Learn lessons from PMIZ


I WANT to clarify some challenges about the Pacific Maritime Industrial Zone (PMIZ).
Despite the negative connotations on the project, the Department of Trade, Commerce and Industry has been operating with frequent changes in ministers and secretaries, which has taken the “bull by the horns”.
That placed some challenges to deliver an international standard port designs within two years.
It all started from a pledge by the Chinese government in 2008 to provide a concessional loan funding of about US$250 million (K890.71 million) to the Papua New Guinea Government to identify three beneficiary projects, which the Government opted for the University of Goroka’s residential complex, the integrated government information systems and PMIZ.
For the case of PMIZ, it was a call by the Fishing Industry Association through the National Fisheries Authority to the Department of Trade, Commerce and Industry to have such a facility to boost the country’s competitive edge over global processors of tuna products.
About 215 hectares of State land under RD Tuna Canneries Ltd was transferred back the State at about K4 million to host the PMIZ.
To commence the process of obtaining the Chinese concessional loan, the PNG Government was required to enter into a general design, build and supply contract agreement with the Chinese State Enterprise in 2010 to use US$95 million (K338.47 million) under the 22 per cent GoPNG counter funding arrangement.
In 2011, the Government and the China Exim Bank sealed the deal.
However, the designs stage was hampered due to lack of geotech drilling data within the site and also the prevailing protest by the landowners.
The Department of Trade, Commerce and Industry challenged all the 11 leaders who were against PMIZ with the original writs of summons served in July 2015 to restrain them.
Unfortunately, the first and the second defendants, upon receipt of summons, perished within the same month.
One died in a car accident in the United States of America and the other of natural causes in Madang.
The third defendant lost his Sumkar seat in the 2017 national general election.The court upheld the defendants constitutional rights to protest until the “cows come home” for PMIZ and ordered the State to pay costs to each defendant.
That was the verdict.
It came with clear message to all impact communities not to interfere unnecessarily with the implementation of PMIZ.
The first design done unilaterally by China to accommodate a budget of US$95 million to deliver a small domestic port for vessels under 20,000 deadweight tonnage was rejected for a breach of contract agreement for the design and delivery of an international port.
The Department of Trade, Commerce and Industry then sat with the China Design Institute No.2 in China to replot into AutoCAD (a commercial computer-aided design and drafting software application) the general parameters and specifications based on geotech data to redesign 260 meters port to accommodate Panamax vessels of 40,000 deadweight tonnage.
About six months later, 14 boxes of detailed designs on PMIZ were delivered for evaluation and acceptance.
Under the political direction, Kumul Consolidated Holdings Ltd was tasked to review the designs to ensure compliance with PNG and international standards.
Kumul Consolidated Holdings then engaged AECOM Ltd of Australia to review and it came up with a minor input to add steel and bricks to meet Australian standards.
The new bill of quantity and costs, including allowable contractor’s margins for a new budget of US$156 million (K555.8 million) was also revalidated.
By then, only US$30 million (K106.89 million) of China Exim Bank loan out of the US$95 million facility was drawn when it expired at the end of 2016.
Obviously, the new costing of US$156 million would require a new loan application to meet the necessary China Exim Bank’s requirements.
The onus is on the Government to reapply for a new loan. It is over four years since the design was re-scoped and delivered by the Department of Trade, Commerce and Industry.
The lessons learned under the frequent changes in the department’s minsters and secretaries will always affect the smooth implementation of a project such as PMIZ.
It will be the poor taxpayers who will meet the cost of non-performing loans against new inexperienced entities prone to double the engineers’ estimate to start from ground zero and get nowhere.

PMIZ 2016 Design Team