Repot No 105434EAP Pacific Islands Transport Sector Study (In Seven Volumes) Volume V: Kiribati -Transport Sector Survey March 1993 Infrastructure Operations Division Country Department III East Asia and Pacific Region FOR OFFICIAL USE ONLY - _-~ . _ 4z ._____ * A g ! | | -! !~~~~~~~~~~~~~~~~~~~~~~-i-' - 3iZf_ y E WM _ _ R rg_ N w , ! _- _ __~~~~~~~~~~~~~~~~~P S | N R | | | |~~~~~~~~~~~~~~~pt !_i_S : : W~~~~~~~~~~~~~~~~~~, 'tt5 LR r w -:' !|m = = _ ~ . g _ v R e rf ~ 1w X e . > . P- _ * c a J X ,I L_ e e a~ * ,, ,, ., , . ! .. "' ,, ,, ,, ,. .... / 44*-S 8.' .'-- ''' ' .'' .' '. - . , ' i. t''"-''''"'--f''' ''¢''''"',' ''',''' ., .) .W X,;,, _ .-,. ..-,- _''" ......'A'.-'.i t L'' '''<' ;'''' , i,t;, ,,, 3 ACRONYMS AND ABBREVIATIONS AMI - Airline of the Marshall Islands AIDAB - Australian International Development Assistance Bureau MOTC - Ministry of Transport and Communications NDBs - non-directional beacons PMCs - Pacific Island member countries PITSS - Pacific Islands Transport Sector Study PVU - Plant and Vehicle Unit RERF - Revenue Equalization Reserve Fund SCK - Shipping Corporation of Kiribati FOR OMCIAL US ONLY PREFACE The Pacific Islands Transport Sector Study (PITSS) reviews the status of the transport sectors in the six Pacific Island member countries (PMCs) of the World Bank. The PITSS is reported in two volumes: Volume One - A Regional Perspective on Transport Issues - presents an analysis of transport issues across the region. Volume Two - Country Surveys - PMC.provides a detailed examination of the transport sector in each This survey of the transport sector in Kiribati, is one in the series for the PMCs which, as a whole, represent Volume Two. Each sector survey presents an overview of transport, identifies areas of concern and suggests priorities for consideration by Government. Maintenance of transport infrastructure is identified as a common major problem area. Therefore, for this particular area, a separate Maintenance Annex is attached to the country sector survey. The PMCs share several areas of common concern with their transport sectors, including strategic planning, project evaluation, regulation, modal coordination, pricing and cost-recovery, commercialization, private sector participation, as well as the management of infrastructure and its maintenance. These areas are reviewed briefly in this survey and, on the basis of the surveys for all PMCs, subjected to comparative analysis in Volume One of this study. PITSS was undertaken by the World Bank with financial support for consultants from the Australian International Development Assistance Bureau (AIDAB) South Pacific Facility. The study was structured and managed by Colin Gannon (Senior Economist). Major contributions to the sector surveys were made by David Bray and Ian Gordon (consultants). The kind cooperation of the many government officials ard industry representatives who assisted the mission is gratefully acknowledged. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. MIBDiATI Land Area 810 sq km Sea Area 3,550,000 sq km EDton Population (1987)/(1991) 66,300/70,489 Population Growth (1980-87) 1.9% per annun Population Density (1987) 88 persons per sq km Population of South Tarawa and Capital of Betio (1990) 24,328 EcoBQmi GNP/Capita (1987)/(1990) US$480/US$481 Exchange Rates: 1980 A$0.8776 = US$1.00 1985 A$1.4310 = US$1.00 1989 (September) A$1.2702 = US$1.00 1991 (March) A$1.2750 = US$1.00 ILT=Pf Registered Vehicles (1986) 1,150 Vehicles/'000 Population (1985) 57 Length of Road (1988) 821 km % of Road Sealed (1988) 4 CONTENTS Page No. 1. INTRODUCT1ON 1...................................... A. Review Context .................,., 1 B. Geography ................ ,,,,,., 1 C. Demography .................,, 2 D. Economy ............................. 2 2. INSTITUTIONAL STRUCTURE ...................... 4 A. Government Structure ................................. 4 B. Agency Responsibilities ................................ 4 C. Private Sector Participation .............................. 6 D. Public Finance ...................................... 7 E. Aid Environment .................................... 7 F. Human Resources .................................... 7 3. ECONOMIC CONTEXT ........ ......................... 8 A. Demand for Transport Services ........................... 