Kumul Submarine Cable Network Project (KSCNP)

A boat that will land with submarine cable - Photo from Shutterstock

Kumul Submarine Cable Network Project (KSCNP)

This research reflects information available up until July 2021, it may not reflect developments after the date of assessment.

The Kumul Submarine Cable Network Project (KSCNP) is a project to establish a 5,457-kilometers submarine optic cable linking fourteen coastal provinces and the National Capital in Papua New Guinea (PNG). The first component is the Coral Sea Cable Project. The KSCNP is implemented by PNG DataCo Ltd, a wholesale subsidiary of Kumul Telikom Holdings and a State-owned commercial entity with concessional 85% (Page 4) loan financing from China through the EXIM Bank, totaling an estimated amount of US$270 million (K879 million). The laying of the cable was completed on June 2, 2020.

Project Background

At present, internet access remains relatively expensive: only about twelve percent of PNG residents are connected to the internet. The KSCNP aims to improving telecommunication services in the country, which currently relies on an inadequate infrastructure consisting of a combination of fixed lines, mobile wireless, VSAT satellite system, and microwave band services. In addition, the PNG government’s ownership of the cable will enable it to regulate the ICT sector, bringing the telecommunication costs down.

To address these concerns, PNG DataCo Ltd has been implementing a significant project to upgrade the national network and expand high-speed internet services by linking fiber optic cables through Guam, Sydney, Australia, and Jayapura, Indonesia. Two components of the project are implemented concurrently with different financing and implementation arrangements: the Coral Sea Cable project, supported by the Australian Government, and the KSCNP, supported by China. The successful completion of the KSCNP and the Coral Sea Cable projects will enable effective domestic connectivity and international submarine cable connectivity with Sydney, Australia, and Jayapura, Indonesia, delivering a minimum of 20 terabytes of data per second.

The Kumul Submarine Cable Network Project (KSCNP) is a project to establish a 5,457-kilometers submarine optic cable linking fourteen coastal provinces and the National Capital in Papua New Guinea (PNG). The first component is the Coral Sea Cable Project. The KSCNP is implemented by PNG DataCo Ltd, a wholesale subsidiary of Kumul Telikom Holdings and a State-owned commercial entity with concessional 85% (Page 4) loan financing from China through the EXIM Bank, totaling an estimated amount of US$270 million (K879 million). The laying of the cable was completed on June 2, 2020.

Project Background

At present, internet access remains relatively expensive: only about twelve percent of PNG residents are connected to the internet. The KSCNP aims to improving telecommunication services in the country, which currently relies on an inadequate infrastructure consisting of a combination of fixed lines, mobile wireless, VSAT satellite system, and microwave band services. In addition, the PNG government’s ownership of the cable will enable it to regulate the ICT sector, bringing the telecommunication costs down.

To address these concerns, PNG DataCo Ltd has been implementing a significant project to upgrade the national network and expand high-speed internet services by linking fiber optic cables through Guam, Sydney, Australia, and Jayapura, Indonesia. Two components of the project are implemented concurrently with different financing and implementation arrangements: the Coral Sea Cable project, supported by the Australian Government, and the KSCNP, supported by China. The successful completion of the KSCNP and the Coral Sea Cable projects will enable effective domestic connectivity and international submarine cable connectivity with Sydney, Australia, and Jayapura, Indonesia, delivering a minimum of 20 terabytes of data per second.

The KSCNP was one of the high priority projects included in the Framework Agreement on Development Cooperation between the People’s Republic of China and the PNG Government signed on July 8, 2016 when former Prime Minister Peter O’Neill visited China. The agreement led to the subsequent development and execution of a project financing agreement between PNG and EXIM Bank with actual project implementation starting in November 2018 with a three phase approach. The KSCNP was implemented over 17 months, beginning on November 17 2018 and ending its third and final implementation phase on June 2, 2020.

PNG secured a loan for the KSCNP project from China’s EXIM Bank for an estimated US$270 million (K879 million). The loan from EXIM Bank accounts for 85 percent of the project’s costs while the remaining balance of 15 percent was to be provided by the government of PNG. At the Provincial level, an additional US$56,423 (K200, 000) was contributed by the West New Britain Provincial Government to connect public institutions in its own province to the cable network. To date, West New Britain is the only province to undertake this arrangement.

There is an evident lack of transparency and accountability associated with this project: much of the documentation concerning planning, budgeting, expenditure, and reporting is not publicly available. The senior officers of key government agencies directly responsible for planning, supervision and management of the project, especially the Departments of Treasury and National Planning and Implementation and PNG DataCo, have refused to either meet with the researchers or provide vital information on the project. This makes it difficult to assess if this project complied with the country’s procurement policies and guidelines.

Without the actual project loan agreement, the amount of the loan obtained for the KSCN project is unclear. There are three different loan figures quoted in the social and printed media: US$270 (K879 million), according to the KCH official website; US$200 (K661 million) was officially announced by Hon. William Duma, State Enterprises and Investment Minister in August 2018; finally, US$279 million (K1 billion) was reported by a former PNG government advisor. It is difficult to ascertain if the project was completed as planned and within the loan-funded budget ceiling without vital project information.

