Sector Memorandum: Papua New Guinea Telecommunications

Document of TO BE RETURN-D TO R7-CTS DESK The World Bank FOR OFFICIAL USE ONLY FILE COPY CONFIDENTIAL Report No. 1366-PNG SECTOR MEMORANDUM PAPUA NEW GUINEA TELECOMMUNICATIONS November 19, 1976 Central Projects Staff East Asia Regional Office This document has a restricted distribution and may be used by recipients only in the performance of their oficlal duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVAIENTS Currency Unit - Kina (K$) US$1.00 - K$0.79 K$1.00 - US$1.26 LIST OF ABBUREVIATIONS AND ACRONYMS USED IN THE REPORT APO - Australian Post Office HF Radio - High Frequency Radio Measured Pricing System - A Tariff System where local calls are charged for and not included in a flat rate tariff Microwave - Wide Band Line of Sight Radio Systems operating at Microwave Frequencies (2GHz and above) NIDA - National Investment and Development Authority OTCA - Overseas Telecommunications Commission of Australia P&T - Department of Posts & Telegraphs SEACOM - SE Asia Commonwealth Cable SSB - Single Side Band - Transmission of one sideband to increase effective power and reduce 4stortion in HF radio STD - Subscribers Trunk Dialing (Direct Distance Dialing as used in USA) Telex - Teleprinter Exchange Switching System Toll Ticketing - A system where full records of long distance calls are recorded instead of just a number of call units on the subscribers meter Troposphoric Scatter - A radio system utilizing very high powers/antenna gains to provide a usable signal through Scatter in the Troposphoric, can be relatively wide band (120 channels) UHF - Ultra High Frequency (300-300011z) UNDP - United Nations Development Program VHF - Very High Frequency (30-300 MHz) FISCAL YEAR July 1 to June 30 FOR OFFICIAL USE ONLY CONFIDENTIAL SECTOR MEMORANDUM PAPUA NEW GUINEA TEIECOMMUNICATIONS Table of Contents Page No. 1. BACMROUND ..................................... 1 2. THE TELECOMMUNICATIONS SECTOR .................. 2 Role of Telecommunications in the Economy....... 2 Progress made under Bank Financing.............. 3 Access to Service .............................. 5 Organization and Accounts ...................... 5 Finance and Tariffs ............................ 6 3. SECTOR DEVELOPMENT STRATEGY ANp GS .......... 7 4. INVESTMErT PROGRAM AND COST .................... 8 5. SECTOR CONSTRAINTS ......................... ... 8 Orga n zational ................................. 8 Financial .................................. -. 9 6. BANK GROUP STRATEGY IN THE SECTOR .............. 9 7. ACTION TO BE TAKEN ......... .. ............... 10 This report has been prepared by C.R. Dickenson and is based on information relating to the sector collected during a supervision mission in June 1976. This document has a restricted distribution and stay be used by recipients only in the performance of their oflicial duties. Its contents may not otherwise be disclosed without World Bank authorization. LIST OF ANNEXURES 1. Potential for Development 2. Administrative and Sociological Factors 3. Dhjor Industrial Development - The Bougainville Project 14. International Telephone Statistics 5. Urban Centers - Population/Telephone Statistics 6. Department of Posts and Telegraphs.- Staff and Training 7. Department of Posts and Telegraphs - Telecommunications Tariffs 8. Department of Posts and Telegraphs - Balance Sheet and Income Statements 9. Department of Posts and Telegraphs - Statistical Data and key Indicators MAP IBRD 11198 R SECTOR MEMORANDUM PAPUA NEW GUINEA TELECONMUNICATIONS 1. BACKGROUND 1.01 Papua New Guinea consists of the eastern half of New Guinea, the world's largest island (taking Australia to be a continent), together with the nearby Solomon Islands group: the Admiralty Islands,.New Britain, New Ireland, and Bougainville. Until the eighteenth century the area had virtually no contact with the outside world. As in Central Africa, the first Europeans to settle in New Guinea and the Islands were the eighteenth century mission- aries who set up mission stations and trading posts. During the nineteenth century Holland, Great Britain and Germany established protectorates dividing the main island into three parts: the western-Irian-(now part of Indonesia), the south eastern-Papua-and the north eastern part together with the offshore islands-New Guinea. When Australia obtained its independence in 1905 it was given the responsibility for the administration of Papua and it subsequently, during the first World War, assumed that of New Guinea. In 1964 a local House of Assembly with its own Administration was created followed by an elected Government in 1972. Papua New Guinea became self-governing in Decenber 1973 and was declared independent on September 16, 1975. 1.02 The country's long association with Australia has resulted in the adoption of Australian methods and technical standards in most fields, the employment of many Australians in senior and skilled technical positions and in close trade and other economic relationships. While some of these ties may diminish in strength as trade expands and more countries become involved in development financing, they are likely to persist for some time and to play an important role in the country's growth. Dbanwhile, Australia still makes a considerable contribution to Papua New Guinea's budget. 1.03 In land area, the country is almost as large as Thailand, though it has only six percent as many inhabitants or about 2.6 million. Eighty-five percent of the population live in largely isolated rural areas, dependent chiefly on subsistence agriculture. any are.just emerging from a way of life characteristic of the late stone age. Population density ranges from one-and a-half per square mile to 90 in parts of New Britain and the New Guinea high- lands. The average is about 14. Including the capital city of Port &bresby with a population of nearly 100,000, only eight urban centers have 10,000 inhabitants or more. 1.04 The rural population is fragmented into many tribes separated by wild and rugged mountain ranges, dense tropical forests, vast swamps, great rivers and wide expanses of sea. Surface transport is minimal and in most places, primitive. Coastal shipping serves a few towns and the offshore islands but there is no railway service and only one major road linking the New Guinea highlands with Lae on the northeastern coast. Aircraft provide the only reliable means of travel and shipment among many parts of the country -2- but costs are high, capacity is limited and the social integr,7tion effects are negligible. 1.05 The physical separation of tribes has also resulted in a multitude of' linguistic barriers to integration. Some 700 languages are spoken. Few have a written form and most are mutually unintelligible. For purposes of education, business, administration and inter-tribal.communication, the principal vehicles are English, pidgin English and btu, one of the better known indigenous languages. 1.06 The country is well endowed with resources for the development of agriculture, mining, forestry, fisheries, power, tourism and various industries (Annex 1). In order to realize the potential of these resources for the benefit of all its citizens, the Government seeks to create a more unified nation through social and economic integration and modernization. But better communications are a prerequisite. Indeed, the critical nature of the relationship between modernization of the society and development of the economy with provision of adequate communications is nowhere more dramatically suggested than in Papua New Guinea's geography, ethnography and history. 1.07 The World Bank's first contact with Papua New Guinea was in 1964 when it sent out an economic survey mission at the request of the Australian Government. The mission's report and recommendations were published in 1965. In the following year the Australian Government asked the Bank to consider a lending program. The Bank Group's lending in Papua New Guinea began with a telecommunications project.appraised in October 1967. 2. THE TELECO14MUNICATIONS SECTOR Role of Telecommunications in the Econor 2.01 The problems of integrating a racial mixture of small and, in many cases, isolated tribal groups without a common language are formidable. How- ever, if Papua New Guinea is to accomplish this task, it is essential that the difficult communication problems be solved in order to facilitate transmission of information and movement of people and goods. The process of modernization and expansion of health, education and other essential social services utilizing the limited available expertise will be greatly facilitated by the provision of an adequate telecommunications network (Annex 2). 