Papua New Guinea - Public Sector Training Project

Document of The World Bank FOR OMCIL USE ONLY LA/J. ~32 9o-Ps/G, Repet No. P-5317-PNG MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN IN AN AMOUNT EQUIVALENT TO US$20.8 MILLION TO THE INDEPENDENT STATE OF PAPUA hlEW GUINEA FOR A PUBLIC SECTOR TRAINING PROJECT DECEMBER 5, 1990 This document has a restricted distribution and may be used by recipients only In the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS (November 1990) Currency Unit - Papua New Guinea Kina (K) US$1.00 KO.967 WEIGPTS AND MEASURES Metric System FISCAL YEAR January 1 - December 31 ACADEMIC YEAR January - December ABBREVIATIONS Adcol - Administrative College DLE - Department of Labor and Employment DPM - Department of Person-el Management NTP - National Training Poiicy NTC - National Training Council PCC - Project Coordinating Committee PNG - Papua New Guinea UNDP - United Nations Development Program  FOR OMFICIAL USE ONLY PAPUA NEW GUINEA PUBLIC SECTOR TRAINING PROJECT Loan and Project Summary Borrower: Independent State of Papua New Guinea Amount: US$20.8 million equivalent Terms: Repayable in 20 years including 5 years of grace at the Bank's standard variable interest rate On-lending Rate: Not applicable Financing Plan: Government US$2.3 million IBRD US$20.8 million Total US$23.1 million Economic Rate of Return: Not applicable Staff Appraisal Report: Report No. 8592, dated December 5, 1990 Map: IBRD No. 22739 This document has a restricted distribution and may be used by recipients only in the performance of theit official duties. Its contents may not otherwise be disclosed without World Bank authorization.  MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE 3XECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE INDEPENDENT STATE OF PAPUA NEW GUINEA FOR A PUBLIC SECTOR TRAINING PROJECT 1. The following memorandum and recommendation on a proposed loan to the Independent State of Papua New Guinea for US$20.8 million equivalent is submitted for approval. The proposed Loaii would be repayable in 20 years including 5 years of grace at the standard variable interest rate and would help finance a public sector training project. 2. Background. Papua New Guinea's (PNG's) basic strategy of accelerated and more broad-based development faces two major constraints--the country's relatively weak institutional capacity and the lack of highly trained personnel. In general, PNG lacks strong institutional capabilities in the form of organizational structures, administrative policies and procedures, and management systems to plan, design, implement and sustain effective development programs. In response to these limitations, the Government is currently implementing an institutiona' reform program which encompasses improved resource management and inves ment programming, new project development and implementation procedures, strengthened technical assistance management, improved procurement procedures and the introduction of program budgeting. These efforts are being assisted by Bank-financed experts and a study on improving absorptive capacity. However, the impact of improved planning mechanisms and administrative processes will be greatly reduced unless well-trained personnel are available to carry through and sustain these improvements. Thus the Government has also turned its attention to improving the planning, coordination, and delivery of training. 3. Major initiatives are being taken in the fields of in-service and pre-service training. In-service training is widespread in the public sector and among the larger private firms but is hampered by poor planning and coordination. The recently approved National Training Policy (NTP) calls for the Department of Personnel Management to play the major role in promoting, coordinating, monitoring and evaluating in-service training in the public sector and for the Department of Labor and Employment to play a similar role in the private sector. The NTP calls for Three-Year Training Plans to be submitted to DPM by public sector agencies and to DLE by private firms. Thirty-six such Plans are currently under review and when reviews are completed, DPM and DLE will make appropriate recommendations to the National Training Council. The NTC is being established under the National Training Policy to formulate overall in-service training policies, set priorities and estimate training resource needs. The Administrative College (Adcol) which is the public sector's main in-service training institution, will be strengthened under the NTP to provide a broader range of practical, skill intensive courses and to develop the capacity to become a training resources center for research and consultancy on training issues, curriculum development, training of  - 2 - trainers, etc. Pre-service training is at present controlled by more than two dozen agencies and comprises many small, uneconomic training institutions. This has led to a poorly planned and coordinated system which also suffers from high unit costs due mainly to its inability to benefit from economies of scale. To address these issues, a higher education plan has