be seen in Table 2.2 below. Table 2.2: PAPUA NEW GUINEA AIR TRA NSPORT OPE RATIONS A T P RINCIPAL AIRPORTS % Increase 1972/73 1976/77 (decrease) Total passengers 1,346,509 1,306,597 (0.8) Total freight (m tons) 34,909 40,01 8 3.5 Total aircraft movements 159,884 138,827 (3.5 ) Source: Tables 9A, 9B and 9C. 2.58 Passenger traffic declined about 0.8%, while freight increased 3.5% from 1972/73. Aircra ft movements declined largely due to the introduction of higher capacity aircraft in the Air Niugini fleet. Comparing the level of operations between Air Niugini (first and second level) l1.. and the third level operations between 1976 and 1977 shows that l1.. First level are international carriers; second level are regularly scheduled domestic operations; third level includes everything else, i.e., general aviation. C4638 3/J55642/D2188 /46 - 23 - Air Niugini carried about one half of domestic passenger traffic and about one quarter of the domestic freight traffic. Air Niugini had a substantial drop (34 %) in passenger traffic in 1977 compared to 1976 (Table 10). There was also a drop in passenger covement for the three other major operators. There is no clear explanation of the drop, particularly for Air Niugini; however, it may reflect a temporary decline in use of air transport by civil servants, who reportedly constitute a large part of the domestic passenger market. Tariffs 2.59 As noted in para. 2.56, Air Niugini's passenger and freight tariffs are among the highest in the world, as can be seen from a comparison of seat-mile costs for Air Niugini and national carriers in three. other countries of the region (Table 2. 3). Air Niugini's fares are nearly three times those of the Philippines, the lowest carrier in the list, and about 50% higher than those of Malaysia, the carrier with the second highest f ares (although they have not done so for the last one or two years). Table 2. 3: COMPARATIVE AIR FARES Average cost per seat mile (US¢) Indonesia 11. 7 Malaysia 13. 8 Philippines 7.8 Papua New Guinea 21. 1 Source: Table 11. 2.60 The usual remedy for high fares and high costs is to introduce competition. It is tempting to recommend the introduction of some competi­ tion on Air Niugini's routes (it currently serves only 17 of the country's 414 landing facilities). This could be done on a limited and controlled basis, i.e., without allowing completely free entry to any carrier which wished to operate on any route. Although the Bank would favor controlled competition, it believes the chance of acceptance of suc h a recommendation is poor. One government committee appointed in 1977 to review the wisdom of allowing competition on Air Niugini's routes recommended against this, but that was before Air Niugini's profits turned to losses. The prospects for reversing the committee's recommendation would now be more difficult. Without competition, it is unlikely that any effective pressure can be applied to Air Niugini to reduce its costs and fares. 2.61 The protection of Air Niugini from any direct competition extends similarly to other second- and third-level carriers. Not only are such C46383/J5 5734/D2188/47 - 24 - carriers protected from competition through route allocations bu t regulation by the CAD prevents a carrier from buying a plane, or changing the type of plane used on a given route, without CAD permission. At present only Air Niugini has aircraft with payload capacities of over one ton (Boeing 707 and F27s and F28s) (Table 12). This control over changes in equiµnent types is one of the more onerous regulations, according to private operators. 2.62 A healthy air transport industry is particularly important in a country with PNG's geographical and topo graphic characteristics, since alter­ native forms of transport can only develop slowly and may never reach many of the country's iso lated valleys. In areas with good agricultural possibil­ ities, air transport has proven to be abi"e to provide access to markets that might not develop for many years if producers have to wait for road connec­ t'ions. This is what happened in the Central Highlands before opening of the Highlands Highway in 1965. There is a definite need to reassess the role of air transport in PNG and its potential market so the Government can develop a rational and affordable aviation plan for the country.  C46383/J55642/D2160/02 ws - 25 - 3. TRANSPORT IN THE NATIONAL PUBLIC EXPENDITURE PLAN, 1980-83 Allocations by Development Objectives 3.01 Proposed expenditures for Transport in the National Public Expenditure Plan (NPEP) have been classified by their estimated contribution to the following main goals: (a) increasing rural welfare; (b) helping less developed areas; and (c) economic production. Minor amounts have been allocated also to projects aimed at improving training and administration. Transport projects comprise about 16% of NPEP's total new project expenditures, 1980-83. Projects serving rural welfare objectives have been allocated 20% of the allocation for transport; those serving the less developed areas objective 6%; and those promoting production, 70%. The total allocation for transport is K 66.1 million (US$102.3 million) out of the total of K 399.7 (US$839.6 million) for the four years (Table 13) •.L.!. Major Projects in the Plan 3.02 Six projects comprise 80% of the transport budget: (a) Rural Transport Sectoral Program K 13.0 million (US$18.2 million) - a program designed to provide provinces with funds to extend transport services to rural areas; (b) Huon Peninsula Regional Program K 4.0 million (US$5.6 million) - includes the construction of two district access roads and a wharf; (c) Hiritano Highway K 2.3 million (US$3.2 million) - provides an all-weather road access between the district center of Malaku and the provincial center of Kerema in the Gulf Province; (d) Waterais-Osino Road K 2.6 million (US$3.6 million) - a continua­ tion of the up grading of the road link b etween Madang and the Highlands Highway; .L.!. The NPEP is updated annually and new projects may be added at each updating. The figures in Table 13 show only the amounts for projects approved by the NEC for 1980 funding and not the projects coming into the pipeline. C46383/J5 5734/D2160/03 ws - 26 - (e) Highland Highways - M arkam Valley Sealing J.l. K 7.2 million (US$10.1 million) - provides for the sealing of the Highlands Highway from Nagdab (near Lae) to the Kassam Pass; (f) Highlands Highway Kassam - Daulo Sealing K 23.5 million (US$32.9 million) - covers the sealing of the Highway through the Eastern Province. 3.03 The major portion (over 80%) of the Plan for transport projects is for highways. The largest portion of the road allocation (58%) is for sealing existing highways; about 20% is for building new access and feeder roads. There are two reasons for this: (a) Most of the roads that fall in the access and feeder road category will be funded out of the separate provincial government budget - one exception to this is the Rural Transport Sectoral program, funded as tied matching grants to provinces. (b) Traffic on several existing roads is now sufficiently heavy to justify sealing in order to reduce operator and maintenance costs. Sealing costs are high and will take 58% of the K 53 million Plan allocation for highways, 1980-83. 3.04 In addition to the Rural Transport Sector program, two provincial roads are included in the NPEP which are considered too expensive for these provinces to finance: (a) Kerema-Kaintiba Road K 2.3 million (US$3.2 mil­ lion); and (b) Baiyer River-Ruti Road K 0.05 million (US$0.07 million) • .Ll 3.05 The NPEP notes that marine transport remains underutilized in PNG and receives vey little government support. The Plan indicates that there is a need for a review in 1980 to determine a method to encourage development of river and sea transport and to rationalize existing services. In addition, feasibility studies will be undertaken for the Bercina-Malalau link of the Kiritano Highway and are underway for the controversial and very costly Trans-Island Highway between Lae and Port Moresby, although no decisions have been made on the phasing of their implementation. Investments Planned by Autonomous Entities 3.06 In addition to the above investments, two of the Government's three autonomous transport entities have the following investment programs (not yet approved by Government): .lJ.. Improvement and paving • .Ll Apparently this is the allocation for the study only. Presumably, if justified, funds will be allocated for the road's construction. C 46383/J55734/D2160/04 ws - 27 - PROJE CTED CAPITAL INVE STHENTS 1 1980-83 i2._ 1980 1981 1982 1983 Total Papua New Guinea Harbours Boards 2,800 9,820 9, 770 4,81 0 27,200 Air Niugini 4,500 2,360 13,170 1,930 21,960 Total 49z 160 i2_ Papua New Guinea Shipping Corporation investment forecast was not provided. 