2.02 Papua New Guinea's natural resources are considerable and provide favorable prospects for development (Annex 1). Forest cover is extensive and, although already in part exploited, offers considerable additional commercial potential; there is a wide spectrum of agricultural activities including copra, cocoa, coffee, oil palm, tea, sugar and rubber. Fishing resources could be further developed with local participation and provision of local processing facilities; the country has major mineral resources of copper, gold and silver; offshore drilling for gas and oil has been taken up. Major potential for long term hydroelectric development possibly linked with Australia's production of bauxite also exists. However, any industrial development, including the further development of mining, involves coordination of a series of operations which are highly dependent on adequate telecommunications facilities. Extracts -3- from the report on the Bougainville mining project (Annex 3) and the contrast between the facilities existing at the outset and the scale of communications now in use emphisize this importance. One of the obvious priorities for development of the economy is the expansion of agricultural production for export. This requires adequate telecommunications to arrange for collection of produce and avoid wastage, facilitate sales and obtain supplies of seeds, fertilizer, etc. The problem of migration to the principal centers poses a need for provision and expansion of the infrastructure essential to commerce and industry. Tourism is a developing industry which could become significant and which is dependent on adequate telecommunications for bookings, efficient use of hotel and transport facilities, organization, effective administration, etc., (Annex 1). 2.03 With the country having only limited and generally very costly transportation facilities, telecommunications provide for-efficient and economical use of the available facilities with major cost savings to the economy. Frogress made under Bank Financing 2.04 When the Bank made its first project appraisal in October 1967, the Department of Posts and Telegraphs (P&T) was operating 28 automatic and manual telephone exchanges serving about 7,000 connected subscribers in the main centers of population. Local service standards were reasonably satis- factory. Long distance services were operated manually, largely over HF (high frequency) radio links. They were subject to atmospheric interference, of poor quality and unreliable. They were also overloaded; delays in obtaining calls sometimes lasted days rather than hours. A subscribers' radio network served areas where there were no exchanges but it was prone to operating problems and poor quality. Telegraph services were also operated over HF radio systems mainly using Morse signaling and were subject to corruptions (aberrant signals) and overloading. International services, which had been operated originally by the Overseas Telecommunications Commission of Australia (CTCA) over HF single sideband (SSB) radio linksl/were substantially improved by the laying of the SEACOM (British Commonwealth) cable in 1967 with a terminal at Madang. 2.05 The first Bank loan,. of $7 million, was made on June 28, 1968. Its purpose was to provide needed foreign exchange for a four-year tele- communications program costing a total of US$27 million. A further program of expansion and improvement has been substantially undertaken with the help of a second telecommunications loan of $10 million made in July 1972. The esti- mated total cost of this second program, including subsequent additions scheduled for completion in 1978/79 is $21 million. The foreign exchange com- ponent is estimated at $146 million. Local expenditures of $6.5 million and 1/ Eliminates much high frequency distortion and permits more efficient use of power. -4- $2 million in foreign costs are beihg provided internally. The balance of $2.5 million for imports is being financed under a suppliers' credit. 2.06 The project assisted by the Bank's first telecommunications loan included 10,000 lines of exchange equipment to expand and improve local tele- phone services. In addition, microwave, VHF (very high frequency) and HF- SSB systems were to be provided, linking the most important urban centers. In 1969 the project was expanded to meet requirements of the copper mining operations at Bougainville. This involved the provision of another 2,000 local exchange lines together with tropospheric scatber systemsi/ to replace the previously proposed HF-SS8 links to New Britain and Bougainville. The project was completed on schedule except for one of the VHF systems which required an additional five months and the 2,000 lines of exchange equipment which took another year. In the course of the project 18 poor quality long distance radio circuits were replaced by 500 high quality circuits with service meeting international standards. In aaaition, good quality access to the SEACOM cable was provided from the main centers. 2.07 The Bank's second loan assisted in further expanding the local tele- phone network. Another 10,000 lines were added and 3,300 lines of obsolescent equipment were replaced. The original project, extending from June 1973 to July 1975 also provided for five new UHF and VHF spur routes, 650 additional long distance circuits on these and existing systems and a national automatic telex system with a capacity of 700 lines. Recently, the project has been expanded to include three additional microwave system extensions which are not likely to be completed until 1978 or 1979. The remainder of the project is substantially complete, about one year behind schedule. 2.08 The Operations Evaluation Departments Project Performance Audit on the first project was distributed on July 17, 1975. It considered the project to have been remarkably successful in spite of a very challenging environment. Physical acheivements were substantially on target; institutional improvements included conversion of P&T to a dynamic organization, operating profitably on a commercial basis. Bank performance was, on the whole, considered satisfactory but the audit indicated that earlier attention could, with advantage, have been directed to steering P&T away from expatriate dependence. 2.09 The strategy followed during the initial stage of development under the Bank-financed projects has been to replace the unsatisfactory long distance telephone network by a modern high capacity system linking the main cities and towns; introduce subscriber dialing (STD) on these routes; modernize and extend the local telephone networks,within the main towns and cities,with a limited extension to new areas; provide a modern telex network; improve earn- ings and financial performance to support continued development of the sector; initiate introduction of modern commercial accounting practices and undertake a -study in depth of the economic costs and benefits of providing telecommuni- cations as a means of improving future investment decisions. 1/ A system which increases quality and reliability up to a distance of about 500 miles and permits the use of many more channels than the HF-SSB system. -5- Access to Service 2.10 P&T now has a modern and efficient telecommunications network but, as is usual in the early stages of.development, available resources have largely been used to provide facilities at and between the main centers of population. In these centers there are now some 17,000 connected telephone subscribers, an increase of 143 percent over the last eight years, and there are more than 35,000 telephones in use. Parallel with this conventional development and in order to provide a basic service in some other areas, P&T has separately extended the subscribers' radio network which now has some 1,200 fixed stations and 250 mobile units operating with HF facilities and about 250 fixed stations operating with VHF facilities. The HF stations have to work at scheduled times and are subject to the operating problems and vagaries in transmission common to HF radio. 2.11 The telephone density at the time of the first project was 0.6 per 100 persons and is now 1.3. This compares with .23 for adjoining Indonesia and 2.2 for Malaysia (Annex 4). Although Papua New Guinea has developed its telecommuni- cation facilities to a greater extent than some other of the lesser developed countries, it is pertinent to examine the extent of penetration in relation to areas covered. Annex 5 shows that this is limited to 40 urban areas plus, of course, the subscribers' radio telephones. Only 388,000 out of a population of 2.6 million or 15% live in areas where full public telephone service is available. 2.12 The demand for service has been affected by uncertainties associated with independence. Growth of demand dropped off to about 4% as independence neared, compared with 11% in 1971 and 1972. Over the last five years the average rate has been 8.2%, which is low for a developing country. One result is a relatively small waiting list of about 8%, nearly half in Port Moresby. But pressure to expand the system is likely to increase as development accelerates, which seems likely in view of the country's resources and the interests of its trading partners. It will increase even more if installation charges are reduced or eliminated, providing more incentive for use by the indigenous population (see paragraph.2.16). Organization and Accounts 2.13 The organization of the sector was originally developed from that of the Australian Post Office (APO) and is based on P&T operating as a Govern- ment department but with considerable autonomy in its day to day operations. Under a covenant to the first loan P&T has introduced commercial accounts and separated its postal and telecommunications operations. P&T is responsible for operation of the public postal and telecommunications services in the country. It also deals with radio licensing and regulating functions. Over- seas telecommunication facilities presently operated by OTCA are in process of being taken over by P&T. The organizational structure is considered to be satisfactory and the quality of management is high. -6- 2.1 The commercial accounting system introduced during the first bank- supported expansion program is a satisfactory basis for commercial operation. However, delays in the Government computer center slow down the preparation of accounts and prejudice P&Ts cash position and, due to staffing problems within P&T, there has been delay in preparation of reports for management. Action is in hand to correct these deficiencies. 