Kumul Submarine Cable Network Project (KSCNP)

Project Structure

The KSCNP was one of the high priority projects included in the Framework Agreement on Development Cooperation Agreement signed between the Peoples’ Republic of China and the Government of PNG dated 8 July 2016 when former Prime Minister Peter O’Neill visited China from 5-10 July 2016. This led to subsequent development and execution of project financing agreement between PNG and EXIM Bank with actual project implementation starting in November 2018 with a 3-phase approach. The KSMCP was implemented over a 17 month period starting 17 November 2018 and came to a conclusion on its third and final phase of the implementation on 02 June 2020. The KSCNP is currently in its system integration, testing and commissioning stage.

PNG secured a loan from China’s EXIM Bank for an estimated US$270 million (K879 million) for the KSCNP of which China’s loan accounts for 85 per cent whilst the remaining balance of 15 per cent to be meet by PNG. At the Provincial level, an additional K200, 000 has been contributed by the West New Britain Provincial Government towards meeting cable network establishment associated costs in its own Province.

Issues

There is a clear lack of transparency and accountability issues associated with this project in terms of documentation in relation to planning, budgeting, expenditure and reporting. The senior officers of key government agencies directly responsible for planning, supervision and management of the project, especially, Departments of Treasury, National Planning and Implementation, and PNG DataCo have refused to either meet with or provide the researchers with vital information on the project, making it difficult to assess if the country’s procurement policies and guidelines are being complied with in the procurement of goods and services for the project.

Without the actual project loan Agreement, it is not clear as to how much loan was obtained for the KSCN project as there are three (3) different loan figures being quoted in the social and printed media; firstly, US$270 (K879 million) referred to earlier based on KCH official website, secondly, US$200 (K661 million) officially announced by Hon. William Duma, State Enterprises and Investment Minister in August 2018 and thirdly, an amount of US$388 (K1 billion) reported by an independent researcher. Without vital project-related information, it is also difficult to ascertain if the project was successfully completed as planned and within the loan funded budget ceiling.

The information provided by the Treasury Department on the annual budget estimate only presented mere information on annual actual allocation of funds and projected budget allocations for the immediate future with a brief background on the projects lacking quality information on the status of project implementation including loan drawdowns and their financing terms, other stakeholders that are involved in project implementation and change of scope if any.