3.07 Papua New Guinea Harbours Board investments are for Stage 1 of the Port Moresby Port Development and construction of Stage 1 of the Lae Tidal Basin. Air Niugini's main item for investment is for the purchase of a new F28 aircraft; however, if the Rabaul airport is not upgraded (which seems in doubt because of a land acquisition problem) there is some question whether this purchase will take place. Draft Transport System Development Plan 2 1979-88 3.08 This draft Plan was prepared by DTCA at the request of the National Planning Council and submitted to the National Planning Office in August ·1979. The draft Plan is under review and has not been approved by Government. The overall objectives of the draft Plan are to: (a ) "Develop a transport s ystem which will permit and encourage achievement of the economic, social and political goals laid down by the National Government, and (b) "Ensure that this s ystem is technically efficient, well integrated and economical." 3.09 The Plan recognizes the lack of an explicit transport policy, particularly for pricing and regulation. It recommends corrective action and proposes that a program be drawn up for pricing and that studies be undertaken of current regulations governing transport, particularly the Licensing of Heavy Vehicles Act 1977 and the Merchant Shipping (Coasting Trade) Act 1977. The Plan proposes that the two chief objectives of Government control should be safety and the avoidance of undue wear and tear on the infrastructure. 3.10 The authors of the Plan recognize that there are currently two major constraints in the preparation of a detailed transport plan: C46383/J55642/D2160/05 w s - 28 - (a) there is a lack of basic data, made more complicated in that data collection must be undertaken in cooperation with the autonomous provincial governments; and (b) the task is far beyond the present staffing and technical resources of DTCA. The authors propose using the transport studies now or soon to be tmderway as a basis for preparing the detailed plan and when sufficient staff are available, for completing the detailed national transport plan. In the interim, the draft Plan proposes the following expenditures in 1980-83 (these are compared with the Government's total estimated expenditures on good and services for the period): Table 3.1: PROPOSED TRANSPORT SECTOR EXPENDITURES COM PARED WITH TOTAL EST IMATED EXPENDITURE ON GOODS AND SERVICES, 1980-83 K '000 1980 1981 1982 1983 Total % Total estimated expenditure on goods and services 521.2 551.1 559.Q 575.4 2,206.7 Proposed transport e xpenditures 52.6 54.0 55.5 55.3 217.4 100 Construction roads and brid ges 30.7 32.2 33.0 32.5 128.4 59.1 Maintenance roads and brid ges 12.9 13.4 13.8 14.5 54.6 25.l Other land transport 0.3 0.4 0.4 0.4 LS 0.7 Maritime transport 4.5 3.6 3.9 4.0 16.0 7.4 Air transport 4.2 4.4 4.4 16.9 7.8 Transport as % of total estimated expenditures on goods and services 10% 10% 10% 10% Source: N PE P 1980-83 and Draft Transport System Development Plan, 1979-88, D TCA, August 1979. C46383/J55734/D2160/06 ws - 29 - 3.11 While the absolute amounts will increase over recent levels, transport as a percent of total development will fall from 14% in the period 1968-78 to 10% for 1980-83. The draft plan indicates that in the budget for ·land transport, an increasing proportion (from 23% to 5 1%) will go to rural road projects in the provinces. Maintenance expenditures are expected to increase by just over 3% p.a. in real terms from some K 12.6 million (US$17.6 million) in 1979 to K 14.5 million (US$20.3 million) by 1984. The amounts proposed in the DTCA plan are not directly comparable to the NPEP because the former includes ongoing projects, new projects, and maintenance (i.e. all capital plus recurrent costs) whereas the NPEP covers only new projects. 3.12 The thrust of DTCA's proposed investment program is for the preservation and improvement of the existing system, largely to reduce maintenance costs, rather than the expansion of the system. Under these circumstances, and assuming the funds in the NPEP allocated for the Rural Transport Sectoral Program (K 13.0 million) are fully used for construction of roads, the Government would take 15-20 years to expand the network an additional 25% or by 4,500 km. At present levels of domestic contractor capacity, this is about all the Government could hope to accomplish. How­ ever this rate of growth of the system, some 1.4% p.a., is only about one­ half the rate of growth of the population (2.9% p.a.). If the present road system is inadequate for the population, the problem will be even greater in the years ahead. Although new road construction should not be geared to population growth (it would normally be higher, especially in the early years of network growth), it is clear that the sector's capacity to build new roads must be increased over that currently possessed by domestic contractors. The expansion of domestic capacity is preferable with use of foreign contractors as a second choice.  C46383/J55642/D2160/1 1 ws - 30 - 4. CURRENT ISSUES IN THE SECTOR A. Transport Policy 4.01 At the National Government level, t ransport policy is formulated and implemented not only by government departments, but also by three statutory authorities: (a) the National Airlines Commission (which is r esponsible for the operation of Air Niugini); (b) the PNG Harbours Board; and (c) the Nautical Training Institute Board. Transport policy, therefore, is not the responsibility solely of the Department of Transport and Civil Aviation, which may partly explain why Government has not yet produced a statement of its transport policy. 4.02 DTCA prepared a draft statement of transport policy and submitted it to the National Executive Council (NEC) in April 1979. It was reviewed by the Council which decided that the policy paper should be discussed in a workshop (to be organized by DTCA) before the end of 1979. This draft paper addresses three major issues: (a) transport pricing, or user charges (see also Annex 2); (b) transport regulation/deregulation; and (c) whether to emphasize preservation or expansion of the road network. Each of these issues will be reviewed briefly. 4.03 User Charges. Table 4.1 compares revenues and expenditures for the three modes. Table 4.1: SUMMARY OF MAIN GOVERNMENTAL REVENUES AND EXPE NDITURES RELATING TO TRANSPORT, 1976/77 Ratio of revenue Mode Revenue Expenditure to expenditure ------ K million ---- -- ------ % ------- Road transport 8.2 49.3 17 Water transport� 5.1 8.0 64 Air transport 2.s 14.8 17 .i.2.. Including PNG Harbors Board which had revenue of K 3.93 million and expenses (including depreciation) of K 3.16 million. Source: Department of Transport and Civil Aviation Although all transport is subsidized to some degree the two modes most heavily subsidized are roads and civil aviation: (a) The highest subsidization (and hence budgetary cost) is for roads; road users pay only an estimated 17% of C46383/J55642/D2160/12 ws - 31 - the total costs, and only about 30% of maintenance and other recurrent costs alone; and (b) Air Niugini and other carriers are generally self­ financing, but users were covering about 17% of the sector's non-carrier costs in 1976/77 (Table 14). Since the Government introduced a domestic airport tax of K 2.00 (US$2.8) per passenger in 1978 this ratio of revenues to expenses has increased (to about 25%) but air transport is still far from covering maintenance and operating costs of infra­ structure and regulatory agencies. Deregulation 4.04 All transport modes are overregulated. Coastal shippers must have route- and capacity-specific "trading licenses." Air Niugini has a monopoly on air transport on the country's main routes. Capacity increase by third­ level operators on their routes is severely restricted by licensing proce­ dures. The road transport industry is licensed under the Heavy Vehicles Act, which allocates licenses by route and capacity. The route and capacity licensing is administratively burdensome and, by limiting free entry, sharply reduces competition for rates and services. 4.05 The 1979 DTCA policy paper recommends a review of the regulations governing both the trucking and coastal shipping industries. The Ministries for Finance, Transport, and National Planning and Development have prepared a separate policy paper for submission to the NEC concerning the development of the national airline (Air Niugini). A short-term study is to be undertaken to determine, inter alia, (a) the type of domestic service which is economically feasible with tariffs set to recover full economic costs; and (b) whether there is scope for more effective complementarity between Air Niugini and third-level operators and/ or greater scope for competition. 