2.15 Before self-government, all senior posts and most professional and technical positions were filled by expatriates, chiefly Australian. Some progress has been made in "localization" (replacement of expatriates by local staff) but about 300 expatriates are still required_mainly in the-tele- communications division where 21% of the staff are still expatriates (Annex 6). Finance and Tariffs 2.16 Local telephone tariffs are based on a measured pricing system. Long distance tariffs, including those on the route to Australia, are based on time and zone metering. Under present practice a fairly large connection fee is payable by all new applicants for telephone service, tending to dis- courage indigenous subscribers. Telex changes are based on an annual rental plus a fixed amount per minute for calls within the country. Public tele- grams are charged by the word. Details of the tariff structure are given in Annex 7. Tariff changes designed by P&T to increase revenue while removing the connection charge are under discussion with the Government. 2.17 Financial results have exceeded both appraisal estimatos and the requirements under the Loan Agreements and have shown a conversion from a loss in 1970 to a rate of return of 16.9% in 1975 with operatiag r-atios reducing over the same period from 102 to 65. Copies of P&Ts income and expenditure statement and its balance sheet for fiscal year 1975, both un- audited, are given . knnex 8. These may be subject to :ome adju_Lmeit and preliminary indications are that results for fiscal year 1976 will be less favorable. Although the accounts for 1976 are not yet available, it is estimated that after meeting debt servicing costs and paying dividends, P&T will, over the extended second project period (1973-76), provide from self- generated funds about 40% of the total project cost. 2.18 At the time of the second project appraisal, it was expected that P&T would be able by fiscal year 1977 to commence dividend payments on Gov- ernment equity at 8% a year. In view of the satisfactory financial position, a first payment of $1.2 million (about b%) was made for fiscal year-1975, with the expectation of making annual payments of 8% beginning with fiscal year 1976. The 1976 payment is subject to review and is, in any case, delayed because of the poor cash position resulting from problems in the Government computer center and consequent delays in billing. 2.19 Long distance traffic growth, including a very substantial inter- national component, was vigorous in 1975 and has been a major factor in the attractive financial results. Present revenue patterns are unusual and deserve-attention. Annual income per direct connection is approaching $1,000 and international telephone revenue, mainly to Australia, represents about 37% of the total. A major factor in the recent increase.in international traffic has been the introduction of international subscriber dialing with calls charged in bulk through subscribers' meters without details of the numbir -7- called, time, or duration. In the absence of full-recorded data, there may be some unauthorized use of these facilities. It would not be unreasonable to expect a reduction in international revenues if and when toll ticketing is introduced. 2.20 Statistical data on P&Ts network are given in Annex 9. 3. SECTOR DEVELOPMENT STRATEGY AND GOALS 3.01 Sector goals in order of importance are:. (a) building up a capability to manage and operate the network using indigenous staff to the maximum extent possible. The aim should be to pro- gressively localize all technician posts to complete the process within five years and aim to substantially replace expatriate professionals within eight years; (b) introduction of a tariff structure encouraging use by the indigenous population; initiation of further improvements in operating efficiency and finances which will extend the ability to self-finance further development and contribute to public savings; (c) introduction of toll ticketing first on the international route and possibly later throughout the network. This is important to arresting unnecessary provision of additional facilities at considerable cost to the economy and every effort should be made to at least introduce the facilities for international calls within a period of four years; (d) extension of facilities into new areas of economic or social significance and with particular relation to the development of agricultural production, forestry, fisheries, tourism, mining and industry, the needs of social services and the problems of integration of the country; replacement and extension of the existing unsatisfactory HF subscribers' radio services which provide access to 1,200 remote.users. The targets attainable will depend on the funds available but if a program costing about US20 million is undertaken over the next three-four years, new services might be extended by providing some 30-40 telephone exchanges serving 3,000 subscribers in new areas and about 1,000 additional radio telephones in the most isolated areas. The service improvements should be-possible within the same 'time frame; and (e) extension of facilities to meet growth in areas presently served. It is to be anticipated that from 5,o00 to 6,000 additional subscribers would be given service in existing areas under a US$20 million program. -8- 4. INVESTmENT PROGRAm AND COST 4.01 With the completion of the relatively ambitious programs which have provided satisfactory long distance facilities and in large part met the existing demand in the main towns and cities, P&Ts next development program, although important to integration and economic development, should be a relatively modest one with total expenditures for a three year period probably in the region of US$20 million including a foreign exchange com- ponent of US$12 million. About 50% of this program would be directed to providing service in new areas, 5% to introduction of toll ticketing, 35% to meeting growth in existing areas and 10% to service improvements. 5. SECTOR CONSTRAINTS Organizational and Staffing 5.01 kP&T is well organized and fully able to organize and undertake the proposed new program of expansion. It is, however, undesiraDle that P&T should substantially depend, over an extended period, on expatriate staff for the provision and operation of an essential public service. Continued use of expatriates is also costly and must result in higher tariffs in a country where the cost of service should be minimized if the full benefits are to be obtained by the indigenous population,. Within the constraints of maintaining operat- ional efficiency the process of localization should, therefore, go ahead as rapidly as possible (Annex 6). 5.02 P&T faces a number of difficult constraints in reducing its reliance on high cost expatriate personnel and in maintaining the generally excellent quality of those it presently employs. This is due to the fact that employment with P&T is no longer attractive to many Australians in view of major salary increases at home. As more Australians have left, P&T has turned increasingly to other countries, especially New Zealand, the United Kingdom and the Philippines. Many of these recruits, however, have no experience on the types of equipment used in Papua New Guinea. Also, most are hired on short term contracts, a situation which tends to result in a lack of continuity and lower efficiency. 5.03 In these circumstances, P&T should do its utmost to retain an adequate number of its present professional staff until these posts can be filled with suitably trained indigenous personnel. A special program of overseas and local "counterpart" training for P&Ts more promising non- graduate local technicians might help to meet the need for capable executives. 5.O4 Secondary scool recruits are available but their training as technicians in V&Ts s`chool has been disappointing (see Annex 6). A new-school is being constructed as part of a UNDP projAnt but is unlikely to be in full operation until 1979. In the meantime, F&T should increase the output of local technicians and upgrade their training. To achieve this, consideration should be given to shortening courses at the existing school and alternating periods of training with work on actual equipment. Whenever possible, installation work should be used in training, especially when contractors' -9- installers are available to assist. Meanwhile, the retention and recruitment of expatriate technicians should be held to the minimum consistent with efficient operations. Financial 5.05 It is to be anticipated that P&T should be able to meet local cost financing that will be required by a development program of the size envisaged. P&T has, however, faced difficulties in obtaining foreign exchange for additional expansion. They are, therefore, pressing Government to request a further Bank loan. 5.06 To obtain foreign exchange for a new submarine cable to Australia, short term credit obligations of US$4.2 million have been assumed, and a further short term credit of US$2.5 million is being finalized in connection with additions to the microwave systems. Consequently, loan amortization pay- ments will double in fiscal year 1977 compared with 1976. Although this alone will not jeopardize P&Ts viability, future development should to a large extent be based on longer term financing. 