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Walk of a lifetime

China (and its workers) will rebuild highlands highway


PAPUA NEW GUINEA IS CLOSE to securing over $3 billion in a loan from China to rebuild and rehabilitate road infrastructure throughout the country.

Under a memorandum of understanding, China's Exim Bank will provide a 'soft loan' that will be repaid over a 30 year period.

PNG's prime minister Peter O'Neill announced the Chinese government loan in Port Moresby this week.

Mr O'Neill says his works minister Francis Awesa has struck a deal with Chinese government and Exim bank officials, who agreed to lend over $3 billion dollars.

He says most of the money will be used to fund and rehabilitate the country's deteriorating economic lifeline, the Highlands Highway.

The highway has been deteriorating as heavy traffic moving cargo and supplies for the LNG project has added more pressure to the road network.

Peter O'Neill says rebuilding road infrastructure is part of his government's policy to improve service delivery.

He says under the loan agreement, Chinese companies will be contracted to rebuild the highlands highway and construct new roads.

"With the Exim bank loans that we have been getting in the past, they prefer Chinese contractors,” Mr Oeill said.

“The Chinese loans are always … conditional to the fact that Chinese companies do the roads and the contract work.

“Many of these companies are world class companies, and they have got experience in many of these infrastructure projects all round the world.

“We are going to screen the Chinese companies properly, so that they are not just fly by night operators.”

Mr Awesa also backed Chinese firms to rebuild run down road networks in the country.

"They come good at this time, they have said any amount up to $10 billion we are more than happy to give,” Mr Awesa said.

“That's a vote of confidence, in this government and we need to move fast on this one.”

The final loan agreement is expected to be signed within two weeks time in Port Moresby.


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Mrs Barbara Short

Thanks Bernard, for your comments. It's folk like yourself that give me confidence that PNG will slowly develop, despite all its problems.

Also its good to hear some positive comments about the Chinese in PNG. I live in an area of Sydney dominated by Chinese and I know there are many good Chinese and they must not be stereotyped.

I also hope that it is not an election gimmick.

Bernard Yegiora

Nice comment Harry.

I have been travelling and driving on the highlands highway for a long time.

The problem areas are as mention by Peter in Simbu Province. Harry gave a good description as well.

The other sections in the other provinces needs to be widened.

In may, when I was travelling up to Kundiawa, I realized the influx of big trucks carrying heavy loads heading towards the LNG project area. Trans Nuigini Wonderland, Mapai, IPI, East West Transport, Whagi valley and there is a new one with a catchy name but I can't recall.

The Chinese can make roads. I travelled on the main highway from Changchun city in Jilin Province to Harbin City in Heilongjiang Province next to the Russian boarder.

The road was in a way similar to the Pacific Highway from Brisbane to the Gold Coast. The only difference being the big concrete slabs that were used to elevate the road off the ground because of water and the unevenness of the terrain.

The need is there for major work to be done on the highway. Despite the negative publicity from the Zambian mine case the Chinese have reputable construction companies like COVEC and China Railway Construction who are already here and working on Asian Development Bank funded road projects. Thus, the Chinese have the capability to deliver.

In terms of their own work force. I have in my research so far interviewed 3 young Papua New Guinea men who are working with Chinese wielders and builders from the Ramu Nice Company.

These Chinese workers also with their PNG apprentices were given a small contract to build a big warehouse for storing Cocoa for Agmark Limited next to my house. They told me that they have picked up a lot of skills from the Chinese workers.

All three of them were grade 10 drop outs with no formal technical skills training. They said the Chinese unlike Westerners were not interested in diplomas or certificates but were interested in whether or not they can learn and perform competently.

PNG already has a lot of debt with IMF, ADB, and the list goes on.

Thus, from my point of view, I have a positive feeling that this could be the project of the decade. It will really change PNG. But hope it is not just another election gimmick aimed at bolstering the current regime's chances of regaining power.

Harry Topham

Peter - I don’t know whether it’s the same section of road you referred to but when a young fella travelling along a section of road between Kundiawa and Kerowagi I had a very rather scary moment when whilst hurtling along a section of road we came to a screeching halt as the road in front of us disappeared.

Getting out and have a look we noticed that the forward section of road had slipped down some 3 metres.

Perplexed we though it was a landslide but looking upwards we noticed that all the trees above were still standing.

With some trepidation wondering that at any time we might become a toboggan and end up in the adjoining river, we proceeded downwards to the road which was still in situ and trundling forward very very slowly we proceeded along some 3 kms where we were confronted with the end of the slip zone - a dirt cliff face.

Realising that we were trapped we then tramped of the nearest village to engage some help.

With our new friends we returned to the scene and after some digging, yodelling and shoving we eventually got the truck upwards to the original road then continuing onwards to Kerowagi.

Strangely now one asked for any rewards, things were different back then I guess.

I think the problem has something to do with the types of soil types which are reactive clays having high plasticity levels which after super saturation turn to mush when affected by external forces which can in PNG be from earthquakes or perhaps in this case heavy vehicle traffic.

