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Vanuatu Infrastructure Strategic Investment Plan

2015 – 2024

Government of the Republic of Vanuatu

This report is published under the auspices of the Government of Vanuatu (GoV), with the support of the Pacific Region Infrastructure Facility (PRIF). 

The report was prepared by Philippe Bergeron, Christopher Cheatham and Bikenibeu Ieremiah working under the guidance of the PRIF Coordination Office and with administrative support by the Asian Development Bank. 

PRIF is a multi-development partner coordination, research and technical facility which supports infrastructure development in the Pacific. PRIF Members include Asian Development Bank (ADB), Australian Department of Foreign Affairs and Trade (DFAT), European Union and European Investment Bank (EU/EIB), Japan International Cooperation Agency (JICA), New Zealand Ministry of Foreign Affairs and Trade (NZMFAT), and the World Bank Group. 

The views expressed in this report are those of the authors and do not necessarily reflect the views and policies of ADB, its Board of Governors or the governments they represent or any of the other PRIF Members. None of the above parties guarantees the accuracy of the data included in this publication nor accepts responsibility for any consequence of their use.  

The use of information contained in this report is encouraged with appropriate acknowledgement. This report may only be reproduced with the permission of both the Government of Vanuatu and the PRIF Coordination Office on behalf of the PRIF Members. 

Acknowledgements 

The authors would like to express their appreciation for the support provided by everyone consulted during the course of preparing the VISIP, in particular Director General of the Prime Minister’s Office Johnson Naviti Marakipule, Director General of the Ministry of Infrastructure and Public Utilities Johnson Iauma Binaru, and Director of Department of Strategic Policy Planning And Aid Coordination, Nebcevanhas Benjamin Shing for their oversight and guidance, and their staff for their help and assistance throughout the process. Thanks to Charlie Namaka who provided assistance to the consultant team on a daily basis. The team is also very grateful for the logistical support provided by the ADB country team: Nancy Wells and Laisa Boedoro, and the technical guidance provided by the PRIF Coordination Office. 

For more information, contact: 

Government of Vanuatu 

Department of Strategic Policy, Planning and Aid Coordination 

Private Mail Bag 9053

Prime Minister’s Office Port Vila, VANUATU 

dsppacps@vanuatu.gov.vu

PRIF Coordination Office c/- Asian Development Bank Level 20, 45 Clarence Street, Sydney NSW 2000, Australia enquiries@theprif.org www.theprif.org 

Cover photo: Phillip Capper, ‘Vanuatu inter-island ferry, Port Vila’. 

Creative Commons Attribution 2.0 Generic  https://creativecommons.org/licenses/by/2.0/ 

Vanuatu Infrastructure Strategic Investment Plan  

2015 – 2024  

                    Government of the Republic of Vanuatu  

Contents 

            Contents                                                                                                                                         i 

            Executive Summary                                                                                                                           vii 

1          INTRODUCTION     1 

1.1     PURPOSE AND SCOPE           1 

1.2     VISIP 2015 PROCESS          2 

1.3     VISIP ROLE IN GOVERNMENT PLANNING            3 

2          INFRASTRUCTURE CHALLENGES   5 

2.1 GROWTH DRIVERS     5 2.2     INFRASTRUCTURE PLANNING 7 

       2.2.1    Background                                                                                                                             7

       2.2.2    National Planning                                                                                                                     8

       2.2.3    National Development Policy and Planning                                                                                    8

       2.2.4    Policy In Transition                                                                                                                   9

       2.2.5    Institutional Responsibilities For Infrastructure                                                                               10

    2.3       SECTORAL STRATEGIES, CORPORATE PLANS AND PROJECTS                                                                     13

       2.3.1    Agriculture                                                                                                                             14

       2.3.2    Education                                                                                                                              16

       2.3.3    Energy, Climate Change, & Disaster Risk Management                                                                  18

           2.3.3.1      Energy                                                                                                                          18

           2.3.3.2      Climate and Disaster Risk Resilience                                                                                   21

           2.3.3.3      Projects (Energy, Climate Change, & Disaster Risk Management)                                             22

       2.3.4    Health                                                                                                                                  24

       2.3.5    Telecommunication and ICT                                                                                                      26

       2.3.6    Transport                                                                                                                              29

           2.3.6.1      Transport - Road                                                                                                             29

           2.3.6.2      Transport - Aviation                                                                                                          33

           2.3.6.3      Transport - Shipping                                                                                                         35

       2.3.7    Tourism                                                                                                                                39

       2.3.8    Water Supply and Sanitation (MIA, MIPU, & MLNR)                                                                       40

           2.3.8.1      Water Supply                                                                                                                  41

           2.3.8.2      Drainage and Sanitation                                                                                                    44

           2.3.8.3      Solid Waste Management                                                                                                 46

           2.3.8.4      Projects (Water Supply and Sanitation)                                                                                48

       2.3.9    Other Social Sectors (PMO, Youth & Sport And Justice)                                                                 49

    2.4       ASSET MANAGEMENT AND MAINTENANCE                                                                                             51

3       VISIP METHODOLOGY                                                                                                                     53

     3.1 STEP 1: CRITERIA AND SCOPE                                                                                                               54

       3.1.1    Criteria Group 1: Project Scale and Status With The Affected Community                                           55

3.1.2 Criteria Group 2: Operational Sustainability   55 3.1.3 Criteria Group 3: Policy Framework 56 

       3.1.4    Criteria Group 4: Financial And Economic Impact                                                                          57

3.2     STEP 2: PROJECT GENERATION          57 3.3    STEP 3: PROJECT EVALUATION           58 3.4    STEP 4: PROJECT PRIORITISATION       58 3.5    STEP 5: FINANCIAL CERTIFICATION AND GOV APPROVAL (FUTURE STEP)            58 3.6    STEP 6: REVIEW/UPDATE (FUTURE STEP)           60

4      PRIORITISATION OF PROJECTS FOR VISIP 2015                                                                                 61

4.1 PROJECT SELECTION PROCESS 61 4.2   ONGOING PROJECTS            64

4.3   SCORING OF INFRASTRUCTURE IN VISIP 2015 LONG LIST    67

4.4   VISIP2015 PRIORITY LIST OF PROJECTS        71 

       4.4.1    Category 1: Individual Public Investment Projects                                                                          71

       4.4.2    Category 2: Bundled Public Investment Projects                                                                            72

       4.4.3    Category 3: Private Public Investment Projects                                                                             74

       4.4.4    Spread of Proposed Investments By Sectors & Geographically                                                         74

5        FUNDING STRATEGY                                                                                                                      77

5.1 GOVERNMENT FINANCIAL STRATEGY        77

5.2    VISIP FUNDING STRATEGY   80 

5.3    INFRASTRUCTURE FUNDING REQUIREMENTS        80 5.3.1 Estimating Capital and Annual O&M Costs    80 

       5.3.2    Estimating The Whole of Life Costs                                                                                            85

       5.3.3    Funding For Maintenance                                                                                                         86

    5.4    RECENT INFRASTRUCTURE FUNDING                                                                                                      87

       5.4.1    Private Sector Participation and Public Private Partnerships                                                            88

5.4.2 State-Owned Enterprises            88 5.5    VANUATU GOVERNMENT BUDGET        88 5.6    DEVELOPMENT PARTNER CONTRIBUTIONS          89 

       5.6.1    Sector Priorities                                                                                                                      89

       5.6.2    Estimated Development Partner Funding Capacity                                                                        90

    5.7    OVERALL FUNDING ENVELOPE                                                                                                              91

       5.7.1    GoV Own Resources                                                                                                               91

       5.7.2    Concessional Loan And Grant Funding                                                                                       91

       5.7.3    Private Sector Funding                                                                                                             91

       5.7.4    Overall Funding Envelope                                                                                                         92

    5.8    TENTATIVE INVESTMENT PLAN FOR NEW PROJECTS                                                                                    92

6        IMPLEMENTING THE VISIP                                                                                                              95

     6.1 IMPLEMENTATION NEEDS                                                                                                                      95

       6.1.1    Implementation Capacity                                                                                                          95

       6.1.2    Processes, Procedures, and Tools                                                                                             96

       6.1.3    Financial Planning, Budgeting, And Management                                                                          96

    6.2    IMPLEMENTATION AND MANAGEMENT STRATEGY                                                                                        97

       6.2.1    A Holistic Approach To Infrastructure                                                                                          97

       6.2.2    Strategic Oversight/Portfolio Management                                                                                    97

       6.2.3    Project Oversight                                                                                                                    97

       6.2.4    Assisting Project Development                                                                                                  98

       6.2.5    Coordination                                                                                                                          99

    6.3    CAPACITY DEVELOPMENT                                                                                                                  101

       6.3.1    Sector-Wide Issues And Opportunities                                                                                       101

       6.3.2    Portfolio Management Capacity                                                                                                102

       6.3.3    Project Delivery Capacity                                                                                                        102

       6.3.4    Sector-Wide Capacity                                                                                                            102

    6.4    MONITORING, REPORTING AND UPDATING VISIP                                                                                      103

       6.4.1    Portfolio Review                                                                                                                    103

       6.4.2    VISIP Results Framework                                                                                                       104

       6.4.3    Updating The Visip                                                                                                                106

APPENDICES 

APPENDIX 1:  PROJECT PROFILE TEMPLATE    108

APPENDIX 2:  PROJECT PRIORITISATION EVALUATION FORM       110

APPENDIX 3:  GUIDING QUESTIONS FORPROJECT SCORING       112

APPENDIX 4:  VISIP 2014 LONG LIST OF PROJECTS      114

APPENDIX 5:   INFRASTRUCTURE PRIORITISATION MODEL (TEMPLATE WITH GRAPH)   123

APPENDIX 6:   PROJECT PROFILES – SHORT-LISTED PRIORITY PROJECTS             125

APPENDIX 7:   LIST OF CONSULTATIONS AND PEOPLE MET         177

APPENDIX 8:   DOCUMENTS REVIEWED        180

List of Tables 

Table 1: Population by Province and Urban Area ............................................................................................................... 7

Table 2: Population by Island .............................................................................................................................................. 7

Table 3: Institutional Responsibilities for Infrastructure ..................................................................................................... 11

Table 4: Existing Sector Plans and Studies ....................................................................................................................... 13

Table 5: Summary of Proposed Agriculture Projects ......................................................................................................... 16

Table 6: Summary of Education Infrastructure (Status 2011)............................................................................................ 16

Table 7: Summary of Identified Ongoing Education Related Projects ............................................................................... 17

Table 8: Summary of Proposed Education Related Projects ............................................................................................. 18

Table 9: Current Access to Electrical Energy in Vanuatu .................................................................................................. 18

Table 10: Summary of Power Infrastructure ...................................................................................................................... 19

Table 11: Main Source of Household Power for Lighting .................................................................................................. 19

Table 12: Main Source of Household Power for Cooking .................................................................................................. 20

Table 13: Summary of Identified Ongoing Energy Projects ............................................................................................... 23

Table 14: Summary of Proposed Energy Projects ............................................................................................................ 23

Table 15: Summary of Health Infrastructure (Status 2009) ............................................................................................... 25