6. BANK GROUP STRATEGY IN THE SECTOR 6.01 In the coming stage of telecommunications development, it is important that P&T should be able to satisfy demand for extension of facilities important to social integration and economic growth; resolve the more pressing problems that persist in the present network and accelerate the process of "localization." Further Bank lending and technical assistance would support those objectives. It would also assist in overcoming constraints on the sector's efficient use of resources and its contribution toward achieve- ment of the country's goals. In more specific terms, Bank Group strategy would be directed to: (a) review of the sector development proposals to ensure these will provide a balanced response to needs implicit in established Government priorities, including requirements in support of economic development, ad- ministration, social services, education, public information and national integration; (b) ensuring that the proposed technology satisfies the least cost criterion. All proposals for the application of advanced or !!glamorous" technology will be subjected to rigorous analysis of real costs and benefits. (c) examining the effects of the proposed investments in terms of P&Ts future viability; (d) advice and assistance in the process of localization, development of management expertise, operating procedures and methods, financial and sta- tistical controls, review of manpower requirements and how they can most satisfactorily be met using indigenous staff as far as possible; coordination with aid agencies, review of training programs; - 10 - (e) finalization of the ongoing economic study particularly as related to the costs and benefits of telecommunications in a developing country; (f) advice on the coordinated provision of communications facilities at least cost for other important services (TV, radio, health, education, etc.) 7. ACTION TO BE TAKEN 7.01 At this stage the content of a possible project has been discussed only in general terms. However, we should not lose sight of the fact that the Bank can fulfill an essential role in the difficult process of localization; in ensuring that balanced development is undertaken which fully takes into consideration the special needs for modernization of the society and economic growth covering all areas, and that costs are minimized in order that tariffs can be kept to levels consistent with the state of development of the economy. 7.02 It is important that the ongoing process of development, institution building and improvement of financial performance to support continued develop- ment, should not be interrupted. As the second project is substantially com- plete, an early decision on the future funding of telecommunications develcp- ment should be taken if the needs of the society and economy, which are of special significance in Papua New Guinea, are to be met. 7.03 In the event that Bank lending may not be available or may have to be limited by the constraints of the overall lending program, the possibility of other funding should be investigated; consideration might also be given to undertaking a program with partial Bank financing associated with bilateral funding. The import-nce of some Bank involvement at this rather crucial stage in P&Ts operations is, however, stressed. If a decisioin is reached to include a project in the lending program, preappraisal should be arranged as soon as possible in order to optimize project design and co-financing. 7.Q Hopefully, additional relevant and useful information will be made available when the economic study of costs and benefits during the first two stages of Bank-assisted telecommunications development in Papua New Guinea becomes available. ANNEX 1 Page 1 of 8 pages PAPUA NEW GUINEA SECTOR MEYDRANDUM POTENTIAL FOR DEVELO.NENT The following data mainly consista i'f extracts from National Investment and Development Authority (NIDA) publications supplemented by discussions with Mr. T. Ayres, Director of NIDA and Mr. Scott, Director of Tourism. 1. Agriculture Agricultural pursuits, mainly subsistence farming, provide the basic necessities of life for 80 percent of Papua New Guinea's population. Although most produce is consumed outside the monetary economy, the extension services provided by the Ministry of Primary Industries have had the effect of introducing the indigenous people to cash cropping which is expected to become of increasing significance to the countries economy. At present the major exports are copra, cocoa, coffee, tea and rubber. The approximate export values of the major crops for 1974/75 are shown below: Coconut Products K.1s3 million Cocoa K.40 million Coffee K.34 million Oil Palm K. 7 million Tea K. 4 million Rubber K. 3 million. The Government wishes to effect a rapid increase in agricultural development, and foreign investment is sought in agro-based industries. Some of the areas of potential significance are as follows: (1) Processing of coconut and other vegetable oils The country's production of copra is about 130,000 tonnes, and it is hoped to increase this production by the introduction of better yielding varieties of coconut. Of the current production about 50,000 tonnes is converted to crude coconut oil for export, and the balance 80,000 tonnes is exported as copra. (2) Manufacture of Coir products and processing of coconut shells This is an area which is totally unexploited at present. ANNEX 1 Page 2 of 8 pages (3) Canning of fruit and vegetables A large variety of fruits and vegetables could be grown on a commercial scale for canning. (L) Manufacture and further processing of Palm Oil The area under oil palm is currently about 20,000 acres, and is being developed on the nucleus estate principle as a joint venture between the Government and a British company. Large areas of Government owned land have been set aside for development under oil palm, and foreign investment in this field is actively sought. (5) Yanufacture of rubber products The country's production of rubber is around 6,000 tonnes per annum, and the entirety is exported in the form of sheet rubber. Foreign investment for further processing and manufacture is being sought. (6) MAnufacture of Cocoa Butter Papua New Guinea exports around 28,000 tonnes of cocoa per annum. Investment is being sought for the further processing of this production within the country. (7) Manufacture of high quality hides for export The country has a developing cattle industry and proposals are being sought to establish a tannery for processing of the hides. Other agricultural crops such as rice, sugar, soybeans and tobacco could also be introduced as.commercial crops. In addition, further processing of these and other crops also have potential - soluble coffee, margine, soaps and edible oils are but a few examples. 2. Fisheries Present activities can be divided into: . Subsistence and barter (inshore) . MLnor local market fishing (inshore) . Commercial (offshore) Inshore The village inshore fisheries largely exist as traditional ones, unchanged except for the introduction of engines (mostly out- board), modern synthetic nets and some freezers. Over the years the Administration of Papua New Guinea has ensured that ANNEX 1 Page 3 of 8 pages traditional rights were respected. Commercial licences issued did not in any way permit interference in traditional fisheries. Thus, certain inshore -fisheries which could be profitable commercially, such as spanish mackerel, barramundi and high class reef fish have always been on a minor scale. It is estimated that some 25,000 tonnes of assorted fish are harvested annually under these conditions. How much intensive fishing is permissible, has not yet been established. Whilst the old style pearl shell, trochus and bech-de-mer industries no longer exist, PNG does have two pearl culture stations, one at Port Mbresby and one at Samarai. The former is a Japanese joint venture and the latter is a growing local operation. Demand for pearls and half pearls remains firm but the Port Moresby operation has been lately affected by disease and other problems. Exports from PNG in 1973/74 was 31,163 pieces worth $279,283. Some 22,000 kg of pearl shell worth $17,000 was also exported. Trochus has made something of a comeback with most harvesting from the S.E. portion of Papua. Exports in 1973/74 were 451,853 kgs worth $235,84. Offshore Papua New Guinea has little shallow water continental shelf, except in the Gulf of Papua. Thus trawling grounds are limited. The Gulf of Papua receives considerable run-off from the large river systems in the Western and Gulf Provinces. Thus some prawn trawling is available, but so far, less.than would be expected. A fleet of up to twenty trawlers has worked the Gulf of Papua grounds with variable success. The strong south-easterly seasonal winds, from My to September, are a hindrance as larger vessels cannot navigate the river entrance bars, to shelter. In 1973/74 some 938,081 kgs of prawns were exported with a value of $2,153,300. Of the offshore species, tuna and skipjack are the most significant. Fish surveys were carried out in 1970/71 by several joint venture companies. The skipjack fishing industry is firmly established. Some 40,000 tonnes were exported in 1973/74 worth $11,458,089. One company produces a small amount of traditional Japanese 'alobushi' a smoked and hard dried tuna product. The rest of the catch is presently exported in the whole round form. A tuna cannery to process up to 15,000 tonnes per annum has been planned and a site selected. Other ocean fisheries, such as squid fishing, have not yet been attempted. Inland Fisheries Papua New Guinea has been described by naturalists as being a 'freshwater fauna desert,' probably due to geographical accident. In truth very little freshwater life did exist, in terms of ANNEX 1 P 4 of 8 pages commercial species, until 195h, when the Department of Agriculture Stock and Fisheries introduced Tilapia which has become established and many thousands of tons are available. Pilot projects in Papua New Guinea are being set up to utilize part of the Tilapia harvest for dis- tribution to areas where protein is in short supply. Local markets .sell large quantities of these fish constantly. 