8 4. TRANSPORT SUBSEL 1ORS ............. .. ............... 13 A. Lani Transport . .................................... 13 B. Maritime Transport . .................................. 15 C. International and Domestic Shipping ........................ 17 D. Aviation ......................................... 19 5. TRANSPORT SECTOR DEVELOPMENT NEEDS ....... .. ........ 22 A. Introduction ....................................... 22 B. Institutionai ....................................... 22 C. General Transport Sector Issues ........................ 23 D. Land Transport Subsector ............................... 24 E. Maritime Subsector .............. 25 F. Aviation Subsector ...............,,. ...... 25 BIBLIOGRAPHY ........................................... 27 CHART: International Air Services MAP IBRD No. 23652 LIST OF TABLES Page No. TABLF 2.1 Agency Responsibilities .............................. 5 TABLE 3.1 Exports by Major Commodity .......................... 8 TABLE 3.2 Trading Partners 1988 Freight Tonnes ..................... 9 TABLE 3.3 Imports by Major SITC Group 1984-1988 (A$'000) .... ......... 9 TABLE 3.4 Visitor Arrivals ................................... 10 TABLE 3.5 Traffic Forecasts Kiribati Inter-Island Shipping ................. 11 TABLE 3.6 Air Passenger and Cargo Summary: 1984-1988 Domestic .... ..... 12 TABLE 4.1 Motor Vehicle Registration: 1982-1990 Vehicles Registered in South Tarawa ...................... 15 TABLE 4.2 Summary of Sea Cargo Shipments - South Tarawa: 1980-1989 (freight tonnes) .16 TABLE 4.3 Overseas Inward Cargo by Freight Type - South Tarawa: 1985-1989 (freight tonnes) .18 TABLE 4.4 Freight & Passenger Movement by Air From Outer Islands to Tarawa .21 CHAPTER 1 INTRODUCTION A. ltIEvW COrMEr lying roughly NNW-SSE across the equator for about 600 kilometrs, to which has been added 1.1 This country survey presents an overview the raised coral atoll of Banaba some 400 of the transport sector in Kiribati, identifles kilometers further to the west. Banaba was the areas of current and emerging concern, indicates source of the phosphates, from which the main priorities, and sugests future strategies for the wealth of Kiribati originated, but was said to be sector.1 mined out when mining ceased there in 1979. The wide dispersion of Kirib.^ti is indicated by 1.2 To facilitate the present study, a desk the distance of some 4,000 kilometers between review2 of the transport sector was previously Banaba in the west and the second group, the undertaken for each of the Pacific Member Line Islands, in the east, and its north-south Countries (PMCs) of the Bank.3 That review spread in the Line Islands of some 2,000 provided preliminary information on each kilometers between Teraina and Flint. The Line country, including Kiribati, and working Islands comprise 8 atolls, of which only Teraina, hypotheses on development needs in the Tabueran and Kiritimati (the latter formerly transport sector. The present survey builds on known as Christmas Island), all north of the this work .o develop a current sector overview equator, are inhabited. Between the Gilbert so as to establish first, directions for the group and the Line Islands, and soutii of formulation of strategies and priorities for each equator, lie the third group, a further 8 atolls, country, and second, the basis for selection of now virtually nrinhabited, known as the Phoenix the specific issues addressed in Volume One of group. The Kiribati Exclusive Economic Zone this Report. is about 3,550,000 square kilometers. 1.3 The present survey is complemented with 1.5 The total land area of Kiribat. is very similar surveys, in this Volume, for the other small, about 810 square kilometers, of which PMCs. A regional overview which compares roughly haif is in lightly populated Kiritimati in and contrasts trapsport sector issues across all the Northern Line Group. With the exception of six PMCs is presented as Par I, Volume One of Banaba, which is a raised atoll reaching some 70 this study. meters above sea level, all of Kiribati is low lying, with maximum elevations of 3 to 5 meters above sea level, and is thus vulnerable to B. GEOGRAPHY climatic conditions and to any significant increase in Pacific Ocean sea levels. 