Western Pacific University Project

Source: INA Staff

Western Pacific University Project

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

On January 10, 2013, PNG and Chinese representatives signed an Economic and Technical Cooperation Agreement (ETCA) which included stipulations for K23 million (RMB 70 million) of Chinese funding for projects in PNG, including Western Pacific University (WPU), to be located in Ialibu in the Ialibu-Pangia District of the Southern Highlands Province. The WPU project was approved by the GoPNG on April 24, 2013. It was subsequently drafted, and sponsored by then Prime Minister Peter O’Neill on October 7, 2013, before receiving authorisation from the National Executive Council on October 23, 2013 to be tabled as a Bill in Parliament. The Western Pacific University Act 2014 was passed by the PNG Parliament on August 28, and certified into law on November 8, 2014.

Chinese involvement in the project is governed by four agreements signed between the Chinese and PNG governments. The plan was to develop the project in three phases over a seven-year period, at a full cost of US $179.8 million (K604 million). Phase One was initially scheduled for 2017–18 with the first intake of students planned for 2018, but the first class was later deferred until 2021 due to delays in formalizing land acquisition for construction and Covid-19 restrictions on the movement of workers from China to PNG.

As of the end of 2021, Phase One was still on-going. While PNG-funded parts of Phase One were completed by the end of 2020, an INA site-inspection in August 2021 found that only 10 percent of the Chinese-funded portion of the project had been completed. Between 2014 and 2021, GoPNG spent US $33.7 million (K113.2) on Phase One, while the PRC spent US $2.98 million (K10 million). The details and funding breakdown of Phases Two and Three is still unclear.

Management Structure

On behalf of the GoPNG, the Department of Higher Education, Research, Science, and Technology (DHERST) is the government agency taking the lead in overseeing, planning, and implementing the WPU Project. Seladi-85 is the PNG private architectural firm which has been engaged to provide design, prepare technical tender documentation, advise on the selection, and supervise the winning contractor together with the external managing contractor (IPPR).

On the Chinese side, the Agency for International Economic Cooperation under the Ministry of Commerce chose IPPR International Engineering Co. Ltd and IPPA International Engineering Co. Ltd as the joint project managers of the “Aid Project on Western Pacific University of Papua New Guinea” through its own open tender process. In January 2020, the PRC gave DHERST a list of six Chinese companies and requested to begin the bidding process for the contract. In February 2021, Seladi-85 invited the six Chinese companies to bid, and in July 2020, IPPR and the Project Steering Committee evaluated the bids. Then, in August, Seladi-85 released its Tender Evaluation Report, and IPPR announced the selection of China Jiangsu International Economic and Technical Cooperation Group Ltd (CJI) as the private contractor for project infrastructure development. In response to DHERST’s request, the Solicitor’s Office granted legal clearance to CJI as the contractor in September 2020.

Funding Breakdown

The total cost of the WPU project is unclear. Professor Jan Czuba of DHERST announced a cost of US $118.7 million (K396.5 million) for project infrastructure on January 5, 2018, but he also highlighted the need for a further US $179.6 million (K600 million) for the completion of the WPU project. Some officials have indicated costs as high as US $179.3 million, while others have publicly declared the number to be US $118.7 million. To date, US $42 million (K140.4 million) has been spent on the project.

Conflicts of Interest in the Decision-Making Process

While PNG does need further university capacity, and Ialibu may well be a suitable location for new university facilities, the Prime Minister had conflicts of interest. First, the Prime Minister rushed to initiate the construction of WPU in his own electorate, with clear benefits for his voter ratings. Second, the site was chosen without a public feasibility study conducted by DHERST on cost effectiveness, alternatives for enhancing university capacity, and land evaluation. Third, Wild Cat Developments, one of former Prime Minister O’Neill’s own companies at the time, was one of the first firms reportedly awarded a contract related to the construction of WPU, linking the decision to personal economic benefits for the former Prime Minister. Fourth, the Chinese contractor for project infrastructure development, CJI, has received extensive public building projects during O’Neill’s term in office, some of which are associated with O’Neill’s own businesses.

 

Project Delays

Project delays occurred for two main reasons. First, PNG’s Covid-19 restrictions prevented Chinese project staff from entering the country for some time, which had knock-on impacts on subsequent stages of the project. Second, in 2021 there were delays in the release of project funds and brief shutdowns of operations due to disputes between the contractor’s Chinese and PNG staff.

 

Procurement Process

Since the 2018 PNG procurement law introduced a provision for foreign funders to use their own procurement systems, the funding, contractor selection, and drawdown of GoPNG funding did satisfy relevant PNG laws. Previously, all projects were legally required to follow guidelines of the Central Supply and Tenders Board, regardless of their funder.

The Chinese grant, at current estimations, only covers 82.1 percent of the construction it is earmarked for, with the remainder paid by GoPNG. This indicates that through its procurement process, the Chinese government was able to select the management contractor and strongly influence the choice of a construction contractor which would receive GoPNG funding. While DHERST and the Solicitor’s Office had to give final approval for IPPR’s selection of contractor, they had no role in the selection itself.

The successful bidder for construction, CJI, was the only company of the six bidders which had been debarred by the World Bank. CJI was sanctioned by the World Bank in February 2014 for misprocurement, with the possibility for a lift in sanctions after three years if CJI took appropriate remedial measures. However, as of November 2021, the company is still debarred by the World Bank.

Under the Chinese procurement system, the Governor of Southern Highlands Province, the Honorable William Powi, was not consulted. He expressed his dissatisfaction that DHERST had surrendered local oversight to the WPU project steering committee, which was supervised by IPPR on behalf of the Chinese Government.

Western Pacific University Project