Table 16: Summary of Ongoing Health-Related Projects .................................................................................................. 26

Table 17: Summary of Proposed Health Care Related Projects ....................................................................................... 26

Table 18: Summary of Telecommunications/ICT Infrastructure ........................................................................................ 26

Table 19: Summary of Identified Ongoing ICT Projects .................................................................................................... 28

Table 20: Summary of Proposed ICT Projects .................................................................................................................. 28

Table 21: Summary of Road Infrastructure ....................................................................................................................... 29

Table 22: Lengths of Roads by Type of Surface ............................................................................................................... 30

Table 23: Summary of Ongoing Road Projects ................................................................................................................. 32

Table 24: Summary of Proposed Road Projects ............................................................................................................... 32

Table 25: Summary of Aviation Infrastructure ................................................................................................................... 33

Table 26: Summary of Proposed Air Transport Projects ................................................................................................... 35

Table 27: Summary of Shipping Infrastructure .................................................................................................................. 35

Table 28: Numbers of Visits by Cruise Ships to the Ports in Vanuatu, 2009-2013 ............................................................ 36

Table 29: Summary of Ongoing Maritime Project .............................................................................................................. 38

Table 30: Summary of Proposed Maritime Projects .......................................................................................................... 38

Table 31: Summary of Identified Ongoing Tourism Projects ............................................................................................. 40

Table 32: Summary of Proposed Tourism Projects ........................................................................................................... 40

Table 33: Summary of Water Supply Infrastructure .......................................................................................................... 41

Table 34: Main Source of Household Drinking Water Supply ............................................................................................ 41

Table 35: Main Source of Household Washing Water Supply ........................................................................................... 42

Table 36: Summary of Drainage & Sanitation Infrastructure ............................................................................................. 44

Table 37: Types of Toilet by Number of Households ........................................................................................................ 44

Table 38: Summary of Solid Waste Management Infrastructure ....................................................................................... 47

Table 39: Method of Waste Disposal by Number of Households ...................................................................................... 47

Table 40: Summary of Identified Ongoing Water Supply and Sanitation Projects ............................................................. 48

Table 41: Summary of Proposed Water Supply and Sanitation Projects........................................................................... 49

Table 42: Summary of Identified Ongoing Projects (PMO, MFAICET, Youth and Justice) ............................................... 50

Table 43: Summary of Proposed Projects(PMO, Youth and Justice) ................................................................................ 51

Table 44: Typical Weighting of Groups of Criteria ............................................................................................................. 58

Table 45: List of Ongoing Infrastructure Projects .............................................................................................................. 65

Table 46: Priority Individual Public Infrastructure Investment under VISIP 2015 ............................................................... 71

Table 47: Proposed Priority Bundled Public Infrastructure Investment under VISIP 2015 ................................................ 72

Table 48: Priority Privately funded Public Infrastructure Investment under VISIP 2015 .................................................... 74

Table 49: Selected Economic and Financial Indicators with Projections, 2008-18 ............................................................ 79

Table 50: Ongoing Projects Funding ................................................................................................................................. 81

Table 51: Funding Requirements for VISIP 2015 .............................................................................................................. 84

Table 52: Maintenance Cost Requirement for Ongoing and Proposed Projects ............................................................... 86

Table 53: Sources of Funding for Infrastructure Maintenance* (VUV million) ................................................................... 87

Table 54: Current Development partners Activity Trend in Vanuatu ................................................................................. 89

Table 55: Estimate of Potential Annual Infrastructure Funding ......................................................................................... 91

Table 56: Annual Funding Available for Infrastructure Development ................................................................................ 92

Table 57: Tentative Programming of Priority Investment under VISIP 2015 ..................................................................... 93

Table 58: VISIP Implementation Roles (Arrangements) .................................................................................................... 97

Table 59: Summary of Key VISIP Functions and Institutional Responsibilities ............................................................... 100

Table 60: Summary of Capacity Development Activities ................................................................................................. 103

Table 61: VISIP Overall Results Framework ................................................................................................................... 104

List of Figures 

Figure 1: Real Annual GDP Growth (%) .............................................................................................................................. 6

Figure 2: Public Debt Stock (VUV millions) ......................................................................................................................... 6

Figure 3: Overview of Sanitation Coverage Trends in Vanuatu......................................................................................... 42

Figure 4: Overview of Sanitation Coverage Trends in Vanuatu......................................................................................... 45

Figure 5: Aligning VISIP Prioritisation Criteria with NSDP ................................................................................................. 54

Figure 6: VISIP Methodology ............................................................................................................................................ 59

Figure 7: Diagram of Institutional Linkages for VISIP ........................................................................................................ 60

Figure 8: Project Selection Process Applied under VISIP 2015 ........................................................................................ 62

Figure 9: Sectoral Spread by Value of Ongoing Development …………………………………………………………………………64   

Figure 10: Geographic Spread of Ongoing Development ................................................................................................. 64

Figure 11: Per Capita Investment/Province (Ongoing Projects: USD/Capita) ................................................................... 64

Figure 12: Scoring of VISIP 2015 Long List (Multi-Sector, Road, Aviation, & Shipping) ................................................... 67

Figure 13: Scoring of VISIP 2015 Long List (Urban & Rural Water Supply, Urban Solid Waste, Power Supply & Tourism)

 ................................................................................................................................................................................. 68

Figure 14: Scoring of VISIP 2015 Long List (ICT & Education) ......................................................................................... 69

Figure 15: Scoring of VISIP 2015 Long List (Health, Youth & Sport, Justice, Foreign Affairs, Agriculture, PMO) ............. 70

Figure 16: Sectoral Spread of Short Listed Priority Investments – VISIP 2015 ................................................................. 75

Figure 17: Geographic Spread of Short List of Priority Investments – VISIP 2015 ............................................................ 75

Figure 18: Per Capita Investment/Province (Proposed Projects: USD/Capita) ................................................................. 75

Figure 19: Development partner Grants and Investment................................................................................................... 78

Abbreviations

Currency Equivalents  

Currency Unit            Vatu  (VUV) 

Executive Summary 

The Vanuatu Infrastructure Strategic Investment Plan 2015 – 2024 (VISIP 2015) sets out an optimal set of strategic infrastructure investments for Vanuatu. Further, it suggests how to fund and implement these investments, and recommends institutional developments for planning effective, practical, and sustainable, infrastructure in the context of identified and expected financing over the coming decade. VISIP 2015 will be considered for adoption with the National Sustainable Development Plan (NSDP), which the Government of Vanuatu (GoV) is expected to approve in early 2015. To establish full coherence with the NSDP and comprehensively address the issues facing the country, the VISIP includes social infrastructure in addition to economic infrastructure. 

In particular, the VISIP: 

• updates the list of infrastructure projects in the draft infrastructure plan prepared in 2012, but never formally adopted, to include sectoral progress and new policy development since 2012;  
• recommends prioritising infrastructure projects by their linkages with other governmental policies and strategies;  
• considers new projects, including in the social infrastructure sectors (health, education, justice, internal affairs) that may support sustainable socio-economic development; and  
• recommends how VISIP can become a dynamic infrastructure project pipeline development process rather than just a static list of priority projects.  

Infrastructure Challenge and Need for VISIP 

Infrastructure is the foundation for developing urban and rural areas, operating industries and commerce, improving living standards, delivering community services and driving economic growth. Vanuatu has made substantial progress in providing infrastructure, and planning for further investment is underway in individual sub-sectors.  

However, the current stock of GoV supported infrastructure assets is largely failing to provide the services for which they were intended, primarily because assets are provided inadequate resources for operation and maintenance (O&M) once they are deployed. Indeed, maintaining and operating assets needs to be accorded a higher priority than expanding the asset base. The report strives to address critical challenges for developing public infrastructure in Vanuatu by:  

• making infrastructure sustainable by systematically identifying O&M requirements and resourcing them;  
• integrating infrastructure planning into routine public administration processes for more transparency and alignment with evolving government policy and strategic priorities; and  
• providing a framework to guide developing partner support for future infrastructure development.  

VISIP 2015 Methodology  

The project selection methodology is based on four criteria groups (CGs) and their sub-criteria that can be quantitatively and objectively scored based on information about proposed projects.  

CGs and their sub-criteria were selected to dovetail into the three pillars of the upcoming NSDP. This ensures that project selection follows emerging GoV policy and to help sector analysts and the Department of Strategic Policy, Planning and Aid Coordination (DSPPAC) score and rank projects in a manner consistent with the NSDP for future VISIP updates. Indeed, to facilitate such updates the VISIP 2015 prioritisation methodology is structured as a process to be periodically repeated to reflect the country’s changing socio-economic situation and GoV’s evolving policies and priorities. 

Figure ES-1 shows the VISIP projects pipeline development flow process through government and external institutions. 

Figure ES-1: VISIP Methodology 

VISIP 2015 Outcome  

VISIP 2015 considered candidate projects across seven economic and social sectors as well as multi-sectoral projects. Information on the projects was drawn from several sources and discussion with relevant ministries and agencies, although availability of detailed data varied widely between sectors and projects. Figure ES-2 shows the outcome of the priority projects selection process. 

Table ES-1 summarises the ongoing projects and short list of proposed investment projects by sub-sector. 

Table ES-1: Summary of Investment by Infrastructure Sub-Sector (in VUV billion) 

Development partners remain engaged in supporting infrastructure in Vanuatu and stand ready to provide assistance for projects and programs under a final and GoV-endorsed VISIP 2015. However, they also emphasise three concerns:  

• infrastructure development needs to be centralised and better grounded in GoV policy, with local and community resources (especially land) fully mobilised;  
• project management and implementation capacity at agency and ministry levels should be strengthened and absorptive capacity thereby increased; and  
• adequate resources for operating and maintaining projects should be systematically provided to ensure sustainability.  

With the exception of the recently completed Vanuatu National Energy Road Map 2013-2020, there is a dearth of robust sector plans for infrastructure. Ministries with responsibilities for infrastructure need to develop and/or update their sectoral plans, identifying and documenting their priority investment focus and specific projects to facilitate future VISIP updating. The ministries include Ministry of Infrastructure and Public Utilities (MIPU), Ministry of Land and Natural Resources (MLNR), Ministry of Climate Change and Disaster Risk Management (MCCDRM), Office of the Government Chief Information Officer (OGCIO), as well as Ministry of Health (MOH) and Ministry of Education (MOE). 

The three transportation sub-sectors (road, aviation, and shipping) under MIPU and the Public Works Department (PWD) necessitate the formulation of an Integrated National Transportation Plan that will:  

• identify sub-sector internal and interdependency issues; 
• prioritise investment projects and balance them with maintenance needs; and  
• plan for institutional strengthening as well as capacity development (government, national consultants, contractors) and recommend reforms in the sub-sectors especially on interacting with stakeholders. 

