Dionisia Tabureguci





Over 420,000 people in Papua New Guinea’s remotest rural communities will soon experience new or improved telecommunications services through the country’s new US$15 million (K45.7 million) Rural Communications Project.
This follows successful talks between officials of the PNG government and the World Bank over its funding.
“Soon after cabinet approved the submission (of the project) on 14 May 2010, a State Negotiation Team travelled to Sydney to negotiate a US$15 million loan with the World Bank,” said PNG’s telecommunications Minister Patrick Tammur.
“I’m happy to announce that the negotiations for the Financing and Project Agreements for this project were successfully concluded on 21 May 2010 for execution between the World Bank and the Minister for Treasury and Finance. 
“As the State Team readily acknowledged, the successful negotiation of the loan is only the first phase of the process. A lot of work needs to be done for the successful implementation of the project,” Tammur added.
The project is a product of extensive and at times controversial reforms undertaken within PNG’s telecommunications industry over the last five years, which has seen the gradual freeing up of its communication market, the entry of new players to provide mobile telephone services and the reduction in call costs.
With the penetration now by both the incumbent and its new competitor into the previously under-serviced areas of PNG, the government has initiated the final stages of Phase One of its two-phased liberalisation process—he development of rural telecommunications.
This intent to develop rural communication in PNG is now packaged as the Rural Communications Project, to be funded by the World Bank.
The loan is going to PNG in three components—the first and second of those as early as early as August, according to Tammur.
The project will assist rural communities in that it will see the setting up of a Universal Access Scheme (UAS) to subsidise the provision of telecommunications services to remote PNG, otherwise seen by commercial telecom operators as not cost-effective to operate in.
Improved access
World Bank states the project’s objective as facilitating “improved access to affordable and reliable telecommunications infrastructure and services in rural and remote areas of PNG…through a sustainable and transparent public-private funding mechanism”.
“The project will provide access to telecommunications to over 420,000 rural Papua New Guineans, and facilitate public Internet access in up to 60 district centres,” the World Bank documents said.
“In addition, it will demonstrate the practical operational procedures and financing mechanisms for the UAS Fund to be replicated for future UAS projects once that Fund is fully operational and once it starts to collect industry levies.” 
The World Bank documents show that bulk of the loan—US$13.5 million—will go towards the project’s second component or the funding of ‘UAS Demonstration Projects.’
It’s a stage that will involve existing and aspiring telecommunication service providers via a competitive tender process. 
“These demonstration projects will test the UAS funds management mechanism as well as the governance, selection, approval and monitoring and evaluation systems,” the World Bank revealed.
The proposed three sub components, according to the World Bank, are:
(i) Demonstration Project in the Chimbu Province which will benefit up to 175 000 people. This includes around 85,000 people living in areas where a subsidy would accelerate service delivery. At least 90,000 people live in areas that would receive no service without a one-time subsidy, the World Bank said. 
 (ii) Demonstration project in East Sepik Province, which will benefit up to 245,000 people. It involves acceleration of services provision to 70,000 inhabitants. The remaining 175,000 people live in locations that would not be attractive enough for private operators to go without a one-time subsidy, which the UAS will fund.
(iii) A third Demonstration Project for Internet service in district centres will provide a one-time capital subsidy to prospective bidders to establish public Internet access facilities (Internet cafes) in up to 60 district centres (with a population catchment area of 4.9 million), and subcontract with local entrepreneurs to operate Internet cafes, possibly on a franchise basis.
These public access Internet facilities are expected to be commercially run, in the interests of financial sustainability. By providing access to information and, potentially, public services, to a large population catchment area, they are expected to contribute to local economic and social development and support local business development.”
The remaining portion of the US$15 million loan will be used for technical assistance provided to the National ICT Authority, NICTA (US$1 million), primarily for the setting up of a UAS Secretariat in NICTA to manage projects financed under the UAS Fund; as well as policy and project management support (US$0.5 million) towards the Department of Communications and Information in project administration.