4.06 Through user charges, t he Government should recover at least its maintenance and operating expenses, at K 24.2 million (US$33.9 million) for roads and K 1 3.8 million (US$19.2 million) for civil aviation in 1976/77. In the case of roads this would mean increasing the present price of diesel by 32% and gasoline by 27%. Although these appear to be large increases, the impact on freight tariffs, for example, would be small (see Annex 2). For civil aviation the taxes on aviation fuels would be levied on both the domestic and international operations of Air Niugini (they are not at present levied on fuel for international flights); and international and domestic airport fees might be increased. The details of the charges would be considered under the study proposed above. As the highway system expands and its quality improves, it would be desirable to recover the additional costs (including an estimate of the annual depreciation costs of the system) from those who benefit from its use. This is largely a fiscal question, however, since those who benefit will not be limited to direct road users. C 46383/J55734/D2l 60/l3 ws - 32 - It will include landowners and others who gain from better and lower cost transport facilities. The question as to how to cover the costs of the highway system is quite distinct from whether or not to carry out a particular investment. In order to ensure the efficient use of scarce f unds, it is necessary that investments satisfy appropriate criteria and be built in a least-cost way . How the costs are to be covered is a separate issue which will need to take into account the general pattern of taxation. It is often convenient to try and recover these costs through transport user charges. DTCA has completed a fairly thorough study of transport user charges. This study proposes a schedule of increased user charges, which have been incorporated in the draft paper on transport policy . 4.07 The Goverment should undertake the studies being proposed as quickly as possible to assess the impact of deregulation on tariffs and service to the more remote areas. The Bank considers the need to review the regulations concerning the trucking industry as a matter of some urgency . For the proposed Third Highways Project there is concern that the substantial user-cost savings from the proposed road improvements will not be passed on to farmers and consumers in the form of lower trucking rates, given the oligopolistic nature of the trucking industry. 4. 08 A similar case for possible deregulation exists in civil aviation. Ai r Ni ugini currently has a monopoly on scheduled air ser1ices between the 17 main airports. It has no obligation to serve the lower-traffic air fields and, in fact, is prevented from this by its obligation to make a profit (para. 2. 56). Considering the role played by ci·;il aviation in the development of the country before Air Niugini was created, it would appear that development is being constrained by that carrier's monopoly of the more profitable routes. The Government should consider abolishing the existing Air Niugini monopoly of scheduled air services between main airports, The review should include a reexamination of the nonsafety regulations covering operations of other second and third-level carriers, with the particular objective of introduc ing greater flexibility (which the carriers will welcome) and greater competition (which some may not welcome) in their operations. 4,09 For coastal shipping, a "trading license" is required to trade in PNG coastal waters, Officials of the Maritime Division believe that there is an excess of coastal shipping capacity (para, 2,49) and that the resulting low freight rates make investment in new shipping uneconomic, With the advice of the Coastal Trade Committee, which represents shipping interests, the Marine Division uses the licensing system to keep down the size of the shipping fleet, The criteria by which "trading licenses" are given or withheld are not clear, We recommend that the licensing system for purposes other than complying to safety regulations be scrapped, and that entry into the coastal shipping be open to all, with the exception of oceangoing ships (i.e, those engaged in international trade), 4.10 Coastal shipping freight rates are regulated by the "Shipping (Freight Rates) (Amendment) Regulation 19 7 6," This regulation does not C46383/J55642/D2160/14 ws - 33 - affect inter-main-port trade which, because of competition, is carried at rates below the maxima, but the regulation does affect, and inhibit, trade between main and feeder ports. In view of the overcapacity in coastal shipping the official freight rates (to which carriers are supposed to adhere) serve as maximum rates only. Further, the Government should not compete tmduly with the commercial fleet by charging rates that do not cover full costs, as is reported in the case of the Coastal Shipping Corporation. Indeed, there is serious doubt that the Govenment should be in the coastal shipping business, given the overcapacity and competition on the main routes. The Government's main concern should be to assure adequate services to areas poorly served at present by private firms. Such services may be assured either through contracts after tendering or by direct Government service in districts tmlikely to be adequately served by private firms. 4.11 The central issue with most governments in deregulation is the extent to which competition should be relied on to determine costs, tariffs, and the availability and quality of services. This is not an easy question to answer. Many governments feel that completely free entry (subject only to satisfying safety standards) can occasionally lead to overinvestment, with consequent cutting of tariffs to a level where they just cover c·ash operating costs but are inadequate to cover capital and fixed overhead costs. To save costs, carriers may withdraw from the least attractive routes, leaving these communities without adequate, or perhaps without any service. With market forces and competition doing most of the "regulating," it must be accepted that some firms will be tmsuccessful and will fail. At the other extreme, regulation of capacity through licensing tends to limit or eliminate competition and favors carriers' revenues and profits at the expense of shippers' and travellers' costs. It is impossible to regulate capacity without giving licensing authorities a considerable amount of arbitrary power, the exercise of which creates inequities. The administrative apparatus needed can easily become a costly bureaucracy, 4.12 Innovation, cost-reduction, and quick adaptability of equipment and services to changing business opportunities are much more likely to occur where entry is easy and competition is encouraged. The Government appears concerned that regulation has become too restrictive in recent years, at least in road haulage and civil aviation and perhaps in coastal shipping. The Bank shares this view and welcomes the Government's willingness to reexamine the possibility of introducing more competition and flexibility by sharply relaxing or eliminating nonsafety regulations. Our recommendation is for independent short-term (two or three month) studies whose objectives would be to define the safety regulations, the regulations limiting damage to the system and the means to enforce them of each transport mode by consultants, followed by hearings focused on proposals made in the light of the consultant's recommendations. Maintenance vs. Expansion Priority, and Related Issues 4.13 NPEP allocations reflect a greater concern for preservation of the existing network rather than for its expansion. Although emphasizing the C46383/J55642/D2160/15 ws - 34 - need for rural roads, the NPEP allocates about 16% of Plan expenditures for rural transport. Provincial governments are responsible for preparing and implementing as well as financing rural transport programs. The Central Government, recognizing the financial constraints as well as the provincial governments' weak capacity for preparing and implementing such programs, has made these NPEP allocations (K 13 million) as matching grants to help the provincial government implement their rural transport programs. 4.14 The NPEP allocations for transport raise several important policy a nd institutional issues which the government must address if transport is to play its potential role in increasing rural welfare and stimulating production. The policy questions are: (a) the share of transport in the public expenditure plan; (b) balance between the Central and Provincial Transport De velopment Budgets; (c) balance of allocations among primary, secondary and tertiary road improvements; and ( d) extent of village participation in road construction and maintenance; The institutional questions are: (a) establishment of provincial transportation institutions; and (b) establishment of a modal strategy. 