been drafted which makes recommendations for improving the planning and coordination of higher education and for a more rational use of institutional capacity. The plan will be implemented by the Commission for Higher Education which will be strengthened for the task by expert assistance to be financed by UNDP. 4. Rationale for Bank Involvement. The Bank has previously assisted institutional improvement and personnel training in PNG. It is therefore well-placed to continue support in these areas and the proposed project is consistent with previous support. Project design has benefitted from the lessons learned from prior experience. The Government's ongoing administrative reform program includes more effective training as a major ingredient, to be achieved through implementation of the NTP. The key to the successful implementation of the NTP is the effective performance of DPM, DLE and Adcol. The proposed project would strengthen the institutional capacity of these agencies to carry out their roles under the NTP. The project would also assist in filling important skill gaps by providing overseas training opportunities in policy, planning and technical fields which are not available in local institutions. 5. Proiect Objectives. The overall objective of the proposed project is to assist the Government in implementing its program of institutional reform by supporting implementation of the National Training Policy. More specific ally, the project wQald strengthen in-service training in the public and private sectors and increase the supply of specialized high-level personnel to staff the Government's policy and planning agencies and to help meet shortages of technical skills. The overall impact of the project would be to assist in strengthening the management, planning and technical capacities of the public sector and improve the effectiveness of training in the private sector. 6. Project Description. The project woulds (a) finance experts, fellowships, furniture and equipment to support the implementation of tU- National Training Policy through strengthening DPM's capacity to promote, coordinate, monitor and evaluate training in the public sector. Strengthen DLE's capacity to play a similar role in the private sector; (b) finance civil works, experts, fellowships, furniture, equipment, consumable and teaching materials to upgrade and reorient the Administrative College towards its new role as defined under the NTP namely to focus on short, intensive skill development courses and executive development programs and place greater emphasis on research, curriculum development and the training of trainers; and (c) finance an overseas fellowship program for training in policy, planning and technical fields which at present is not available in PNG. 7. Each project agency (DPM, DLE and Adcol) would be responsible for implementing its part of the project under the overall direction of a project manager. A Project Coordinating Committee (PCC) would assist in the overall coordination of project activities, provide policy advice and resolve major  - 3 - problems which might arise during project implementation. A breakdown of costs and the financing plan is shown in Schedule A. The proposed loan, to be disbursed over seven years, would finance 902 of total project cost. This level of cost sharing is based on the increasing needs of PNG for external assistance which is partly due to the recent oil price increase as PNG is an oil importirng country. Retroactive financing of US$0.7 million will be provided for expenditures after December 1, 1990 for civil works, equipment. fellowships and consultant services. Amounts and methods of procurement and of disbursements, and the disbursement schedule are shown in Schedule B. A timetable of key project processing events and the status of Bank Group operations in PNG are given in Schedules C and D respectively. A map is also attached. The Staff Appraisal Report No. 8592-PNG dated December 5, 1990, is being distributed separately. 8. Actions Agreed. The Government has agreed that: (a) special attention would be given to recruiting women candidates for overseas fellowships including the flexible application of grade and position levels for the award of policy/planning fellowships; (b) a writte-i undertaking would be given by sponsoring departments that fellows being finunced under the project would return to their previous positions or to positions within the departments which were relevant to the training programs undertaken by the fellows; and (c) consultants will be appointed under a schedule agreed with the Bank. 9. Benefits. The project would assist in the effective implementation of the NTP. This would lead to higher quality in-service training in the public sector, which would be of greater relevance to clients' needs and more efficiently delivered. The project would also increase the supply of trained high-level personnel which would improve the management, planning, and technical capacities of key agencies thereby enhancing their performance as agents of development. The project would also lead tc more effective training in the private sector. 