1.4 Kiribati is a country of 33 coral islands spread across vast areas of the Pacific Ocean. The islands form three separate groups. To the west is the Gilbert group comprising 16 atolls -2- C. DBMOPEMA D. ECONOMY4 1.6 The resident population of Kiribati was 1.10 Kiribati had an estimated GDP per capita 63,883 at the last census in 1985. Population i., of US$470 in 1988, placing it in the category of mid 1988 was est:mated at 68,207, of whicn low income coUI. ies. 22,833 (i.e. about one third) were resident in the urban area around the principal center of Betio 1.11 Kiribati obtains a very substantial flow of in South Tarawa (representing only 2 percent of income from abroad, comprising mainly income the total land area). Population density en South from the Revenue Equalization Reserve Fund Tarawa has reached nearly 1,450 persons per (RERF), from fishing licenses issued to foreign square kilometer. More petple than can be fleets and from remittances from I-Kiribati productively employed have been attracted from working in Nauru and on fbreign ships. The the outer islands by the amenities available in 1,600 workers employed in overseas shipping South Tarawa, and the hope of gaining wage and mining represents more than 20 percent of employment. total formal employment ir. Kiribati, and is one of Kiribati's main assets. In 1988 income from 1.7 The population of Kiribati is heavily these sources amounted to some A$18.6 million, concentrated in the Gilbert group, where the comprising over 40 percent of GNP. density was 2 14 persons per square kilometer at the 1985 census, and 148 per square kilometer 1.12 Offlcialdevelopmentassistancebywayof if urban South Tarawa is excluded. The budgetary grants, project aid and technical Phoenix group, on the other hand, was virtually assistance has averaged US$15 million during uninhibited in 198;, with only 24 people on the 1980s. Aid has fluctuated during the period, Kanton. The Line Islands, with more than half declining i&1 the mid 1980s but since 1987 has the total land area of Kiribati, are very much averaged over US$16 million per annum. Since less densely populated than the Gilberts. 1986 external grants have only been applied to development expenditure, current expenditure 1.8 In addition to the resident population, being financed entirely from domestic resources. substantial numbers of I-Kiribati reside overseas, at least temporarily. At the 1985 census there i.13 The bulk of employment is in the were 1,273 in Nauru, 665 serving on foreign subsistence sector. Fk. . wage employment is ships, and 289 others known to be overseas largely limited to urban areas where civil service representing a total of 2,227 or about 3 percent and public enterprises account for over two- of total population. The majority of those in thirds of formal paid employment. Nauru are likely to return to live in Kiribati when phosphate mining stops on that island as 1.14 The public sector dominates the Kiribati expected in a few years time. economy accounting for 95 percent of gross investment and almost half of GDP. 1.9 The rate of population growth is just Government has recently moved to under 2 percent per annum. The expected "privatize/corporatize" major public enterprises, repatriation of the workers from Nauru will add with the objective of shrinking the size of the to population pressure. A proposed resettlement public sector and encouraging greater private program to the Line Islands is a matter of great sector participation in investment and enterprise. importance to the Government, despite the However, the existing private sector, including difficulties of moving and administering settlers the capital market, is small and underdeveloped. over distances of 3,000 kilometers. 1.15 Although the natural environment and infertile soil constrain agriculture, the nation 3-3 possesses abundant ocean resources-principally fish and manganese-in its 200 mile exclusive economic zone. Two primary exports, copra and fish, account for about 70 percent and 27 percent of merchandise exports, respectively. Prospects for the growth in copra production Is limited and the primary source of growth is expected to be in fisheries development. 