Manila, July 4, 2006 AEST (ABN Newswire) - Two loans totaling US$53 million will scale up the impact of ADB road sector operations on Papua New Guinea's (PNG) economic and social development.
The loans are the first ones to PNG's road sector since 1999. They will finance the upgrading and rehabilitating of 270 kilometers (km) of roads in the Highlands region, in addition to 338 km of roads financed by a $63 million Asian Development Bank (ASX: ATB) loan approved in 1999 for the Road Maintenance and Upgrading project.
The road system in the Highlands - home to the highest proportion of the poor in the country - constitutes the backbone of the economy. The condition of these roads, however, is poor, mainly due to design flaws and lack of maintenance, leading to high vehicle operating costs and long travel times. Mountainous, geologically unstable, and battered by torrential rains, road construction in these areas is also costly.
As a result, local communities are isolated. About a million people in the region live within a day's walk of the road, and significant business opportunities are lost. The situation has led to increased social unrest and deteriorating peace and security.
"Poor road infrastructure is identified as a major constraint to the Highlands' and the country's economic growth and social development," says Cai Li, Project Specialist of ADB's Pacific Operations Division.
The new loans will, improve road access to more than 600,000 people in the five Highlands provinces, reduce their travel costs and time to major commercial and service centers, and enable them to tap economic and social opportunities in the Highlands.
To prevent the spread of sexually transmitted infections and HIV/AIDS associated with improved transportation, the loans will also finance training and awareness campaigns.
The two loans consist of a $35 million loan from ADB's ordinary capital resources (OCR) and an $18 million loan from ADB's concessional Asian Development Fund (ADF). The OCR loan carries a 24-year term, including a grace period of 4 years, and an interest rate to be determined based on ADB's LIBOR-based loan facility. The ADF loan carries a 32-year term, including a grace period of 8 years, with interest charged at 1% per annum during the grace period, and 1.5% per annum thereafter.
The Government will contribute $25.07 million toward the project's estimated total cost of $78.07 million. The Department of Works will continue as the executing agency for the project, due for completion in December 2009.
Contact
David Kruger
Email: dkruger@adb.org
Tel:+632 632 5204; +63 916 767 3671
Graham Dwyer
Email: gdwyer@adb.org
Tel:+632 632 5253; +632 898 3413; +63 915 741 4363
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