10. Risks. The major risk associated within the project concerns the capacity of the relatively inexperienced project institutions to implement the project efficiently. The risk would be reduced through the establishment of a high-level Project Coordinating Committee and the appointment of an experienced project manager. 11. Recommendation. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Bank and recommend that the Executive Directors approve the proposed loan. Barber B. Conable President Attachments Washington, D.C. December 5, 1990  Schedule A PAPUA NEW GUINEA PUBLIC SECTOR TRAINING PROJECS Estimated Costs and Finarcing Plan Estimated Costs 1/ Local Foreign Total -------(us$ million)- Implementation of NTP DPM 0.8 2.5 3.3 DLE 0.2 1.5 1.7 Subtotal 1.0 4.0 5.0 Strengthening of Adcol 2.9 5.2 8.1 Overseas Fellowships 0.3 5.8 6.1 Baseline cost 4.2 15 19.2 Contingencies Physical 0.3 1.0 1.3 Price Increase 0.7 1.9 2.6 Subtotal 1.0 2.9 3.9 Total Project Cost 5.2 17.9 23.1 Financing Plan Government 2.3 - 2.3 IBRD 2.9 17.9 20.8 Total 5.2 17.9 23.1 1/ Project expenditures are exempt from duties and taxes.  Schedule B Page 1 PAPUA NEW GUINEA PUBLIC SECTOR TRAINING PROJECT Procurement Method and Disbursements (US$ million, including contingencies) Category of Expenditure Procurement Method Total ICB LCB Other /a N/A Cost Civil works - 3.3 - - 3.3 (2.6) (2.6) Furniture, equipme_... and 2.0 0.8 0.8 - 3.6 teaching materials (2.0) (0.5) (0.6) (3.1) Fellowships and training - - - 9.5 9.5 (9.5) (9.5) Consultants - - 5.6 - 5.6 (5.6) (5.6) Consumables and supplies - - 0.6 - 0.6 (0.0) (0.0) Overseas family allowances - - - 0.5 0.5 (0.0) (0.0) Total 2.0 4.1 7.0 10.0 23.1 (2.0) (3.1) (6.2) (9.5) (20.8) la Includes: (a) international and local shopping; (b) direct purchase after negotiations for best discounts for books and teaching materials; and (c) consultant services. Notes Figures in parentheses are the amounts to be financed by the Bank.  Schedule B Page 2 Disbursements Category Amount 2 of Exaenditures to be Financed Civil works 2.6 802 of expenditures Furniture, equipment and teaching materia4s 3.1 1002 of foreign expenditures for directly imported. equipment, furniture and teaching materials, lOOZ of ex-factory costs of locally manufactured gouds, and 75S of the costs of other items procured locally. Overseas fellowsh4ps and 9.5 1002 of expen itures training Consultant services 5.6 1002 of expenditures Total 20.8 Estimated IBRD Disbursements Bank FY 1992 1993 1994 1995 1996 1997 1998 Annual 1.6 2.8 4.0 4.0 3.8 3.0 1.6 Cumulative 1.6 4.4 8.4 12.4 16.2 19.2 20.8  Schedule C PAPUA NEW GUINEA PUBLIC SECTOR TRAINING PROJECT Timetable of Key Project Processing Events (a) Time taken to prepare: 12 months (b) Prepared by: Government with Bank assistance (c) First IBRD mission: February 1989 (d) Appraisal mission departure: February 7, 1990 (e) Negotiations: December 1990 (f) Planned date of effectiveness: May 1991 (g) List of relevant PCRs and PPARs First Education Project (Cr. 661-PNG), PPAR No. 5126, June 15, 1984. Primary Education Project (Cr. 1087-PNG/Ln. 1934-PNG) PCR, February 28, 1990  Schedule D THE STATUS OF BANK GROUP OPERATIONS IN PAPUA NEW GUINEA A. STATEMENT OF BANK LOANS AND IDA CREDITS /a lb (as of September 30, 1990) Loan/ Amount (US$ million) Credit Fiscal (less cancellations) number year Borrower Purpose Bank IDA Undisbursed Twelve loans and thirteen credits fully 125.72 113.77 - disbursed 2265-PNG 1983 PNG Road Improvement 31.00 - 5.44 2395-PNG 1984 PNG Secondary Education 49.30 - 1.18 2475-PNG 1985 PNG West Sepik Provincial 9.70 - 3.93 2608-PNG 1986 PNG Nucleus Estate Smallholder 27.60 - 8.41 2722-PNG 1986 PNG Yonki Hydroelectric 28.50 - 7.60 2742-PNG 1987 PNG Transport Improvement 45.50 - 32.84 3051-PNG 1989 PNG Land Mobilization 19.60 - 18.00 3154-PNG 1990 PNG Third Telecommunications 17.20 - 17.20 *3218-PNG 1990 PNG Structural Adjustment /c 50.00 - 50.00 Total 404.12 113.77 144.59 Of which has been repaid 80.47 3.90 Total now held by Bank and IDA 323.65 109.86 Amount sold 15.39 of which repaid 14.83 Total Undisbursed 144.59 B. STATEMENT OF IFC INVESTMENTS (as of September 30, 1990) None la The status of the projects listed in Part A is described in a separate report on all BankJIDA financed projects in execution, which is updated twice yearly and circulated to the Executive Directors on April 3C and October 31. lb Prior to exchange adjustmerts. /c Not yet effective as of September 30, 1990. * SAL, SECAL or Program Loan.  ______ ______________ ___________________________ IBRD 2273 ! 9 at ' ,,47' iA A.' M A N U 5 PAPUA NEW GUINEA r -T- ---L PUBLIC SECTOR TRAINING PROJECT MANUS ~~~~~~~~~~~~~~~~~~~~~~~~~~A Regioali Training Centers i tIS I N E W IR E A N D Adminisrtive College ~~~~~~~~~vaflim. ~~~~~~~~~~~~~~~~~~~~~~~~~~~Mai Roads 4. Ports F , 4 Anape Ia}_ jg i s ^ e r c k I.. 1'i t hntemotionol Airport VV E 5, ' Z ---_ | Z ^t7 0~~~~~~~~~~~~~~~~~~~~~~~~~ Towns ISLANDS REINLRvr ;. 5 g D * g :t % X & -_ 1TRAINING CENTER - ! , | c Fl F, < - r___ _ , ---Disirirt Boundoriz~~~~~~~~~~~~~~~~~~~~~~~~~-- Dshit oudoie v) | / ~~~--- ~ < ' , < / \ /111 i -.-International Boundaries