Proposed future priority investments have been grouped into three categories: 

• A list of high priority individual public infrastructure projects needing DP support for implementation funding – consists of 18 projects with a potential VUV21.10 billion (USD226 million) investment value. 
• A list of bundled sector projects (comprising many smaller mostly rural projects) needing development partner funding – rural roads, domestic airports, local jetties, and water supply. The total investment value of those bundled projects may be too large to implement in 10 years with foreseeable DP funding; implementation will thus need to be carried out over a longer timeframe. The realistic investments for the next 10 years in this category, consists of  seven sector projects with an estimated VUV6.81 billion (USD73 million) investment value, which would be in line with foreseeable levels of development  partner funding over the coming decade. 
• A privately-funded public infrastructure project under Public Private Partnership (PPP) arrangements – a power supply project (geothermal) with a potential VUV10.08 billion (USD108 million) investment value. 

Table ES-2 reflects the list of future priority projects under VISIP 2015.  

Table ES-2: Priority Projects List Under VISIP 2015 

The figures below provide a perspective of the distribution of priority projects investments by sector (Figure ES-3), and province (Figure ES-4), and, given the disparity in populations in the provinces the per capita investment amounts in each province (Figure ES-5). 

Figure ES-5: Per Capita Investment/Province (Proposed Projects: USD/capita) 

Funding Strategy  

CAPITAL INVESTMENT 

The factors constraining infrastructure investment in Vanuatu are:  

• limited domestic public financial resources available for infrastructure investment; and 
• limited institutional capacity to absorb and execute infrastructure investment (from domestic or external sources).  

GoV funds little infrastructure and other capital expenditure from domestic revenues. It relies on a narrow tax base (VAT, excise, import duties). Barring a broadening of this base, it is unlikely that GoV could self-fund major infrastructure projects in the medium term. Development partner grants (and more recently concessional loans) have been the main finance source for infrastructure. Clearly domestic resources for infrastructure investment, to augment those from the development partners, will need to increase (along with institutional capacity) for the pace of infrastructure investment to rise commensurate with GoV’s development goals.  

The strategy for financing economic infrastructure priority projects under VISIP 2015, developed with the Ministry of Finance and Economic Management (MFEM), reflects the following principles: 

• Ensure that the available funding for economic infrastructure from GoV and its development partners roughly matches the total capital and maintenance expenditures for the proposed investments in VISIP.  
• Ensure that funds are available for adequately operating and maintaining new infrastructure and that the assessments of proposed projects are based on the lifetime costs of infrastructure assets. 
• Use civil society organisations (CSOs) as instruments for achieving GoV’s social and community objectives to avoid compromising the financial performance of existing or potential new state-owned enterprises (SOE) or private utilities.  
• Continue to develop a GoV debt management strategy to ensure infrastructure investment do not lead to debt distress; prioritise using grants to fund infrastructure investment; and strictly limit using loans for those investments that will best boost the country’s productive capacity. 

For ongoing and proposed priority projects, a mixture of external grants and concessional loans will cover investment costs; for proposed projects, grants are preferred but some concessional loan finance will also be needed.   

The total funding requirement for capital costs for ongoing and proposed projects amounts to about VUV71.2 billion (USD763 million) over the next 10 years. For the new projects the proposed investment over 2014-2025 amounts to VUV37.99 billion (USD407 million). Funding modalities for these investments are likely to be: 

• Public investment (DP grants, local+concessional borrowing): VUV25.48 billion  (USD273 million)  
• Private Sector (concessionaires): VUV2.43 billion (USD26 million) 
• Public private partnerships: VUV10.08 billion (USD108 million) 

For proposed priority investment projects, the following split of fund sources has been estimated: 

• Grants: VUV11.7 billion (USD125 million) 
• Loans: VUV13.8 billion (USD148 million) 
• Private funding: VUV12.4 billion (USD133 million) 

As public debt was around 22.5% of GDP at end 2014, well within the 40% threshold suggested by the IMF, the proposed additional loans appear affordable. 

MAINTENANCE EXPENDITURES 

Maintaining public infrastructure is critically important in Vanuatu. Currently, most budgetary allocations dedicated to maintaining infrastructure are limited to domestic aerodromes and some roads. It remains below the threshold for sustaining maintenance and reinvestment of public assets. GoV funding for infrastructure O&M has averaged slightly less than VUV1.0 billion annually largely for roads and airstrips. 

There is a substantial gap in maintenance funding, with most public infrastructure unsupported by preventative maintenance or with no capacity to plan and implement maintenance programs. In addition while this VISIP focuses on ongoing infrastructure projects and prioritised proposed projects, there is no information about GoV’s total existing infrastructure assets. Given the limited funding for maintenance available, much of this stock is probably in disrepair and needs rehabilitation. The cost of such ‘backlog’ maintenance is unknown. 

A broad process of systematically estimating recurrent operation and maintenance expenses is in its initial stages, especially in MOH and MOE, which are managing diverse and dispersed investment assets. To sustain the investment benefits that VISIP 2015 proposes, it will be critical to secure sufficient funding for operating and maintaining all ongoing and proposed new projects. Table ES-3 summarises the demand for funding of maintenance for the sub-sectors. 

Table ES-3: Maintenance Cost Requirement for Ongoing and Proposed Projects (VUV million p.a.) 

* O=Ongoing Projects, P=Proposed Projects 

These costs aggregate in the following indicative sums: 

• GoV-financed stand-alone projects  VUV1.13 billion p.a. (USD12 million) 
• GoV-financed bundled projects                   VUV0.14 billion p.a. (USD1.5 million)          PPP/private sector projects                        VUV0.52 billion p.a. (USD5.6 million) 

ANNUAL FUNDING AVAILABLE FOR INFRASTRUCTURE DEVELOPMENT

Data from implementing committed ongoing projects highlight that the current level of actual development partner spending in Vanuatu, is around USD60 million (VUV5.6 billion) annually. This is considered at or near the country’s current maximum absorptive capacity. Assuming that 75% of that spending is for direct infrastructure investment, a reasonable target for sustained partner funded infrastructure investment in Vanuatu is approximately USD45 million (VUV4.2 billion) annually. 

Therefore, the average annual funding for investment available for implementing the priority projects retained under VISIP 2015 is expected to be as Table ES-4 shows. 

Table ES-4: Annual Funding Available for Infrastructure Development 

A significant increase in investment beyond these levels will require extensive reforms to operations budgeting and to project preparation and selection procedures as proposed in the report. Broadening the tax base to increase GoV revenues for supporting infrastructure will help relax the current capacity constraints on Vanuatu in developing its infrastructure. It will also allow a gradual increase in infrastructure investment in the future.  

Programming Priority Investment 

Table ES-5 provides a tentative programming of priority investment for new projects documented in VISIP 2015 for 20152024. In the table, the ranking of the project by implementation timing follows the scoring of the projects along the VISIP project prioritisation methodology as in the report. The higher the scoring, the earlier project implementation should begin. 

Given the current backlog of ongoing investment, budget availability for new publicly funded investment is expected to begin to appear only in 2018-2019. It is noteworthy that expenditure on public-funded projects declines towards the end of the 2023-2024 planning period as projects in the shortlist are implemented. The VISIP process is meant to provide a continuously updated long list of projects. At periodic intervals, new projects will be added to the shortlist as infrastructure planning though updates of the VISIP. Funding for such new projects is expected to be available from continued external funding support, private sector contributions to infrastructure, and gradually increased contributions from GoV internal resources. 

GoV recognises the need to initiate new capacity development for the infrastructure sector. The larger ‘infrastructure capacity system’ includes the capacities of institutions and individuals from government, SOEs, private sector, civil society, and development partners.  

VISIP implementation requires high quality enabling institutional environment surrounding the investment plan as it emphasises managing an investment portfolio instead of individual projects. The management of VISIP depends on clearly defining the central oversight and implementation agencies’ roles. These include the Prime Minister’s Office (PMO), DSPPAC’s Vanuatu Project Management Unit (VPMU), MFEM, line agencies with cross-sectoral responsibilities such as MIPU (which will assist other ministries in preparing project profiles, scheduling and supporting of maintenance activities, and liaising with local communities), and the project-sponsoring line ministries themselves.

DSPPAC will manage VISIP implementation centrally. However, VISIP projects need sub-sector capacity building in project areas, to design approaches to strengthen local economies and create livelihoods such as using labour-intensive methods and local contractors when possible (key for project selection criteria). VISIP’s monitoring and evaluation (M&E) should develop and apply a narrow set of measures to track gains in sector-wide capacity. 

The updating of the VISIP must be anchored in national development plans which can be expected to evolve. Overarching goals of improving living standards, and supporting inclusive human development and economic growth are unlikely to change, but relative merits of specific investments and of sectors will and criteria governing investment priorities must respond to changing priorities of the GoV. Regular VISIP reviews and updates will ensure continuing alignment with national priorities. This report sets out the key functions, institutional responsibility the key activities for VISIP updates. They are detailed in Chapter 6 (table 59). As noted earlier, capacity development needs to go hand in hand with VISIP implementation. The main recommendations for capacity development activities to enable efficient application of the proposed enhanced institutional responsibilities are detailed in Chapter 6 (Table 60) 

Technical assistance should come from local training institutions and others from the Pacific region. Sources of support should come from academe, non-profit research institutions, and regional training centres to complement country-based resources. Also, peer learning can be a most effective and convincing means to support change. ICT will provide more opportunity for real-time linking of Vanuatu’s infrastructure planning with other Pacific island countries’ experiences. 

VISIP managers, whether in DSPPAC, VPMU, or line ministries, need good information to support decision-making. Rather than focus on individual VISIP inputs and activities, an M&E Framework has been proposed for the implementation of VISIP that suggest performance indicators for goals, outcomes and outputs, in alignment with national development goals. The overall results framework is presented in Chapter 6 (Table 61).  

In terms of reporting, DSPPAC will update its portfolio and database of large investments, including VISIP priority projects on a regular basis, with brief quarterly activity reviews and an annual report. Quarterly reviews will inform stakeholders of major portfolio activities and share success stories about implementation or results of a particular active VISIP investments. Annual reports will analyse the progress and status of the entire VISIP portfolio, discussing investments completed, funded, or committed. Further, they will check each investment in the pipeline and assumptions about readiness, sequence, cost, and funding sources; note outstanding issues to decide if the plan needs adjusting; and review the update process to see if it helps manage VISIP effectively. 

DSPPAC, in line with its mandate, will organise periodic meetings with developing partners to share information on project progress or problems and update them on the evolving project pipeline and emerging projects. 

VISIP 2015 - 2024 | Executive Summary 

Table ES-5: Programming Priority Investment Projects under VISIP 2015 

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VISIP 2015 - 2024 | Executive Summary 

MAP OF VANUATU 

       Courtesy of National Statistics Office, Vanuatu

xviii 

1 Introduction 

VISIP 2015 builds on a draft infrastructure plan that was prepared in 2012, but was never formally adopted. VISIP 2015 covers social as well as economic infrastructure priorities and presents a Strategic Investment Plan for 2015-2024 for the Council of Ministers and Parliament to adopt to complement NSDP, which GoV is preparing for early 2015 approval. Its preparation was coordinated with PMO and MIPU and was supported by the Pacific Region Infrastructure Facility Coordination Office (PCO).^[1]

In particular, the VISIP: 

• updates the list of infrastructure projects in the 2012 draft plan to include sectoral progress and new policy development since that time;  
• recommends prioritising infrastructure projects by their linkages with other governmental policies and strategies;  
• considers new projects, including in the social infrastructure sectors (health, education, justice, internal affairs) that may support sustainable socio-economic development; and  
• recommends how VISIP can become a dynamic infrastructure project pipeline development process rather than just a static list of priority projects.  

