ADB, Vanuatu Aim to Lift Incomes in Remote Islands with More Frequent Shipping

MANILA, PHILIPPINES – The Asian Development Bank (ADB) is to help Vanuatu upgrade its port facilities and expand shipping services to remote islands to support national development and promote new economic opportunities for isolated rural communities.

The ADB Board of Directors has approved a nearly $11 million equivalent loan for the Interisland Shipping Support Project. The project will finance a new interisland shipping terminal in the capital, Port Vila, with improved berthing facilities, along with new and upgraded jetties on outer islands. It will also establish a safe and reliable shipping support scheme to help develop services on routes that have so far been commercially unviable.

“This will be a major shot in the arm for many poor rural communities because more frequent shipping services will give them the means to get their goods to market more regularly, resulting in higher incomes and reduced poverty,” said Robert Wihtol Director General of ADB’s Pacific Department “It will also increase access to social services such as schools and health care facilities, which will be especially beneficial to women and children.”

The project is due for completion by December 2016.

Water transport is the economic lifeline of Vanuatu with about 240,000 people scattered across 60 populated islands. However, many wharves and jetties are in poor condition, causing restricted access, delays, and safety problems. In Port Vila there is an acute shortage of berths for interisland vessels and services to remote locations are sporadic, due to uncertain demand.

The new interisland terminal in Port Vila will provide sufficient berths to handle the growing volume of vessels, as well as having separate transit facilities for men, women and the disabled. New jetties will be built at Port Sandwich (Malekula); Lolowai (Ambae); Waisisi (Tanna), and Loltong (Pentecost). Existing jetties at Litzlitz (Malekula); Lenakel (Tanna) and Simonsen (Espiritu Santo) will be rehabilitated.

The support scheme will provide subsidies to private operators for a fixed number of voyages on otherwise unprofitable routes, with funding tied to performance, franchise areas and routes, and voyage frequency. The support program will run for five years, with subsidies scaled back as routes become commercially viable.

The project will be complemented by technical assistance of about $2 million to establish a Maritime Safety Administration and to pave the way for a restructured and strengthened oversight and enforcement agency, the Ministry of Infrastructure and Public Utilities.

ADB’s loan from its concessional Asian Development Fund has a 25-year term, with the Government of New Zealand providing a cofinancing grant of $12.6 million equivalent. The Government of Vanuatu will contribute $3.4 million, for a total project cost of around $26.8 million. The technical assistance will include a $500,000 grant from ADB’s Technical Assistance Special Fund, a $1 million grant from the Government of New Zealand, to be administered by ADB, and about $500,000 in-kind from the Government of Vanuatu.