4.15 Th ese issues are interrelated and the approach to solving them depends largely on the measures the Government undertakes regarding user charges and deregulation. Each question is discussed briefly below. Share of Tr ansport in Public Expenditure Plan 4.16 PNG does not have the resource base to engage in an ambitious program of infrastructure development. However, the Plan's allocation, particularly for road transport may not be adequate. As stated, rural communities place a high priority on getting connected to the road network; this is bound to be a slow process, especially since the number of road extensions with strong economic justifications is believed to be small. While the overall level and the sectoral distribution of public expenditures can be ultimately determined only in a broader macro-economic and political framework, recognition of the aspirations of affected rural populations for better transport, reflected in high provincial allocations for road building, gives strong weight to increasing NPEP transport allocation in both real and relative terms. An increase in user charges should help to reduce demand somewhat while increasing the resource base. Should the C 46383/J55734/D2160/16 ws - 35 - Government increase transport bud gets, it should also strengthen project planning and implementation capacities at both national and provincial levels. Balance Between Central and Provincial Transport Funding 4.17 Decentralization is a recent occurrence. In the transport sector, jurisdiction over existing transport assets such as roads, airfields and seaports has been neatly divided between the governments. The central Government has offered assistance to the provinces to organize and undertake road maintenance on an agency basis. Decentralization of planning and building new infrastructure has advanced the least, as the provinces, which financially depend strongly on central Government grants, have insufficient development funds after meeting maintenance needs. The issue is the rate at which development funds at the disposal of provinces can be increased, whether they should be earmarked for specific activities (e.g., road maintenance), and whether increases in funding can be phased wi th progress in provincial institutions and spending capabilities. Balance Between Primary, Secondary and Tertiary Road Investments 4.18 The Government's objective of meeting rural transport needs by expanding the rural road infrastructure as a means to improve physical communication links raises a ntunber of po licy sub-issues: the phasing of road t ypes (defined by jurisdictions and functions), choice of road design and maintenance standards, and village participation in road construction and maintenance. All three of these issues are interlinked. For the p urpose of this discussion, roads ma y conveniently be divided on a functional basis into primary (national, linking provinces with provinces) roads, seconda�; (provincial) roads, which link district headquarters with their provincial capitals, and tertiary (rural/local) roads connecting a district's villages to its headquarters. This is a logical model which is inevitably compro­ mised by the country's formidable topo graphy. 4.19 In deciding the network's development path, the central issue is priorities. Present priorities favor the rehabilitation of deteriorating primary and secondary roads which would only fulfill a tiny portion of actual needs. A reversed po licy - giving priority to expansion of the rural road network - though appealing to a rural population eager to get road connections, could be detrimental to the assets themselves and to provinces relying heavily on national highway links. If additional resources became available in the short term, the provincial governments' ability to prepare and implement the projects is questionable. Ext ent of Local Participation in Road Construction and Maintenance 4.20 The planning, design, construction and maintenace of the primary and secondary road network has generally been done by exp atriate staff and foreign contractors. Village self-help in the building of tertiary roads, a frequent occurrence in the p ast, has been declining and its revival deserves C46383/J55642/D2160/1 7 ws - 36 - discussions. The domestic construction industry is embryonic and making slow progress. Efforts to assist the industry under the Second Highlands Road Improvement Project were only partially successful due to DWS ' administrative inability to award small contracts to local contractors without competitive bidding. The issue is whether this underutilization of local resources should be accepted or could be changed. The revival of self-help would put idle development resources to work; the development of indigenous construction capabilities is a means of import substitution. Use of indigenous construction firms and organization of self-help village efforts are critical to mobilizing sufficient resources for expanding and maintaining PNG's transport system. Establishment of Provincial Transport Institutions 4.21 Prior to implementation of the nation's decentralization measures in 1977, the central Government departments in charge of transport had comprehensive responsibility for PNG 's transport system. Decentralization has introduced the short-term risk of institutional confusion and some deterioration of the transport sector's performance. The issue is how to minimize these transition problems by building up suitable provincial organizations. The most pressing need is for an organizational arrangement for maintaining provincial roads; when this is achieved, attention can be given to creating provincial capacity to plan, design, and build new roads. Definition of a Modal Strategy 4.22 The evolution of PNG 's transport has been characterized by the parallel development of three complementary modes: coastal shipping, air and motorized road transport. PNG planners presently envisage that within this century most settlements off the sea-accessible coasts should be linked by roads, an unattainable objective unless the sector's absorptive capacity is greatly increased during the early 1980s. Such institutional development is unlikely to happen rapidly. To overcome the probable delays in rapid extension of the road network, the Government should continue to strengthen the developmental role of coastal shipping and, especially, aviation. Poorly-served coastal communities with agricultural potential should be identified and efforts made to assure scheduled shipping services to existing feeder ports. The single most effective step the Government can take to open up inaccessible inland areas is probably to deregulate second­ and third-level air carriers. The issue of whether or not to subsidize certain coastal and air services is bound to arise and a clear Govenment policy on this issue will be needed. B. Design Standards 4.23 There is considerable conflict between DT,CA and DWS over appropriate design standards for low-cost roads. DWS argues that its C46383/J55642/D2l60/l8 ws - 37 - present design standards are the minimum for roads that are to be maintained. DTCA states that provinces are building roads for less than one half the cost of those designed and executed by DWS. Costs quoted by DTCA for the provincial-built roads were from K 20,000-30,000 per km (US$28,000- 42,000). DWS costs, based on recent engineering studies, average about K 50,000 (US$70,000) per km for flat to rolling terrain and about K 80,000 (US$112,000) per km for hilly to mountainous terrain. These costs, relative to Bank experience in Indonesia and other countries where low-volume access roads are built for less than US$10,000 per km, help to illustrate the extremely h igh cost of road building in PNG. 4. 24 The lack of data concerning maintenance costs and practices make it difficult to adequately balance capital costs for roads and subsequent maintenance. Current cost accounting procedures do not distinguish funds expended on capital works, i.e. rehabilitation, or deferred maintenance, and current maintenance. It would benefit the Govenment to cost maintenance by each maintenance procedure. Until these data are available, design should be on a project-by-project basis bearing in mind that the construction cost is only part of the total cost to the economy. Capital costs of a new road last only two or three years but the new maintenance costs will go on for the life of the road. C46383/JS5642/ D2160/30 WS ANNEX 1 - 38 - Page 1 PA PUA NEW GUINEA TRANSPORT SECTOR REVIEW Summary of Experience with IDA/Bank Transport Projects 1. 