1.1 Purpose and Scope

VISIP 2015 outlines Vanuatu’s priorities and plans for major infrastructure for the coming decade -- up to 2024. 

Specifically, it sets out a list of priority projects, and also recommends processes and institutional responsibilities within GoV that will allow successful implementation, monitoring and evaluation of these strategic investments. The types of infrastructure considered cover the commonly termed ‘Economic Infrastructure’ as well as ‘Social Infrastructure’. Economic infrastructure (e.g. transport, power, water supply, communication) directly facilitates business activity and economic growth (e.g. industry, commerce, trade, tourism, food production). Social infrastructure refers to assets and buildings that accommodate social services (education, health, youth and sport facilities, justice and community services)². Social infrastructure fosters economic development indirectly by nurturing the population’s well-being and productivity in the medium and longer term.   

The report analyses the demand for economic and social infrastructure and documents the proposed priority investments for Vanuatu, along with a funding strategy. The report also recommends government actions for: 

• making VISIP the main infrastructure projects pipeline instrument to attract development partner funding; and 
• securing the long-term sustainability of infrastructure assets proposed in the pipeline by explicitly recognising maintenance needs. 

VISIP 2015 covers the following infrastructure sub-sectors:

Infrastructure, vital for economic and social development, provides the foundation for developing urban and rural areas, operating industries and commerce, and delivering services to the community. Although Vanuatu has progressed in providing infrastructure and planning for investment is underway in individual sub-sectors, challenges remain:  

• making infrastructure sustainable by  identifying resources for maintenance and operation;  
• intergrating the prioritisation and planning of infrastructure into GoV’s routine public administration;  
• aligning development of the pipeline with evolving governmental policy and strategic priorities;  and            guiding development partner assistance to infrastructure in line with strategic priorities VISIP 2015.  

The current stock of GoV-supported infrastructure assets is largely failing to deliver planned services, because they receive inadequate resources for their O&M once they are deployed. School buildings, sports stadiums, health facilities, courthouses, and GoV buildings as well as key transport and other assets are falling into disrepair and often become unusable well within design life.  

VISIP 2015 recommends that operational and asset management considerations should not be side issues to consider after infrastructure investment decision making, but should be core to the investment decisions themselves. Maintaining and competently operating the current stock of assets should be prioritised in parallel with expanding the current asset stock. As such, the report includes an updated methodology for prioritising projects. It tailors the list of projects proposed for investment in accordance with to GoV’s capacity and resources to operate and maintain each investment over the life of the asset.  

1.2 VISIP 2015 Process 

The preparation of the VISIP involved two stages: 

STAGE 1: REVIEW AND CONSULTATION

The long list of projects to potentially include in VISIP 2015 was first compiled from the draft 2012 plan and then updated through consultations, and in line with developments in the past two years. Stage 1 integrated five tasks: 

• Update the long list and structure of projects in VISIP 2012 based on evolved GoV policies and strategies. 
• Review new GoV policies and strategies related to economic and social infrastructure development and other sector plans and studies. 
• Consult with ministries covering productive sectors to update infrastructure requirements consistent with new governmental policies and targets. The ministries include MIPU; Ministry of Agriculture, Livestock, Fisheries, Forestry and Bio-Security (MALFFB); Ministry of Foreign Affairs, International Cooperation & External Trade (MFAICET); Ministry of Tourism, Trade, Commerce and Ni-Vanuatu Businesses (MTTCNVB); MLNR; and MCCDRM as well as the social sectors MOH; MOE; Ministry of Justice and Community Services (MJCS); Ministry of Youth Development, Sport and Training (MYDST); and Ministry of Internal Affairs (MIA). 
• Prepare an updated long list of projects and complementary measures to meet the demand for infrastructure for 5-10 years, including indicative cost estimates. 
• Organise a workshop with key stakeholders to review the proposed long list to ensure that it reflects a coherent program of infrastructure investments, measures, and interventions for achieving national objectives and requirements. 

STAGE 2: PRIORITISATION AND FINALISATION OF THE VISIP 2015 DOCUMENT  

This included seven tasks: 

• Develop and agree with the VISIP Steering Committee (VISIPSC) to a prioritisation framework including a methodology and criteria for ranking projects. 
• Prepare preliminary cost estimates for priority projects including capital and recurrent funding requirements in the proposed investment portfolio. 
• Update the institutional assessment and recommend improvement for governance and management for implementing and managing VISIP. 
• Prepare a draft prioritised investment program, an underlying funding strategy, and draft implementation schedule, for VISIPSC. 
• Develop workshops to find governmental consensus on the prioritised investment program.    
• Finalise VISIP 2015 with updated concise and comprehensive project summaries for priority projects for formal GoV approval. 
• Train governmental staff in the VISIP process and project prioritisation methodology to enable future VISIP updates. 

The VISIP 2015 process involved wide consultation among policy makers in government, and with providers and users of infrastructure and funding agencies. These consultations included meetings with individual stakeholders and stakeholder groups (including the private sector and civil society), and five workshops bringing stakeholders together at critical stages in the preparation process (see Appendix 8). 

1.3 VISIP Role in Government Planning 

GoV intends to formally adopt VISIP 2015 as its primary reference for considering infrastructure priorities: including those funded form its own resources, and those supported by its development partners. It therefore needs to have a clear position and role within GoV’s existing framework for operations, planning, and decision-making.  

The VISIP will be integrated with evolving national development plans and government policies, sector plans, and line ministries’ corporate plans. As Chapter 3 outlines, the line ministries will support VISIP by encapsulating their priority project concepts into project profiles such as those in appendix 6. Equally importantly, they are tasked with working closely with rural communities that their projects will affect. Such work includes resolving land issues and securing communities’ in-kind contributions to project construction, operation, maintenance, and security. Line ministries will also be responsible for updating their respective sector plans and ensuring that they are consistent with the overall infrastructure investment program (i.e. VISIP). MIPU, as the GoV’s lead line ministry involved in infrastructure development, will assist all other line ministries in preparing their project profiles and ensuring that investments are well integrated across sectors.  

To combine the project concepts from the ministries in a coherent, fundable, and practical implementation plan consistent with GoV policies requires two key roles at senior GoV levels for integration and project selection and coordination:  

1. The Department of Strategic Policy, Planning and Aid Coordination (DSPPAC) will be responsible for: 

• aligning infrastructure investment projects with GoV policy and priorities;  
• short listing projects for subsequent development using the selection process Chapter 3 describes; and             liaising with developing partners to secure funding commitments to the project short list. 

1. The Ministry of Finance and Economic Management will consult with DSPPAC to:  

• review the project short list as it is being prepared; and   
• evaluate the extent to which the GoV budget can realistically support the life cycle costs (staffing, operations, asset maintenance, energy, utility needs) of the envisaged investments.  

These functions will integrate the VISIP with GoV priorities and capacities, and enable alignment with infrastructure sector and sub-sector plans. It is also intended as a basis for infrastructure development and development partner financing discussions between GoV and developing partners and the private sector, giving these stakeholders confidence in the rationale behind and commitment to proposed investments. The VISIP will be subject to ongoing monitoring and updating, as Chapter 3 discusses.  

The following chapters introduce roles and institutional linkages that support the process for formulating the VISIP.  

2  Infrastructure  Challenges 

2.1 Growth Drivers  

Vanuatu’s economy is founded largely on agriculture and services. Based on GDP estimates at 2012 prices, agriculture, fishing, and forestry account for around 22.5% of output and 65% of the labour force, with crop production dominating. Industry accounts for only around 9.5% and 5% of employment with the major contributors being construction, manufacturing, and electricity and water supply. The service sector accounts for nearly 68% of output and 30% of employment with the major contributors being public administration, retail trade, finance and insurance, transport, real estate, and accommodation and food services.  

The service sector relates primarily to tourism. This puts premium importance on developing less costly air, land, and sea transport services to improve market linkages within the country and with the outside world; this also applies to communications and energy in urban and rural areas. Most residents live in rural areas, and rely on agricultural production for their subsistence and for generating cash incomes. GoV wishes to integrate more people across Vanuatu into the growing national economy to better distribute the benefits of economic growth and to strengthen local human resource inputs in that growth.  

Vanuatu’s population is young and youth unemployment is a growing problem, with crime increasing. GoV is considering professional training, agricultural support services, and increased access to education and health, justice, and sports. Infrastructure development can help most by supporting good climate-resilient transport and communications (supporting market development), water supply and sanitation (supporting health), least-cost electrification (improving productivity), and other facilities supporting productive youth activities. 

Looking at the macroeconomic trend and recent GoV budget papers, Vanuatu is still in a phase of relatively low economic growth. Given its high degree of openness to the global economy and global recession-related delays to implementing major donor-funded construction projects, Vanuatu’s economic activity has picked up only gradually from 2012. A recovery in tourist air arrivals and strong copra exports partially offset persistent weaknesses in the construction, financial services, and several key agricultural commodity sectors.  

Vanuatu has achieved a period of sustained positive economic growth since 2003, following years of fluctuating performance (Figure 1). The real annual increase in gross domestic product (GDP) peaked at 8.5% in 2006 and held above 5% for 3 years before slowing to 3.3% in 2009, and less than 2% in 2010-2012. Estimated growth for 2013 is 2.8% which is expected to rise slightly and stabilise at 3.2% in 2014-2016. 

Figure 1: Real Annual GDP Growth (%) 

Source: World Bank Statistical Data; Government of Vanuatu, 2013 Budget Papers.  

Vanuatu’s economic activity should strengthen slightly in the years ahead. GoV allocated VUV494 million for new projects proposals (NPP) in the 2013 budget. These included VUV109 million to boost service delivery in the health and education sectors, VUV40 million for trade and agriculture to boost the productive sector, and VUV125 million to OGCIO for managing the government IT system (especially the i-Government network) which is expected to generate cost savings and additional revenue for the government. 

Also in 2013, GoV started drawing down loans to fund the Port Vila Lapetasi International Multi-Purpose Wharf Development Project and the Vanuatu Inter-Island Shipping Project supported by ADB, DFAT, and NZMFAT. GoV had hoped that these projects would help drive strong future economic growth. Emerging delays in their implementation due to limited absorption capacity in the sector may blunt their future economic impact. 

Deficit financing has intensified borrowings, with new borrowing growing by 13% on average between 2008 and 2011; slower though than the average 42% growth recorded between 2004 and 2007. New borrowing in 2012 pushed the total stock of public debt (domestic and foreign) to a new high at VUV 15,750 million in 2012 (19% of GDP); up by 7% from its level in 2011 (VUV14,676 million).  

At the end of 2012, total public and public external debt remained low at 21.6 and 13.9 percent of GDP respectively, which is below the 40% threshold identified by IMF^[2] as Figure 2 shows. 