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

Average Transparency Score:
2.5/6
  • Not Transparent
  • Transparent
Project & Contract Phase Project Information Score Response Link to Information
Project Identification Project owner PNG DataCo Ltd. Annual Planning Budget documents identifying PNG DataCo as project Executing Agency.
http://www.treasury.gov.pg/html/national_budget/files/2020/Volume%203B.pdf
Vol 3B – Public Investment Program for Statutory Authorities and Provincial Governments 2020-2024
Sector, subsector Telecommunications, State Owned Enterprise sector. https://www.kch.com.pg/key-impact-projects/telecommunications/
Project name Kumul Submarine Cable  Network Project. http://www.treasury.gov.pg/html/national_budget/files/2020/Volume%203B.pdf
Vol 3 – Public Investment Program for Statutory Authorities and Provincial Governments 2020-2024;
Project Location Kumul Submarine Cable network is a 5,457 kilometer domestic internet platform to link capitals of fourteen (14) coastal provinces. System 1 (Jayapura, Vanimo, Wewak, Madang, Manus, Kavieng, Kimbe and Kieta); System 2 (Madang, Lae, Popodetta, Alotau, Port Moresby); and System 3 (Port Moresby, Kerema and Daru). http://www.treasury.gov.pg/html/national_budget/files/2020/Volume%203B.pdf
https://www.kch.com.pg/key-impact-projects/telecommunications/
https://tech.pngfacts.com/2019/03/stable-high-speed-internet-expected-as.html
Purpose The project is in line with the country’s strategic development plan towards improving telecommunication services in PNG where it is operating from a poor infrastructure provided by a combination of fixed lines, mobile wireless, satellite visat systems and microwave band services. As such, this project is vital towards improving existing facilities and reducing high cost of internet locally through use of latest technology fiber optic to transmit data domestically and internationally. With improved performance and reducing costs of communication services it will facilitate broad economic growth nationally. http://www.treasury.gov.pg/html/national_budget/files/2019/Public%20Investment%20Program%20Volume%203B.pdf
https://www.kch.com.pg/key-impact-projects/telecommunications/
Project description Scope of work includes: construction of fiber optic cables linking 14 provincial capitals covering 5,457 kilometers, construction of respective cable landing centres, installation of electronic transmitting systems, installation of electricity power back-up systems to energize the cable network system, procurement of equipment, materials and supplies, feasibility studies, administration, supervision and coordination of the project. http://www.treasury.gov.pg/html/national_budget/files/2020/Volume%203B.pdf
https://tech.pngfacts.com/2019/03/stable-high-speed-internet-expected-as.html
Project Preparation Project Scope (main output) – Constructing 5,457 kilometers of sea cable to connect 14 provincial sites
– Procurement of equipment, materials and construction
– Feasibility study, survey and technical design
– Project advisory, supervision and management
Consecutive Government Annual Budget Plan, i.e, 2020.
https://www.treasury.gov.pg/html/national_budget/2020.html
Vol 3 – Public Investment Program for Statutory Authorities and Provincial Governments 2020-2024
Environmental impact Not available
Only assurances given by PNG DataCo Ltd period. that there is no environmental effect from the Kumul Submarine Cable Network that has been laid in the provinces including emissions of electromagnetic radiation and has real, health or environmental hazards or risks.
https://www.telecompaper.com/news/pmg-dataco-denies-environmental-effects-of-kumul-cable-1344671
https://www.looppng.com/business/no-radiation-kumul-submarine-cable-network-kcsn-91333
Land and settlement impact During the website’s latest update, no information was available publicly.
Contact details “PNG DataCo
Level 1, Wokples Bld, Savanna Heights
Waigani,
P O Box 1744, Port Moresby
Website: http://www.pngdataco.com
General Line: +675 77522093 “
https://www.pngdataco.com/datacentre/
Funding sources – EXIM Bank, People’s Republic of China
– Preferential Buyer Credit Loan Agreement on PNG National Submarine Fiber Cable Network project included on collaborative partnership agreement signed between the 2 countries in July 2016.
https://www.kch.com.pg/key-impact-projects/telecommunications/
https:/www.fmprc.gov.cn/mfa_eng/wjdt_665385/2649_665393/t1378713.html
Project Budget Total project cost estimated at USD270 million (K879 million) – EXIM Bank loan 85% and PNG Government counterpart financing 15%.
Funds appropriated through annual budget i.e 2020 K125 million allocated under PNG DataCo, and K35 million allocated under Kumul Consolidated Holdings for Kumul Submarine Cable project.
https://www.kch.com.pg/key-impact-projects/telecommunications/
https://www.treasury.gov.pg/html/national_budget/2020.html
vol 2D Estimates of Revenue and Expenditure for Statutory Authorities, Provincial Governments, Trust Accounts; under PNG DataCo, 2016-2018 under Kumul Consolidated Holdings.