'nle Bank Group's assistance in the transport sector has included acting as executing agency for the UNDP-financed transport survey of 1968/69, and financing the First Highway Project, the Second Highlands Road Improvement Project, and the First and Second Ports Projects. The UNDP Transport Survey provided the framework for the subsequent reorganization of transport administration and for the preparation of initial investment programs. The First Highway Project was financed under Credit 204/Loan 693- PNG in 1970. It provided US$9.0 million for construction and improvement of sections of the Highlands Highway totalling 150 km between Kundiawa and Mendi, at the western end of the highway. The work was satisfactorily completed at the end of 1973, but there was a cost overrun of �bout 90%, due c hiefly to bid prices being 60% higher than estimated, but also to greater than expected quantities of unsuitable soil that had to be replaced. After refusal of the Bank Group to provide supplementary finance, the overrun was financed by the Government. The Project Performance Audit Report of June 16, 1977, concluded that: (a) the Bank Group's refusal to provide supplementary finance was severe; and (b) international competitive bidding under the conditions prevailing in PNG during 1970 may have contributed to cost esc alation. Under the Second Highlands Road Improvement Project bids were received prior to negotiations. The project provided for execution of about 30% of the work by force account to provide a standard of comparison with construction by contract. Finally, the audit concluded that the Bank s hould investigate further the effects of the road works on the transport industry, because the inward-outward trade imbalance and back haulage arrangements distort the competitive basis and the larger firms may gain by this advantage. 2. nie Second Highlands Road Improvement Project is being financed under Credit 677-PNG of January 25, 1977. The credit provides US$19.0 million for construction and improvement of 68 km of the Highlands Highway b etween Asaro and Garnigl, road engineering and feasibility studies, rural development studies and assistance to domestic contractors. The Government originally proposed that the project include improvement and paving of all the 302 km length of the Highlands Highway presently unpaved between Kassam and Togabo and this was included in the appraisal in 1974. However it was agreed that before negotiating the credit, bids would be obtained for the works. When bids were received in March 1975 they were found to exceed the cost estimates by 75% and rebidding in July 1975 failed to obtain lower prices. The Government rejected the bids and decided, in consultation with the Association in March 1976, to reformulate a reduced project to cover initially only the most urgent section, as described above. It was also C46383/J55642/D2160/31 ws ANNEX 1 - 39 - Page 2 a greed that new bids should be obtained before negotiating the credit for about 50% of the works, including the most difficult sections near Kundiawa and Asaro. Accordingly, a fter new international advertisement and prequalification of contractors, the Government received bids in October 1976 which were about 10% lower than those received in 1975 and were c onsidered reasonable. In addition, it was agreed that about 30% of the works would be carried out by department forces under a management team provided by consultants. The implementation of the project, which is now a bout 65% complete, is proceeding satisfactorily. The project is expected to be completed in August 1981. 3. The First Port Project (Credit 326-PNG) provided US$9.2 million in 1972 for improvements at the ports of Kieta, Lae and Port Moresby and for a new overseas port of Alotau. Work on the First Port Project was satisfactorily completed at the end of 1976, except for a barge ramp at Alotau and additional work at Kieta and Port Moresby to which the Association agreed, following substantial completion of the original works at a significant cost saving. This additional work, which was completed in July 1977, included reclamation of additional land at Port Moresby to increase the land available for stacking the growing number of containers. PNGHB's performance has been satisfactory; however, it has not met the full requirements of the Project Agreement for Credit 326-PNG in regard to cost-based tariffs and has not achieved the required 8% rate of return on net fixed assets because revenues have not kept pace with increased operating costs. 4. Tii.e Second Ports Project (Loan 1551-PNG, April 18, 1978) provides US$3.S million for a new container berth at Port Moresby with additional stacking area, dredging alongside the berth, improved container freight station and improvement of an access road. Furthermore, it provides for a coastal berth at Samarai, three pilotage launches, and consulting services and technical assistance. The Kuwait Fund also provided a loan of US$3.S million for this project. The project is presently 70% completed. C46383/J55734/D2160/35ws ANNEX 2 - 40 - Page 1 PAPUA NEW GUINEA TRANSPORT SECTOR REVIEW Background on User Charges and Deregulation Issues 1. The Appraisal of a Second Highlands Road Improvement Project Papua New Guinea (Report No. 1250a-PNG dated January 11, 1977) states that a study was being undertaken to formulate a rational transport user charge system and it was agreed during negotiations for that project (Credit 677-PNG) that a further exchange of views would take place in the course of completing the study. The study J1.. was completed in 1978. The Bank's sector mission to Papua New Guinea in October 1978 reviewed the study, but the Bank's comments were not officially transmitted to Government. The study makes recommenda­ tions on changes in user charges and suggests Government adopt the policy that the users pay full cost of the services. The IMF in its recent mission (in remarks covering the National Airline, Air Niugini) emphasized the same policy for civil aviation. the Department of Transport and Civil Aviation (DTCA) has issued a draft policy statement (dated April 3, 1979) recommend­ ing a policy which will ultimately make the users "pay for what they get." F urther, DTCA has prepared a schedule of specific charges for users. These charges were not detailed in the draft policy statement. The draft policy statement also recommends reviewing the Heavy Vehicles Act as well as other regulations affecting transport services. User Charges 2. Government officials have indicated concern that increasing transport user charges will increase sharply the cost of transport, with a consequent negative impact on development. This conclusion does not seem to be justified, however. According to a recent survey J.1:.. on vehicle operating costs in Papua New Guinea, the tax on diesel fuel for heavy commercial vehicles is less than 0.2% of the total annual resource operating cost per vehicle; for motor cars about 3%. Fuel (less taxes) as a percentage of resource cost is about 10% of the total operating cost for heavy commercial vehicles and about 27% for motor cars. For example, current tariffs (1979) quoted by truckers from Lae to Goroka and to Mt. Hagen are as follows: J..l.. Cook, R.C., An Assessment of Transport User Charge Policy and Rates in Papua New Guinea, August 10, 1978, Division of Projects and Coordina­ tion, Department of Transport and Civil Aviation • .1..1. Rendels Economics, Vehicle Operating Costs, August 1979.  �4bj�j/J))734/D2lbU/3bws ANNEX 2 Page 2 - 41 - Cost/ From To Tariff per ton Distance ton km Lae Goroka K 38.00 (US$53.20) 300 km K 0.1267 Lae Mt. Hagen K 64.00 (US$89.60) 480 km K O. 1103 Heavy commercial vehicles travelling the Lae-Goroka-Mt. Hagen Highway use 390.3 1 per 1,000 km. At an economic cost /1- of K 0.21 1 the cost of fuel is K 81.96/1,000 km (Table 1). The tax on thi-; fuel (diesel) is K 0.00367/1 or 1.7% of the economic cost. These heavy commercial vehicles carry average loads of 10 tons. The following table shows the impact of raising the fuel tax rate on these tarif fs: Fuel consumed Increase per ton Increase as a Tariff Distance hauled Total plus % of per ton (km) (1) Tax tax tarif f tariff K 38.00 300 11.71 K Q.00367 K 0.0430 K 38.00 300 11.71 K Q.0367 K 0.430 38.39 LO K 64. 00 480 18.73 K 0.00367 K 0.069 K 64.00 480 18.73 K Q.0367 K 0.687 64.62 1.0 Reducing the average tonnage to 5 tons or one half, the increase would have the following impact: K 38.00 300 23.42 K o.0367 K 0.860 38. 77 2.0 K 64. 00 480 37.46 K Q.0367 K 1.37 4 65.24 1.9 3. The above example has been used because fuel taxes represent the major source of sectoral revenue to the Government. If diesel fuel taxes were raised to the cost shown, 0.0367/1, (i.e. by ten times) Government would have received K 5.8 million in revenue in 1976/77 rather than .l.1.. Taken as cost at the pump minus retail taxes. For purposes of this illustrative exercise, import duties on petroleum products - which would give us a lower economic cost - are ignored. C46383/J55642/D2l60/37ws - 42 - ANNEX 2 Page 3 K 0.58 million. An ad valorem rather than a specific tax would be recom­ mended inasmuch as many of the operating and maintenance expenses increase as the cost of petroleum products increase and specific taxes would lag behind needs. 4. Similarly, although the tax on gasoline is higher, (K 0.033/1) or about 12% of its cost (K 0.28/1) increasing the tax to K 0.10/1 (40% of the cost) would increase the cost of operating passenger cars and small commer­ cial vehicles by about 13%. The revenue to Government, however, would increase from K 3.33 to K 10.1 million. With both of these taxes increased, revenues for 1976/77 w ould have been K 20.2 million instead of K 8.2 million or more than double with little or no impact on heavy freight costs and marginal, if any, on passenger transport. The type of increase would have covered maintenance and operating expenditures for that year of about K 24.9 million. 