Tonga: Tonga-Fiji Submarine Cable Project

Sovereign Project | 44172-022

Summary

The Tonga-Fiji Submarine Cable Project will provide a submarine fiber optic cable system linking Tonga to Fiji where an existing international submarine cable system will provide onward cost-effective access to the rest of the world. This will provide substantially higher initial capacity of 10 Gpbs and reduce international connectivity costs by at least 50%. The submarine cable system will stimulate increased take-up of broadband internet, and lower the cost of telecommunications services. The infrastructure development under the project will be complemented by regulatory capacity development technical assistance from the Pacific Regional Connectivity Program (PRCP) of the World Bank.

Latest Project Documents

Consulting Notices

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Procurement Notices

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Procurement Documents

Title Document Date
Tonga-Fiji Submarine Cable Project Jan 2013

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Project Name Tonga-Fiji Submarine Cable Project
Project Number 44172-022
Country Tonga
Project Status Approved
Project Type / Modality of Assistance Grant
Source of Funding / Amount
Grant 0256-TON: Tonga-Fiji Submarine Cable Project
Asian Development Fund US$ 9.70 million
Grant: Tonga-Fiji Submarine Cable Project
International Development Association US$ 16.50 million
Strategic Agendas Inclusive economic growth
Regional integration
Drivers of Change Partnerships
Private sector development
Sector / Subsector

Information and communication technology - ICT infrastructure

Gender Equity and Mainstreaming No gender elements
Description The Tonga-Fiji Submarine Cable Project will provide a submarine fiber optic cable system linking Tonga to Fiji where an existing international submarine cable system will provide onward cost-effective access to the rest of the world. This will provide substantially higher initial capacity of 10 Gpbs and reduce international connectivity costs by at least 50%. The submarine cable system will stimulate increased take-up of broadband internet, and lower the cost of telecommunications services. The infrastructure development under the project will be complemented by regulatory capacity development technical assistance from the Pacific Regional Connectivity Program (PRCP) of the World Bank.
Project Rationale and Linkage to Country/Regional Strategy

Tonga is far away from large economies in the region (Australia and New Zealand) and has a small population of 102,000 spread across 48 inhabited islands out of 171 islands. About 70% of the population is in Tongatapu where the capital city of Nuku'alofa is located. Main economic activities include fishery, agriculture, and tourism. Tonga's small size and distance from large markets do not allow the people to exploit economies of scale. A narrow resource base and small market have resulted in a highly undiversified economy. Remittances from about 100,000 Tongans overseas account for an estimated 30% of the gross domestic product. As the global economic slowdown affected the principal remittance-sending countries (Australia, New Zealand, and the United States), remittances are expected to fall by an estimated 18% in FY2010, following a decline of 12.5% in FY2009. Lack of economic opportunity within the country resulted in migration from rural to urban areas, and overseas.

Tonga's isolation and other constraints to economic development may be mitigated in part by improved access to and more affordable telecommunications, especially high-speed (broadband) internet, which offers new economic opportunities both domestically and internationally and new avenues for delivery of services. A recent World Bank study indicates that a 10% increase in broadband penetration results in a 1.38% increase in gross domestic product growth in low and middle income countries. Such impacts result from (i) reduced transaction costs for business, government, and household communications; (ii) new business opportunities such as investments in e-commerce and business process outsourcing facilities; and (iii) improved public service delivery, in particular to support e-education and e-health services. Affordable high speed internet services will also help Tongans maintain social cohesion with their relatives residing abroad.

Tonga was the first country in the Pacific to liberalize its telecommunications sector. Since 2002, access to basic telecommunications has increased significantly. Mobile teledensity , at about 60%, is among the highest in the region; and local and international call tariffs are among the lowest in the Pacific. Internet penetration, however, remains low with about 2,500 subscribed broadband internet users. This is because of the high cost and limited availability of international bandwidth, resulting in congestion. Internet service is also open for competition and five internet service providers (ISPs) have been licensed. However, because of the high cost of satellite infrastructure and capacity leases, only two telecommunications operators are operational ISPs. The limited capacity and high cost of international bandwidth is the principal constraint to higher internet penetration, the introduction of new telecommunications services, and new market entrants. This is due to Tonga's total dependence on satellite connectivity. The current market price for two-way satellite capacity is about $3,600 per megabit per second per month. With normal growth, Tonga's bandwidth demand is projected to increase to 1.243 gigabits per second by 2032. With the current satellite capacity and price, it would be impossible to meet the growing demand.

