Vanuatu: Interisland Shipping Support Project (Second Additional Financing)

Transport / Transport policies and institutional development - Water transport (non-urban)

Original project. On 30 November 2011, Asian Development Bank (ADB) approved the Loan 2820 for SDR6.71 million from ADB's concessional ordinary capital resources lending, and Grant 0273 for $12.60 million cofinanced by the Government of New Zealand through the Ministry of Foreign Affairs and Trade (MFAT). The government will provide $3.42 million in counterpart funds. The original project aims to (i) build a new interisland domestic shipping terminal in Port Vila, with sufficient berthing capacity to handle conventional vessels and landing crafts in the Vanuatu fleet simultaneously, and improve rural access by constructing one outer island wharf and three jetties, rehabilitating or repairing three existing outer island wharves, and ensuring all sites will have ancillary infrastructure, as appropriate for each location, to cater to the transit of passengers (including shelters, toilets and separate facilities for women, children, and men) ; (ii) establish shipping support and coordination schemes to improve frequent and reliable shipping services to remote areas by providing subsidies on commercially unviable routes; (iii) ensure efficient and effective project implementation; and (iv) create the Office of the Maritime Regulator. The grant, partially administered by ADB, was closed on 20 September 2019 whereas the original loan's closing date was extended to 31 December 2024.

First additional financing. On 27 February 2015, ADB approved the first additional financing of (i) SDR12.60 million from ADB's concessional ordinary capital resources (Loan 3249), and (ii) $4.65 million (Grant 0427) cofinanced by the Government of New Zealand through MFAT and government's contribution of $1.67 million. The project was not performing well at the time of the first additional financing processing. The first additional financing results from; (i) change in the design specifications to address unforeseen conditions underneath the seabed resulting in an increased length of piles for Lolowai, Loltong, Port Sandwich, Port Vila, and Simonsen wharves; (ii) increase in scope for (a) the repairs of Lenakel and Litzlitz wharves, and (b) government's request to change the project scope from rehabilitation to full reconstruction of Simonsen wharf, and (c) dredging of a channel in South Paray bay for easier access to domestic Port Villa domestic wharf; and (iii) additional consulting services. The construction of wharf at Waisisi Bay was deleted from project's scope on request by the government, leaving behind seven wharves and jestties in the scope of the project . The overall project costs increased by $24.80 million from $26.82 million in 2011 to $51.62 million in 2015.

The original and first additional financing amount is not sufficient to fund all the five wharves and allied facilities in the ongoing project scope. The proposed second additional financing will cover cost overruns for constructing two new wharves at Port Sandwich and Simonsen areas, public shelters at Lenakel, Litzlitz, and South Paray wharves, a new ramp at Litzlitz wharf, and construction supervision services. The ongoing project (original project and first additional financing) aims to improve Vanuatu's shipping services by upgrading domestic wharves infrastructure in the national capital of Port Vila and four outer islands, and supporting private shipping operators to service remote noncommercial destinations. The project was complemented by an associated technical assistance to improve sector governance, and safety regulation and enforcement through institutional strengthening and legal and regulatory reforms. The additional financing is consistent with the project rationale, extending the socioeconomic benefits to the outer islands of Vanuatu.