Gravity then takes over when the sub soils in their new plastic state then lose their natural adhesion to underlying bedrock
We have similar problems along the lower foothills of the adjoining Blackall ranges, which designated as being landslip zones.

I recall several years ago when doing an inspection of a property in this area I commented to a local farmer that the site need clearing of unwanted pest trees whereby he commented sagely "Light machinery only”.

Curious I asked why to which he related a story that post WWW1 the area had been developed for soldiers settler farmers who cleared the slopes and planted banana crops however after very heavy rainfall they awoke one day to find that their houses had started to slide down the slopes.

Needless to say the whole area was abandoned although some relics of the original houses still remain today.

Lindsay - I would have to agree that this proposal does have all the hallmarks of colonisation by chequebook although it is strange that this issue has only arisen during the recent and rather frenetic pre-election campaign period and as such may be just pork barreling.

Lindsay F Bond

Stemming from, tho separate from an 'uggins idea, are not many postings reflective of apprehension of 'take-over by wealth'. How can an earlier Australia escape a like review, bearing in mind a 2007 loss of bridges in Oro Province?

Peter Kranz

Go west out of Kundiawa and about 2km up the hill and you come to a sharp left turn around the elbow of a ridge.

There is an underground drainage problem here which causes wash-aways and frequent landslips, and is often the cause of the highway being blocked.

Best solution is probably a new route to the south of the Wagi running up to a new bridge crossing before Minz. This has already been surveyed.

Families are already planting gardens along the route in anticipation.

Build this into the proposal and you'll have a longer-lasting road, but a frw more compo claims.

(Stepdad is a Simbu Dept of Works foreman, so I plead an interest and inside knowledge.

Paul Oates

Absolutely Harry. I have nothing but respect for the achievements of the Chinese in completing that railway and other construction projects of this magnitude.

However they didn't have to cope with PNG 'conditions' that they don't at the moment control?

Also, even if the cost is K3m a kilometer and I'll lay a bet it will be far more, whose going to manage and pay for ongoing maintenance?

harry topham

Most of far north Queensland in particular the road from Cairns north to Cape York remains a badly formed dirt track and the poor souls who live there are still reliant on sea transport for those parts of the year during the wet season when the road is closed to vehicle traffic.
The result very high costs of living due to maritime shipping costs.
So maybe we too can get some of this cheap moola and get this road finally finished?
To the highlands hwy, simple arithmetic really, road already formed, divide the length (700kms) by 3 million kina by equals $4.3 million/km, sounds a bit expensive I would have thought, unless the engineers have included compensation factors AND Government consultancy fees in the brief.
The Chinese Government has completed some pretty remarkable construction projects over recent years.
The Qinghai-Tibet railway link is a good example of such as it is quite a remarkable achievement of modern engineering as is passes through some difficult geographical features at 5,000 metres ABSL as well as traversing areas affected by permafrost.
So having the required expertise so gained, the little old Highland Hwy should be quite a breeze to them if constructed to the same standards as this project.
Be curious to know how much that additional 815kms length of railway eventually cost them financially and what also was the human cost in life for building this monument.

Pauil Oates

Crickey Harry. You're not suggesting that there could possibly be any ulterior motives about this announcement are you?

The Environmental Impact Statements will of course all be carried out in an efficient, transparent and satisfactory manner.

Any unnecessary vegetation, timber, err... trees that need to be removed will just be disposed of in the usual thoughtful manner.

Necessary negotiations with landowners to resume any land required or to access raw materials will be conducted in an appropriate and sensitive way as has been the case in the past. Compensation will be suitably negotiated.

There won't therefore be any need to hire lowly paid and disgruntled police to actively protect foreign workers and equipment. Road blocks, armed holdups, pilfering and unofficial tolls will be a thing of the past.

Any contracts that don't require highly specialised labour will of course all be open to public tender.

Finally, no one will benefit from hidden kickbacks and untoward activities. That's a 'given' surely.

err... what's that you say? Yep! All pigs are saddled and ready to fly.

harry topham

If true that this matter is not just another fairy tale, one would have thought that a project of this magnitude and high cost would have been put out to tender after the necessary preliminary feasibility studies, engineering details and costs had been completed beforehand.
Before those involved start sticking their beaks into the new honey pot a note of caution should prevail in that the nectar on offer might also contain unseen contaminates.
Good deal for the Chinese government though, true boomerang aid with open ended contracts having added value and vertical integration flowing one way northwards.
Perhaps it is not such a good deal for PNG as the opportunity costs may outweigh the perceived benefits offered.
Knowing the Chinese way of doing business the PNG government could be advised to read the fine print of the loan to establish the particulars of the interest charges applicable in particular whether such rates are fixed or variable and more importantly how the necessary funds required to repay the loan are to be sourced into the future.

Mrs Barbara Short

An excellent article, Peter. It needs to be read by all PNGians.

I notice that the Chinese have ways of controlling their loans so that local corrupt officials cannot get their hands on the money, which is good.

But it also mentions that often what they do is "poor quality" with built in obsolescence.