3. Forestry About )0.5 million hectares of Papua New Guinea are covered with forests of which at least 12 million hectares may be developed economically. Mbst of the readily accessible millable timber is in the lowlands. Large areas are being opened for development. The total log production of the Papua New Guinea industry is at present around one million cubic metres. The Government is releasing more areas to timber operations. The timber resources of these areas have been surveyed and, where necessary, hydrographic surveys of possible harbour sites have been carried out. The following are some of the major.pro*jects at present in operation: The Sagarai-Gadaisu Timber Area This area is in the south-east corner of Papua New Guinea which extends from Millport Harbour to Milne Bay and contains an estimated 3.4 million cubic metres of merchantable timber in a productive area of 58,300 hectares. The Madang Timber Area on the north coast of Papua New Guinea contains over one million cubic metres of merchantable timber in a productive area of 62,000 hectares. The Cape Rodney Timber Area is located between Abau and Margarida, extending to the foothills of the Owen Stanley Range. This area is on the Papuan South Coast. It is estimated that a total volume of 4.4 million cubic metres of merchantable timber, plus 3.5 million cubic metres of material suitable for the production of woodchips for pulp is to be found on this area. The Open Bay Timber Area is located in the southern half of the Gazelle Peninsular in the New Britain Province. It extends from Open Bay across the island to Wide Bay. Assessment has indicated a net merchantable log volume of 7.0 million cubic metres, of which 0.8 million cubic metres is eucalyptus deglupta. An estimated 4.6 million cubic metres of material is suitable for woodchlps. MAJOR PROJECTS NOW BEING NEGOTIATED The Vanimo Timber Area It is the largest single area currently considered for a big integrated timber development locateu on the most northern tip coast of Papua New Guinea. Assessment figures indicate a gross merchantable log volume of 14.2 million cubic metres with a further 3.5 million cubic metres which may be suitable for the production of woodchips. ANNEX 1 Page 5 of 8 pages The Kumusi Timber Area between the Kumusi River and ?opondetta. Assessment figures indicate a net merchantable volume around-2.4 million cubic metres. There is a possible 2.4 cubic metres of woodchip material. The Kapiura Timber Area is on the north coast of the island of New Britain to the west of Talasea. The estimated merchantable log volume is about 5.7 million cubic metres with an additional volume of 4.7 million cubic metres of pulpwood. The Kapuluk Timber Area is on the north coast of New Britain to the west of Talasea. An estimated volume of 6.1 million cubic metres of merchantable logs, plus 4.7 million cubic metres of potential woodchip material represents the total resource of this area. The New Ireland Timber Area is located in the middle central New Ireland. The total volume of timber accessible is about 4.2 million cubic metres. 4. Ydneral and Petroleum This is a brief resume of mineral and petroleum resources as they are known in July 1975. A simple locality map is attached. Copper A major copper mine at Panguna on Bougainville Island was brought into production in 1972 by Bougainville Copper Ltd., a partly-owned subsidiary of Conzine Rictinto of Australia. Annual production is around 175,000 tonnes of copper metal in the form of copper concentrate, and 19,600 kg. (700,000 ounces) gold. Other known occurrences of Porphyry copper in Papua New Guinea may be summarized as follows: Reserves Grade Other Prospect (M. Tonnes) Cu. Metals Remarks Ok Tedi 250-300 .88 Some gold The Government is currently having discussions with a number of potential operating companies. Frieda 360 .45 Japanese consortium has just started a 5-year program to prove up more ore, and will spend $5 million, Carpentarin Expl. Co., (Mr. Isa Hines) and Consortium: Frieda Expl. P/L. Tilfamin 150 .6 possible >ossible The reserve figure shown here is that of one of a number of pro- posals which exist on this site. Yandera 100 .5 Some moly- Vigorous drilling program has in- bdenum dicated good mineralization at several localities, investigation continuing. Kennecott-BHP (Amdex/Triako). ANNEX 1 Page 6 of 8 pages Copper has bee-1 mined from lode deposits (relatively rich discontinuous lenses) in the Astrolabe field near Port Moresby. Total production in the period 1905-41 was ll,OUO tonnes copper ore (about 4% Cu) and 15,000 tonnes copper matter (about 90% Cu). This ore also included recoverable amounts of gold. Gold and Silver Alluvian gold has been mined in the Amanab, Ambunti and Maprik areas of the East and West Sepik Districts, at Pongera in the Enga District, Jimi Valley in the Chimbu and Western Highlands District, Kainantu area in the Eastern Highlands, Wau-Edie-Bulolo, Waria and Mbrobe coast areas in the Norobe Districts, Gira-Aikora, Mambare, Yodda and Keveri areas in the Northern District, Lakekanu area in the Gulf District, south of Milne Bay, on Woodlark, Misima and Sudest Islands and in the Gazelle Peninsula. By far the richest and most productive of these fields was the Wau-Fdie-Bulolo area. A gold-sluicing operation is now under way at Porgera (Mount Isa Mines Holdings/Ada Exploration/Kimberley) and small scale mining continues in the Sepik, Simbai, Kainantu and Wau areas. Reef gold was mined on Yisima Island until 1941 and is still being mined at Wau and Kainantu: testing of reef gold at Porgera is continuing. Total alluvial and reef gold production (excluding the Panguna copper mine) until 30 June 1974 was 117,880 kg (3,789,958 fine ounces). Up to the present the Panguna mine has produced about 50,000 kg gold. Gold in the Waria, Gira-Aikora, Yodda and Nilne Bay areas is associated with platinoid minerals including alloys of osmium, irridium and ruthenium.. Nickel Rich lenses of nickel sulphides have been found in the upper reaches of the Adau and Domara Rivers, Northern District, and one lens has been drilled (Doriri prospect). None of the lenses is big enough to warrant development. Silver, Lead, Zinc Some or all of these metals are known from a number of locations including the gold lodes on Misima and at Wau and Porgera, Wood- lark Island, the Efontera prospect near Kainantu, and a small skarn deposit near Lake Kopiago. Manganese Small lenses of manganese oxide (pyrolusite) have been mined near Rigo. Total production was abou' 2200 tonnes of battery- grade ore. Limestone Limestone suitable for cement manufacture occurs over large areas of vapua New Guinea, including much of the Highlands, ANNEX 1 Page 7 of 8 pages Gulf District, Huon Peninsula, and New Britain and New Ireland. Coal Thin seams of lignitic coal are exposed in the foothills of the Western, Southern Highlands and Gulf Districts. Petroleum Oil and gas seeps occur over a large area in the Gulf, Western and Southern Highland& Districts and extends into the West Sepik District near Telefomin. These seeps indicate that the rocks of the Papuan Basin are petroliferous but do not necessarily indicate that significant quantities of oil or gas exist below ground. This can only be tested by drilling. The most important discovery to date is the Pasca gas and gas-condensate field in the Papuan Gulf 260 km west-northwest of Fort Moresby. Reserves are not adequately defined and no official estimate is available. Nearer the coast is the Urama gas discovery, 35 km south-west of Baimuru, estimated reserves are around 5.7 billion cubic metres of gas (200 billion cubic feet) and 95,000 kilolitres of natural gas liquids (600,000 barrels). Onshore there have been four gas discoveries and one oil and gas discovery. The discoveries and their possible reserves are: Barikewa 0.88-8.5 billion cubic metres of gas (31-300 billion c.f.) Bwata 5.83 billion cubic metres of gas (206 billion c.f.) 0.22 kilolitres of natural gas liquids (1.4 million barrels) lehi 0.28-3.57 billion cubic metres of gas (10-126 billion c.f.) Kuru No estimate; gas flows'of up to 150 million cubic feet/day were recorded in Kuru No. 1 Puri Gas, condensate and oil; no estimate of reserves is possible. Petroleum exploration in the Papuan Basin is continuing at a moderately high level. In view of the known petroleum reserves and given a reasonable rate of success, it is very likely that commercial development of petroleum will be undertaken within the next three to five years. ANNEX 1 Page 8 of 8 pages 5. Wrdrologicl Major potential exists in line with the mountainous nature of the main island and the very heavy rainfall. Although not yet fully established and defined other than for the Furari River project, there is a potential for development in conjunction with Australian supplies of bauxite. Only small and uneconomic supplies of bauxite have so far been found in Papua New Guinea. 