Papua New Guinea - Enga Provincial Development Project

Doc tknent of The World Bank FOR OFFICIAL USE ONLY Report No. 8104 PROJECT COMPLETION REPORT PAPUA NEW GUINEA ENGA PROVINCIAL DEVELOPMENT PROJECT (CREDIT 1227-PNG/LOAN 2125-PNG) OCTOBER 20, 1989 Asia Region Country Department II This document has a restricted distribution and may be used by recipients onlv in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EOUIVALENTS At Anoraisal (1982) gQmpletion (1988) Currency Units Kina (K) Kina (K) Kina 1 = US$ 1.50 US$ 1.15 US$ 1.00 = K 0.67 K 0.87 WEIGHTS AND MEASURES 1 kilogram (kg) = 2.20 pounds 1 metric ton (ton) = 2,204.6 pounds 1 kilometer (km) = 3 6214 miles 1 square kilometer (sq km) = 100 ha 1 hectare (ha) = 2.47 acres GOVERNMENT OF PAPUA NEW GUINEA FISCAL YEAR January 1 - December 31 GLOSSARY OF ABBREVIATIONS DFP - Department of Finance and Planning of the National Planning Office DPI - Division of Primary Industry (Agriculture) DWS - Department of Works and Supply ERR - Economic Rate of Return PC - Project Coordinator PNG - Papua New Guinea  FOR O0FICIAL US ONLY THE WORLD BANK Washigton. D.C. 20433 U.S.A. Oke d Ow-ckwGerwal Op0atmm ivakiatw October 20, 1989 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Report - Papua New Guinea Enga Provineial Development Proiect (Credit 1227-PNGILoan 2125-PNG) Attached, for information, is a copy of a report entitled 'Project Completion Report - Papua New Guinea Enga Provincial Development Project (Credit 1227-PNG/Loan 2125-PNG)", prepared by the Asia Regional Office and the Food and Agriculture Organization of the United Nations. No audit of this project has been made by the Operations Evaluation Department at this tlme. Attachment Thb document hs a iteddbtibution and MAy be usd bY r`ip1onts only in th peforme of their offci duthists contents nmy not otherwise be disckosed without World Oank authoMn.  FOR OFFICIAL USE ONLY PROJECT COMPLETION REPORT PAPUA NEW GUINEA ENGAL PROVINCIAL DEVELOPMENT PRGJECT (CREDIT 122J-PNGILOAN 2125-PNG) TABLE OF CONTENTS Pase No. Preface ................................................... i Evaluation Summary . . ............... e.0 .......... ii PROJECT COMPLETION REPORT .... .. . ... ..... . ... 1 PART I. PROJECT REVIEW FROM BANK'S PERSPECTIVE . . 1 1. Project Identity ................................................ 1 2. Background ........ ....................... ..... ......... 1 3. Project Objectives and Description .................... . 1 4. Project Design & Organization ......................... 2 5. Project Implementation .............. .o ................. 3 6. Project Result ........ ............. ............. . -. .-. 6 7. Prolect 7nstainability .......... ........................ 7 8. Bank Performarse .. ............... ................ 9 9. Borrower's Performance ......... ..... ........ ..... .* .... 10 10. Project Relationships . ...... . ................. . 11 11. Consulting Servicas ....................... ... 11 12. Project Documentation & Data ..................... 11 PART II. PROJECT REVIEW FROM BORROWER'S PERSPECTIVE .... .. 12 PART III. STATISTICAL INFORMATION . .................. 13 1. Related Bank Loans and/or Credits ....... ........... 13 2. Project Timetable ............ .. .. .......... ..... 13 3. Loan Disbursements .. ......*...... ..... 14 4. Project Implementation .... .. . . . . ...* ....................... 15 5. Project Costs and Financing ........... .................. 16 6. Project Results ........ . .......... .. . . ... ...... . 18 7. Status of Covenants ..... .......... ............ *O. . 20 8. Use of Bank Resources ........... .... 20 MAPS IBRD Maps (15769, 15770 and 15771) This document has a restricted distribution and may be used by recipients only in the perfosmance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  - i - PROJECT COMPLETION REPORT PAPUA NEW GUINEA ENGA PROVINCIAL DEVELOPMENT PROJECT (CREDIT 1227-PNGILOAN 2125-PNG) PREFACE This is the Project Completion Report (PCR) for the Enga Provincial Development Project in Papua New Guinea, for which Loan 2125-PNGlCredit 1227-PNG in the amount of US$8.0 million was approved on April 6, 1982. The loan was closed on March 28, 1989, two and a-half years behind schedule. It was fully disbursed and the last disbursement was on March 28, 1989. The PCR was prepared by FAO/CP (Parts I and III), and the Borrower (Part II), with the preface and evaluation summary prepared by the Asia Regional Office. Preparation of this PCR was started in February 1989, and is based, inter alia, on the Staff Appraisal Report; the Loan Guarantee, and Project Agreements; supervision reports; correspondence between the Bank and the Borrower; and Internal Bank memoranda.  - ii - PROJECT COMPLETION REPORT PA1'UA NEW GUINEA ENGA PROVINCIAL DEVELOPMENT PROJECT (CREDIT 1227-PNG/LOAN 2125-PNG) EVALUATION SUMMARY Obtectives. The objective of the project was to alleviate key development constraints by improving physical and social infrastructure, developing appropriate agricultural packages, strengthening Covernment services in the Province and provide a replicable model for development in other Pro'vinces. (para 3.1) Implementation Experience The main issues concerning implementation wore (paras 5.1-5.8): (a) Time over-run: Weaknesses in budgetting for the civil works component, protracted Dept. of Works and Supply mobilization problems, lengthy engineering design procedures, DWS' limited capacity to carry out the works on force account, resulted in project being completed in six years instead of the planned four years. A more realistic assesment of departmental capacities and a greater use of local competetive bidding might have helped overcome DWS'capacity problem; (b) Project costs, accounts: Total project costs showed a modest under-run in US$ terms due largly to exchange rate fluctuation. However, it is also likely that due to highly decentralised project implementation arrangements not all expenditures were reported in the central project accounts; (c) Phasing of internationally recruited specialists and counterparts: the smooth phasing in of expatriate staff and their local counterparts proved difficult. There was also frequent turnover of counterpart staff and relatively long periods when expatriate staff worked on their own; (d) Phasing of agricultuiral and other activities: the synchronisation of agricultural production activities with staff recruitment,civil works program and vocational training and community development proved to be difficult; (e) Bidding procedures: Civil works was a major component in terms of total project costs (about 60Z) and although the Loan and Credit Agreements allowed the use of local competitive bidding for civil works only a small proportion of the civil works were in fact constructed using this procedure (only about 7Z of project costs). The bulk of the construction was carried out by DWS using torce account.This may have resulted in higher construction costs and missed opportunities in encouraging the growth of a fledgling local contracting industry. Results The project has provided the planned infrastructure (Part III, Sect. 4) and particularly in the case of roads, targets have been exceeded. Specific agricultural targets were not attained. There has been no significant increase in sweet potato, irish potato or coffee cultivation. Only 20 ha of the proposed 215 ha of forest plantation were established mainly due to land  - iii - acquisition problems. Preliminary surveys of the health and -ernacular education programs appear to indicate positive impact in terms of reduced morbidity and improved school scores. (paras 6.1-6.3) Sustainability Project activities were designed for implementation through existing provincial institutions and departments with suitable strenghthening rather than through a seperate entity specifically set up for the purpose. It was expected that experience from the project would form the basis for similar, sustainable phases within a long-term investment program. Therefore, considerable flexibility and adjustment during implementation was expected. In practice, however, the individual components were generally implemented rigidly and the project objective of developing an institutional capacity for critical review and fine-tuning of components and activities was not fully achieved. The project has contributed towards strengthening a relatively new provincial administration through the introduction of improved procedures,training of provincial staff, and developing a mechanism to coordinate the activities of the Enga Departments technical divisions. Sustainability of the activities, processes, and institutional arrangements will depend on provincial and national Governments efforts to ensure staff continuity and adequate budgetary allocations for operation and maintenance of activities and infrastructure initiated and constructed during the project period. This remains very much an open question. (paras 7.1-7.4) Findings and Lesscas Learned The main lessons are as follows: (para 8.4) (a) Project design. In order to make integrated Provincial/ area development projects flexible and replicable,it is advisable to provide a mechanism for adjustment and fine-tuning of project components and items during the course of implementation. This may be achieved, inter alia, by providing a system of annual plan of operations and related reviews. (b) Procurement. In Provincial/area development projects *with a large civil works program, emphasis on local competitive bidding (as against exclusive reliance on force account) as well as engineering supervision by the Bank may help contain costs and would, in any case, promote transparency, timely implementation as well as encourage the growth of the local construction industry. (c) Key indicators. Both attainment and impact indicators need to be defined at appraisal and utilized as a monitoring tool within a consistent program structure. (d) Phasing of project components. Skillful phasing of project components and items is essential for the success of a project of this nature. This concerns not only the phasing of externally recruited and local appointments and the physical implementation but also the optimal timing of the agricultural and other productive activities. It may well be that in Provinces/areas at an early stage of development, the building up of social infrastructure should precede agricultural efforts.  