Figure 2: Public Debt Stock (VUV millions)

Source: Department of Finance and Treasury (DOFT) 

GoV may need to raise this ratio further over the medium term, following its new borrowing plans for public investment projects. At the macroeconomic level, Vanuatu appears to be able to absorb the considerable external financial flows necessary for realising its goals for infrastructure in the coming years. According to the IMF:⁴

“The economy is gradually turning around after weak growth in 2010–11 on the back of increasing tourism income. Inflation remains low, and the balance of payments stable. The fiscal position is sound, with fiscal deficits on the decline. Credit growth has slowed significantly. In the medium term, growth is expected to be driven by rising public investment, in part financed by external loans. Macroeconomic and prudential buffers are strong. Net international reserves are high, and public and external debt low. The risk of debt distress is low, and expected to remain so. … In the longer run, financing continued investment while preserving low debt will require additional revenue measures. At the same time, structural reforms to improve the functioning of markets and institutions and to create a more business-friendly environment are needed to boost the growth potential.” 

There are strong indications that development partners remain closely engaged in infrastructure development in Vanuatu and are keen to move projects and programs forward under VISIP 2015, endorsed by GoV. Looking ahead, the key partners for infrastructure investment will remain, in addition to World Bank and ADB – urban development and maritime transport: Japan International Cooperation Agency (JICA) – maritime transport, agriculture, tourism, health;, NZMFAT – health, tourism, maritime and air transport; Australian Aid (DFAT) –  land transport, maritime transport, rural energy, education; and China – land transport, public buildings, sport facilities, social services. The private sector is also significantly involved in renewable energy, urban and rural electrification, information and communication technology (ICT), and water utilities in urban areas.   

2.2 Infrastructure Planning  

2.2.1      BACKGROUND 

5

Vanuatu’s geographic and demographic structure poses obstacles to efficient development. Around 250,000 people are scattered over about 80 widely distributed islands, of which 64 have residents (2009 national census). This makes travel difficult and costly. The distance from the southernmost to northernmost islands is over 800 km. About 75% of the population lives in rural areas, and 55% live on islands with no significant urban centres (see Table 1 and Table 2). Just under a quarter of the population lives in the two urban areas of Port Vila and Luganville, and these are the only two areas with any significant formal urban services. 

Table 1: Population by Province and Urban Area 

Source: National Census 2009 

Table 2: Population by Island 

⁴  IMF Country Report 13/169, 2013 Article IV Consultation Report for Vanuatu (June 2013) pp.5, 17.

⁵  The 2009 National Census, the latest available, recorded a total population of 234,020. For subsequent years, the National Statistics Office (NSO) assumes a 2.5% growth rate up to 2025. 

Source: National Census 2009 

Vanuatu’s geography also makes it difficult to build infrastructure efficiently and economically. Small population clusters make economic and financial justification difficult. Logistical problems of moving large construction equipment from island to island deter contractors and increases prices. Once built, limited capacity and resources to maintain infrastructure leads to asset deterioration. Consequently, there are significant gaps in providing and operating physical infrastructure, particularly in poor and remote rural areas.^[3] In the late 1990s and early 2000s, development partner assistance was focused on policy reform, reducing public investment in infrastructure, which GoV further constrained as it reduced its debt burden. Infrastructure deficiencies reduce access to essential social services, and hinder economic development. 

The proportion of people living in urban areas increased between census dates: from 21.5% in 1999 to 24.4% in 2009. Whilst this is not a dramatic change the government wishes to manage urbanisation risks before it does become a significant issue. 

According to the National Statistics Office (NSO),⁷ the population is estimated to reach around 300,000 by 2020 with a 2.5% annual growth rate. By 2040 the estimate ranges from 400,000 to 500,000.  

2.2.2      NATIONAL PLANNING 

There is a lack of clear, comprehensive, and rational planning for infrastructure in Vanuatu. This is partly due to the fragmented responsibilities for planning and providing infrastructure (see Section 2.3). It is also a result of there being little national, provincial, or local guidance on what is specifically needed and where. National policy, ministerial corporate plans, road maps, action plans, and sector strategies lack clear priorities and hard project proposals. With few exceptions 

(Energy Road Map and Integrated ICT Government Initiative or ‘iGov Plan’), proposals tend to be loosely worded documents announcing overarching objectives but detailing only soft issues such as organisational matters and human resources. Infrastructure requirements are seldom documented and lack any geographic focus, road maps for deployment, or indicators for monitoring and evaluation. 

There are no currently approved spatial or physical development plans for any part of Vanuatu, or for the whole country. Thus deciding where infrastructure might be most needed or identifying infrastructure project investments that could have synergies with other aspects of development is difficult. 

To alleviate these shortcomings, the sector planning policy framework will be strengthened to allow for developing or updating sector plans, especially in investment heavy economic and social sectors: transportation, energy, ICT, tourism, agriculture, climate change and disaster management, health and education. Updated sector plans will include an inventory of the existing asset base, with their conditions and the prioritised demand for infrastructure improvement. It will also include phasing in needed investment to balance developing new infrastructure against rehabilitating existing assets combined with sustainable operation and maintenance of the entire asset base. 

2.2.3      NATIONAL DEVELOPMENT POLICY AND PLANNING  

In 2006 GoV prepared an overarching development agenda ‘Priorities and Action Agenda 2006-2015’ (PAA), followed by ‘Plan Long Act Short 2013-2016’ (PLAS). These laid out seven key priority areas, emphasising:  

• economic integration,  
• primary productive sectors support,            education and social welfare support, and   income increases.  

Nearing the end of this planning period, and having had a change of government, Vanuatu is at a policy crossroads. After extensive national consultation the GoV has broadened its focus beyond simply economic growth and now also emphasises improved social services, protection of cultural values, protection of the environment, and resilience to climate change and natural disaster risks.  

The ongoing consultative process within GoV and the present technical assistance (TA) are inputs to NSDP, which is is on track for adoption by the Council of Ministers to in the first half of 2015. Previous governments’ priorities have not been officially superseded and many are still relevant to the current discussion. A summary of PLAS and PAA elements key to VISIP 2015 follows. 

PAA outlines seven key GoV development priorities: 

The seven priorities are not ranked. GoV recognises that these goals are interdependent and must proceed together. Of chief relevance to VISIP 2015 is priority vii although there are elements of priority iv and vi. that also need to be taken into account. Under priority iv, key sub-tasks are to improve climate resilience by protecting coastlines and water supplies through reduced pollution and to finalise and implement the Vanuatu climate change policy including its integration in the PAA, sector plans, and ministry corporate plans. Under priority vi, a key sub-task is to deliver a school infrastructure development program that improves the stock of school facilities and equipment and mitigates the impact of national disasters. 

In priority vii a key policy objective (7.1) is to ensure the provision of competitively priced, quality infrastructure, utilities and services, either through public enterprises or through private sector partnerships and competition.  

PLAS 2013-2016 mirrors these priorities, except that under priority vi it also includes a strategy to support and strengthen holistic development of youth and conduct and ensure quality sports for all. Youth activities and development of sports facilities are high GoV priorities that VISIP 2015 addresses. 

The project list VISIP 2015 retains aligns with the PAA, PLAS, and NSDP’s current strategic orientation. Given the evolving governmental policy for development planning, the VISIP priority project lists (the projects pipeline) will be updated periodically to ensure its continued alignment with the national policy framework for development planning. 

2.2.4      POLICY IN TRANSITION 

As set out in the emerging NSDP,^[4] national policy rests on three pillars: 

1       Sustainable economic development focused on the traditional economy and on economic policy and planning, with priorities to: 

• strengthen and encourage ‘kastom’ or the traditional economy alongside the cash economy; 
• develop the primary sector to ensure sustainable resource use that benefits current and future generations;  
• empower the private sector to increase green employment opportunities; and 
• cut costs by expanding renewable energy, both by major urban energy producers and also in small-scale rural contexts.   

2       Sustainable human and social development focused on cultural, human, and social development, with priorities to: 

• expand educational opportunities and develop the sustainability skills for the workforce;
• improve health services, especially for rural communities, based on promoting Melanesian nutrition and 

lifestyles;  

• promote good government and public sector services that empower traditional leadership structures; and 
• strengthen communities and families through increased valuation and promotion of social networks. 

3       Sustainable natural resource and environmental management and development focused on protecting the environment and natural resources and reducing climate change/disaster risks, with priorities to: 

• maintain and capture the value of critical ecosystem services, even in remote and rural areas; 
• enforce comprehensive, clear, and conservative development controls to ensure that the economy does not grow detrimentally to the environment;  
• ensure protection for the diverse natural and social resources (including indigenous foods); and 
• integrate climate change and disaster risk policy and action, so that risk is managed holistically and effectively. 

Economic integration and growth are still expressed as high priorities (pillar 1), but social development, environmental protection, and climate change/disaster risk management are more prominent among government goals than they were in the 2006-2015 planning cycle.  

GoV recognises that infrastructure investment is key to achieving development goals, and that infrastructure must be of high quality and focussed on sectors instrumental for economic and social development (transport, education, health). Infrastructure must also be sustainable for the country’s capacity to staff, operate, and maintain it. Selecting future infrastructure projects for investment in Vanuatu must reflect these recognised realities.  

Importantly, the donor community’s more constrained resource availability for Vanuatu increases the need for a more strategic view of infrastructure investment. Absence of a sustainable maintenance framework for existing public assets particularly concerns the development partners consulted. This needs to be addressed at the national level for donor community confidence and therefore their willingness to keep the current support momentum. 

2.2.5      INSTITUTIONAL RESPONSIBILITIES FOR INFRASTRUCTURE 

Vanuatu has a complex and fragmented set of institutions, in and outside government, active in infrastructure development and services. Table 3 shows the major institutions’ roles in each subsector. This section notes key challenges in and across institutions for managing and coordinating infrastructure investments, along with broader institutional issues around managing project implementation. 

PMO is responsible for medium- and long-term national development plans. DSPPAC in PMO is responsible for monitoring and guiding infrastructure project development in general, following national objectives. DSPPAC is coordinating VISIP 2015’s development.  

Responsibility for major project implementation rests with the Vanuatu Project Management Unit (VPMU). Its core staff previously managed the Millennium Challenge Account (MCA) project. This was a stand-alone unit that operated beside normal government procedures, as a good model for managing large projects. Following the MCA project, VPMU continued to oversee all major projects, especially donor-funded ones. It now operates under PMO. 

MFEM is responsible for the GoV budget. Within MFEM, the Treasury lays out a macro fiscal framework to guide development partner investments.  

Large infrastructure investment decisions have been rather reactive with funding opportunities from bi-lateral development partners and international finance institutions.  

Although line ministries sponsoring projects in their sectors liaise with local communities to ascertain community support for a project (including in-kind) and the availability of land, MLNR is ultimately responsible for resolving issues related to the land required for physical infrastructure in each subsector. Land use is complex, as most land in Vanuatu is not owned by individuals but is customary land with communal rights. Balancing the need for national development with honouring customary land rights has been challenging. It is common for grievances to end up in an overburdened Customary Land Tribunal. Some cases, often lasting a year or more, delay or stop infrastructure construction altogether and raise costs substantially. The Vanuatu Land Governance Committee (VLGC), with Director General MLNR as chair, has proposed land reform measures, but land issues are likely to remain sensitive. Each investment must examine land issues, and early in the process. 