1.16 During the later half of the 1980s economic growth has averaged about 1.9 percent per annum. A recent Bank study of the Paciflc Island economies concluded that in the 1990s Kiribati has the potential for a modest economic growth, predicated on substantial increases in fisheries output (World Bank, 1991a). -4- CHAPTER 2 INSTITUTIONAL STRUCTURE A. GovuNPMr Smucnum Works Department of the Ministry of Works and Energy. Three Government owned companies 2.1 The Gilbert Group -was proclaimed a are also involved in the provision of transport British Protectorate in 1892, followed by services. Air Tungaru operates domestic air annexure with the Ellice Islands (now Tuvalu) in services to the outer islands (and is considering 1916. The Northern Line Croup which had extending services to Kiritimati and been annexed somewhat earlier were added to internationally to Hawaii). The Shipping the Gilbert and Ellice Island administration at Corporation of Kiribati operates domestic that time. The Phoenix Group, then shipping services to the outer islands, to the lmninhabited, were added to the coleny in 1937. Northern Line Islands, and some services to Fiji. Full independence was achieved in 1979, the The Betio Shipyard Ltd. provides repair and Ellice Group having chosen to become a maintenance facilities for the local shipping fleet separate nation (Tuvalu), seceded from the and can slip vessels of up to 100 tonnes. colony in 1976. Agency responsibilities are set out in Table 2.1. 2.2 Kiribati is governed by a single chamber legislature of 36 elected members plus the B. AGENCY REspoNsn[LITIEs Attorney-General who is a member ex-officio. the Head of State and Head of Government is 2.4 Roads. The Public Works Department the President, and there is a Cabinet of up to 11 of the Ministry of Works and Energy is members, including the President, Vice- responsible for the planning, construction and President and the Attorney-General. Tarawa is maintenance of the sealed road system on the administrative center of Kiribati. Tarawa, which has a total length of only 35 km. Parliament, Ministries and Departments are The Island Councils and the two urban councils located in urban Tarawa, with some public or' Tarawa are responsible for maintenance of administration on Kiritimati Island in the ;eads within their jurisdiction. In practice the Northern Line Group. There is a local council roads on Tarawa, which comprise some (iovernment administration consisting of 17 35 km of unsealed road, are maintained by the Island Councils and two Town Councils - Betio Public Works Department, because of lack of Town and Teinainono (Tarawa) UJrban Council, council resources. Roads which exist elsewhere which are responsible for local administration are mainly graded coral surfaces and are and participate in project identification and maintained by the Island Councils. Kiritimati implementation. has an extensive sealed road network dating from the period of atomic bomb testing. 2.3 Transport sector responsibilities are contained in two Ministries - the Ministry of 2.5 Land Transport Operations. Land Transport and Communication and the Public transport is not a significant element of the - 5 - Table 2.1: KjRIBATI - AGENCY RESPONSIBILITIES, 1991 Land Maritime Aviation Intermodal Policy MOTC MOTC MOTC MOTC/NPO Planning PWD MOTC MOTC MOTC/NPO Construction and Maintenance PWD MOTC/PWD NMOTC/PWD MOTC/NPO Operations: hnfrastructure NA MOTC/SCK MOTC MOTC/NPO Services Private SCK/Private AT MOTC/NPO Regulation MOTC/ MOTC MOTC MOTC/NPO Police MOTC Ministry of Transport and Communications PWD Public Works Department, Ministry of Works and Energy NPO National Planning Office, Ministry of Finance and Economic Planning SCK Shipping Corporation of Kiribati AT Air Tungaru. Source: Mission consultations. transport sector, due to the fragmented maintenance of navigation aids in Kiribati geography of Kiribati. Public transport services waters, the survey of vessels and the issue of on Tarawa are provided by buses, typically survey certificates, and the licensing of vessels individually privately owned, which run along to engage in trade or passenger traffic. There is the spine road of the island. There is no entry no entry restriction provided marine survey or route control and buses charge a common requirements are met. The Director of the fare. A vehicle registration charge of A$20 per Marine Division is also the Registrar of Seamen. annum is applied which is independent of vehicle size; the revenue is retai5aed by councils. 