6. Tourism The country is unique in attracting considerable numbers of tourists while not providing what are normally accepted as tourist amenities such as, resort areas, organized entertainments, etc. Interest is largely concentrated in the mountains and country areas with their primitive cultures. Tourists mainly come from Australia and New Zealand but increasing numbers of Japanese are now visiting the country. In 1974 some 12,000 tourists came by ship and 38,000 by air. Arrivals are growing at a rate estimated variously as from 8-30% per annum; probably averaging about 20%. Limitations to growth are the restricted hotel facilities (1,480 rooms at present) and the problems of access to the areas of interest (despite some 400 landing strips). Tourism has become of significant importance in the development of cottage industries which produce rugs and artifacts. In all, tourism contributed about US$13.0 million to the econor in 197 amounting to about US$260 per visitor. Telecommunications are considered essential to both the operation of existing facilities and the further growth of tourism. Instances were given of the pilots having to buzz the lodge on the Sepik, one of the main attractions, to advise them to send a boat to the landing strip; of problems of co-ordinating transport involving the national airline and other carriers both surface and air, of overbooking with visitors stranded and/or failures to notify cancellations with resulting poor seat and room occupancies. SIMeLE LOCALITY MAr \NÅERAL CTRC UM AN 1YOAC V TY TFw A M~ÑR COPPER_ CDE COPER-R J1 F!EfDA ADR 3 CDP6 ,GOLD O.'0p p£ 50 WYDM..~ PdVE.1i0 C~~~O M, W,- nc A9 voo-7001 ian ) sn Axo 1consoR-no x co Ti a PA PUA975 O!L EX PLORATå N NEcL" L= &- tRRIoMr, & P WEU.S ANNEX 2 Page 1 of 2 pages PAPUA NEW GUINEA SECTOR MEMORANDUM ADMINISTRATIVE AND SOCIOLOGICAL FACTORS The Administration, Social Services and Security Administration 1. The society is still essentially a rural one with about 85% of the population living in rural areas. One of the main targets for develop- ment must be to provide the rural population at present substantially dependent on subsistence agriculture with the opportunities, knowledge and motivation to become more productive. 'A vital function in this development is the coordination through the administration of the various agencies and societies working in the development field. 2. A further requirement for satisfactory development is the integration of a society at present largely based on small and sometimes isolated tribal groups and over 700 local languages mostly mutually un- intelligible. Local disputes sometimes arise and highlight the administrations need for rapid communication. Health 3. Health services have been fairly extensively developed and are of good quality. The doctor to population ratio is. however low, and services at the initial level are peripheral,with about 1,600 aid posts staffed by orderlies who are frequently dependent on the telephone to obtain advice from the doctors in the case of more serious illness or injury or alternatively to arrange transport for the patient to centers where adequate treatment can be obtained. Education 4. Mjor progress has been made in extending educational facilities with some 70% of the boys and 45% of the girls now obtaining primary education and with about 1/3 progressing to secondary education. Here again, one of the limiting factors is the language problem. Out of a total population of 2.6 million, about 707,000 speak Pidgin, 323,000 English and 151,000 Motu. Extension of broadcasting (and later TV)facilities to the local areas should progressively help in resolving the language problem. Migration 5. The following table shows the increase in population of the main towns over the period.1966-71 with an estimate for 1975: ANNEX 2 Page 2 of 2 pages 1966 1971 Increase June 1975 Increase Town Population Population % Estimates % Goroka 4,800 12,100 252 18,500 53 Kieta/Arawa/Panguna 800 14,400* 1,800* 22,600 57 Lae 16,500 38,700 235 57,100 48 Madang 8,800 16,900 192 2hj,100 3 Mount Hagen 3,300 10,600 321 21,000 98 Port Moresby 41,800 76,500 111 96,400 26 Rabaul 10,600 26,500 250 35,700 35 Wewak 8,900 15,000 169 20,900 39 Total 95,500 210,700 220 296,300 141 Bougainville copper mine. . NIDA estimates are that although population growth will be around 3% per annum, a high level of migration to urban areas will continue and the urbqn population will be about 2.3 times the present level by 1986. As urban population growth was 2.2 times over the five-year period of 1966-71, this may be an under- estimate. The expected migration might be reduced by providing improved facilities for gainful employment and improved amenities in rural areas; it will also be desirable to develop industries in the urban areas which will provide work for the migrants. Role of Telecommunications 6. It is of interest to examine the role telecommunications must play within the above context. Discussions with the Provincial Commissioner, Mount Hagen, and District Commissioner, MLnj, clearly confirmed their almost total dependence on telecommunication facilities if they were to operate effectively. Each personally made from 3-5 calls a day to Port Moresby dealing with administrative, social service and development matters and up to 40 calls to their staff, other agencies, etc. In both cases the need to extend facilities in rural areas was stressed. Health orderlies are sub- stantially dependent on the use of the telephone to obtain advice and assistance as required. Progressively as broadcast facilities are extended and when TV is provided, P&T should provide the bearers for relay purposes. Migration poses a significant problem with a need to meet demand from industry and agriculture in the rural areas and also extend the infrastructure for commerce and industry in the main towns. ANNEX 3 Page 1 of 2 pages PAPUA NEW GUINEA SECTOR MIORANDUM MAJOR INDUSTRIAL DEVELOPMENT - THE BOUGAINVILLE PROJECT It is of interest to examine the impact of a major development project such as the Bougainville copper mine. This was almost a classic example of a tendency in planning development frequently encountered both in industry and the agencies responsible for development to neglect the need for adequate telecommunications and/or not allow sufficient time for their provision. This invariably results in additional costs with frequently reduced efficiency. In addition to the main industrial development, the provision of supplementary services for the staff working on the project such as, housing, food supplies, health and welfare are dependent on adequate telecommunication facilities. In the Bougainville case workers on the project rose to a maximum of 13,000 during the installation period and have now, under operating conditions, come down to about 4,000. In addition to the mining and associated power generat- ing installations this has necessitated the creation of two new townships. At the time the project works were commenced, communications were completely in- adequate. An extract from a report on the project follows: "Throughout the project, communications with Project teams at Bougainville were a constant problem. Only one telephone was available at the Kieta Post Office early in the project and it was necessary to have messages relayed to Australia through occasional radio links, if important, or by mail." This apparently necessitated special measures as is indicated in the following extract: "In order to minimize "lost" time due to design queries, changes, etc. the company arranged for all design to be undertaken at site. A team of 14 engineers and draughtsmen was seconded from the company's Sydney office to undertake the preparation of and amendments to de- tailed construction drawings." Separately, consultants were brought in to undertake planning for an adequate system. The commencement of their report reads as follows: INTRODUCTION "When CRA Exploration Pty. Ltd. commenced operation on Bougainville there was no internal communication system on the island and the only external link was a temporary HF link from Kieta to Rabaul available for limited times during certain days. ANNEX 3 Page 2 of 2 pages A project of the magnitude contemplated by CRA required a completely integrated communication system between its centres of operation on the island and telex and voice communication to the international communication system. A decision was made by the Posts and Telegraphs Depart- ment to install a high quality tropo scatter-microwave system to cover internal communication on Bougainville and to connect Bougainville into the international com- munication system via the SEACOM cabld at Madang. Of all the program the Lae-Bougainville Wideband Tele- communications System was the most demanding,in terms of both design and implementation. This can best be under- stood by considering the geography of the system. Between Lae and Bougainville are a total of 715 radio route miles; 539 miles of that total comprising water span tropospheric scatter links, the remainder LOS microwave. The system installed is among the most technically sophisticated in the world and yet it is located in one of the most primi- tive and inaccessible areas on earth. The bearer-multiplex system design permits a maximum capacity of 120 voice channels throughout the system, except for one span between Rabaul and Bougainville which supports a maximum capacity of 60 voice channels." Since completion of the project demand for service has continued to grow. Capacity of the tropospheric scatter system has been extended to 240 channels and forecasts indicate that by 1980 this capacity will be exhausted and it will be necessary to replace it with a wide band microwave system having a capacity of up to 960 channels. The three telephone exchanges now consist of a 1,000 line public telephone exchange at Arawa with 621 working subscribers, a 400 line exchange at Kieta with 221 subscribers and a 330 line exchange at Panguna with 11 subscribers. This is a far cry from the facilities existing in 1969 of one HF radio circuit to the Kieta Post Office working on a scheduled basis. РАА1А'fEtд GUINx'..