It would probably be a good idea if PNG sent a group of its own civil engineers over to Africa to have a look at the type of work that the Chinese have been doing there.

The Highlands Highway is such an important part of PNG's infrastructure that it needs to be world class.

Peter Kranz

Before coming to a conclusion, read this.

"At Chinese-run mines in Zambia’s copper belt they (locals) must work for two years before they get safety helmets.

"Ventilation below ground is poor and deadly accidents occur almost daily.

"To avoid censure, Chinese managers bribe union bosses and take them on “study tours” to massage parlours in China.

"Obstructionist shop stewards are sacked and workers who assemble in groups are violently dispersed. When cases end up in court, witnesses are intimidated."

Joe Wasia

Its good that a loan has been secured but the problem is memoredium of agreements between the the two governments.

As everyone knows the quality of their products are very low. If the government of PNG agreed to contract only Chinese firms to build 3 billion dollors worth of roads and bridges over the 30 years period its wrong.

We want quality. The ministers and PMs must not rushing and pushing for such important agreements.

Mrs Barbara Short

The Chinese Government has a long history of carrying out capital works projects in various developing countries throughout the world over many years.

The PNG men, some who write for this blog, who are at present studying various courses in China, should have the ability to enquire into the success or failure of these projects and assess any problems that may have arisen in the developing countries during the construction periods.

The Chinese have a vested interest in any country that may be able to supply them with raw materials needed for their industrial development. They obviously believe that this loan and infrastructure project will have mutual benefit.

It is a pity that they choose to bring in their own Chinese labour force to carry out the project but that is probably part of the conditions of the loan.

The Chinese have to also consider that the loan may never be fully repaid due to "the mishandling of funds" in PNG.

Tony Flynn

The road Lae Bulolo was built by the Chinese. The road is now crap. Should I blame the Chinese for bad construction, the Government for bad / no maintenance or do I blame MMJV for super heavy loads of mining equipment and supplies?

Trevor Freestone.

So many problems come to mind when hearing this apparent rushed proposal.

Have any plans been drawn up or surveys undertaken allowing actual costings of proposed projects? It is not good enough to just pull a figure out of the air especially when it will effect the nation for thirty years, long after the current government no longer exists.

It seems that part of the deal is to use Chinese labour in large numbers instead of willing Nationals many of whom have had excellent experience in maintaining the roads only to be restricted by lack of funds.

One can imagine the trouble in many parts of the country as local people who are desperate for work to enhance their living conditions watch helplessly as the Chinese earn good money which they will eventually take back to China. This is one of the criticisms of Ausaid with their aid being referred to as Boomerang aid.

One can foresee the Chinese next step being the establishment of an army base with their soldiers protecting their investment with no regard for the rights of local villagers.

I agree with Paul nobody seems to be aware of or cares about what is happening in PNG.

Surely if the resource sector is destroying the roads they should be held accountable and should be the main source of funding. Similarly the income from PNG's resources should have and still can fund such major work if managed properly.

Every one seems to be ignoring history and has forgotten how such a large sum of money would leave the flood gates open for corruption. Obviously in the past overseas mansions have taken priority over local infrastructure.

Alex Harris

And there is no reason for a lot of foreign workers on this. It would be a perfect opportunity for the Chinese to build bridges (so to speak) with the people of PNG. A perfect opportunity for training and employment of nationals that would bring as much if not more mutual benefit than the road itself.

Paul Oates

Convention appears to be being cast out the window yet again. A caretaker government is not supposed to make any new decisions until the new government is sworn in.

As for the ability to effectively assess and evaluate foreign workers and influence... um... exactly where and when has that happened previously?

The scale of this project is not something too many people might be able to comprehend. The scale and number of 'overseas' workers who might be required to undertake this project and the 'long term' requirement for maintenance might also be hard to anticipate.

Is there no one who is actually awake in our region?

Colin Huggins

Well this should be very interesting. Trying to be politically correct, seems like a take-over by stealth.

Will any PNG nationals be employed? Will the PNG government have any control? If so, what? I await with bated breath the final communique and so should all PNG nationals.

Should be a very interesting enterprise, no doubt watched very carefully by the Embassies of Australia, New Zealand, Indonesia, the USA, the UK, Malaysia, Japan and Singapore, and other countries with diplomatic ties.

Three billion, and maybe ten billion is an awful lot of money to be the throwing around, isn't it?

Mrs Barbara Short

As members of Parliament, Ministers and Prime Ministers and other parliamentary figures may "come and go" after elections I hope that some overall Infrastructure Committee has been set up to oversee this project from start to finish.

My mind boggles at all the things that could go wrong during such a project in PNG. This committee should be able to foresee these problems and help overcome them.

Also PNG Civil Engineers need to be given the role of checking all these Civil Engineering works that are being planned by the Chinese.

I hope the Finance Department and Reserve Bank also have in place the necessary controls for handling a $3 billion loan. It is a lot of money.

A project of this size has to be carefully considered by all parties involved and it is a pity that the government feels it has to sign the contract during an election period. Just my thoughts, tasol.

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