Upgrading Fiji's Suva and Lautoka ports helped the Pacific country meet growing cargo traffic and make its economy more competitive.
The Challenge
Fiji recognized the importance of transport service supporting economic growth. This particularly emphasizes the need to improve the efficiency and productivity of port operations by increasing the role of the private sector, commercializing services, maintaining high safety levels, and ensuring intermodal coordination. The country's aim was, and continues to be, to ensure future competitive and lower port services costs while providing adequate capacity to meet the anticipated traffic and cargo growth.
ADB undertook this project to assist the Government of Fiji in developing port sector facilities and operations, thereby enhancing competitiveness of the Fijian economy.
Approximately 90% of Fiji's import and export trade occurs through the two ports of Suva and Lautoka. Suva Port is the country's busiest international entry port but its capacity to handle the current cargo levels was inadequate. Its wharf structure and landfill reclamation were below minimum seismic standards, and storage space for containers was insufficient.
Lautoka Port, the country's second busiest port, lacked adequate storage and berth capacity to support the local export industries. The port was originally built with only one berth, which meant that if a cruise ship came in while a cargo vessel was unloading, the cargo ship had to abandon its task and go out to sea to make way for the cruise ship, which had priority of berth. Additional storage and berth capacity were needed to improve shipping services, and ensure better intermodal allocation of cargo traffic to reduce impact on the road system and environment.
The Strategy
The Fiji Ports Development Project's main objective was to support Fiji in achieving a stable macroeconomic environment; support trade, investment, and private sector development; and enhance competitiveness of the Fijian economy. Approved by ADB in March 2002, the project's aim was to enhance regional competitiveness of the Suva Port by decreasing ships' turn-around time and allowing more ships and throughput to be facilitated while extending Lautoka Port to accommodate more container traffic.
Discussions on policies were also conducted by the processing missions. These dialogues focused on the introduction of competition and market conditions to improve cargo-handling performance, improving port operations and management, and providing a cleaner environment at the ports and their surroundings.
The Results
The Fiji Ports Development Project was completed in late 2006. Suva and Lautoka ports are now well positioned to accommodate future growth in trade and guard against natural disasters.
According to the performance evalution report published in December 2011, the predicted impacts, outcome, and outputs were consistent with the Fiji government's development strategies. The project was also consistent with ADB's country strategies and programs at the time of appraisal.
The intended outcomes of faster average vessel turnaround time, increased cargo volume, increased number of ship calls, and more effective use of stacking areas were fully achieved. There were some marked improvements in cargo-handling operations as a result of the project. The Suva component was assessed slightly higher than the Lautoka component since it achieved more of its project outputs and had better economic and financial rates of return. Both components were, however, given the same ratings of relevant, effective, highly efficient and likely to be sustained.
Once both wharves were upgraded, the conditions were right for the government to invest in mobile cranes that facilitated mechanized stevedoring (the loading and unloading of shipping containers) and raised productivity. The commissioning of the cranes has made Suva and Lautoka ports four times more efficient. On average, 20 containers per vessel are lifted per hour. Ten years ago, the average lift rate was only about five containers per vessel per hour.
The Independent Evaluation Mission gave the project an overall economic internal rate of return (EIRR) of 24.5%, with Suva Port having an EIRR of 26.4% and Lautoka Port an EIRR of 22.8%.
The Impacts
Maritime trade at both the Suva and Lautoka ports has grown strongly. For Suva Port, stevedored exports increased from 365,500 tons (t) in 2002 to 473,700t in 2010, or 3.29% annual growth for the period. Stevedored import tons rose from 851,300t in 2002 to 961,800t in 2010, or by 1.54% annually. For Lautoka Port, stevedored exports grew from 106,200t in 2002 to 324,100t in 2010, or 15.0% annually. Stevedored imports increased from 149,200t in 2002 to 304,600t in 2010, an annual growth rate of 9.3%.
With regard to competitiveness, Suva Port is currently the third-largest port in the Pacific after Apra (Guam) and Papeete (French Polynesia). It has gradually assumed the role of a leading regional hub for the South Pacific over the past 10 years, and according to staff of the Secretariat of the Pacific Community, it is well-positioned to further strengthen this role in the future.
The Lessons
The Independent Evaluation Report identified some important lessons from the project:
- The project could have benefitted from more careful preparation. Small scale project preparatory technical assistance should have been considered to better prepare the project;
- The project processing missions could have consulted the key project stakeholders more effectively. More thorough consultation would have ensured that all parties are aware of their commitments and resulted in a better project design;
- More rigorous risk assessment during project processing would have allowed for better monitoring of key assumptions during implementation; and
- Lack of baseline data hampered evaluation. The absence of these baseline data targets made independent evaluation of the project considerably more difficult.
Moving Forward
ADB's 2007 Fiji Islands: Reengagement Approach stipulates that there will be no country partnership strategy or country operational business plan for the country until such time as the criteria for reengagement have been achieved.
ADB's Independent Evaluation Department recommends two follow-up actions for ADB's sector division to take upon reengagement. The first is to follow up with Fiji Ports Corporation Limited to expedite introduction of competition in cargo handling by awarding and putting in effect two or more non-exclusive licenses to different firms for cargo-handling operations. This remains relevant and necessary for achieving efficient port operations.
The other action that needs to be resolved is eliminating the port service charge imposed on shipping lines and agents on cargo moving from Suva and Latouka ports. The fee, which puts Fijian ports at a competitive disadvantage, covers the transaction between the shipping line or agent and the shipper of cargo, and it is outside the control of Fiji Ports Corporation Limited and the project. The government needs to enter into dialogue with the shipping agents and companies to work toward eliminating the port service charge.