Kiribati: Enhancing Economic Competitiveness through State-Owned Enterprise Reform

Sovereign Project | 46511-001 Status: Approved

Summary

The TA will contribute to reducing drain on the fiscal position of the government from underperforming SOEs. Of the six priority areas in the Kiribati Development Plan (KDP) 2012 2015, this TA will support Government efforts on economic growth and poverty reduction priority area. With the government providing substantial resources to subsidies and bailout underperforming SOEs, strengthening these SOEs will result in the effective allocation of resources leading to economic growth and achieving of national priorities. Economic growth and poverty reduction are also ADB's core specializations, as set out in Strategy 2020. The proposed TA will also address priority actions identified in the joint policy matrix

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Project Name Enhancing Economic Competitiveness through State-Owned Enterprise Reform
Project Number 46511-001
Country Kiribati
Project Status Approved
Project Type / Modality of Assistance Technical Assistance
Source of Funding / Amount
TA 8478-KIR: Enhancing Economic Competitiveness through State-Owned Enterprise Reform
Japan Fund for Poverty Reduction US$ 800,000.00
TA 8478-KIR: Enhancing Economic Competitiveness through State-Owned Enterprise Reform (Supplementary)
Technical Assistance Special Fund US$ 222,000.00
Strategic Agendas Inclusive economic growth
Drivers of Change Governance and capacity development
Partnerships
Private sector development
Sector / Subsector

Public sector management - Economic affairs management - Reforms of state owned enterprises

Gender Equity and Mainstreaming No gender elements
Description
Project Rationale and Linkage to Country/Regional Strategy The TA will contribute to reducing drain on the fiscal position of the government from underperforming SOEs. Of the six priority areas in the Kiribati Development Plan (KDP) 2012 2015, this TA will support Government efforts on economic growth and poverty reduction priority area. With the government providing substantial resources to subsidies and bailout underperforming SOEs, strengthening these SOEs will result in the effective allocation of resources leading to economic growth and achieving of national priorities. Economic growth and poverty reduction are also ADB's core specializations, as set out in Strategy 2020. The proposed TA will also address priority actions identified in the joint policy matrix
Impact Reduced drain on the fiscal position of the government from underperforming SOEs
Project Outcome
Description of Outcome Improved financial, operational and governance performance of SOEs
Progress Toward Outcome Since inception that TA has provided advised Cabinet on the three SOEs it had identified for rationalization. The TA has also run the first workshop on financial management tageting SOE Financial Managers and CEOs.
Implementation Progress
Description of Project Outputs

1. Rationalization strategies for at least three SOEs Implemented

2. At least four training courses on SOE governance and monitoring

3. Director performance evaluation system developed and implemented

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

1. The government has approved the rationalization of the three SOEs - (i) a PPP concession for the Betio Shpoyard, (ii) Rationalize the Plant and Vehicle Unit to focus only on heavy machinery and (iii) privatize the Shipping Company. On the Betio shipyard,The TA Team worked further on the concession deed and lease and responded to new queries raised by the bidder. The SRSC met to consider a proposed Cabinet Paper to resolve the remaining issues.

Following submission of the Cabinet Paper, Cabinet approved payment of BSL liabilities and tasked the AG to resolve the remaining legal issues. The main legal issues are the lease of the BSL property to the bidder which requires confirmation and registration of GoK's ownership on the property and confirmation of the legal authority for GoK to lease the property to a foreign-owned company. The TA had previously identified legislation for this latter purpose but awaits confirmation from the Office of the Attorney General that this is the appropriate authority.

Cabinet has tasked the AG's office to expedite the resolution of the court case seeking legal authority to sell the private catamaran (so that the ramp can be cleared as this is to be the site for the second slipway). The MIA and the Kiribati Port Authority are working on a contract with a diving company to remove the sunken Island Council vessel to enable the private catamaran to launch.

On 27 August, the Foreign Investment Commission approved the application by the bidder (Frabelle-Shila group) to set up a local company in Kiribati to operate the BSL Concession. This will enable Frabelle to complete its Kiribati company registration and enable SOEMAU to finalise Immigration permits for the bidder's initial residential staff.

On Shipping, ADB TA 8478-KIR - MONTHLY UPDATE REPORT - AUGUST 2015

Gareth Davies

to:

Malie Lototele

08/09/2015 05:04 PM

Cc:

David Hutton

Hide Details

From: Gareth Davies

To: Malie Lototele ,

Cc: David Hutton

Hello Malie

I hope you are well.

Please see below the TA Monthly Update Report for August 2015, prepared by David Hutton and Kietau. Please note that we continue to make progress towards finalisation of a concession deed with the bidder, with the TA Team endeavouring in particular to ensure that the process is not unduly slowed by bureaucratic hold-ups in the GOK ministries involved in the process.

