ADB and New Zealand Partner to Help Improve Domestic Shipping Services in Vanuatu

Domestic shipping services in many Pacific island countries are far from adequate. While each island nation is unique, their people share common challenges related to their small size, narrow economies of scale, vulnerability and geographic isolation. Certainly one of the biggest challenges faced by the region is how to provide reliable, frequent interisland shipping services. Due to inadequate interisland shipping services, people in remote and poor parts of the region remain cut off from access to markets, education and health services.

Interisland shipping services are generally operated by governments, or by small, independent shipping companies. Service schedules are often poorly maintained, and it is not uncommon for services to be cancelled at short notice or suspended for long periods of time. This makes it very difficult for rural producers to get their commodities to markets, or for people to access social services like health and education.

With its population of about 240,000 scattered across 60 islands, Vanuatu, like much of the Pacific, is heavily dependent on agriculture with most of the production occurring in remote, rural areas without access to suitable maritime infrastructure. Wharves and jetties in some areas are in such poor condition that ships cannot berth, forcing cargo to be offloaded into small boats and causing delays and safety issues while cargo is transported onshore.

Realizing that ports and jetties needed to be upgraded, and safe, reliable, regular shipping services are needed to support trade, economic growth and development in Vanuatu, the Government asked for assistance.

“Recognizing the critical situation of inadequate domestic ship berthing in the country, we welcomed the assistance of the New Zealand Government and the Asian Development Bank to address this critical need,” said Simeon Athy, Director General of the Prime Minister’s Office.

The Interisland Shipping Support Project, to be implemented over five years, will finance a new interisland terminal in the capital, Port Vila, and construct new jetties on the islands of Malekula, Ambae, Tanna and Pentecost. The project will also rehabilitate several jetties in remote areas of Vanuatu.

The project is expected to cost around $26.8 million, with the New Zealand Government providing a grant of $12.6 million, ADB providing a loan of almost $11 million from its concessional Asian Development Fund, and.the Government of Vanuatu contributing $3.4 million.

“This project is all about re-connecting people in rural and remote areas to health and education services and markets in other parts of Vanuatu and the region,” said Rishi Adhar, project team leader. “It is modeled on the successes of similar projects in Fiji, Papua New Guinea and the Solomon Islands.”

As part of the Domestic Maritime Support Project in Solomon Islands, a similar support scheme enables private sector ship operators to provide services to commercially unviable destinations in remote parts of the island nation. Co-financed by the European Commission, the Asian Development Bank, and the Solomon Islands Government, the project aims to spur rural development and provide economically disadvantaged people with greater access to markets and services by improving domestic shipping services. The project also promotes the growth of rural production.

The Vanuatu Interisland Shipping Support Project aims to do the same. It will provide subsidies to encourage private sector ship operators to deliver safe and regular shipping services to remote and commercially unviable destinations. Funding will be tied to performance, services areas and routes, and voyage frequency. The support program will run for five years, with subsidies scaled back as routes become commercially viable. Direct benefits of the project will include better terms of trade for remote rural areas and increased agricultural production – with farmers able to more easily get hold of seeds and fertilizers and to market their products.

A planning workshop for national and provincial government representatives recently held in Vanuatu’s capital Port Vila, discussed and agreed on priority areas for shipping services in each province. The workshop selected two priority areas for piloting the shipping services scheme. More workshops are planned for the shipping industry to educate the industry on competitive tendering and the subsidy scheme. Community workshops are also planned to inform the community in the priority service areas on the proposed shipping services under the project.

“Working with the New Zealand and Vanuatu Governments, we look forward to introducing a competitive, regular, safe, reliable  and cost effective interisland shipping service to remote areas and stimulate economic growth at the same time,” said Robert Guild, Director Transport, Energy and Natural Resources Division of ADB’s Pacific Department.