Announcement of Seven Million US Dollars Loan in Papua and New Guinea on June 27, 1968

1818 H STREET, N.W .. WASHINGTON D. C. 20433 T.ELEPHONE: EXECUTIVE 3-6360 Bank Pt:·ess Release lioo 68/34 Subject; $7 million loan in Papua June 27, 1968 and New Guinea A program to expand and improve telecODD11unications in the Territory of Papua a:-nd New Guinea, essential to e~ficient administration and further economic develop- ment, will be undertaken with the assistance of a World Bank loan of $7 million. This will be the first lending operation by the World Bank Group in the Territory:, The Territory, which is administered by Australia, consists of the eastern half of the island of New Guinea and some 600 islands. Physical communication within the Territory is extremely difficult because of the rugged terraint scattered islands· and great distance between centers of economic activity. There- • fore good telecommunication connections are of special importance • The inter-urban network established some years ago by the Posts & Telegraphs Department of the Territory has become so overloaded by increased traffic that it cannot cope with essential requirements. A substantial investment is now needed to greatly enlarge ,1the ca~;icity ': ';\ of this network as well as to meet the normal growth of the Departmen~:i s l<k.~al systems. The four-~rear progi:\au1c now being undertaken, by the Department includes ~pan- ' I sion of the lo~al teleph6ne exchange service by 10,000 lines of automatic telephone exchange equipoient at 35 locations and provides for the necessary increase in asso• ciated sQt,scriber plant, telephones, and radio outstations. I/ The most important and costly part of the project is t.he virtual replacement of the long distance toll and t~legraph network with one of several times the pr~sent capacity. This consists of establishing on the oain island a microwave backbone route with a basic capacity cf • /more  - 2 - 300 channels, linking the principal towns, Port Moresby, Lae, Madang, Goroka and • Mt. Bagen, and a~propriate spur links to other centers and off-shore islands. The total financial requirements of the four-year program are estimated at the equivalent of $16 million. The Bank loan will finance 437.; about 26i will come from the Department's internal cash generation, and the remainder from ad- van,:.:es from.· .the Government. All goods and services to be financed under the Esnk loan wU\l be procured on the basis of international competitive bidding. The loan will be made to The Administration of the Territory of Papua and New Guinea and will carry the guarantee of the Conmonwe~lth of Australia. The loan will have a term of 20 years, including a five-year grace.:,eriod, and will bear interest of. 6-1/47.. Pour financial institutions have agreed to participate in the loan for a total amount of $255,000. The participants will be Girard Trust Bank, Philadelphia Morgan Guaranty Trust Co. of New York • The Fidelity Bank, Philadelphia The Northern Trust International Banking Corporation, New York - 0 - • },. ..