Please let me know if you have any questions arising.

Best, Gareth

ADB TA 8478-KIR - MONTHLY UPDATE REPORT - AUGUST 2015

1. TA INPUTS

The Team Leader (David Hutton) arrived in Tarawa on 30 July and departed on 13 August with a TA focus on finalising the shipyard concession and providing support of a draft Cabinet Paper on copra.

National SOE Specialist (Kietau Tabwebweiti) maintained progress through provision of continued support to SOEMAU and the SRSC. The main work under the TA focussed on finalising the shipyard concession and support of a draft Cabinet Paper on copra.

Project Director Gareth Davies as well as the Legal Specialist (David Cochrane) continued to support the TA from the home office.

2. WORK UNDERTAKEN

2.1 Shipyard PPP Concession

The TA Team worked further on the concession deed and lease and responded to new queries raised by the bidder. The SRSC met to consider a proposed Cabinet Paper to resolve the remaining issues.

Following submission of the Cabinet Paper, Cabinet approved payment of BSL liabilities and tasked the AG to resolve the remaining legal issues. The main legal issues are the lease of the BSL property to the bidder which requires confirmation and registration of GoK's ownership on the property and confirmation of the legal authority for GoK to lease the property to a foreign-owned company. The TA had previously identified legislation for this latter purpose but awaits confirmation from the Office of the Attorney General that this is the appropriate authority.

Cabinet has tasked the AG's office to expedite the resolution of the court case seeking legal authority to sell the private catamaran (so that the ramp can be cleared as this is to be the site for the second slipway). The MIA and the Kiribati Port Authority are working on a contract with a diving company to remove the sunken Island Council vessel to enable the private catamaran to launch. On 27 August, the Foreign Investment Commission approved the application by the bidder (Frabelle-Shila group) to set up a local company in Kiribati to operate the BSL Concession. This will enable Frabelle to complete its Kiribati company registration and enable SOEMAU to finalise Immigration permits for the bidder's initial residential staff.

The remaining three 2015 SOIs (CPPL, TACL, and PVU) were tabled in the August Parliament thus completing the SOI requirement for 2015. Half Year reports were submitted by 9 SOEs but due to some misunderstanding, only 6 were tabled in Parliament. SOEMAU will be following up on the 6 SOEs with outstanding Half Year reports.

On PVU, management has delayed implementation of the Board's decisions on the agreed restructuring. Apparently this coincided with concerns raised in Cabinet mainly about staff redundancies and reduced capacity by PVU to service GoK's needs. These concerns seem to have arisen from complaints by PVU staff and voiced in Cabinet by some Ministers. At the last SRSC meeting on 6 August, Secretaries on the PVU Board were tasked to resolve these concerns and fast-track further progress even without the Board Chairman who has been on extended sick leave.

2. The TA has run 4 workshops targeting SOE Financial Managers on financial projections and reporting.

3. Directors Performance evaluation system is being developed

Geographical Location
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design During Project Design, ADB consulted the Ministry of Finance and the SOE Monitoring Unit, the SOE Reform Steering Committee and Kiribati Development Partners.
During Project Implementation The review missions will consult the different stakeholders to update members on progress of the TA.
Business Opportunities
Consulting Services

Consulting services will support the three outputs of this technical assistance (TA).

The team leader, who will be a state-owned enterprise (SOE) reform specialist, will supervise the TA. The consultants will work closely together to ensure the TA is in line with the proposed scope. The TA will work closely with 3 SOEs, which the government will select from the 23 SOEs.

Consulting services will include:

i) SOE reform specialist and team leader (international, 10 person-months, intermittent);

ii) SOE legal specialist (international, 4 person-months, intermittent);

iii) SOE accounting specialist (international, 3 person-months, intermittent);

iv) Capacity building specialist (international, 3 person-months, intermittent); and

v) SOE specialist (national, 10 person-months, intermittent).

Procurement Financed by Japan Fund for Poverty Reduction-US$800,000.
Responsible ADB Officer Malie Lototele
Responsible ADB Department Pacific Department
Responsible ADB Division Pacific Subregional Office in Suva, Fiji
Executing Agencies
Ministry of Finance and Economic Development
P.O. Box 67
Bairiki, Tarawa
Kiribati
Timetable
Concept Clearance 10 Jun 2013
Fact Finding 29 Jul 2013 to 01 Aug 2013
MRM -
Approval 08 Oct 2013
Last Review Mission -
Last PDS Update 21 Sep 2015

TA 8478-KIR

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
08 Oct 2013 21 Oct 2013 21 Oct 2013 31 Dec 2016 31 Mar 2017 -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
222,000.00 800,000.00 80,000.00 0.00 0.00 0.00 1,102,000.00 08 Oct 2013 478,055.37

Safeguard Documents

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Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.

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Evaluation Documents

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Related Publications

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