MIA coordinates among six provincial and three municipal governments. It performs a cross-cutting policy function for all infrastructure subsectors. The Physical Planning Unit advises local governments on development planning, zoning, and enforcement. Like MLNR, it lacks adequate technical staff to fulfil its mandate, and its planning function appears to duplicate MLNR’s. With these constraints, ministries with immediate staff presence and technical capacity in a particular area are often called upon to provide services that may or may not exceed their mandates. For example, MIPU’s PWD has operational units in each province and may fulfil land resolution functions. 

Currently coordination between GoV central agencies and the line ministries that implement projects is insufficient. The project-orientation of most infrastructure investment strains ministries’ capacity to work programmatically and strategically. And while central agencies have skilled and experienced staff, their capacity is still inadequate to manage a portfolio of large investments. Often, their capacity is spent managing development partner relationships and diverse development partner driven requirements.  

MIPU is directly responsible for transport infrastructure in land, aviation, and shipping. ICT has been moved to OGCIO under PMO. MIPU is also involved in planning urban water supplies (with MLNR). It operates the water utility in Luganville municipality and four other provincial capitals in remote island towns. Because sanitation and drainage is associated with road construction, MIPU’s PWD often provides this infrastructure. Further, although MCCDRM is officially responsible for the energy sector (moved in 2013 from MLNR), PWD operates small power generation facilities in two remote island towns. It operates these water supply and power plants in remote islands because it has a critical, though inadequate, mass of staff and operations in the provinces. For cases like these, it is too costly to set up separate ministry facilities to build and operate small-scale infrastructure services. 

With all these mandates, MIPU faces severe shortages of skilled staff in its Port Vila office and provincial PWD operations. PWD has 30% of its posts unfilled. Most of its few engineers are mainly generalists, not specialist engineers (civil, structural). Some skilled engineers have been promoted to management where their engineering expertise becomes less relevant.  

For land and marine transport subsectors, particularly in remote islands, PWD and Ports and Harbours (PaH) are responsible for much of the policy and planning work along with practical aspects of regulation and monitoring. The Civil Aviation Authority of Vanuatu (CAAV) mainly regulates the aviation sector with the Pacific Aviation Safety Office (PASO) at Port Vila’s national airport. Being stretched so thin in planning, operating, and maintaining infrastructure and with limited budget, PWD and PaH have great difficulty maintaining existing infrastructure. Much of the available funds is diverted from budgeted purposes into the emergency rehabilitation of critical, mostly urban infrastructure leaving few resources for maintenance. Provincial PWD directors complain that only a portion of the stated budget arrives in the provinces. This leads to rapid deterioration in infrastructure assets, particularly roads until they become unusable due to lack of maintenance.  

The public works units in Port Vila and Luganville municipalities are responsible for small roads while their sanitation units collect solid waste. Their efficiency as infrastructure providers and operators is low. Roads are in poor repair and sanitation services uneven. MIPU and the municipalities or provincial authorities may not be the best institutional choice for providing infrastructure services. The use of local contractors and island-based labour including training programmes, pioneered under VTSSP, may prove more efficient and transparent as a model for future infrastructure implementation, operation, and maintenance, particularly away from larger urban centres.  

The Department of Environmental Protection and Conservation (DEPC) now under MCCDRM regulates sanitation and solid waste. The formal collection of rubbish and establishment of dumpsites are limited to a few urban areas and larger towns, with local mayoral offices managing. DEPC is also responsible for pollution control, which should affect infrastructure investments and the need for environmentally friendly project designs.  

Table 3: Institutional Responsibilities for Infrastructure 

        Source: GoV communications; VISIP 2012.

Table 3 denotes the division between the governmental department and the public or private corporation operating the infrastructure with a right slash ‘/’ between them. Major international wharves; Port Vila’s water supply; telecoms including mobile phone, cable television, and Internet; and most power stations are operated privately, by charter, concession, or license. Airports Vanuatu Limited (AVL), an SOE, operates the international airports. The table excludes other small private sector infrastructure service providers. Except for telecom, competition has been slow among these corporations. Involving PWD (not set up as a service vendor and revenue collector) in operating and maintaining public infrastructure limits the prospect of predictable revenue streams from infrastructure. This discourages private sector investment and action. 

Electricity rates are uniform across the country even for those with cheaper local sources. Alternative energy sources are being explored, but low demand densities in rural areas may inhibit cost reductions for consumers. Internet speeds in Vanuatu, in urban areas and especially in rural areas, is slow, with many in the private sector calling for the construction of a second undersea fibre optic cable to PNG via Solomon Islands to complement the existing one to Fiji.  

Utility regulators in electricity, water, and telecoms are challenged to balance the need for quality and reliability in infrastructure services with the mandate for access and affordability. Table 3 does not show the larger roles of the private sector and civil society in infrastructure services. The private sector is likely to invest in and drive investment in the next 5-10 years, especially in sectors like ICT, tourism, energy, and water. Civil society groups will continue to push for infrastructure that reaches Vanuatu’s poorer populations.  

If Vanuatu grows demographically and economically as projected, development partner roles will also shift or moderate. GoV needs to be more assertive in defining and owning its portfolio of priority investments and in coordinating regularly with development partners. This would bring all development partners around one table in sharing sector constraints and issues facing the country. Effective GoV donor coordination will help identify more creative partnership modalities for using the private sector, communities, and civil society. This would strengthen national systems and harmonise procedures throughout the investment cycle. In many line agencies functions such as policy, planning, implementation oversight, and monitoring are weak due to lack of funds and/or technical capacity. The government relies on external senior advisors in ministries or regulators. It is GoV’s intention to build capacity, replacing many of these positions with national staff. 

2.3 Sectoral Strategies, Corporate Plans and Projects 

To date, line ministries responsible for infrastructure assets development or management do not have a comprehensive analysis of their sectors nor sub-sectoral infrastructure preparatory studies along with investment needs specified by location, although this has improved in some sectors in the past two years. Moreover, they do not as yet have clear infrastructure development and management plans that anticipate infrastructure needs, set priorities, and estimate budget requirements that take into account the need for sustainable operation and management. Table 4 summarises the situation by sector. 

Table 4: Existing Sector Plans and Studies 

Except for the recently completed Vanuatu National Energy Road Map 2013-2020, there are few recent and robust sector plans to guide public infrastructure planning. Infrastructure heavy ministries (MIPU, MLNR, MCCDRM, OGCIO, MOH, and MOE) need to develop or update such sectoral plan identifying and documenting priority investment orientation and projects to allow future VISIP updating. 

The three transportation sub-sectors (road, aviation, shipping) under MIPU and PWD need an Integrated National Transportation Plan that will: 

i.     identify sub-sector internal and interdependency issues;  ii.      prioritise investment projects and balance them with maintenance needs; and  

iii. plan institutional strengthening and capacity development (government, national consultants, contractors), and recommend reforms in the sub-sectors especially for interacting with stakeholders. 

The following sections present the current situation in each sector. For each ministry there is an overview on infrastructure project status with underlying policies and plans for future projects. The project lists are split into two groups. The first includes ongoing projects implemented in each sector. The second refers to future projects for which the ministry was able to provide enough information to formulate a reasonably complete project profile (see Appendix 1). The analysis reflects information gathered from meetings with the GoV, ministries, and other agencies and the review of sector and project reports.  

Some sectoral lists include bundled projects (highlighted as bundled in the ‘Type’ column). These projects comprise many similar smaller projects across all islands and provinces (rural feeder roads, jetties, rural water supply) that cannot be differentiated without the completion of prefeasibility studies, (that are yet to be done). The investment cost has been estimated for the bundled project’s underlying sub-projects. The sub-projects within bundled projects, and their estimated costs are presented in the overall project long-list for proposed projects in Appendix 4. 

‘Important but Unplanned’ (IU) is a new category projects, introduced in VISIP 2015. An IU project reflects an investment that ministries and agencies consider very important for fulfilling their mandates, but for which not enough project information (perhaps not even a project concept paper) is available. Such a project cannot be ‘scored’ under VISIP 2015, but their inclusion in the project long list may stimulate a ministry to prepare a project concept and profile as in the template Appendix 1 outlines. Then it can be included in the pipeline of demanded projects and scored in future VISIP updating. 

2.3.1      AGRICULTURE 

Current Situation 

Vanuatu’s fertile soil and generally favourable climate have the potential to produce a wide range of agricultural, forestry, and fisheries products for domestic and export markets. A productive agriculture sector is important for the national economy, vital for food security and rural poverty alleviation, and also provides links to downstream industries such as agricultural processing. Agriculture consists of two sub-sectors: subsistence smallholder farming, and large commercial farms and plantations.  

The majority of Vanuatu’s population depends on agriculture and other primary sectors such as fisheries and forestry for their economic sustenance. While the primary sector constitutes 21% of GDP (2010-2012), almost 75% of the population depends on this sector. Further, this sector contributes almost 60% to Vanuatu’s merchandise exports (average over 2011-2013). A significant proportion of exports from the manufacturing sector are value-added primary products. Moreover, being a small island economy, Vanuatu imports many food products. 

Due to the significance of exports and imports of raw and processed primary products to Vanuatu’s economy, the country requires adequate diagnostic testing and certification facilities for food, animal, and plant products. Vanuatu currently lacks such facilities.  

In 2012, the Australia funded Pacific Horticultural and Agricultural Market Access (PHAMA) programme commissioned a study ‘Establishing Diagnostic Services in Vanuatu’. The study inspected Vanuatu’s laboratory facilities and concluded that: “None of the existing laboratories visited are currently at the ISO/IEC 17025:2005 standard, for multiple reasons, including the standard of facilities available, the standard of suitable quality procedures being used and the suitability of current laboratory equipment available.” The report recommended constructing a central diagnostic facility to bring together all the diagnostic functions to ensure cost-effective provision of diagnostic services in Vanuatu. 

The lack of diagnostic facilities caused the following problems: 

• Increased cost of export certification: primary products can be exported to developed country markets such as Australia, New Zealand, or the European Union only after they have been certified to meet those countries’ standards.  

• Reduced ability to regulate imported primary products: the absence of sufficient laboratory facilities for food, animal, and plant products reduces the ability of the GoV to regulate imports of these products and take adequate measures to prevent the entry of new pests and diseases into the country. 
• Reduced ability to ensure food safety in Vanuatu: the absence of adequate laboratory facilities reduces local authorities’ ability to ensure the safety of food and water produced and sold for human consumption in Vanuatu, and carries a significant risk for the country.  
• Risk of violating international treaty obligations: Vanuatu is signatory to international treaties and protocols related to animal and plant safety, as well as bilateral quarantine protocols, and the absence of adequate diagnostic facilities creates the risk that Vanuatu violates its international obligations.   

Strategy and Plans  

The priority and strategy for agriculture under the update 2012 of the PAA 2006-2016 follows: 

The Overarching Productive Sector Policy 2012-2017 includes three pillars:  

• revitalise the productive sector, local food production, and marketing systems;  
• improve farm incomes and livelihoods; and  
• support low carbon, equitable broad-based sustainable economic growth.  