5. Although the above example shows a staggering of the tax increases on diesel and gasoline, the tax rates should not vary b etween the two fuels. Diesel-powered vehicles usually get more mileage per liter than their gasoline-powered counterparts, and therefore, would presumably be in greater demand even if prices per liter were the same. The tax per liter needed to cover the maintenance and operating expenses for 1976/77, assuming other revenues would not change, would be K 0.072/1 (US$0.38/ gal) for both gasoline and diesel. This would be a 32% increase in the diesel price and a 27% increase in the gasoline price-.Ll The price of diesel fuel would be K 0.282/1 (US$1.50/gal) versus the current price of K 0.214/1 (US$1.14/ gal) and for gasoline, K 0.3198/1 (US$1.70/gal) versus the current price of K 0.253/1 (US$1.35). (On the tariffs mentioned earlier it would mean between a 2 % to 4% increase.) 6. The increases suggested will not meet the proposed DTCA recommendation to make the user pay the full cost of the service. Based on the 1976/77 figures, these increases would represent a ratio of 51% of revenues to expenses over the 17%, i.e., more than a doubling of revenues. Regular increases, however, would eventually bring about sufficient revenues to cover costs, possibly within ten years which is in line with DTCA's recommendations. (Not all revenue increases would have to come from taxes on fuel; this would be much the largest source of increases, however.) 7. The recent K 2.00 (US$2.80) airport tax levied on domestic passengers is expected to bring in K 1.0 million in revenues this year. This represents about a 40% increase in user charges over the 1976/77 f igures increasing the former ratio of 17% to a present ratio of about 25% of costs (K 14.8 million - US$20.7 million) • .L1 These ratios presume economic costs at pump of K 0.21/1 for diesel and K 0.25/1 for gasoline. The taxes if levied on the c.r.F. price may not show such a large difference in the ratios. C46383 /J55642/D2160 /4lws - 43 - ANNEX 3 Page 1 PAPUA NEW GUINEA TRANSPORT SECTOR REVIEW Transport Sector Planning Data Requirements In 1976, the United Nations Economic Commission for Latin America in a joint project with the World Bank published a manual classifying information for transport sector planning.ll The manual is over 200 pages and covers a very wide variety of information although it is not exhaustive. Giving a full list of transport sector data requirements in this Annex would be redundant. Nonetheless there are several basic data needs which are essential to proper transport planning. Briefly, these needs concern inventories of fleets and facilities; volumes of freight and traffic flows; fleet and facilities' costs; as a check of costs, tariffs; and revenues or user charges collected by Government. Some of these data are collected by other agencies many in a form readily adaptable for transport planning - others need either analyses or a system to begin their collection. With the exception, perhaps, of the location and capacity of facilities, a ll data should be monitored and collected on a regular basis. The listing below is considered to be an outline of essential data. its collection should be supervised by an experienced transport economist. (a) Inventory of Fleets (i) age and ownership (private or public); (ii) type and weight (commercial); and (iii) payload capacity (passengers and/or cargo). (b) Inventory of Facilities (i) location; (ii) condition (age, if applicable); and (iii) capacity (maximum and usable). (c) Traffic Movements by Mode Costs (i) tonnages by major commodity by port; 11 United Na tions CEPAL, Information Classification Manual for the Trans­ port Sector, E/CEPAL/1008/REV.l, 16 March 1976. C46383/J55734/D2160/42ws ANNEX 3 - 44 - Page 2 (ii) ship and aircraft movements; (iii) vehicle traffic counts; (iv) origin and destination surveys; (v) replacement of new construction costs by facility type; (vi) maintenance costs by facility type; (vii) other operating expenses by facility type; and (viii) vehicles, vessels and aircraft operating expenses by type with or without taxes. (d) Tariffs (i) by routes per ton by major commodity class by mode; and (ii) by ton/km by mode. (e) Revenues - duties, taxes and license fees (less general import duties) by mode.  C46383/J55642/D2178/03ws - 45 - Table 1 PAPUA NEW GUINEA TRANSPORT SECTOR REVIEW PNG Harbors Board Administered Ports (Revenue '000 tons) FY73 FY74 FY75 FY76 1977/a 1978.f.!?. Overseas Cargo Imports 717 849 655 749 435 896 Exports 283 302 279 286 134 299 Subtotal 1,000 1,151 934 1,035 569 1,195 Overseas unitized 87 82 89 110 57 130 Oil torinages n.a. n.a. 320 300 110 215 Coastal Shipping Discharge 196 222 214 231 125 2.65 Loaded 157 180 160 189 100 217 Subtotal 353 402 374 420 225 482 Total 1,430 1,635 1,717 1,865 961 l. 922 i2_ Covers July through December 1977. £E.. Covers the calendar year 1978. Source: PNG Harbors Board. January 1980 C46383/J55642/D2178/12 WS - 46 - Table 2 PAPUA NEW GUINEA TRANSPORT SECTOR REVIEW Volume of ExEorts (m tons) % p.a. FY73 FY74 FY? 5 FY76 FY77P growth rate Copra 123.S 113.8 137.1 136.6 124.7 0.3 Coffee 31.2 32.7 36.8 37.2 49.8 12.4 Cocoa 22. 1 28.7 35.5 30.4 28.0 6.1 Fi sh 12.7 38.6 31. 6 19.9 31.8 26.0 Palm oil 8.1 8.7 18.4 21.1 26.9 35.0 Tea 2.8 4.0 4.5 4.9 6.0 21.0 Rubber 5.6 6.1 s.s 5.0 4.4 -5.9 Subtotal 206.0 232.6 259.4 261. 1 271. 6 7. 1 Copper concentrates 495.1 717.1 623.7 530.2 552.9 2.8 Timber 468.2 703.6 427.3 418.3 546.7 4.0 Total lzl69.3 1 2 653.3 1 2 310.4 1 2 209.6 1 1 371.2 4. 1 P = Prelimi nary. Source: Bureau of Statistics. January 1980 C46383/J55642/D2178/02ws - 47 - Table 3 PAPUA NEW GUINEA TRANSPORT SECTOR REVIEW Road Trans2ort Statistics by Provincesz 1976-77 Motor Km of vehicles roads per per Province Population Motorized Km of 1,000 1,000 ('000) vehicles roads people people Western 81 115 1,066 1.4 13.2 Gulf 86 61 278 0.7 3.2 Central (including national capital) 148 14,455 1,540 97.7 10.4 Milne Bay 133 227 405 1. 7 3.0 Northern 73 450 504 6.2 6.9 Southern highlands 252 469 1,385 1.9 5.5 Enga 186 347 773 1.9 4.2 Western highlands 210 2,636 1,043 12.6 5.0 Chimbu 224 583 754 2.6 0.8 Eastern highlands 282 2,367 1,366 8.4 4.8 Morobe 307 6,780 1,291 22.1 4.2 Madang 207 2,287 1,099 11.0 5.3 East Sepik 245 2,090 1,220 8.5 5.0 West Sepik 116 309 537 2.1 4.6 Manus 27 422 123 15.6 4.6 New Ireland 63 770 1,377 12.2 21. 9 East New Britain 114 3,787 1, 146 33.2 10.1 West New Britain 81 906 817 11.2 10.1 North Solomons 100 3,514 1,327 35.1 13.3 Total 2z837 42z575 l8z351 15.0 6.5 Source: Department of Transport and Civil Aviation.  l'APllA NEW C:UitH:A TRANSPORT SECTOR HEMORANUUH Vehicle l'leet - Number of Vehicles on Register, 1963-78 (As of December 31) ----- Vehicle 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 19 76 19 77 19 78 --- Hotor Cars llighland:; 218 248 N/A )Id 512 669 892 1,034 I, 144 1,283 1,263 1,084 1,089 1,008 1,023 N/A Other provinces 4,71:l 5,269 N/A 6,547 7,865 9,454 10,651 13,600 13,773 14,390 13,550 12,261 12,819 12,472 11,913 N/A Subtotal 4,9]0 .hl.ll �on 1�� 8,377 10,123 .!.h1il 14,6311 � 15,673 .!.i,_fi l ],396 13,908 .!),480 12,936 � §!.at ion Wagons I, Jeeps llir,hlands 63 107 tl/A 182 232 313 328 348 453 530 531 490 524 561, 555 N/A Other provinces 809 1,020 N/A I,468 l,92] 2,499 2,641 2,532 3,595 3,854 3,696 3,424 3,491 7, 149 3,737 N/A Subtotal 872 J...,127 I,460 1.., 650 1....!21 ..?..... 2,969 2,880 4,048 4,384 4,227 3,91 4 .i...Q!1 J...lli 4,292 lliA Hororcycles Highlands 177 183 N/A 258 278 348 418 552 580 531 528 618 627 668 760 N/A Other provinces 381 501 N/A 878 1,242 1,687 I,813 2,305 2,414 2,516 2,421 2,790 3,188 3, 198 2,676 N/A Subtotal '>58 684 8% hill I, 520 2,015 2,231 2,857 2,994 3,047 2,949 J,395 3,815 3,866 ],436 N/A Tractor:-s Highlands 82 109 N/A 175 296 313 ]9 7 462 48 7 547 560 496 381 415 51 3 N/A Other proviuces 348 414 N/A 524 694 798 1,01) I,255 I, 262 I,374 I,380 I,328 I,405 I,338 I, 299 N/A Subtotal. lli 52J. 59tl 699 990 ..Lill .!_,410 .!..,1.!2 �- J· 749 .!..Bl 1,940 l,863 .!..,]86 l, 753. _!_,.fill !!!� Commercial Vehiele,; Ill ghlauds 534 6]7 N/A 966 I,309 1,819 2,209 2,598 2,797 2, 92 l 3,150 3, 165 3,479 3,747 4,868 ti/A Other provi11ces 4, 208 4,562 N/A 5,922 6, 345 7,559 8,871, 9,981 11,658 11, 752 11,752 11,174 14,427 15,483 16,419 N/A Suht,ltHI .i.lli _h!22 1,286 �888 7,651, J_.ll§. Jj_,_Q_ll.l 12 579 J.iij.21 li,67) �- 15,077 In, 398 .!L,J06 19, 2:10 _21, 28 7 N/A Total Vehicle,; llighlaud,; I, 0 74 I, 284 Nit\ I,92 2 2,6'!. 7 },462 4,244 ,,, 994 5, 41,1 5,812 6,012 5,853 h, 100 6,402 7, 719 N/A Otlie1- pro,,.riur.t!.S )0,458 11, 766 N/t\ 15,D'J 18, ()(,') 21,997 'L4,9'J:l 29, h7J ·12, 702 ]),8116 32,971, 32,977 )'i, 3)() ]9,640 36,044 N/A Tnt:a I 11 '>Jl _J.- J.1.,.Qi/! 15 J 12 -'-- l.!_,1!!.!_ =-- __ 29 2)6 1!� 66 � )ll 16] 20 6% 25 459 �--- _:., -"."-'-- 39,698 39,006 �%6 !!