Project budget approval date Project started in October 2018 following NEC approval for EXIM Bank Loan financing and arrival of 5,600 KM submarine optic cable from China National Machinery Import and Export Corporation. Phase 1, system 2 connecting Port Moresby, Alotau, Popodetta, Lae and Madang expected to be completed by February 2019. Phase 2, system 1 connecting Madang, Wewak, Vanimo, and New Guinea islands anticipated to be completed by end of 2019. https://www.kch.com.pg/key-impact-projects/telecommunications/
https://www.treasury.gov.pg/html/national_budget/2020.html
Project Completion Project status (current) With System 3 (Port Moresby, Kerema, Daru) complete, project moved into system integration, testing and commissioning as of 2nd June 2020. https://www.facebook.com/pngdatacolimited/photos/the-landing-od-kumul-submarine-cable-network-kscn-in-western-province-on-tuesday/687839235342850/
Completion cost (projected)
Completion date (projected) Phase 1 connecting Port Moresby to Madang with landing stations in Alotau, Lae and Madang expected to be completed by February 2019; Phase 2 connecting Madang to Wewak, Vanimo, Manus, Kavieng, Kimbe, Rabaul and Kieta expected to be completed by end 2019. https://www.kch.com.pg/key-impact-projects/telecommunications/
Scope at completion Project was completed with the 3rd phase or system 3 covering Port Moresby, Kerema and Daru in June 2020 instead of the earlier anticipated date of year’s end in 2019 https://www.facebook.com/pngdatacolimited/photos/the-landing-od-kumul-submarine-cable-network-kscn-in-western-province-on-tuesday/687839235342850/
Reasons for project changes During the website’s latest update, no information was available publicly.
Reference to audit and evaluation reports During the website’s latest update, no information was available publicly.
Procurement Procuring entity Kumul Consolidated Holdings https://www.kch.com.pg/what-we-do/our-portfolio/kumul-telikom-holdings-limited/
https://www.treasury.gov.pg/html/national_budget/2018.html
vol 2D Estimates of Revenue and Expenditure for Statutory Authorities, Provincial Governments, Trust Accounts; under PNG DataCo, 2016-2018 under Kumul Consolidated Holdings.
Procuring entity contact details Kumul Consolidated Holdings
3rd Floor, Harbour Side West, Stanley Esplanade
P O Box 320, NCD, PNG
Phone (675) 3212977, (675) 3212019
https://www.kch.com.pg/what-we-do/our-portfolio/kumul-telikom-holdings-limited/
https://www.facebook.com/pngbreakingnews/posts/2220534788055127?comment_id=2224093614365911
Procurement process During the website’s latest update, no information was available publicly.
Contract type – Shipping transportation, French Vessel Ile De Re.
– Cable construction/laying, Optic Marine Services
– Management contract, Huawei Marine
https://www.looppng.com/tech/kumul-cable-lands-arob-92235
Contract status (current) Closed https://covid19.info.gov.pg/index.php/2020/06/06/prime-minister-launches-sea-cable-system-in-port-moresby/
Number of firms tendering During the website’s latest update, no information was available publicly.
Cost estimate During the website’s latest update, no information was available publicly.
Contract administration entity PNG DataCo https://www.pngdataco.com/datacentre/
Contract title During the website’s latest update, no information was available publicly.
Contract firm(s) 1) Huawei Technologies
2) China National Machinery Import and Export Corporation
3) Optic Marine Services
4) French Vessel Ile De Re
The National, March 2020: https://www.thenational.com.pg/submarine-cable-network-a-milestone-achievement-for-png-china/
Loop Technologies May 2020: https:/www.looping.com/tech/kumul-cable-ands-arob-92235
Contract price During the website’s latest update, no information was available publicly.
Contract scope of work – Project supervision and management
– Supply of submarine optic cable
– construction and laying of 5,457 kilometers of optic submarine optic cable in 14 provincial capitals
– technical design and procurement of materials.
– Transportation and shipping support services for cable laying.
The National, March 2020: https://www.thenational.com.pg/submarine-cable-network-a-milestone-achievement-for-png-china/
Loop Technologies May 2020: https:/www.looping.com/tech/kumul-cable-ands-arob-92235
https://www.kch.com.pg/key-impact-projects/telecommunications/
Contract start date and duration – 2018, exact date hard to figure out but anticipated completion end of 2019;
– Project completed June 2020; reasons could relate to inadequate/timely release of counterparts.
http://www.treasury.gov.pg/html/national_budget/files/2019/Public%20Investment%20Program%20Volume%203B.pdf
http://www.treasury.gov.pg/html/national_budget/files/2020/Volume%203B.pdf
Vol 3B – Public Investment Program for Statutory Authorities and Provincial Governments 2020-2024;
Implementation Variation to contract price During the website’s latest update, no information was available publicly.
Escalation of contract price During the website’s latest update, no information was available publicly.
Variation to contract duration During the website’s latest update, no information was available publicly.
Variation to contract scope During the website’s latest update, no information was available publicly.
Reasons for price changes During the website’s latest update, no information was available publicly.
Reasons for scope & duration changes During the website’s latest update, no information was available publicly.

Kumul Submarine Cable Network Project (KSCNP)