Some strategies are relevant for infrastructure. 

The following underlying strategies have an infrastructure dimension: 

Ongoing Projects: Agriculture 

There is no major agriculture-related infrastructure project identified as ongoing besides the roads and naval infrastructure mentioned above.  

Proposed Projects: Agriculture 

Table 5 shows proposed projects in the agriculture sector.  

Table 5: Summary of Proposed Agriculture Projects 

Source: MALFFB Datasets 

2.3.2      EDUCATION

Current Situation 

The Ministry of Education is mandated to provide education for all. Education is considered a pre-eminent tool for achieving increased economic prosperity, social welfare, and stability in the country. Vanuatu’s latest development agenda in the sector, the Vanuatu Education Sector Strategy (VESP) 2007-2016 has as its vision ‘an educated, healthy and wealthy Vanuatu’. The agenda sets primary education as one of its three overarching goals.  

There is no documented inventory of all schools in the country. A TA project under MOE that NZMFAT sponsored has just started an inventory for the ministry’s infrastructure assets particularly in the primary school sector. Table 6 gives an overview of the infrastructure in the sector based on data available from the Vanuatu Education Sector Strategy 20072016, and updated by MOE’s Facility & Asset Management Unit. 

Table 6: Summary of Education Infrastructure (Status 2011) 

Source: Vanuatu Education Sector Strategy 2007-2016. 

MOE provides teachers (salaries, allowances, and scholarships) and funding for operational needs such as training, infrastructure, and teacher support.  

In most provinces the communities may be involved in constructing and maintaining the schools, which are not necessarily built using robust public construction standards. According to MOE’s Facility & Asset Management Unit, which has launched a thorough survey and inventory of the schools assets, half the buildings are semi-permanent or of bush materials, and virtually no major maintenance has taken place in the last 20 years.  

Primary schools vary in size from as few as 60 pupils to 300/400 in urban areas. Nearly half of them may be too small and below the ideal critical mass needed to enable a sustainable operation not excessively overburdening MOE’s limited budget for teachers and operation. 

A junior high school with an average 240 students would be similar in complexity to a primary school, but would also need four specialist classrooms, a bigger library, a staff room, a computer room, a full size school hall’ and more sports facilities. The number of junior high schools has expanded rapidly in the past 10 years with little new investment. Some are too small to be sustainable and overburden the budget for teachers and operations. In addition the condition of the physical assets tends to be appalling. It is estimated that bringing primary and secondary schools up to a basic standard would require an investment corresponding to about half a new construction value. 

Most senior high schools form part of a junior high school. About 20% of the senior high school students are boarders who live at the high school premises. 

Around 44% of schools are on customary land, 27% are GoV owned, 12% are owned by other agencies, and no data is currently available for the remainder. Land disputes create problems in some schools. 

MOE’s strategy for improving school maintenance (after thorough renovation) should be to rely on using communitybased methodologies and funding approaches supporting the provincial facilities officers – providing technical expertise and supervising quality and expenditure. With 6 provinces and about 70 schools, each officer would look after around 12 schools. 

Strategy and Plans  

With education and human resource development its 6th core priorities, PAA update 2012 says that serious concerns remain about the quality of education. It points to poor 2010 examination results for years 8 and 10. The PAA sees quality education relying on sound infrastructure and in-service and teacher training. 

The priorities and strategy for education infrastructure under update 2012 of the PAA 2006-2016 include the following: 

The Vanuatu Education Sector Program (VESP) 2007-2016 foresees its 4th and 5th implementation strategies as follows: 

The Inclusive Education Policy & Strategy Plan 2010-2020 (completed in 2012) has no priority for rehabilitating school infrastructure. 

Ongoing Projects 

Table 7 shows ongoing projects in the education sector that reflect construction. 

Table 7: Summary of Identified Ongoing Education Related Projects 

Source: MOE Datasets 

Proposed Projects  

Table 8 shows proposed construction projects in the education sector.  

Table 8: Summary of Proposed Education Related Projects

Source: VESP; MOH Datasets  

2.3.3      ENERGY, CLIMATE CHANGE, & DISASTER RISK MANAGEMENT  

The energy sector has been administratively attached to MCCDRM since 2013. The paragraphs below assess the energy sector and then the climate change and disaster risk management for which MCCDRM’s also responsible. Ongoing and proposed projects are then captured in tables merging energy, climate change, and disaster risk management projects. 

2.3.3.1    ENERGY 

Current Situation 

Table 9 indicates access to electricity according to the Vanuatu National Energy Road Map 2013-2020. 

Table 9: Current Access to Electrical Energy in Vanuatu 

Source: Vanuatu National Energy Road Map 2013-2020 

Key challenges mentioned in the Vanuatu National Energy Road Map 2013-2020 include: 

• Low access, large urban-rural divide, and stagnation of development are characteristic. 
• Priority institutional sectors like health and education are far from achieving universal access. 
• Vanuatu residents pay among the highest retail prices for electricity and petroleum products in the world. 
• Increased access to electricity requires a comprehensive and credible strategic plan for grid extensions and renewable energy development. 

Table 10 shows an overview of infrastructure in the power sector. 

Table 10: Summary of Power Infrastructure 

   Source: VISIP 2012; Vanuatu National Energy Road Map 2013-2020 

At present, diesel generators produce electricity in Vanuatu with some from other sources:  hydroelectric, wind, solar, and coconut oil. Alternative sources are being investigated and there is increasing domestic usage of solar power and heating systems. Table 11 reflects the main household power sources and Table 12 summarises the main power sources for cooking.  

Table 11: Main Source of Household Power for Lighting

Source: National Census 2009 

Table 12: Main Source of Household Power for Cooking 

 Source: National Census 2009 

Efate 

Electricity in Port Vila is supplied under Union Electrique du Vanuatu’s (UNELCO) private concession. In addition to a bank of diesel generators, a wind farm north-west of Port Vila supplements the output. Overall the wind turbines provide about 25% of the total output (UNELCO figure). The Castelrock^[5] study for the World Bank (WB) suggests the contribution of wind power is closer to 11%. Small contributions also come from solar and coconut oil. UNELCO supplies 10,000 customers in its concession area, which is the municipal boundary plus 15km. Not all households in informal settlement areas are on the grid. It anticipates an annual increase of 4% in consumer numbers. The increased consumption will be met with one new diesel generator and two additional wind turbines. Diesel storage is currently at Paray Bay, close to the urban area. There are proposals to relocate this facility, possibly to Forari wharf.  

UNELCO has signed an MOU with the company that holds the license for explorations into geothermal power on Efate. Following WB-funded feasibility studies, a concession contract was awarded to an Australian company^[6] for validating the plants prospective capacity and then design-building it. However, little progress has been made in proving the resource since the concession contract was signed. 

Santo 

The concession to supply electricity in Luganville is being litigated. Vanuatu Utilities and Infrastructure Ltd. (VUI is in the interim operating under an MOU rather than a full concession agreement as UNELCO has challenged the way in which GoV tendered and awarded the contract to VUI. Whilst the legal case is pending VUI will not invest significantly in equipment or system extension. 

Diesel turbines (2,800 kW) and one hydroelectric plant (1,200 kW) generate the electricity. Maximum demand is around 1,500 kW with adequate capacity for now. The split between diesel and hydro varies, with hydro providing up to 70% of the output at times. VUI supplies about 2,700 consumers and is keen to bring more on to the grid, including extensions into informal areas such as Pepsi. A new hydro source is being investigated. Two off-grid companies using copra show interest in joining the grid. 

Tanna 

UNELCO operates three diesel generators with a combined 270 kW capacity. This provides power to around 650 users. Solar contributes about 4% of total output. About 200 more users will come on to the grid when an extension to the airport is complete. Communities along the road also want connection and this will eventually include a new 650-plot subdivision south of the airport. Two further generators will be installed to accommodate the extensions. Hydro may have some potential on Tanna.  

Other Islands 

UNELCO provides electricity on just one other island – Malekula. Here, three generators provide a capacity of 340 kW. A Vanuatu Energy for Rural Development (VERD) programme (Australia funding) was considered but has insufficient support so far to move to implementation. The program would have targeted rural areas with Phase 1 targeting rural government institutions, businesses, and commercial centres. 

Strategy and Plans  

The priorities and strategy for energy under the update 2012 of the PAA 2006-2016 include the following: 

The Vanuatu National Energy Road Map 2013-2020 lists the following priorities for action and investment: 

• Access: Access to secure, reliable, and affordable electricity for all Citizens by 2030
• Petroleum Supply: Reliable, secure and affordable petroleum supply throughout Vanuatu 
• Affordability: A more affordable and low-cost energy service in Vanuatu 
• Energy Security: An energy secure Vanuatu at all times 
• Climate Change: Mitigating climate change through renewable energy and energy efficiency 

The main objective is to develop a strategic investment planning framework for scaling up electricity access nationwide by 2030. 

Main infrastructure priority for the petroleum sector in the road map: 

• Upgrade the safety of infrastructure especially for the Petroleum Pacific Company storage tanks. 

Main infrastructure priorities in the electricity sector: 

• Increase the electricity connection rate through grid extension and micro-grid or individual access development in off-grids areas. 
• Achieve a greater diversity of energy sources through promoting renewable energy (wind, solar, geothermal). 
• Increase the use of renewable energy and improve energy efficiency and conservation to mitigate climate change risks. 

2.3.3.2    CLIMATE AND DISASTER RISK RESILIENCE 

Current Situation 

Island countries such as Vanuatu are particularly vulnerable to the potential effects of climate change. According to a WB report^[7] it is also a country with the highest exposure to natural disasters. Infrastructure planning and design needs to account for this. There has been much international discussion on this issue with Pacific countries for years. However, specific quantitative studies directly relevant to Vanuatu have been undertaken only recently.  

In its Fourth Assessment Report^[8] the Intergovernmental Panel on Climate Change (IPCC) outlined that for small island states in the Pacific, the following scenarios could be identified with some confidence: 

• Rise in sea level from 0.5 metre to 1 metre by 2100. 
• Increase in surface air temperature between 1.6o and 3.4oC by 2100. 
• Rise or fall in rainfall by about 20% from current averages leading to more intense floods or droughts by 2100. 
• Increased frequency of more El-Nino like conditions leading to higher rainfall in the central Pacific and northern Polynesia. 
• Increased intensity of cyclones with wind speeds increasing by up to 20%; unknown if cyclones will become more frequent. 

In Vanuatu, climate resilience concerns has gained traction with the creation of MCCDRM, which also oversees the energy sector. This has been done against a background in which several Pacific countries have consciously restructured and integrated their disaster management and climate change programmes to boost implementation efficiency and approach the cross cutting issues of disasters and climate change more strategically. 

The National Advisory Committee for Climate Change (NACCC) gained formal recognition and a clear mandate from the Council of Ministers (COM) in 2000. It currently coordinates studies and projects with funding from government and development partners, and takes an active role in regional initiatives such as the Secretariat for the Pacific Regional Environment Programme (SPREP) and the Pacific Adaptation to Climate Change (PACC). 

