Announcement of Nine Million Dollars for Road Development in Papua and New Guinea on June 12, 1970

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT • 18 1 8 H IN'rI•:RN A'flON A~A DI~~VELOPM}~NT ASSOCIATION ST R E ET, N W WASHINGTON D.C. 20433 TELEPHONE. EXECUTIVE 3-6360 Bank Press Release No. 70/38 Subject: $9 million for road development IDA Press Release No. , 1/28 in Papua and New Guinea June 12, 1970 The World Bank and its affiliate, the International Development Association (IDA), are lending the equivalent of US$9 million for the improvement and develop~ ment of roads in the Territory of Papua and New Guinea. The project will facili- tate access to the Central Highlands, reducing road maintenance and freight costs to this large, fertile and populous area of growing economic importance. It will also encourage the political and social cohesion of a country divided by geograph- ical and language barriers. • The Bank loan and IDA credit, of $4.5 million each, will be extended to the Administration of the Territory of Papua and New Guinea, and guaranteed by the Connnonwealth of Australia. The Bank loan will be for a term of 24 years, in- cluding 4 years of grace, with interest at 7%. The IDA credit will be for a term of 50 years, including 10 years of grace; it will be interest free but will car~y a service charge of 3/4 of 1%. Most of the Territory's roads are contained within enclaves along the coast and generally terminate a short distance inland. An exception is the "Highlands Highway", completed about four years ago, which extends over 300 miles from the port of Lae to Mt. Hagen, the administrative and connnercial center of the western part of the Highlands. Nearly half the Territory's population lives in the High- lands, where cash crops, notably tea, coffee, and pyrethrum, are expanding and the outlook is promising for the development of light manufacturing industries and of • tourism. Although the opening of the Highlands Highway reduced freight costs from /more Bank P.R .. No •. 70/38 - Papua & New Guinea- .. Ro11ds IDA P.Ro No~ 70/28 - 2 - the coast and led to a marked shift from air to road in the tonnages moved into the ~ Highlands, road freight is still expensive and there is need for better roads in the area and for a more reliable access from the coast. The Highway is tortuous, often difficult for trucks to negotiate, and frequently closed because of land slides. The project being assisted by the Bank. and IDA financing consists of the im- provement of stretches of the Highlands Highway and the construction of an extension of it into the southern part of the Highlands to an area at present virtually with- out road access. Finance will also be provided for the engineering of 135 miles of a second road from the coast which would provide an alternative and shorter access to the Highlands. Provision is made fot· the services of consultants to supervise construction and undertake the engineering wc,rk. Funds are also included for over- seas fellowships for the training of nationals of the Territory in transportation • and public works. The project is scheduled for completion by mid-1974 at a total estimated cost equivalent to US$13,140,000. The US$9 million from the Bank and IDA will finance that portion of the cost arising outside the Territory. Construction contracts will be awarded after international competitive bidding. The local costs will be met by the Administration from its budget. A transport survey of the Territory> financed by the United Nations Develop- ment Programme with the Bank as Executing Agency, was completed in 1969. The con- sultants recommended a transport program which called for an investment equivalent to US$122 million in highways for the five years ending in 1972/73. The Bank loe.n and IDA credit are financing the highest priority roads identified in the trans- port survey. - 0 - •