2.7 Ports. The Director of Marine, MOTC, Transport on the outer islands and the Line and is the Harbormaster for Tarawa (Betio Harbor) Phoenix groups is limited, consisting mostly of and for vritimati (London Wharf). Import and bicycles, with some motorcycles or vehicles export -.go is centralized on Betio Harbor. owned by churches, councils and cooperatives. Port operations at Betio are undertaken by the Ports Divisiorn of the Shipping Corporation of 2.6 Shipping. The Marine Division of the Kiribati (SCK). Maintenance of port facilities is Ministry of Transport and Communications the responsibility of the Marine Division, but (MOTC) is responsible for shipping legislation work is contracted to the Betio Shipyard or to and administration. The Divisional the Public Works Department. A Bill to create responsibilities include the provision and a Kiribati Port Authority (responsible only for -6 - Betio) has been passed but not y6t (as of 1992) Government departments. The final plan is enacted pending clariflcation of management submitted to cabinet for approval. matters and audit of port and shipping assets. The Marine Division, in association with Island Councils and the Ministry of Home Affairs and C. PRIVATE SECTOR PARTICIPATION Decentralization is responsible for the reef blasting program to enable better access to 2.13 The private sector is responsible for islands. provision and operation of bus services on Tarawa and for land freight services. 2.8 Maritime Training. Kiribati has a Operations outside of Tarawa are minimal and Marine Training School which was started in informal. The private sector operates some 1967 with assistance from the UN and a British formal shipping services to the outer islands of and German shipping company. A relatively the Gilbert Group and an informal boat service large number of qualified I-Kiribati (over 600) which caters for most f*eight and passenger are employed on overseas vessels. needs of Abaiang. There is no documentation of informal shipping oervices although the 2.9 Shipping Services. The Marine Division Government has proposed a study to cover this of the SCK operates five vessels on domestic sector. services withiii Kiribati. The SCK, is a filly owned Government company which competes 2.14 The Government is committed to a policy with limited private ccmpetition on services to of privatization of major public enterprises as a the outer islands but provides the c.:ly shipping means c' reducing Goverrnment expenditure services to the Line and Phoenix Group. while encouraging greater private sector part.cipation in investment and enterprise. A 2. 10 Civil Aviation. The Director of Aviation preliminary assessment of 44 public enterprises in the Ministry of Transport and has been drawn up for possible private Communications is responsible kor the operation investment or management by contract. These of air rts, the provision of air traffic services include maior holdings in the transport sector. and air safety regulation throughout Kiribati. A concern expressed in developing the privatization policy is the disadvantage which 2.11 Domestic Air Services. Domestic air may result because of reduced inputs of foreign services are provided by Air Tungaru, a wholly aid into the affected sectors of the economy. It Government owned national carrier formed in would be undesirable if such a situation were to 1977. discourage transfer of appropriate public sector enterprises to the private sector. The private 2.12 Policy and Planning. The National sector is small and underdeveloped and its ability Planning Office of the Ministry of Finance and to take over management of present public sector Economic Planning is responsible for the enterprises is limited. Some external preparation of the National Development Plan. management assistance should be utiiized if Previous plans have covered a five year period, privatization is to be successful. but the next plan-the 7th National Development Plan-will cover a spai. of four year (1991- 1994) in phase with Government elections. The D. PBLIC FINANCE planning process involves five steering groups (one for each main sector of the economy) which 2.15 Kiribati relies on a narrow tax base for prepare draft proposals, which are put to a recurrent revenue. Tax revenue was budgeted to Development Coordinating Committee provide only A$5.7 million (37 percent) out of comprising the Chief Executive Officers of total revenue raising of A$15.5 million in 1989. 