П Internatloaal Теlерhопе Statlвtleв , cнoss нАтгоqлг теr.еРноrгкs - sАнцАт 1g75 ' POPi1LATI0N _ РнОП1С" - 1973 NATIONAL CITIES 1 REST OF COUNTRY PERCENTAOE Or^ NATIOPAL (�) _ Рег Caplta Av. Аапивl 1975 Рет Capita Crowth Rate Tota1 No. Telephon Groxtъ Rate Automatic ТеlерЪопев Telephone Telephonee Telephon�s/ C1t1ee Reat о£ Country " COUHTRY 000`в us (1965-73) 000'в Deneity � (1965-75) �_ 000's nensity J 000's Denslty J Population Теlерhопев Populatlon ТеlерЪопев ' г 2 3 4 5 6 7 8 9 го ц • 12 13 14 15 AFRICA A1gerla 16,64о 57о 4.3 г3о 1.38 5•1 79•7 136 7.8о 94 0.63 1о.5 59•1 89•5 40.9 Е�рг, Атвъ нер. о£ Э6,73о 25о о.8 503 1.37 5.3 9б.7 347 4.29 156 о.55 г2.г 69.о 78.9 31.о вthlopla 1 27,45о 9о 1.6 66 о.24 ц.8 88.5 42 0.37 24 о.о9 4.г 65.2 85.8 34.8 мвигitlив J В5о 41о 1.4 23 2•68 7.5 77.8 1о 7.1о 13 1.8о 16.6 43•5 83•4 57•5 tMrocco 16,73о 3го г.5 189 1.13 г.б 8г.о 81 4.о1 гое о.73 1г.г 42.9 87.9 67.г Nigerla 71,7оо цо 9.3 ш о.гб 6.3 83•4 47 7.1г 64 о.о9 о.9 �•3 91.1 57.7 иhodeein 6,210 430 3.5 172 2.77 6.1 93•4 127 14.83 45 0.84 13.8 73.8 86.2 26.2 soutь А1�1св 24,91о г,о5о г.о 1,936 7.77 9.7 82.6 1,399 24.18 537 2.Вг г3.г 72.3 76.В г7.7 " sиавп 18,цо 13о (-)о.б 56 о.31 4.7 91.4 37 4.67 19 о.ц 4.3 65•2 95•7 34.8 Тилlаlв 5,628 Чбо 4.9 ц4 2.о3 12.9 92.6 39 3•37 75 1.68 г0.7 34.г 79•3 65•8 AMERICA Areentina г5,2оо 1,64о г.9 2,374 9•41 4.9 96.8 2,179 18.55 195 1.45 46.6 91.8 53.4 8.2 вгатll 1о6,1оо 76о б.о г,65г 2.5о 7.6 94.6 8о5 5.87 1,847 г.оо 1г.9 Зо.4 87.г 69.6 саг,ааа 22>7о0 5,45о 3.5 12,45k 54.96 5•9 99•7 5>554 58.52 6,9оо 5г.84 41.4 44.6 58.6 55.4 Мехlсо 58>ЗОо 89о г.8 г,546 4.37 г3•4 1оо.о 1,548 11.72 998 2.ц 22.6 бо.8 77.4 39•г u.s.A. гlг,ооо 6,2оо г.5 143,427 67.65 5•о 99.9 62,7о6 84.7 8о,7г1 58.5г 34.9 43•7 65•г 66•3 ASIA 12 л.а. п.а. 83.1 п.в. 16.9 вап8lааевъ J 7г,5оо Во (-)1.6 66 о.о7 5.8 83.4 54 п.а. Сп1nа, Rep. оУ 15,9� 660 7.3 901 5.68 19.8 gz.5 445 14.93 456 3.53 18.8 49.4 81.г 5о.6 гnа3а 58г,боо 12о г.5 г,69о _ о.29 8.3 82•3 583 3•г8 1,107 о.го 3.1 34.5 96.9 65.5 - Iadnneela 123>800 130 4.5 285 о.г3� 3•4 �63.3 147 1.44 138 0.12 8.3 51.6 91.7 48.4 Irвn 3Э,боо 87о 7.4 806 2.4о 16.1 94.1 4о6 5•7г 4оо 1.51 21.1 5о.4 78.9 4Э.6 Iвтаеl 3,4оо З,о1о 6.7 735 21.57 г3.1 1оо.о 544 32.57 191 ц.о4 ' 49.1 74д 5о.9 г5•9 тареп цо,7оо 3,63о _ 9.6 41,9о5 37•88 г3.1 97.4 18,4о2 47.г5 г3,5о3 32.63 35•г 43•9 64.8 56.1 Lebanoп � 2,891 940 3•5 г27 7•67 9.1 95•0 п.а. п.а. п.а. п.а. п.в. л.а. п.в. п.а. Маlв,увi�q ц,700 570 3.7 259 2.21 8.0 96.6 п.а. п.а. п.а. п.в. п.а. п.а. , п.а. п.а. Nepa1 J ц,470 90 (-)0.1 9 0.08 19.7 76.2 п.а. п.а. п.а. п.а. n.a. а.в. а.а. n.a. Paklвtan � 66,720 120 2.5 195 о.г9 6.2 83•о 140 1.50 55 0.10 14.0 71.8 86.0 10.0 Рnцiррlпвв 4о,9оо г8о г.б 446 1.о9 ц.4 96•о 337 1о.ц 1о9 о.г9 8•2 75.6 91.8 г4.4• 9ingapore 2,237 1,ВЗ0 9.4 280 12.53 13•5 100.0 280 12.53 - - 1оо.о 100.0 - - 5r1 г,вnкв J 13,198 12о 2.о 6В о.51 19.8 98.6 21 3•2о 47 о.4о 5•о Зо.9 95.0 69.1 syrla 4/ 6,740 4оо 36 143 2.а8 7.7 89.4 1г1 5.2о 22 о.5о 34.5 84.6 65.5 15.4 тпаilвла 41,Оо0 270 4.5 31г о.76 15•4 9б•7 249 5.54 63 о.17 10.9 79.8 89.1 15.4 Рариа неи Gulnea 2,600 410 5•0 Э3 г•3 10.6 98.в 28 29•32 5 .20 3•8 85.6 96.2 14.4 EUROPE Fтвпсе 52,7оо 4>54о 5.о 12,4о5 гз•5г 8.1 94.о б,о78 53•55 6,327 15•Зо г1.5 49.о 78.5 51.о сеттвкуу,Fеа. нер. оУ 62,о4о S,Зго 4.о 18,767 3о.25 В.7 1оо.о 7,В34 46.14 1о,933 24.26 г7.4 4L 7 62.6 68.3 svedea 8,2оо 5,91о 2.4 5,178 63.3г 8.1 1оо.о 1,25г 91•79 3,926 57.43 16.6 24.2 83.4 76.8 sиltzerlend 6,4оо 6,1оо 3.о 3,79о 59•� 5•9 1оо.о 1,385 82.05 2,4о5 51.о5 26.8 36.5 73•2 63•5 и.к. 56,1оо 3,06о 2.3 го,34г Зб.гб 7.4 99.9 7,065 52.о4 13,777 32.о4 г4.г 34.7 75.8 65.3 u.S.s.н. 253,3оо 2,о3о 3.5 15,782 6.23 8.3 94.8 4,157 17•33 ц,625 5.о7 9•5 26.4 9о.5 73.6 оСЕАнIА Тшеtгвllа 13,Зоо 4,35о З.о 5,� 37.49 6.5 95.г 3,477 42.91 1,523 г4.58 бо.9 69.5 39•1 30.5 хеи zealand 3,1оо 3,68о 2.о 1,495 48.1г 4.5 9г.7 � 746 55.63 749 42.58 43•3 49•9 Зб.7 5о•1 souнces: 1. Telephone впд Populatlon 8Lat1atlce: Wor1d'в Telephone Statlвtlcв Ъу АТ&Т (1975). 2. GNP Statlstlce: Wor1d Hank Аt1ав (1975). I� NOTES: х r 1. Lnformatlon 1л reepect оУ theee countrleв 1в Рог January 19'14. 2, Telephone Denslty 1в питЪег оР telephoneв lпвtаllед рег 100 populeLloa. 3. These etatlstics relate to сltlев vltъ тоте thвп 10,000 telephoaeв ексерt for countrlea 1п ЕЪгоре впд NorLh апд South America, апд for Japan Уог иhich atatistics ате for сltlев иlth 100,000 tеlеръопев. Ь. ТеlерЬопе вtatistlce Уот Thallaad ате Уот September 1975• п.а. лоt вvеllаЫе March 29, 1�+'76 ' ANNEX 5 PAPUA/M GUINEA SECTOR MEKORANDUK URBAN CENTERS - POPULATION/TELEPHONE STATISTICS The following scheduld shows the position ' at June 1975 in rela- tion to provision of telephone facilities at all urban centers. Exchnage Connected Location Population Capa Lines- % Penetration Port Moresby 96,o4O0 11.,100 7, 25 8.1 (including Boroka) Lae 57 100 4.9000 2001 7.7 Rabaul 35 700 29230 1.,513 4.2 Madang 24.,100 19000 788 3.3 Mt. Hagen 21,000 1.9000 534 2.5 Wewak 20,900 900 396 1.9 Goroka 18,,5oo 1.9000 668 3.6 Panguna lO.OOO 330 lo8 1.1 Arawa 8,400 IYOOO 458 5.5 Popondetta, 7,700 200 152 2.0 Daru 7,000 200 119 1-7 Lorgngau 6,400 90 81 1.2 Alotau 5,400 200 141 2.6 Bulolo 51200 100 58 1.1 Kavieng 4,6oo 200 197 4.3 Mendi 4.500 200 lo8 2.4 Kundiawa 4,500 200 141 3.2 Kerema 4,400 100 71 1.6 Kieta 4,200 400 188 4.5 Kainantu 4,000 200 103 2.6 Sohano 3,8oo 100 63 1.7 Vanimo 3,700 200 93 2. Wau 3 600 200 130 3.6 Angoram 3,300 50 17 0.5 Kokopo 2.400 100 78 3.3 Kimbe 2.t2OO 200 167 3.5 Wabag 2.100 100 60 2.9 Samarai 2.9100 100 70 3.3 Aitape 2.9100 50 46 2.2 Kagamuga 2.9050 100 73 3.5 Banz 1,900 100 52 2.7 Kwikila (1,800) NO FACILITIES Kiunga (1,800) NO FACILITIES Maprik 1.,600 100 47 2.9 Sogeri 1 ,600 100 50 3.1 - 2 - ANNEX Exchange Connected Location Population Capacity Lines % Penetration Ambunti (1,500) NO FACILITIES Minj 1,400 50 31 2.2 Buin (1,400) NO FACILITIES Kerowagi (1,400) NO FACILITIES Balimo (1,300) NO FACILITIES Liaia Gam (1,300) NO FACILITIES Losuia (1,300) NO FACILITIES Kikori (1,100) NO FACILITIES Bereina (1,100) NO FACILITIES Baimuru. (1,100) NO FACILITIES Tapini 1,100 30 17 1.5 Bogia (1,OOO) NO FACILITIES Tari (1,000) NO FACILITIES Kinim (1,000) NO FACILITIES Finschhafon 660 100 51 7.7 Namatani 625 80 32 5.1 Kerevaj 600 50 21 4.3 Nairovi 600 100 24 N/A Wapanamunda 600 50 29 Better than 5% Total Numbers in Areas with Tele- phones 388,035 26,610 17,111 4.4 Balance of Country 2.2 million NIL NIL NIL Overall 2.6 million 26,610 17,111 .66 Exchange lines Overall 2.6 nillion - 35,140 1.35 Telephones ANNEX 6 Page 1 of 4 pages PAPUA/NEW GUINEA SECTOR REPORT STAFF AND TRAINING 1. Staff Levels As at April 30, 1976, the staff employed in the Postal and Tele- communications Services of Ministry of Public Utilities and divided on a functional basis was as follows: Telecommunication Division CADET OVERSEAS NATIONALS TRAINEES TOTAL Operations 146 670 - 816 Planning 9 2 - 11 Construction 54 152 - 206 International 16 - Totals 2258 Finance and Administration Finance 38 137 - 175 Staff Development and Training 25 207 43 275 Administration 18 184 - 202 Totals 81 528 43 652 Postal Division 1 388 399 Total 1,759 2,119 Finance and Administration provides services for both the Telecommunications and Postal Departments with an approximate division of work of 75% and 25%. Total telecommunications staff can therefore be estimated as about 1,557 of whom 222 were employed in the Telegraph Division leaving a balance of 1,335 providing and operating telephone services. The staff level per 1,000 tele- phones is 38 which is considered satisfactory for a developing country. (If one excludes installation staff this figure falls to 32 per 1,000 tele- phones). ANNEX 6 Page 2 of 4 pages 2. Staff Structure The division of staff between grades within the Telecommuni- cations Department has, based on information from a number of sources, and updated from 1975, been interpolated as follows: Probable No. of Local Total Expatriates Staff Senior Executive 8 3 5 Executive Engineers 30 29 1 Sub Professional Executives 100 98 2 Technicians 320 95 225 Supeivisors 300 - 300 Other Staff 310 - 310 1,068 225 843 3. Pay Scales The scaLes applied to Overseas staff and numbers employed (P&T as a whole) are as follows: G2oup K/P.A. No. of Staff 1 6,040- 7,174 70 2 7,421- 9,570 123 3 9,558-11,777 67 4 12,158-14,079 39 5 14,653-16,375 14 Super Scale 16,375 4 317 Details for local staff are as follows: Group K/P.A. No. of Staff 1 1,880- 2,725 1,591 2 2,725- 3,215 140 3 3,215- 4,000 40 4 4,000- 5,630 20 5 5,630- 7,240 9 Super Scale 7,240 2 It will be noted that an expatriate costs from 2 to 3 times as much as a local employee. The increased cost of employing expatriates as against local staff is about K 2.37 million a year (about 20% of total operating expenses). ANNEX 6 Page 3 of 4 pages Training 1. At university graduate level it has been difficult to recruit candidates for profesbional engineers Posts and only one indigenous pro- fessional engineer is at present employed by P&T:with 5 expected to join this year. This is about the present output limit of graduates from the Technical College specializing in telecommications. 