� 4 2 5 7 S 4) I 76) 2:;:J ___ N/A tJout·ces: llepart111e11t of Tra11,;pn1·l and Clvi l AvLHion ,rn<I llure,rn nf St;it!stics. I:: t> October I 'l 79 C46383/J55642/D2178/16 WS - 49 - Table 5 PAP UA NEW GUINEA TRANSPORT SECTOR REVIEW Central Government Ex:eenditure b:z Function 2 FY73-1978 (K million) 1977 E FY73 FY74 FY75 FY76 FY77 Jul-Dec 1978.f:E.. General public services so. 0 57.1 82.2 96. 7 104. 8 54d 111. 4 Social services 66.0 73.6 90. 8 106.3 116 •. 0 68.6 116.5 Economic services 77.1 90.8 126.5 132.6 133.1 74.3 141. 8 of which transportation 29.7 41.9 65.4 65.3 55.3 33.0 58.5 Unallocable is_ 57.3 86.0 74.4 79.6 55.5 14.1 94.5 Total 250.4 307.5 373.9 415.2 409.4 211. 1 464.2 Transport as % of total 12 14 17 16 14 16 13 1.2. Preliminary actuals. J:E.. Budget estimates. is_ Excludes interest on government securities paid to the National Debt Sinking Fund . Source: De partment of Finance. C46383/J55642/D2178/08-09 WS PAPUA NEW GUINEA TRANSPORT SECTOR REVIEW Expenditures on Roads, 1968-79 (K million) Type of project FY68 FY69 FY70 FY71 FY72 FY73 FY74 FY75 FY76 FY77 (E) 19 78 (E) Ca.eital Highway 1. 3 2.4 3.5 8.2 7.9 7.5 9.3 9.7 13.5 14.70 16.1 Trunk 2.1 L3 2.3 2.3 1.9 - - 4.3 3.2 3.00 D evelopment, agri- culture & resource 0.4 0.7 0.4 0.8 1.1 - - - 1.6 1.60 - 0 Rural improvement 0.4 0.9 1.0 1.1 1.0 1.9 4.2 6.0 6.2 0.30 Urban 1.7 1. 5 1.6 3.6 1. 5 - - - - 0.05 Unclassified - - 0.1 0.2 Sub total 5.9 6.8 8.9 16.2 13.4 9.4 13.5 20.0 24.5 19.65 16.1 Maintenance Roads & bridges 6.0 6.9 8.5 9.6 9.9 13-2 18.9 16.3 18. 9 16.30 17.0 Total 11. 9 13. 7 17.9 25.8 23.3 22.6 32.4 36.3 43.4 35.95 33.1 E = Estimated ·� Source: Department I� C46383/J55642/D2178/11 WS - 5;1 - Table 7 PAPUA NEW GUINEA TRANSPORT SECTOR REVIEW Road Infrastructure - Composition of Expenditure and Estimated Revenue from Road User Charges in 1976/77 (K million) Estimated revenue Expenditure Source of revenue Amount Type of expenditure Amount Automotive gasoline tax 3.33 Capital 24.2 Automotive distillate ( diesel fuel') tax 0.58 Maintenance 17.5 Motor vehicle registra­ tions and other fees 1.89 Administration 5.6 Import duties and mis­ cellaneous charges 2.40 Policing Total 8.20 Total 49.3 l.2.. One-tenth of total policing costs. Source: Department of Transport and Civil Aviation. November 1978 C 46383/J 55642/D2178/13 WS - 52 - Table 8 PAPUA NEW GUINEA TRANSPORT SECTOR REVIEW Structure of Interisland Trad e (metric tons) Beer MT bottles Coffee Building materials 51,837 42, 342 3,275 21,604 14% 11% 1% 6% Ve hicles, earth- HT drums Food, basic Gas, petrol and moving and boats and general other fuels 21,783 7,926 46,382 31,12 3 6% 3% 8% 8% Timber Copra Cocoa Tea 12,393 29,064 3,944 1 04 3% 8% 1% General cargo Cartons Produce Trade goods 64,318 260 4, 051 2,5 03 18% 1% 1% Tobacco products Arc mesh and steel Cement Rubber and copra 8,959 2,676 1,768 6,5 35 2% 1% 2% Freezer cooler Charter 390 7,960 2% MT = Empty Source: Touche, Ross and Co. January 1980  !able 9a - 53 - PAPUA NEW GUINEA TRANSPORT SECTOR REV!EW Air Transport - Pas:.enger Movement� at Princi?al Pa?ua �lev Guinea Airports Including all Re<;ular Public Transpor� and Charter S.ar-:tces, 1976/77 Passengers Carried Airport FY72 FY73 FY74 FY75 FY76 Domestic 19,557 19,336 20,794 18,317 19, SOlf.!. Interns tional 60 13 43f.!. 19,617 19,349 18.325 19,501 Daru 12,923 10,716 12,330 11,403 11,8431.!. Goroka 100,407 83,520 63,978 72,557 80,11 Sf.!. Gurney 13,186 10,607 lJ,308 13,445 12,636f.!. Hoskins 18,215 11,502 22,016 � l, 977 1a,677E.. Kavieng 15,287 10,840 16,065 15,228 14,3351.!. Domestic 68,062 60,057 63,830 60,362 63,078.i!. Interns ttonal 1,578 1,307 1,52 l 3,065 3,452 69,640 61.364 66,530 Lae 257,285 176,956 169,367 161,060 191,167.L!. l1sdang Domestic 70,667 57,641 79,784 80,263 n,088J.!. Incerna tional 362 342 455 357 71,029 57.983 80,2)9 80,620 72,088 Momote 12,331 9,221 12,827 10,504 ll,221/a Mc. Hagen 90,969 74,019 55,283 68,017 12,ont"; Popondec ca 22,212 14,223 23,932 28,000 22,092/a Port l'.oresby Domestic 313,568 248,608 261,678 262,852 271,676.i!. Aus c ra 11.a /PNG 135,512 126,751 119,679 26,696 International 20,061 21,736 23,125 100,109 120,845 469,141 397,095 389,657 392,521 Domestic 116,902 91,316 101,95) 98,203 102,0931.!. Incerna tional 1,445 848 813 152 118,347 92, 164 102.766 102,093 Vanimo Domestic 9,429 7,368 8,463 8,928 (8,927 T/co: (8, 54 71.!. Int.!T•ta tional 380 Domestic 46,476 40,103 46,169 45,4 ;J 44,55lf.!. Interns tional 15 18 191 471 812 46.491 40,121 46,)60 45,028 45,363 Total Passenger Movements Domestic 1,187,476 524,429 582,671 977,573 1,015,712 InterM t l,lnal 159,033 151,015 145,827 130,858 125,489 l.346,509 1,077,048 l, 117,604 l, 108,431 1,141,201 J.!. Estimated figures. Note: Boarding-disembarking - no transits. Source: Department of Transport iltld Civil Aviation.  Table 9b - 54 - PAPUA NEW GUI�IEA TRANSPORT SECTOR REVTE'� Air Transport - Freight M<wP.i,1ents at Princi;:,al Papua :-iew Cub.ea Airports Including all ?,egular Public Transport and Charter Serdces, 1976/i? Freight (tons) Airport FY72 FY73 FY74 FY75 FY76 Buka Domestic 134 308 213 182 International l ill. w. lli ill. 209 Daru 677 612 354 417 515/a Goroka 2,365 2,851 2,450 1,949 2,404h. Gurney 267 269 246 283 266h Hoskins 274 317 386 426 351.l!. Kavieng 204 288 325 314 283.L!_ Domestic 1,339 1,591 5,652 l,180 2,441.l!. International l 53 49 38 39 Lae 7,827 9,055 3,610 7, 119 6,903.l!. M.adang Domestic 3,097 5,894 3,430 2,981 3,851.l!. International 3 28 24 5 3,100 5,922 2,986 l,.fill Momote 164 273 360 251 262 /a Mt. Hagen 5,948 5,545 3,277 2, 734 4,376/a Popondetta 1,009 1, 121 786 817 933/a Port !'!oresby Domestic 10,911 12,568 9,846 8,310 10,409.l!. Austr;;lia /PNG 4,281 4, 707 1,036 547 International 296 517 475 1,664 2,086 Total � � Domestic 1,340 2,993 2,387 2,288 2,252_& International 3 20 15 4 Domestic 977 759 750 551 (761 Tito: (759_& Incernational ill .lli We'lolak Domestic 1,619 1,834 1,308 l, 933 1,674/a International l 6 4 J Total Total Freight Movements Domestic 38, 152 46,278 35,380 31, 735 3 7, 888 International 4,584 5,326 1,606 2,262 2, 130 42,736 40,013 L.!. Estimated Eigures. Source: Department of Transport and Civil Aviation.  Table 9c - 55 - PAPUA NEW GUI�EA TRANSPORT SECTOR F.F.VInl Air Transenrt - \ircraft Movements at Pr in,; L ,,:\l Paeua Xe� Guinea Aireorts Including all Regular Public Transeort and Charter Se?r1ices, 1976/77 Ai re raft Movement� Airport FY72 FY73 FY74 FY75 FY76 ·- Buka �mestic 4,861 4,484 4,379 3,931 4,414.L!_ International 416 177 l2fil 5.277 4.661 4,379 3.931 4.414 D aru 2,802 2,715 2,662 2,462 2, 660.L!_ Goroka 16,478 13,437 9,569 10,577 12, 515.L!_ Gurney 3,372 2,436 2,678 2,425 2, 728.L!_ Hoskins 2,456 1,853 3,701 3,364 2, 844.L!_ Kavieng 1,610 1,353 1,526 1,453 l,486.L!_ Kieta Domestic 10,695 9,201 8,943 8,256 9,274.L!_ International 433 278 154 377 473 l2fil 1.l,..,! 9.479 9,097 8,633 J....1!t Lae 26,563 22,026 21,440 20,664 23,173.L!_ Ma dang ·oomestic 12,027 12,805 12;276 10,922 12,008.L!_ International 5'.l 52 18 26 !2E.l 12 I 077 12 I 85 7 12 I 294 10,948 12,008 Momote 954 758 929 695 83 4.L!. Mt. Hagen 20,747 17,787 14,171 11,521 16, OS 7 Popondetta 4,365 3,159 4,240 5,535 4,32S_l!. Port Moresb::z: Domestic 27,492 22,865 24,964 22, 139 24,365.L!_ Austrd ia /PNG 2,496 2,449 2,049 470 International 648 590 459 l,324 1,690 Total 30,636 25,904 27,472 23,911 26,055 Rabaul Domestic 7,617 8,178 9,476 8,724 a, 1soE International 212 138 l � 7,829 8,316 9,477 8.724 8.386 Domestic 4,982 3,031 3,203 3,256 (3 652 T/to: (3,618.L!_ International 34 � 4,982 3,031 3,203 3,256 Domestic 8,594 6,559 8,070 8,296 7, 380/3. International 14 28 32 28 63 !2E.l 8.608 6,587 8,102 8,324 7 I 943 Total Aircraft Movements Domestic 155,615 132,647 132,227 126,220 136,567 Ince ma tional 4,269 3,712 2, 713 2,225 2,260 !2E.l 159,884 136,359 134,940 128,445 138,327 l.!. Esti:na ted figures. C46383/J55642/D2l78/27 WS - 56 - Table 11 PAPUA NEW GUINEA TRANSP ORT SECTOR REVIEW Comparative Fares i2_ Cost per Average cost Coun try Fare Di stance seat mile per seat mile (US$) (S tatute miles) (US$) (US$) I ndonesia 94.30 971 0.097 I 15.70 73 0.215 I 74.30 598 Q.124 } o. 117 34.00 269 0.126 I 22. 00 131 0.01s I Malaysia 23.05 189 0.122 I 17.74 122 0.145 } 0.138 11.35 77 o.147 I 25 .19 174 0.144 I Philippines 11. 50 131 Q.088 I 23.40 298 Q.078 } 0.078 26.90 349 o. 077 I 44.80 597 0.075 I PNG 30.41 119 0.256 I 43. 80 251 0.174 I 34.06 134 o.254 } 0.211 71. 78 397 0.181 I 4 7. 45 188 0.252 I 69.34 317 0.219 I 12_ 1978 data. Sour ce: Mi ssion estimates. November 1978  - 57 - Table 12 PAPUA NEW GUl�lF.A TRANSPORT SECTOR REVIEW Aircr�ft Fleets and Capac ities �s of June 30 1 1977 Aircraft type No. in fleet Standard seating P:.yload capaci. ty ( <:g) Aerospatial SA315B 5 100 Beech E33a 1 4-5 80/100 58 l 4-6 100/120 A65-8200 1 4-6 100/120 95· 9 4-6 181 055 Bell 47 B38l 2 206 8 7 140 Boeing 707-338C 2f.!. 219 40,324 Britten Not"lllan BN2A 33 10 560/610 Cessna 170A l 172 3 4 80/100 180 5 6 100/120 182 10 4 80/100 185 18 6 100/120 206 46 6 100/120 207 3 7 120/140 210/5 2 6 100/120 210B AI l 336 3 337C l 4-6 100/120 402 13 6-8 600 De Havilland DRC-6-200 4 20 360/1,940 (no J)SSs.) Dornier D0-27A4 40 Fokker F27-200 8/a 44 5,849 F28-100 2f.!. 65 9,076 Government aircraft fac tor1es N22B 5 Grumman Av'n AA5A 2 4 54-80 Hiller UH 12E 2 3 Hughes 269C 1 2 397 369HS 3 2 500 D 4 5 Partenav'ia P58B 2 2 n.a. Pilatus Porter PC6 2 10 650 Piper PA 23 5 6 725 PA 24-250 l PA 28 7 4 90 PA 39 1 Sikorski S58C 10-16 Swearingen SA26AT 19-20 286 Thorp !18 LOO /a Air Niug1ni. Source: Department nf Transport and Civil Aviation and mission estimates.  