7 - Interest income from the Revenauo Equalization F. HUMAN RESOURCES Reserve Fund (RERF) was to have contributed $5.4 million of this anount. Since 1986, with 2.18 The need to increase investment in the cessation of UK budgetary grant assistance, humzn resources development through Kiribati has met recurrent expenditure manpower planning and training in those skills requirements from recurrent revenue, with a that are in short supply has been given a high surplus sufficient to finance about 4-5 percent of priority in the current Development Plan. There capital expenditure. Actual performance for is a shortage of skilled and professional staff but 1989 was better than budgeted, as current an over supply of administrative and clerical expenditures were held down and the overall staff. A scheme of Pre-Service scholarships, budget showed a surplus of nearly 10 percent of directed towards areas of demand identified GDP. through manpower planning, and in-service training with counterpart officers, is planned to 2.16 To support long-term growth it will be redace reliance on technical assistance and necessary to expand the domestic revenue base expatriate personnel. through reform of tax administration, the introduction of user fees, and new forms of 2.19 Chief Executive positions, in the main, taxation, possibly including a value-added tax are filled by I-Kiribati officers, but expatriate (World Bank, 1991). Greater demands on staff are required at present for professional and current expenditures are expected as specialist technical positions. Current pay scales infrastructure and production projects are do not encourage higher education and salary completed and local operation and maintenance levels have resulted in loss of professional and financing requirements increase. technical officers to other island nations. E. AI ENVIRONMENT 2.17 During the period of five years to 1989, external grants comprised 96 percent of the Government's developmental expenditure, and constituted approximately 35 percent of GDP. The development strategy embodied in the 6th Development Plan (1987-1991) allocates 19 percent of total public investment to transportation, somewhat lower than the share in the period 1980-1985 (23.3 percent) but nevertheless a substantial allocation. CHAPTER 3 ECONOMIC CONTEXT A. DEMAND FOR TRANsPoRT SERVICES their families with one air trip per year to their home island also contributes a considerable 3.1 Dmanad for transport services in demand for air transport. Kiribati derives primarily from activity in the agricultural and services sector. A Government 3.2 Because of the land form of most islands, policy of providing Government employees and and the geographic spread of the islands over a Table 3.1: KiRIBATI - EXPORTS By MAjOR CATEGORY, 1984-1988 La 1984 1985 1986 1987 1988 Copra Value 6,987 4,718 459 1,173 4,203 Volume 11,333 10,376 4,611 4,437 11,790 Shark Fins Value 49 35 22 16 18 Volume 3.0 1.8 1.1 1.1 1.2 Fish Value 1,718 1,017 1,775 823 1,606 Volume 2,289 1,038 1,524 658 1,456 Other Value 14 20 38 119 21 Volume - - - - - Total Value 8,768 5,790 2,294 2,118 5,848 Volume 13,625 11,416 6,136 5,096 13,247 La Does not include re-exports. Source: Kiribati Statistical Yearbook, 1988. -9 vast area, the major demand is for maritime 3.4 International visitor arrivals at Tarawa services with air services being of secondary increased by an average of 8 percent per annum importance for the movement of freight but the over the period 1984-1988. Visitors to primary mode for passenger transport. Demand Kiritimati (ex Honolulu) increased to the year for motorized land transport services is minimal 1987, but declined in 1988. In comparison with with the exception of south Tarawa. other Pacific countries the tourism industry is small and tourist facilities are minimal. 