Regionally, the Secretariat of the Pacific Community (SPC)/South Pacific Applied Geoscience Commission (SOPAC) provides oversight on climate risk and disaster management in the Pacific. In particular it manages the Pacific Catastrophe Risk Information System (PacRIS). PacRIS has information on 14 Pacific island countries and on TimorLeste. The system houses a comprehensive historical catalogue of earthquakes and tropical cyclones, a database of geo-referenced fixed assets, and probabilistic analyses and risk mapping. 

One NACCC project is particularly relevant to VISIP: the pilot study into vulnerability and adaptation on the Epi island. The study is assessing and measuring the actual potential impacts on the island and its infrastructure. Study outcomes will include estimates for infrastructure (roads, small wharf, airfield) to adapt. The results of this study will be particularly useful for estimating adaptation costs for VISIP projects and other infrastructure projects. 

Strategy and Plan   

According to update 2012 of the PAA 2006-2016, climate change issues are being addressed through the development of a climate change policy. The policy, although drafted in 2010, has yet to be adopted. 

Disaster prone areas have ongoing programmes for disaster risk management. Activities have begun in some communities for reducing disaster risk with support from provincial governments and area councils. However, this approach depends on communities, individuals, and development partner initiatives. A cornerstone of Vanuatu’s Disaster Risk Reduction and Disaster Management (DRR&DM) strategy is its reliance on traditional knowledge and implementation through traditional governance systems. 

The National Task Force and working groups for disaster risk reduction structure functions with the National Disaster Management Office (NDMO) acting as the secretariat. The challenge is for all sectors to include disaster risk reduction and disaster management in their budget planning and processes. Mainstreaming hazard risk management is constrained by resources (skills, capacity, finance) and some communities and provinces have begun developing and implementing DRR&DM plans. Penama province recently completed its DRR&DM based on considerable community consultation. This work is ongoing. 

Work to fully integrate DRR into policies and programmes has begun in the education and health sectors with development partner assistance. Discussions are underway to promote DRR and climate change adaptation strategies and policies within the tourism industry. Traditional coping mechanisms particularly on food security during disasters are being researched and documented for policy development. 

The coverage of disaster risk assessments and routine monitoring and surveillance has expanded as resources permit. Capacity for using the information is limited. NGO partners are actively mainstreaming DRR&DM in ongoing projects and programmes. 

The priorities and strategy for climate change and disaster risk management under the update 2012 of the PAA 20062016 follow: 

2.3.3.3    PROJECTS (ENERGY, CLIMATE CHANGE, & DISASTER RISK MANAGEMENT) 

Most climate change relevant projects have been mainstreamed in every other infrastructure project to ensure climate impacts are minimised, reduced, or addressed as in development partner safeguard requirements. However, as this work is just beginning it is insufficiently documented to enable a meaningful scoring under VISIP 2015. 

Ongoing Projects 

Table 13 shows the list of identified ongoing projects in the Energy, Climate Change & Disaster Risk Management sector. 

Table 13: Summary of Identified Ongoing Energy Projects

Source: DOEn Datasets; Vanuatu National Energy Road Map 2013-2020 

Proposed Projects  

Table 14 shows proposed projects in the Energy, Climate Change & Disaster Risk Management sector. 

Table 14: Summary of Proposed Energy Projects 

Source: DOEn Datasets; Vanuatu National Energy Road Map 2013-2020.  

2.3.4      HEALTH  

Current Situation 

Government health services comprise a four-tier system: referral hospitals, health centres, dispensaries, and community supported aid posts.  

The two referral hospitals include Vila Central Hospital in Port Vila and Northern Provincial Hospital in Luganville, with a range of specialist outpatient clinics. Doctors, nurses, and health professionals provide obstetric, medical, paediatric, surgical, inpatient and outpatient services. Inpatient services include medical, surgical, maternity and neonatal, paediatric, infectious diseases, psychiatry, ear nose and throat, and eye care. Allied health services include laboratory, radiology, orthotics, nutrition, pharmacy, dental, and physiotherapy.  

Provincial hospitals are in Torba (Torba mini-hospital), Penama (Lolowai Hospital), Malampa (Norsup Hospital) and Tafea (Lenakel Hospital). They provide obstetric, medical, paediatric, surgical, inpatient and outpatient services. The only doctor at Lenakel is an expatriate Canadian doctor on a six-monthly rotation basis. 

The Norsup Hospital has one recently graduated junior doctor while Lolowai Hospital and Torba Mini Hospital are yet to be assigned doctors. In the absence of a doctor, the health service team comprises a nurse practitioner, a nurse, and a midwife. 

Health centres serve a population of 5-8,000 and are staffed by nurse practitioner, midwife, registered nurse, and nurse aid possibly with a driver and vehicle providing essential primary health care through outpatient consultations and MCH/RH services. Each has around 10-15 inpatient beds for paediatrics, medical, and maternity patients.  

Dispensaries are serving a population of up to 5,000. They are staffed by a registered nurse and nurse aid providing essential primary health care through general outpatient consultations for common illnesses, MCH/RH services, and with 2 to 4 inpatient beds. The beds are for stabilising patients before transfer to provincial hospital. 

The country is divided into the Northern and Southern Health Care Directorates. The Northern Health Care Directorate in 

Luganville is responsible for the delivery of curative and preventive health services in Torba, Sanma, Penama, and Malampa Provinces. The Southern Health Care Directorate coordinates health services provided by the southern provinces of Shefa and Tafea. 

Each province is made up of several islands divided into zones with health facilitie distributed among these zones. There is a referral hospital in each of the two Health Care Directorates. Community and preventive services include: malaria control, environmental health, immunisations, reproductive health, MCH/Reproductive Health/Family Planning, STIs and HIV/AIDS, TB/leprosy, IMCI, and nutrition and health promotion programs. 

Each province has a provincial administration including a rural health office responsible for administering health facilities in the province right down to dispensaries. The government is now better defining the functions for each health facility level and corresponding resource packages to support the revitalising primary health care. Table 15 shows the type and number of government-funded facilities in each province. 

A TA under the MOH sponsored by Australian Aid is completing a thorough inventory of the Ministry’s infrastructure assets. Table 15 outlines the sector’s infrastructure based on data from the Vanuatu Education Sector Strategy 20072016 updated with data available from the Facility & Asset Management Unit from the Ministry. 

Table 15: Summary of Health Infrastructure (Status 2009) 

                                    Source: Health Services Delivery Profile, WHO, 2012 

MOH provides the staff at each facility (salaries, allowances, scholarships) and funds operational needs such as medicines and equipment. MOH also provides housing for key staff at most of the facilities.  

Service quality in rural areas is poor due to weak institutional capacity at provincial, district, and local levels. In-service training for health professionals is conducted but the lack of supervision, funds, and other resources compromise the ability to deliver quality services. Even if there are adequate technical skills for service delivery, the lack of basic equipment and supplies disallows providers from delivering essential health services. 

The general state of buildings in the health sector is poor and under-maintained, with fairly frequent natural disasters including cyclones and earthquakes worsening the situation. The TA expert team supporting MOH estimates a need for building renovation for all health facilities amounting on average to about USD75,000 for a health centre, USD45,000 for a dispensary and USD32,000 for a staff house. 

A key issue is also the lack of a functioning health information system. The current monthly reporting of health facility data is cumbersome and time-consuming for busy staff resulting in incomplete and inaccurate data from most health facilities. Health information is not being used to inform planning and decision-making. 

Strategy and Plans  

The provision of better health services, especially in rural areas is the 5^th core priority in PAA update 2012. The priorities and strategy for health care infrastructure under update 2012 of the PAA 2006-2016 include the following: 

The Health Sector Strategy 2010-2016 (HSS) stipulates the vision for the country’s health sector development and is being used to better coordinate health development partner assistance. 

The broad health sector objectives include: 

• ensuring equitable access to health services at all levels of services,  
• improving the quality of services delivered at all levels, and  
• promoting good management and effective and efficient use of resources.  

These may require developing a health facilities rehabilitation programme to underpin other objectives.

Ongoing Projects 

Table 16 lists the ongoing projects in the Health Care infrastructure sector. 

Table 16: Summary of Ongoing Health-Related Projects 

Source: MOH Datasets 

Proposed Projects  

Table 17 shows proposed infrastructure projects in the Health Care sector.  

Table 17: Summary of Proposed Health Care Related Projects

Source: MOH Datasets 

2.3.5      TELECOMMUNICATION AND ICT  

Current Situation 

Table 18 summarises the sub-sector. 

Table 18: Summary of Telecommunications/ICT Infrastructure 

   Source: OGCIO Datasets 

The telecommunications and ICT sub-sector has changed dramatically following the opening of services to competition, and the introduction of a regulation authority, the Telecommunications and Radio-Communications Regulator (TRR). There are now seven companies providing broadband Internet, of which Digicel and TVL also provide mobile telephone services.  

According to TRR^[9] there are over 11,000 internet users. Digicel reports that 95% of the population now has mobile phone coverage.^[10] In addition there are approximately 7,000 fixed line subscribers. Digicel has 80 towers and TVL around 65. GoV also has 7 towers providing its e-government service. This provides direct interconnections between most of the main government offices throughout the main islands, with 1,500 connections. (The system was implemented with support from the Chinese Government).  

Many islands in Vanuatu are too distant to be linked by microwave and use expensive satellite connections.  

Overall Vanuatu’s Internet service quality compare unfavourably with other Pacific island countries. It ranks 6 out of 8 for international bandwidth, and is the most expensive. GoV has started a programme providing Internet access booths in rural areas; these are commonly linked with schools. This is still embryonic though. 

Strategy and Plans  

Through its National ICT Services Policy,^[11] GoV envisages ‘ICT For All’ backed up by the Universal Service Policy. A Universal Access Policy (UAP)¹⁶ sets some key targets for extending services to rural areas and outer islands.  

OGCIO recently assembled information and uses GIS software to document current telecommunications and Internet services, and where the commercial sector is planning to introduce services. This exercise identified areas not served and the budget required to provide services into those areas. The programme will include the hardware for digital services and also capacity building and training for service providers and consumers particularly in remote areas. Funding for this will be a combination of grant money, TRR surplus licence funds, and money raised under the Universal Service Levy on operators. However, GoV intervention might be required to support infrastructure development and take up in the uneconomic areas and communities.

GoV is considering the option for submarine cable connections from neighbouring countries (Fiji and New Caledonia). There is strong argument for the cables for Vanuatu to not depend on just one source. This is seen as critical to Internet growth in Vanuatu and to economic development. The private sector appears to be struggling to raise the capital and loans required and may require government or development partner support. Extending the cables to Santo and Tanna is also being considered.  

The priorities and strategy for ICT infrastructure and services under the update 2012 of the PAA 2006-2016 follow: 

OGCIO successfully mobilises public and private funding for developing application-oriented ICT projects. It is the logical interlocutor for funding agencies interested to advance the sector. OGCIO has a long list of proposed projects and is optimistic about mobilising private funding for several of these projects from major Internet companies. 

In a country with scarce managerial resources, OGCIO’s professionalism is remarkable. It deserves full support from sponsors and development partners. 

Ongoing Projects 

Table 19 lists ongoing projects in the ICT Sector. 

Table 19: Summary of Identified Ongoing ICT Projects