In addition to the positive economic and social impact in Tonga, the submarine cable system will contribute to regional integration. It will increase the frequency and quality of communications among the countries in the region, thus increasing trade in services (tourism and back-office functions) and allowing the region to form a sizable market for digital products and services. It will also strengthen the existing regional public goods and encourage new ones by allowing countries to share the limited knowledge and human resources available in the Pacific.

Impact Widely available and affordable ICT services improve Tonga's economic performance and public service delivery.
Project Outcome
Description of Outcome The population of Tonga has access to good quality broadband internet services at an affordable price
Progress Toward Outcome Few options for additional financing and extending the cable beyound Nukua'lofa has been brought up by TCL and are being discussed further with WB and ADB. A jont review mission was fielded from 9-13 Februiary for further discussion on the issue.
Implementation Progress
Description of Project Outputs

Establishment and efficient operation of the Tonga submarine cable system by TCL

Efficient and effective project management services by TCL

Status of Implementation Progress (Outputs, Activities, and Issues)

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Geographical Location
Safeguard Categories
Environment B
Involuntary Resettlement C
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects Cable laying and the minor civil works proposed will not result in any significant adverse environmental impact, and all potential environmental impacts can be adequately mitigated and monitored
Involuntary Resettlement The project does not involve any land acquisition
Indigenous Peoples No indigenous peoples' issues have been identified
Stakeholder Communication, Participation, and Consultation
During Project Design
During Project Implementation
Business Opportunities
Consulting Services Consulting services included in the procurement package.
Procurement Evaluation of the bidding documents for procurement of plant design, supply and installation (LIB No. TC 2011/1) is on-going.
Responsible ADB Officer Vijay Narayan
Responsible ADB Department Pacific Department
Responsible ADB Division Pacific Subregional Office in Suva, Fiji
Executing Agencies
Ministry of Finance and National PlanningMINFIN@CANDW.TOVuna Road
Nuku'alofa
Kingdom of Tonga
Timetable
Concept Clearance 07 Jul 2010
Fact Finding 12 Sep 2010 to 24 Sep 2010
MRM 16 Mar 2011
Approval 23 Aug 2011
Last Review Mission -
Last PDS Update 02 Mar 2015

Grant 0256-TON

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
23 Aug 2011 09 Sep 2011 21 Dec 2011 31 Dec 2016 - -
Financing Plan Grant Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 16.30 Cumulative Contract Awards
ADB 9.70 23 Aug 2011 7.41 0.00 76%
Counterpart 6.60 Cumulative Disbursements
Cofinancing 0.00 23 Aug 2011 7.40 0.00 76%
Status of Covenants
Category Sector Safeguards Social Financial Economic Others
Rating - Satisfactory - Satisfactory - Satisfactory
Title Document Type Document Date
Tonga-Fiji Submarine Cable Project: Audited Project Financial Statements (July 2013-June 2014) Audited Project Financial Statements May 2015
Tonga-Fiji Submarine Cable Project: Audited Project Financial Statements (June 2012-June 2013) Audited Project Financial Statements Feb 2014
Tonga-Fiji Submarine Cable Project Procurement Plans Jan 2013
Grant Agreement for Tonga-Fiji Submarine Cable Project between Kingdom of Tonga and Asian Development Bank dated 9 September 2011 Grant Agreement Sep 2011
Project Agreement for Tonga - Fiji Submarine Cable Project between Asian Development Bank and Tonga Cable Limited dated 9 September 2011 Project/Program Agreement Sep 2011
Tonga-Fiji Submarine Cable Project Reports and Recommendations of the President Jul 2011
Tonga-Fiji Submarine Cable Project Summary Poverty Reduction and Social Strategies Jul 2011
Tonga-Fiji Submarine Cable Project Project/Program Administration Manual Jun 2011
Tonga-Fiji Submarine Cable Project Design and Monitoring Frameworks Jul 2010
Tonga-Fiji Submarine Cable Project Initial Poverty and Social Analysis May 2010

Safeguard Documents

See also: Safeguards
Title Document Type Document Date
Tonga-Fiji Submarine Cable Project Initial Environmental Examination Mar 2011
Tonga-Fiji Submarine Cable Project: Resettlement Framework Resettlement Frameworks Mar 2011

Evaluation Documents

See also: Independent Evaluation

No documents found.


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