In 2007, the port sector of Papua New Guinea (PNG) comprised 22 declared ports and many small wharves, jetties, and landing stages. However, only 5 of these ports had appropriate infrastructure and received international and coastal traffic. Lae Port was the most important port for international and domestic trade. To address the increasing congestion and ship waiting times, a feasibility study requested by the government from the Asian Development Bank (ADB) recommended the urgent expansion of Lae Port.
The Lae Port Development Project evolved against this backdrop. Financed by ADB initially with a $154 million package of loans and grants approved in December 2007, the project built on an earlier Lae port project, which was reduced in scope due to unresolved land ownership issues and lower-than-expected traffic levels. It had 3 key components: (i) port facilities improvement, (ii) resettlement and livelihood support, and (iii) gender-responsive HIV/AIDS prevention programs.
Completed as planned, the port facilities reflected a vision for Lae Port to become a regional transshipment hub that caters to port-related industries. They comprised: (i) a 700 x 400 meter (m)–tidal basin, with a dredged depth that can accommodate vessels with an overall length of 200 m, a beam of 32.2 m, and a fully laden draft of 12 m; (ii) a multipurpose berth, 240 m long and 45 m–50 m wide; and (iii) a container terminal, complete with all ancillary facilities.
Defects in the slope protection works were however detected prior to the closure of the defects−liability period. Corrective actions were undertaken by the contractor at its expense. Higher-than-expected siltation levels were also observed, but this had stabilized after a year.
Other shortcomings or deviations from the appraisal plans were also noted. For instance, an alternative small-craft landing site for the Labu people affected by the project was not developed because of unresolved land issues. As an interim measure, the existing small-craft landing area was upgraded, and a new basin was constructed. Instead of relocating the residents of the area dredged for the tidal basin, a cash assistance package and in-kind transitional support were provided to allow people to self-relocate to their chosen areas. The livelihood program for displaced persons was subsequently streamlined and focused on teaching income-generating skills. An HIV/AIDS awareness campaign was undertaken but only 2 of the 5 planned clinics had been established.
A coastal shipping services has been using and operating the facilities on a 3-year lease. Nevertheless, a long-term arrangement is being worked out for the PNG Ports Corporation Limited to engage in a public–private partnership to operate the container terminal under a concessional agreement.
The project encountered a 2.5-year completion delay and a 102% actual cost increase from the appraisal estimate. It was rated less than successful by ADB’s Pacific Department. The Independent Public Business Corporation was the executing agency. A project management unit implemented the project, in association with the Morobe Provincial Government, the implementing agency for livelihood, and the Lae Chamber of Commerce, the implementing agency for HIV/AIDS.