PAPUA NEW GUINEA ENMA PROVINCIAL DEVELOPMENT PROJECT (LOAN 2.25 - PNG) (Credit 1227 - PNG) PROJECT COMPLETION REPORT PART I 1. Project Identity Project Name Enga Provincial Development Project Loan/Credit Number Ln. 2125-PNG/Cr. 1227-PNG RVP Unit Asia Country Papua New Guinea Sector Agriculture Subsector : Rural Development 2. Backpround 2.1 Papua New Guinea (PNG) became independent in 1975. One of the main problems faced by the country was that of building nationhood, in spite of very diverse ethnic groupings tover 700 different clans) and major regional differences in socio-econumic development and growth potential. For these reasons, a highly decentralized system of Government was devised with a great delegation of responsibilitiesto the Provinces, and since mid-1970s all the policy strategy of the Government placed emphasis on the need to inject funds and technology into the least developed Provinces through provincial-based multi-sectoral integrated rural development projects. Five such projects have been financed with assistance from several external sources during 1977-1987. The Enga Provincial Development Project was the third in the series. 3. Project Obiectives and Description 3.1 The overall objective of the project has been to strengthen the human, agricultural, institutional and physical resource base which would allow directly-productive and market-oriented activities to be carried out under subsequent development programmes. Project components were identified to focus on alleviating key developmental constraints, the most fundamental being the need for essential physical and social infrastructure as well as for appropriate agricultural packages. The project was also expected to help strengthen Government services in the Province and to provide a replicable model for development in other Provinces. 3.2 The project was designed to constitute the first four-year phase of an eight-year development plan for Enga province to improve communications, promote inter-clan integration, increase subsistence production and cash incomes, and enhance living conditions. All project activities have been included in the National Public Expenditures Plan (1982-85), viz the principal planning vehicle for PNG, incorporating all development and incremental government expenditures  - 2 - 3.3 The project compoonents as appraised were as follows: a) Agriculture.. Improved varieties to increase crop yield, and land use practic.. for subsistence crops, inceeased production of-cash crops with total planting of 400 ha of coffee and 40 ha of cardamom, expansion of forestry by the development of 215 ha of plantation as well as establishment of nurseries and demonstration lots, encouragement of livestock activities by the establishment of a 140 ha breeding cent-e for sheep and supporting an existing small breeding centre for ducks and chicken. b) Infrastructure. Upgrading of 92 Km of priority roads, development of rural electrification, co struction of offices and staff housing for the Enga Departmenit, equipment and staff for the Department of Works and Supply (DWS) c) Health. Rehabilitation of four hedith centres, establishment of two new health sub-centres, equipment for eleven health centres and seven sub-centres, and upgrading of 45 aid posts. d) Education and community development. An inducement allowance for about 60 primary school teachers, a boarding facility for 150 students at a new high school, the expansion of vocational training in agriculture, carpentry, health, nutrition and home economics, a pilot programme for vernacular instruction at the pre-primary level, and the establishment of four community development centres. e) Institution building. A comprehensive programme of organization planning, development of managerial and administrative procedures, staff training, monitoring and evaluation and studies in an array of areas (incluoing commercial promotion anthropology and law and order, for the Enga Department. 4. Project Oe.Lign and Organization 4.1 Initial projec.: formulation was done by the Provincial Government in close consultation with local groups, as well as with the involvement of both civil servants and traditional leaders. In formulating the project, the experiences of then ongoing Asian Development Bank-assisted East Sepick Provincial Development Project and the World Bank-financed Southern Highlands Provincial Developmnent Project, were taken into consideration. After extensive internal discussions, a two-volume project document was prepared with over 100 items to be implemented over a six-year period at a cost of some US$45 million equivalent (excluding contingencies): the document's emphasis was on basic infrastructure (mostly roads) with agriculture accounting for only 15% of the total costs. Concern about the size and complexity of the proposed project was expressed in the Bank both before and after appraisal. During the appraisal process, the project was reduced in scope (US$16 million equivalent, including contingencies), complexity (five components with 46 items) and expected implementation duration (four years). Its emphasis was also revised, with agriculture accounting for nearly one-third of the total costs. The aim was to develop a replicable and flexibl3 design to help lay the foundations for development through effective institution building and to develop a model applicable also to other Provinces (para 3.1).  -3- 4.2 In the early 1980s. when the project was conceived, the provincial economy was at a very early stage of development. Distance from the main markets, dearth of roads, a weak human resource base witn extremely low educational achievements and poor health and hygiene, lack of labour and primitive technology constrained the use of available resources for gicjutural development and accordingly specific targets to be attained within each component were defined. For the physical and social infrastructure components, in particular, these targets were based on conservative assumptions concerning implementation capacity. Because of lack of basic technical data, targets under agriculture component rested on preliminary hypotheses mostly derived from international com'arisons. 4.3 Project design in the agricultural component was adversely affected by: (a) lack of essential information derived from a good baseline survey, and (b) an excessive fragmentation and dispersion of activities. Inadequate economic-geographical priorities for the agricultural targets caused too thin a spread of resources over the entire sector. More significantly, the project specific targets in terms of areas and yields have been greatly overestimated; this has been the result of using international comparisons to set the project's areas and yields objectives in lieu of data stemming even from scanty and incomplete sample surveys such as those normally feasible at the project preparation stage. Overall, in spite of these design weaknesses, many dispersed items of the agricultural component had a unifying element as their rationale: to provide the basis for policy formulation and for the development of a Provincial agricultural development strategy (Section 3.01 b of the Loan and Development Credit Agreements). 4.4 The design of infrastructure components was modelled on that of specific projects on roads, rural electrification, health, education and community development. Indeed, each component appears to ha-e been designed as an individual small project. AltITough all the components have the broad and general objective of supporting agricultural development in the Province, there was only a l1iited attempt to coordinate them substantially towards certain specific tae-gets and groups and to obtain synergies from their development. Coordination was mostly bureaucratic. 5. Project Iml]ementation 5.1 In harmony with the overall project objectives and design, implementation arrangements were based on normal Government's procedures and channels suitably strenghtened by the appointment of a Project Coordinator (PC) with essential supporting staff. The main issues concerning project implementation were: (a) time over-run; (b) project costs, accounts and disbursements; (c) phasing of expat,;ate contract officers' assignments with those of their counterparts; (d) phasing of agriculturdl activities with those under other project components; and (e) bidding procedures. 5.2 Time over-run. The project was completed in six years as opposed to the four years estimated at appraisal. The delay built up essentially in the first 18 months due to: (a) failure to budget properly for the vast civil works component; (b) protracted DWS mobilisation problems also due to recruitment difficulties; and (c) lengthy procedures for the preparation of the engineering design and related bills of quantities. When the physical parts of the project finally got underway, further delays occurred mostly due to: (i) OWS's limited capacity to carry them all on force account; (ii) difficulties in coordinating the definition of the "scope of works' for individual items (a responsibility of the Enga Department technical divisions) with OWS plans of operation. A larger use of local competitive  - 4 - bidding (see para. 5.3 below) might have had a beneficial impact on the duration of project implementation. Implementation has proceeded smoothly since 1985; the 1984 mid-year project review focussed on implementation problems and arrangements and dealt only marginally with project content matters. As such, it helped clear up a number of implementation procedural steps even though it did not shed light on the key issues of replicability and flexibility. Altoge-her, it appears that at appraisal, both the PC cocc-dinating effectiveness and the DWS capabilit;es had bees over-estimated. 5.3 Project costs. accounts ani disbursements. In spite of the tin,e over-run, the total project costs reported a modest under-run in US$ terms, even after the inclusion of two additional items (the Wapeg Court House and the Wapenamanda Remnant Juvenile Centre). The t.nder-run is to be imputed to a large extent on the excnange rate fluctuation as illustrated in Part III, Section 5-A. It is, however, likely that many items procured and eligible for reimbursement under the project were not properly accounted for due to the decentralized project implementation arrangements; a review of the 1988 accounts suggests that in several cases of expenditures under the project were not reported by the technical divisions to the PC. Improvements in project accounting procedures have becn recommended by the external auditors (Coopers and Lybrand) as a part of their periodic reviews. The difficulties in keeping up-to-date project cost estimates and good accounting pGint once again to underestimating the authority and skills required by the PC in managing highly decentralized project implementation arrangements. 5.4 Phasina of internationally recruited specialists and counterparts' asiignmex