Table l3 - 58 - PAPUA NEW GUI)IF.:A TRANSPORT SECTOR REVIEW Transportation Projects Pr0Dos�d in the Naci0nal Public !::xoenditure i'::-,)"::ao, 198(,-33 (K'OOO) 1980 1981 1982 "I'ota l Total NPEP projects 117,800 119,200 8 9,200 73,500 399,70(1 Transport projects 19,851 19,159 1:,. 133 13,441 6 6, l 48 Objective 1: Rural �elfare 3 x 25 meter barges 420 420 Village-level low technology ship­ ping advisor 20 20 40 Rural transport sectoral program 2,500 3,500 3,500 3,500 13,000 Objective 2: Less Developed Areas Huon Peninsula regional program 1, 155 908 938 996 3,997 Objective 4: Econocic Production Ramu dist. transp. & rural dev. 200 200 Hudrographic survey c onsultant 250 250 Backup vessel to MV Agilani 345 345 Navigational aids vessel 105 6 95 800 New lights structure - carine 100 100 Upgrading maintenance of national airports 54 21 75 Fire fighting & safety equi?cent 420 420 840 Air navigation & radio netvork improvement 330 136 466 Baiyer River-Ruti road 50 50 Minj-Ganiger hi6hlands highvay 765 765 Finschhafen-Wasu road 296 296 Sovan River bridge 50 50 4 bridges - north coast roads, Hadang 55 55 Goilala access road 300 300 Hiritano highway - Kerema-Malalaua 1,000 1,260 2,260 Wewak-Aitape road 250 250 400 900 Rumginae-Ningerum road, stage I 90 90 Waterais-Usinon road 400 400 400 1,450 2, 650 Uai/Luai Sepik highway 500 500 Sepik highway - Uewak Passam sealing 700 400 1, l 00 Garnigle Chuave - highlands highway 1,775 1,775 Highlands highway - !:1.arkham Valley s ealing 4,950 2,213 7,163 Rigo road sealing 6 90 690 Rigo road bridges 200 200 4 00 Highlands highway - Kassam-Daulo sealing 500 8,000 8,000 7,000 23,500 Aerodrome improvements - Momote 350 200 550 New terminal - K.ieta 50 50 Fire station & access road - Jackson's airport 223 223 Lo rengau t.'harf 50 50 Drainage & paveoencs - Bewani 37 37 Upgrading Rabaul to F-28 standard 130 130 Objective 6: Tr aioi�g !:1.arioe engineering lecturers 116 116 Nautical training equipment 91 7 99 Objective 8: '£ffective Administra­ tion �licy & planning division 88 88 88 28 3 52 Transport economist (UNDP-financed) 37 37 Tr ansport inspectorate branch 57 lOC 100 257 National goverm:1ent aircraft 300 300 300 300 l, 250 Source: NPEP, 1980 -83. January 1980  - 59 - C46383/J55642/D2178/26 WS Table 14 PAPUA NEW GUINEA TR ANSPORT SECTOR R EVIB-7 Civil Aviation - C omposition of National Government Expenditure and Estimated Revenue Fr om User Charges in FY 1976/77 l2.. (K million� Estimated revenue Expenditure Source of revenue Amount Type of expenditure Amount Import Duties Capital Investment J.s.. Aviation fuel (av. gas Airports o. 9 & av. turb.) 0. 60/b New navigational aids, navi- Lubricating oil, etc. 0.09 gational systems, etc. Q.l Civil Aviation Charges Maintenance Air navigation charges 1.18 Airports 1. 5 Airport leases & c oncessions 0.35 Equipment (e.g. nav. aids) Outg oing passenger fee 0.18 used by Civil Aviation Other miscellaneou s charges o.os Agency 5.3 T otal 2.45 Administration Salaries, allowa nces, over­ time payments, travel expenses, etc. for: Div. of Civil Aviation 0.6 Civil Aviation Agency 5.3 Training 1. 1 Total 14.8 � Excludes revenue from the general 2-1 /2% levy on imports • .LE. Net revenue fr om "domestic" fuel only. There is a 100% drawback of the tax on fuel c onsumed on international flights. J.s.. Not including K 3.0 million spent under the Australian grant pr ogram, partly on Jackson's Airport (Port Moresby), but m ostly on Nadzab Airport. Source: Department of Transport and Civil Aviation.  l'MOA � CiUL"(.U.: Tll.AN:>t'VII.T :;i:;1..-rv11. =vu.w D!PARTMl!NT OF 'WORKS AND SUPPLY ORGANIZATION CHART MINISTER FOR WORKS & SUPPLY SECRETARY FOR WORKS & S�PPLY FIRST ASSIST.:.NT ,:IRST .)..5SIST,!..'�T SECRETARY SECf:1ETAAY WORKS SUPPLY ROADS& GOve.:i,\u.1:··. r ARC><ITECTURE BRIDGES STOA ES GENERAL COVEANMH�T AERODROMES ENGINEERING PAINTER MECHANICAL & PROPERTY SURVEY ELECTRICAL AOMtN LOCAL PLANNING GOVERNMENT QUANTITY LABORATORY SURVEY CONTRACTS .:..ss1STANT SECA::-:-.:.�y ASSISTANT SECRETARY ASSISTANT SECRETARY ASSISTANT 3ECR5i,l,,RY STAFF OEVELIJPMENT & OPERATIONS PLANT & TRANSPORT MANAGEMENT SERVICES TRAINING CONTRACTS DAY L..ABOA TECI-INICAL HEAVY PLANT ACCOUNTS MANAGER MANAGER TRAINING CLERICAL LIGHT PLANT STAFF TRAINING LOCALIZATION FIXED PLANT SALARIES POLICY AUDIT OFFICE SERVICES �l:!OVINCiAL SERVICES COMPUTERS I AREA WORKS BOROKO LAE MADA.NG MT. HAGEN A ASA UL MANAGERS PROVINCIAL WORKS NAT. CAP. 01ST. BOROKO LAE MAOANG MT i-tAGEN i=!ABAUL MANAGERS CENTRAL POPONOETIA WEWAK. AENOI 1 KIMBE BOROKO OAAU GOROKA VAN IMO <UNOIAWA <.).VJ ENG KEREMA LORENGAU 'NA.SAY <lE7A ALOTAU Sourm: 0eQat"O'Nnt ot Works ano SYPOtV. ·,vortd S1n11: - 21018  PAPUA Nl!V GIJilll!A• TUHSPO&T SECTOR NIOIOIWIDUII D£1'ARntl!NT OF T&ANSPORT AND CIVIL A9IATI<11 OIIGAIIIZATION CllilT Mlt,11:iTER ,-oo TRANsPORT • CIVIL AVIA T ION SfCH flARY DEPUT Y SECflt:TARY A$ST."-CRl:T AIIY A$sr. Sf:CHETARY POLICY. PLANNING 1--------------...,------+-----------------IMANAGl:MENJ&ERVICES 0tV1St0N OIVIS,ON TR AHSl'OAT Pl.AH.HING ADVISER "' SLl'PLY. ... iTAff ESTAIIUSH­ INTERNAL OfflCt ACCOUHTI PERSoNNEL INVENTORY I I AECltulTMENl MENT& AUOIT S EAVICtS OFFICE PROGRAM­ AUfUC R AN 1-INANCl.-,L MING & lH T T T l:CON ��� E N�� ANALYSES BUDGET CONlflOL COHTHOllEH OU1£C100 CIVIL AYIATM>H MAHtllMt OtVlltlON DIVlllosON ROAD &AffJY 11 C ENrnAL lRAfflC OFFICER RGTRV OIY AIRPOHJ t>llCUI IYf lXtClJTIVt OlfftCJOH OfFl(.fil Off-lClR NAOZA8 ltUHVlYlt World ts-11. - 2 lutlll l,,o,un• o..,.,,.,._,., ot l•••�l ••Id C,..il AV'lalluo  IBRD 13732 AUGUST 1978 rf' 146° 150" 154° PAPUA NEW GUINEA PACIFIC 0 CEA N MAJOR LOCATIONS OF CASH CROPS "' NEW � . MANUS I � eS -COCONUTS -COFFEE ..COCOA ti ZEACV >SO 0 \ -,RUBBER � \ - di> \ I �OILPALM _," (Ii I 142° 0 I �'ii avieng fiHJ?f;j PYRETHRUM b,..._Vammo I Q I .. TEA � � - PEANUTS NEW IRELA� ' "" q, DISTRICT BOUNDARIES INTERNATIONAL BOUNDARIES BISMARCK SEA ' '' 40 (J° 40 ' .......) 0 I I I .,./ - - -, I --.· ,-. ....,_...,. MADANG I I I , I <"-­ :o I <( ! � ' I >­ \) 1 ', WESTERN ', / I I �HIGHLANDS <( _,', :�) ---, �.::_-,. -, .- I z _ ..... ; I ,- _ ,_,_____ ,, , /� �, lliif @ @ "; ,.••Ji <( ',,./'CHI SDUTHEHN II \a ,., �/// • - -- L, HIGHLANDS - (} HIGH LANDS ... _ / O!'. _':.. '\ �,"--,::. l ; 1 MOROSE 1 ',,,<'" / ,,,.Q / SOLOMON SEA so '--:>,,�,,�-1 -- .,,--::_ ___ _ .-::::..·._ - • I ', ,/ ' <2 '-, ,/ / °70 .,/ (I GULF OF PAPUA -, � I i L- - _,, / 'i PORT <b i I i ) �� \ Th,s map has been prepared br the °� 0 100 200 World Bank ·s staff exclusr11ely for the convemence of the readers of MILES ; CORAL SEA 0 200 400 ,e;:::i the report to which 1t rs attached Tht!i denommst,cms used and the boundt1T18S shown on this map ') KILOMETERS do not imply, on the part of the World Bank and ,rs aff,ltates. eny ( > Judgment on the legal stews of any ternlOI)' or eny endorsement 120 { 14 60 150" 154° or ecceptence of such boundaries 120  IBRD 14767 141" 14,," 1A7" 150° i.53" 136· JANUARY 1980 � PAPUA NEW GUINEA - - ----T- M AN U 5 �� TRANSPORTATION I • I l I �;-) - - Main Roods I IRElAND I I .l,. Paris I -:,=o,n mo I t 1n1ernat1ona! Airport ® Cop1tol '�: [ I Bi s m a r c k 5 e a O Towns ,· ! � c:::J Mountainous Areas ----- - - - I W E 5'{__ �-�I ----==: Rivers I 5 E P I K � i - - -- ----- -�-- - J---V --- D1str1ct boundaries ' � <! --- lnternot1onol boundaries V) - - a 20 40 60 so ioo 120 l"-O 160 t w KILOMETERS I z \ lO 100 I 4� MILES 0 I NEW B R I T A I -, 0 I I z <! / >­ Ill E / <! / ,.. I I I I z I I E A 5 T NEW BRITAIN ;;; / <! ...\ ,,. 0 I I I I / . ./ /"""' \'- °" 'i · I I I / / '----' s a,o,. ES TERN I I I ./ _././ ,,,o� I 5 o m o n 5 e a I is , I // "l tv Ds 1 ----�"'"1-l ,,. ____!.:._________] �' I Gulf of H E RN 4 i i Lous1 ( I� u � Papua I ,. D·1: I ,· 1v,- � i £�'\ ��s�&+ I P i o C I C � MI l N E 8 A Y / io C e 0 n -"(,(a' -4 G. ' PHl!IP?INlS mo ( I G u L F I ' ,, 'J,,i \it ,, ' fc Ocoan �' "· w c1, •�PAPUA rc;'_,-. [h..0�� !;/•� NEWGUINEA A J _ • .,, .dJ \.J....,JI \ "'� ��,? :_ " " _/" • I " i lnd,ooOreun i Th15m;Jph.U bl'!l'!llprcparedbytht1 C o r a I 5 e a W0tld8s11k$5r11ll,::n::/us,w,lylor i ihe u,,,�11mel)(:eof tht1rt111d1Ns of 1herepon1owh,cfl1l ,s attached The dMommar,ons ust:d and thtl ( boundanessflownfJll lh•sm;,p donor,mply orl tflepar1ol!o'ie ·-·- -·------- ---·- -· ·�- NEW� WorldBank1111d1UtJll1l,MU ariy ) u v "'"'Y? 1ud(!mtlfltonlhel�i1/SIOlurol D 1�12· fl(lytemroryor,myl'!ndw.1emMI OIICCtPlanceoliwchbourrd/11'1es ---lnternol1onolboundorie,s 144° 147° ,so· l:iJ" 156°