2. At secondary school graduate lvel the position is far more encouraging and there tends to be a surplus of potential recruits. None- theless, progress in training technicians has been disappointing due apparently to difficulties experienced by the trainees in making progress under a 5-year course at P&T's t'raining school. In the total period 1972-75 only 16 technicians and h6 artisans have graduated from the school. (Vocational courses have proceeded side-by- side with the new entrants' courses and have been reasonable successful with about 1,000 course seats provided during 1972/75). The new entrants training scheme has now been revised to a "proceed at your own pace" basis with operational experieace at various working levels in between. It is expected that about 20 trainee technicians will graduate this year in- creasing substantially in subsequent years. 3. In order to decide on requirements, projections of likely staff requirements through 1980 have.been made by the ITU expert and are as follows: Estimated 1975 1980 Senior Executives 8 9 Professional 1hgineers 24 36 Sub Professional Engineers 93 112 Technicians 297 385 Linesmen and Supervisors 241 315 Other Staff 276 280 1,137 Note: These figures appear to be an underestimate as the staff level in May 1976 had already increased to 1068. 4. P&T's present training school at Port Moresby is congested and has neither the facilities nrstaff to satisfactorily undertake an extended training program of the scope required to take care of expansion of the net- work and early localization of the Department. A project was therefore pre- pared with the help of an ITU expert and submitted to the UNDP for consider- ation in October 1975. The project involves the construction of a new training school at Lae, provision of additional training equipment, 258 man months of ANNEX 6 Page 4 of 4 pages ITU instruction and 2,260 man monthis of other instruction (870 local) and 321 fellowships. The UNDP's decision on the project is still awaited but it has been confirmed that it is still in the program with the likelihood of $60,000 being provided for in 1977 and $1.5 million in 1978. Total cost of the project is estimated at US$8.0 million. P&T are going ahead with the construction of a new building at Lae at a cost of US$4.2 million and the recruitment of some 18 instructors in advance of UNDP approval. ANNEX 7 Page 1 of 2 pages PAPUA NEW GUINEA DEPARTMENT OF POTS AND TELEGRAPHS Telecommunications Tariffs Annual Rental for Automatic Metered Services With direct dialing access to: up to 2000 subscribers K$26 over 2000 subscribers K$39 Unit Fee Rate for Local Calls K7 cents Annual Rental for Manual Unmetered Service. Connected to exchange serving: up to 100 subscribers - private K$39 - business K$65 over 100 subscribers - private K$52 - business K$91 Local calls free on these services Service Connection Fee for a New Line K$50 Long Distance Charges Subscriber Trunk Dialing Intra-zone calls per 36 seconds 7 cents Calls to adjoining zones per 18 seconds 7 cents Calls to other zones per 12 seconds 7 cents Manually-assisted Calls Intra-zone calls per 3 minutes 30 cents Calls to adjoining zones per 3 minutes 60 cents Calls to other zones per 3 minutes 90 cents Higher charges are made for manual assistance where STD is available. Calls to Australia per minute K$1.25 ANNEX 7 Page 2 of 2 pages Internal Telegram Service Not exceeding 10 words 50 cents Each additional word 5 cents Urgent rate teleg:aams are charged at double the above tariffs Telex Service Annual Rental Standard printer K$676 Printer with tape attachment K$884 Installation Fee K$50 Call Charges Internal per minute 40 cents To Australia per minute K$1.56 ANNEX 8 ,Page 1 of 2 pages PAPUA/IW GUINEA ScTO REPORT Income Statement Year ffded June 30, 1975 (Unaudited) Appraisal Forecast Actual hccoo) Telephon6 Rentals 1,621 1,56h Calls 6,980 13,879 Tolograms 900 1,066 Telex Rentals 450 219 Calls 430 857 Miscollanous 495 1,101 Total income - Telecommunications 10,676 18 686 Operations 4,200 10,165 Depreciation 2,370 1,923 Suporannuation 170 77 Totil Operating Expenses - Telecommunications 6,7U0' 12_16 Net Incomo Telecommunications 3,936 6,521 Rate Base - Telocommwunictions - Average Net Assets 37,473 38,321 Rate of Retuni 10.5% 16.9% ANNEX 8 Page 2 of 2 pages PAtjUA/NEW GUINEA SECTOR REPORT Balance Sheet As at June 30, 1975 (Unaudited) Appraisal Forecast Actual (xooo) AS33 ET j Gros!; Telecommunications Plant 50,9h5 50,135 Losn; Depreciation 11,186 6 672 Total 39,759 Gross Postal Plant 1,901 Less Depreciation 265 220 Total 1,636 _1715 Total Not Fixed Assets in Service 41 395 65K178 Works Undor Construction ,167 1 139 Total Not Fixed Assets U 762 Current Assets Stores 2,508 1,790 Dobtors 1,700. 9,360 Cash - 5 (512) Total Current Assets -10,636 Total Assets 9 120 56,955 CAPITAL AND LIABILITIES F1ui ty Governrent 33,628 60,666 Provision for long leave and stock adjustments 500 489 Lon -tenn Debt IBID Loan 546 5,ho 5,422 IBRD Loan 852 8,423 3,851 Australian Government & A-PNG Cable - 811 Total Long-tarm Debt 13,827 10,84 Curront Liabilities Acconits Payable 850 5,300 Other 315 416 Total Current Liabilitics 5,716 Total Capital and Liabilities b9,120 56,95 D)ht/P4ul ty ILatio 29/71 20/80 November 12, 1975 ANNEX $ 1jage 1 of 4 pages PAPUA/NEW GUINEA DEPARTMENT OF POSTS AND TELEGRAPHS Statistical Data on Exchanges (a) Automatic Increa:e Individual June 30 May Over 4 Exchange t72 176 Years Fill % Exchange Name Cap. Con. Cap. Con. Alotau 200 109 200 155 - 678 Arawa 1000 67 1000 621 - 55 62 Boanz 50 37 100 53 50 16 53 Boram 150 118 300 155 150 37 52 Bulolo 100 43 100 64 - 21 64 Finschhafen 100 37 100 49 - 12 Goroka 1000 522 1000 709 - 187 71 Kagamuga 100 b 100. 91 - 47 91 Kainantu 200 67 200 107 - h40 5 Kavieng 200 176 200 193 - 17 96 Kerema 100 71 100 73 - 2 73 Kerevat 50 17 50 22 - 5 4h Kieta 400 212 400 221 - 9 55 Kimbe - - 300 166 300 166 55 Kokopo 100 58 100 81 - 13 81 KundIawa 200 99 200 104 - 5 52 lae 2000 1849 h000 2368( 4000 519 59 (-2000 Phdang 1000 687 1000 781 - 94 78 Yhprik - - 100 56 100 56 56 Mendi 200 68 200 124 - 56 62 tinj 50 28 50 31 - 3 62. Mt. Hagen 800 390 1000 566 200 176 57 Nairovi 200 5 . 100 37 -100 32 37 Panguna 330 40 330 141 101 43 Popondetta 200 132 200 162 - 30 81 Rabaul 1400 1399 2000 1358- 600 -hl 18 Samarai 100 79 100 70 - - 9 70 Toleap 100 64 230 83 130 19 36 Vanimo - - 200 97 200 97 19 Wau 200 135 200 123 - -12 62 Wewak - - 600 292 600 292 49 (Bomene 100 .83 300 106 200 23 39 (doraka 5000 094 9000 6282 4000 2188 70 (Gerehu - - 400 192 400 192 [8 (Konedobu 1200 . 796 - - -1200 -796 (Port Presby 1200 1131 11100 12qh 200 123 (Sageri 100 50 100 51 - ANNEX 9 -2- Page 2 ofh pages Capacities and lines 15,130. 12,707 25,960 17,038 11,130 5,189 Less Recoveries 3,300 858 Net.Increase 7,830 h,331 Exchange Fill 70 65 Note: Of the additional exchange capacity 1,780 lines were provided for in the first project. Of these 1,030 have been double counted in the second project. (b) Manual Aitape - - 50 46 50 16 92 Angoram - - 50 17 50 17 3 Daru 200 86 200 120 - 34 60 Kimbe 100 -70 - - -100 -70 - Lorengau h0 38 170 112 130 7h 66 Sophano 100 53 100 64 - 11 64 Tapini 30 15 30 17 - 2 St Vanimo 100 61 - - -100 -41 - Waberg - - 100 60 100 60 .60 Wapenamunda - - 50 29 0 29 58 Capacities and Lines 570 323 750 464 380 273 Less Recoveries 200 131 Net Increase 180 142 Exchange Fill 57 62 ANNEX 9 Page 3 of L pages PAPUA/1-TEW GUINEA DEFARTNENT OF POSTS AND TELMRAPHS Key Indicators and Basic Data Vhy 30 Years ending June 30: 1972 1973 1974 1975 1976 Number of Direct Exchange Lines, Appraisal Forecast 15,1455 17,223 19,500 19,500 1/ Adjusted Forecast 114,650 15,970 17,200 18,130 Actual . 13,030 14,596 15,915 16,99 17,502 Percentage Achievement on Appraisal Forecast 94.4 6 92.4 86.9 89.7 Percentage Achievement on Adjusted Forecast 99.6 99.7 98.5 96.5 Number of Telephones Appraisal Forecast - - - - 0,000 1/ Adjusted Forecast - - - - 35,500 Actual 26,120 - - - 35,1h0 Percentage Achievement on Appraisal - - - - 8b.9 Percentage Achievement on Adjusted Forecast - - - - 99.0 Exchange Capacity Appraisal Forecast - - - - 30,700 1/ Adjusted Forecast - - - - 25,580 Actual 18,700 - - - 26,710 Percentage Achievement on Appraisal - - - - 87.0 ANNEX 9 Page 7 of 4-pages orcont:o AkchiLC'Cment, on lidjusted Forecist - - - - 104.4 Exch:mc Pill (ctu:l ) 70 - - .- 65% Long DiCtam:o Circuits Appraisal Forecast - - - 1,322 1,322 Actual 237. - - 1,h2 P'ercentage !kchäivement - - - - 106.0 tur.bcr ox Tcee:/Gentex Appraisal Forecast - - - - - 500 A - Lua] - - - 427 Percentage Achievenent 84- - - 2/ Revenue per DEL (in K 000) Appraisal Forecast~ 270 330 392 443 A ctull 332 535 707 911 Rae Iof Return on Net Assets Appr:Iisl Forecast 2.2% 4.4% 7-5% 10.-% - A ctual 1.0% 10.5% 12.9%- . 16.9% - Adjuted to reflect extension of construction per:i,od to June 30, 1976, and rcunc!d provisions .for exchnnge lines and incrcases in long dist,nce facilitics. Subnequenty the additions for exchance lines was inereased t-o more than the or.iginal projoct and the additional long distance facilities retained. 1 Kena ~ 1 Autralian -2- IBRD 11198 R 44S - 48 0° 152- AR -5 PAPUA NEW GUINEA 4 ROAD PROVINCIAL BOUNDARIES -- TERRITORIAL 8OUNDARIES -- INTERNATIONAL BOUNDARIES MANUS HIGH-.ANDS RE7 N WEST SEPIK p - AVIENG V EAST SEPIK Bsm a r c k Sea MItES 0 500 150 2 0 300 K LOES RABAu E W E 5 T N E W BR I T AI N FRI iM A D A N GVILLE D MADANGM ICX ZKND .O AGA.6- xiETA - OU ETER PANCGJNA HIG L_AN E A S T NEW BRITA IN NE' oU F Sol /mon Se a W E 5 T R N KEREMA --FO-M- -L PAPUA) w PORT MORESSI PL1PPsNES I I N E -10° M ll1BA QcA EI GUNEA C E N T R A L T..Cora Se a 12 _ 1 - - - -- - - - - N ZEALAND