Papua New Guinea - West Sepik Provincial Development Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 5017-PNG STAFF APPRAISAL REPORT PAPUA NEW GUINEA WEST SEPIK PROVINCIAL DEVELOPMENT PROJECT October 11, 1984 Projects Department East Asia and Pacific Regional Office This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS (as of April 1984) Currency Unit = Kina (K) KL = US$1.18 US$L = K 0.85 WEIGHTS AND MEASURES 1 kilogram (kg) = 2.2046 pounds (lbs) 1 metric ton (ton) = 2,204.6 pounds (lbs) = 1.1023 short tons (2,000 lbs) = 0.9842 long tons (2,240 lbs) 1 kilometer (km) = 0.6214 miles 1 square kilometer (sq km) = 100 ha = 0.3861 square miles l hectare (ha) = 2.4711 acres GOVERNMENT OF PAPUA NEW GUINEA FISCAL YEAR January 1 - December 3L GLOSSARY OF ABBREVIATIONS DOF - Department of Finance DPI - Division of Primary Industry (Agriculture) DWS - Department of Works and Supply HQPC - Headquarters Project Coordinator HQPCC - Headquarters Project Coordinating Committee lASER - Institute of Applied Social and Economic Research LDP - Less Developed Provinces LGC - Local Government Council NPEP - National Public Expenditures Plan NPO - National Planning Office OPC - Office of Project Coordination PC - Project Coordinator PMT - Provincial Management Team PNC - Papua New Cuinea PSC - Public Service Commission SOE - Statement of Expenditures VDC - Village Development Center  FOR OFFICIAL USE ONLY PAPUA NEW GUINEA WEST SEPIK PROVINCIAL DEVELOPMENT PROJECT STAFF APPRAISAL REPORT Table c' Contents Page No. Loan and Project Summary ..................................... . iii I. BACKCROUND ..o....................................... .......... ........... 1 A. Introduction ..... ..... ................0........ ....................... 1 B. Structure of Government .............. ............. ...... 1 C. Development Objectives and Less Developed Provinces ...... 2 D. Bank Financed Agricultural Projects ....................... 3 II. THE PROJECT AREA .......... .. ................................... ... 4 A. Physical Characteristics . ................ ................. 4 B. The West Sepik People........... .......................... 4 C. Agricultural S........... .................... ... ....... 5 D. Provincial Economy ...... ............. ........ .......... . 7 E. Government Structure ..*. ** * ..................................... 8 F. Public Services .... *... ... . . . . . . . . .. . .......................... O...... . 8 III. THE PROJECT ................... ............................... 11 A. Objectives and Scope . .... ..... . .................. .. . . . . . 11 B. Detailed Features ..... . ...... . . ................... . ....... . 13 C. Implementation Period and Status .......... o .............. 24 IV. PROJECT COST AND FINANCING ......... .... .......... ...... . 25 Ao Cost Estimates ..... ...........O.....,..... O........................ 25 B. Financing ......................................0...................... . 26 Co Procurement . 27 D. Accounting and Auditing ........ . ........................ . . . ..... . 28 E. Disbursements ....... .................... ............. .0. ............... 28 V. PROJECT IMPLEMENTATION, ORGANIZATION AND MANAGEMENT ....... . .. 29 A. Implementation Responsibility ............................ 29 B. Management, Coordination and Reporting ..................o. 29 C. Project Staffing . ..... . ... ...... o..o ................ .. 32 This report is based on the findings of an appraisal mission comprising Messrs. A. Hasan, J. P. Baudelaire, D. Parbery, F. Iqbal, and Ms. C. Clark (Bank) which visited PNG in November 1983. The report was reviewed by Mr. K. Sengupta (Bank). This document has a restricted distribution and may be used by recipients only in the perrormance oa their offil duties. Is contents may not otherwie be discloed without World Bank authorization.  - ii - Page No. VI. BENEFITS AND JUSTIFICATION ........ ........................... 32 A. Nonquantifiable Benefits ................................. 33 B. Quantifiable Benefits and Economic Analysis ............. . 33 Co Farm Incomes ............. 35 D. Agricultural Production and Marketing ................... . 35 E. Fiscal Impact . .................................... 36 F. Environmental Impact ............................................. 36 C. Risks ............................... 36 VII. AGREEMENTS REACHED AND RECOMMENDATIONS ....................... 37 A. Conditions of Loan Effectiveness ......................... 37 B. Agreements ... ................................. 37 ANNEXES 1. Tables 1. Provincial Population and Land Distribu*ion 2. Subsistence Systems in West Sepik 3. Project Roads 4. Implementation Schedule: Key Indicators 5. Incremental Staff and Recruitment 2. Tables 1. Project Cost Sulmmary (by Component) 2. Project Cost Summary (by Category) 3. Procurement Arrangements 4. Disbursements Schedule 3. Tables 1. Implementation Responsibility 4. Table 1. Economic Costs and Benefits: Long-Term Agricultural and Roads Investment Program 2. Costs and Benefits of Highlands Vegetable Subproject 3. Farm Incomes 5. Selected Documents Available in Project File CHARTS World Bank 25784 Provincial Government Organization Chart World Bank 25944 Implementation Schedule: Project Components MAPS IBRD 17935 Agriculture IBRD 17936 Social Infrastructure and Road Network  - iii - PAPUA NEW GUINEA WEST SEPIK PROVINCIAL DEVELOPMENT PROJECT Loan and Project Summary Borrower: Papua New Guinea (PNG) Beneficiary: West Sepik Provincial Government Amount: US$9.7 million (including capitalized front-end fee) Terms: The loan would be for a term of 20 years, including a grace period of 5 years, at the standard variable rate. Project Description: The proposed project would constitute the first five-year phase of a long-term effort to accelerate social and econo- mic development in West Sepik, one of the poorest provinces in Papua New Guinea. The objective of the project is to strengthen the human, agricultural, institutional and physical resource base to enable directly-productive and market-oriented activities to be carried out now and in the future. Specifically, the project includes: (a) agricul- tural development comprising subsistence agriculture, cash crops including tree crops and vegetables, strengthening of support services and special studies to investigate and prepare future agricultural projects; (b) infrastructure development through road upgrading and rehabilitation, airstrip upgrading and wharf construction; (c) health and nutrition services development including malnutrition research in the Lumi district, a school niutrition program, and training and supervision of primary health care workers; (d) education and training improvement comprising establishment of central community schools, boarding facilities, an in-service training center, and vocational training; and (c) institution building through upgrading of the provincial management, financial and staff development functions. Benefits: It is expected that quantifiable benefits of higher family incomes would accrue to about 90% of the 114,000 people living in the West Sepik Province over the long-term as a result of the development program, of which this project is a first phase. Many unquantifiable benefits such as more balanced diets, improved health and nutrition, improved educational coverage and quality, and improved services are expected.  -iv - Risks: The main project risks are: (a) the likely delay in recruiting the professional staff required to help imple- ment the project cwing to procedural problems; (b) poten- tial management and coordination problems arising from the project's relacive complexity and remote location; and (c) poor participant response and the possibility of intro- ducing culturally inappropriate practices. The recruitment risk would be minimized by the appointment of key project staff before project initiation. A Project Coordinator would be appointed to ensure coordination of the various project components. The risk of low response has been reduced by proposing modest modification in the farming system, requiring low but adequate levels of skills and technology, and directing the project to areas where acceptance is likely to be high. Also, a monitoring and evaluation officer would be appointed to assess among others the socioeconomic appropriateness of, and response of the participants to, project activities.  Estimated Cost: Local /a Foreign Total - 1 milijo