According to the Asian Development Bank’s May 2018 update, contracts for the US$800 million (K2.5 billion) multi-tranche funding to rehabilitate Papua New Guinea’s 430-kilometre Highlands Highway will be awarded between August and September. It can’t come soon enough for many operators.
Mudslide on the Highlands Highway. Courtesy: Peter Korugi
The reality of the day-to-day woes of the highway (sometimes referred to as the Okuk Highway) in PNG has left some operators questioning if the ADB-funded rehabilitation will occur in time.
Negotiations over the procurement of more than six contract packages are ongoing, with only a small percentage of the 10-year funding so far utilised.
Meanwhile, the deteriorated state of the highway contributes to delays and the premature mechanical failures of trucks and vehicles—and consequent higher costs.
Diversified landowner company NKW Fresh Produce supplies in excess of 120 tonnes of fresh produce monthly, sourced directly from smallholder subsistence farmers.
David Stewart, Fresh Produce Manager Growers Service at NKW, believes the state of the highway makes it hard for PNG companies to be competitive.
‘The turnaround time to deliver goods and services, utilising the roads infrastructure, is extended.’
‘There is no way a developing nation, without infrastructure, can compete against products imported from a first world country with first world infrastructure,’ he says.
Unfair
Stewart considers it ‘grossly unfair’ to expect the fresh produce industry in PNG to stand on its own when it cannot achieve first world economies of scale. It is also a barrier to investment.
Stewart explained that the turnaround time to deliver goods and services, utilising the roads infrastructure, is extended. What should take seven hours, can take up to a full day because of the poor conditions.
‘There is no need to purchase new trucks.’
‘Our trucks suffer a level of deterioration that just does not occur in a developed market.
‘So the reality is that our cost of access is higher. This creates a market situation that is anything but equal.’
Adequate
Mapai Group’s Jacob Luke. Source: EMTV
Jacob Luke, Chairman of Mapai Group of companies, and President of the PNG National Road Transport Association (RTA) says the current state of the Okuk Highway remains a great challenge for the industry. He, too, says it is discouraging investment.
‘There is no need to continue buying new trucks when the supply is sufficient.
‘However, the utilisation is very poor because of the poor state of the highway and security issues.
‘The government is not in any way positioned to fix the highway, despite (the) ADB funding. They are far too remote from our immediate and day-to-day operational needs.
‘The focus of Tranche 1 is to do the necessary emergency works.’
‘We are taking up a solo fight for our own survival,’ he observes.
Truck and vehicle owners are also concerned that they are not only paying for the cost of the deteriorating infrastructure, but also paying fees to be worthy road users.
Funding
Meanwhile, the ADB has said that, rather than work on individual and separate sections at a time, each of the three funding tranches will be applied to the whole road.
‘The focus of Tranche 1 is to do the necessary emergency works, rehabilitation and maintenance to get the road passable all year round on a daily basis,’ the ADB stated.
According to the ADB, the second tranche will be targeted at improving 118 kilometres of priority national roads, provide maintenance arrangements for 500 kilometres of roads, provide capacity development for agencies, and improve road safety.
The third tranche will include:
- Improvements to 113.5 kilometres of priority national roads including redesign considerations for road users;
- Maintenance arrangements for 200 kilometres of the Highlands Core Road Network;
- Improving the capacity of the National Road Authority and Department of Works to manage and improve the roads;
- Improving the road safety capacity of the National Road Safety Council (NRSC).
David Hill, the Asian Development Bank’s Country Director for Papua New Guinea, will talk about the bank’s investment plans for road, port, aviation and energy infrastructure in PNG at the 2018 Papua New Guinea Investment Conference, to be held at the Sofitel Brisbane on 6 & 7 August. To view the program or register to attend, visit www.pnginvestmentconference.com.
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The problem that our government, the works department and NRA always face is maintenance of existing highways/roads or building new ones. There’s always budget shortage or no budget at all to fix the roads or maintain their quality. Some highways/roads even become forgotten for years. How can this be solved?
The highways/roads are heavily used by commuters, PMV’s and business houses everyday 365 days a year, which in turn deteriorates the condition of the highways/roads. Funding is difficult as there’s no separate independent funding source for this highways/roads as the government always relies on revenue created from business along these roads that aren’t even enough to cater for the maintenance or expansion of the highways/roads. This makes the government borrow money again and the stress adds on.
1. Now, what I think would partly or maybe fully solve the funding issues is by establishing toll road systems along all the highways/roads around the country. This toll road system will generate funds to repay the cost of building the structures and pay for future maintenance or enhancement of infrastructure in existing or new planned highways/roads. If required, it can also pay externals like police presence/patrols along roads and cleaning along the road edges. The amount of the toll should vary by vehicle type, weight, or number of axles. Many countries around the world ease their stress of highway/road infrastructure maintenance or building by using revenue generated from toll roads. This in turn helps the government of a nation using this toll road system have an independent funding source for its transportation sector.
2. So when the revenues generated from the toll road system increase into a surplus, the government can then think of building railways for a more effective and efficient way of transportation. Railways are less expensive on maintenance, have a more greater capacity of cargo carriage and have less accident rates. This could be a game changer for the transport industry of PNG. Since the highlands have unpredictable landslides because of unstable soil, the railway system could be implemented/piloted on the lowlands/coastal edges around PNG and then later moved up to the highlands on improvements on how to curb the soil erosion problems.
Our next door neighbors, Australia and Indonesia use toll road and railway systems and they’re really a bonus for their growth.
I don’t know why PNG hasn’t even figured this out yet!
The problem with the Okuk Highway and every other capital work project in PNG is that is no budget for maintenance.
Any fool can carry out capital works, but without a supplementary long-term financially secured maintenance program, whatever you build will eventually fail, whether it be the Okuk Highway or
any other capital projects. Look around you. The examples are all there.
Unfortunately, money put into immediately unused maintenance lines in the budget become the target of those who trawl through the budget looking for unused money to fund their own favourite projects.
Ultimately, the Highlands (Okuk) Highway was built to service colonial tea and coffee plantations, hence its route between Lae and Hagen. In the new world, the old highway does not service all the interests of the resource projects or their landowners. There is too much dependence on a single coast to highlands route. The most economical alternate highway is from Kopi port in Gulf to the highlands (via Samberigi). There are so many cost saving advantages.