3.3 With respect to transport demand arising Kiritimati is a specialist destination catering for from international trade, copra and fish account bird watching and game fishing. Tourism can for over 95 percent of all exports by volume and be expected to remain small. value. Exports show significant variation on a year to year basis reflecting their vulnerability to 3.5 The domestic demand for the carriage of exogenous shocks from weather and prices, with freight by sea, is generated by the movement of volumes in 1986 and 1987 falling to very low exportable commodities (copra), some local levels. Table 3.2 shows the import and export consumption products from the outer islands to of cargo through South Tarawa by origin and Tarawa, and a reverse flow of imported goods to destination. It does not include fish exports by the island communities. The demand for Te Mautari Fishing Company which are passenger movement is similarly centered on freighted on the company's own fishing vessels. Tarawa. IMe planned resettlement in the Line The tonnage of imports exceeds exports by a Islands, which has commenced, will substantially ratio of 3:1. The imbalance by origin and alter the present traffic flows if it is sustained to destination is far greater. The Asia-Pacific planned levels. Projections made of traffic to region is the major supplier of Kiribati's import and from the outer islands (Interisland Transport requirements, whereas over 90 percent of Study, ADB 1991), are summarized below, exports are to the EEC. Imports by major using the most likely scenario. Freight commodity over the period 1984-1988 indicate movement from the outer island is mainly copra, increasing import of consumption goods with but it is expected to reduce as a percentage of food, beverages and tobacco making up over 30 total freight from 90 percent in 1990 to 71 percent of imports by value. percent in 2005. The growth predicted in freight movement is between 3 percent and 4 Table 3.2: KIRIBATI - TRADING PARTNERS, 1988 (Freight tonnes) Imports Exports Japan 7,017 45 Australia 15,428 165 Fiji 6,122 165 EEC - 11,309 Other 5,764 474 Total 34,331 12K156 Source: Kiribati Statistical Yearbook, 1988. - 10 - Table 3.3: KIRIDATI - IMPORTS BY MAJOR SITC GROuP, 19841988 (AS '000) 1984 1985 1986 1986 1988 Food 5,626 5,975 5,691 7,783 8,080 Beverages & tobacco 1,130 1,039 1,236 1,540 1,588 Crude materials 268 185 338 266 574 Mineral fuels 3,088 3,236 2,239 2,671 2,960 Oils & fats 38 29 24 29 44 Chemicals 1,090 1,086 1,142 1,248 1,371 Manufactured goods 2,169 2,060 4,408 3,633 3,564 Machinery & transport equipment 6,062 6,354 4,251 5,219 7,661 Miscellaneous manufactured goods 1,314 1,417 1,964 2,460 2,151 Miscellaneous commodities 93 202 159 293 192 otal Imrts28 27 21.582 21.452 25142 28.185 Source: Kiribati Statistical Yearbook, 1988. percent per annum (both to and from the islands) and the passenger growth rate is expected to be generally less than 2 percent per annum. 3.6 The demand for domestic air transport services is shown in Table 3.6. Growth in both passenger and freight movement over the period has been modest, averaging 3 percent per annum and 4 percent per annum respectively. Domestic passenger and freight movement between the outer islands averaged appreximately 2,000 passenger enplanements per year and 20,000 lb of freight movement per year. These are of the order of 10-15 percent of total air passenger and freight movement. - 11 - Table 3.4: KnRIBATI - VISITOR ARiRvALs, 1984-1988 1984 1985 1986 1987 1988 A. Total Arrivals by Air Kiritimati 824 880 1,170 1,080 671 Tarawa 1,943 2,026 2,031 2,661 2,696 I;at1 2L767 2!ZQi ]. 374 32367 B. ByNationjlj(%) (Tarawa only) Australia 14 14 13 10 13 New Zealand 7 7 9 7 8 UK 7 8 7 6 7 USA 8 12 9 10 13 Japan 5 S 5 4 6 Fiji 6 4 4 4 7 Nauru 20 12 20 24 15 Tuvalu 19 19 11 16 9 Other Pacific 6 9 10 7 11 Other 8 10 12 12 11 Source: Kiribati Yearbook, 1988. Table 3.S: KRDATI - INTER-ISLAuND SHIPPING: TRAmFIC FORECASTS, 1990-2005 1990 . 2000 - 2005 From From From To Outer Outer To Outer Outer To Outer Outer Islands Islands Islands Islands Islands Islands Freight tonnes Gilberts 8,572 9,402 11,707 14,638 13,713 19,098 Line 1,491 1,139 3,741 1,891 4,433 2,404 Banaba 253 63 437 75 574 81 TotS 10.316 10.604 1S.885 16.604 18.720 21,583 Passeneers (N_s.) Gilberts 4,068 3,975 4,826 4,385 5,293 4,639 Line 1,806 254 1,314 627 1,676 699 Banaba 206 120 217 125 222 128 I1aTi 42 km .1 7.191 5 Source: Inter-island Transport Development Study (ADB 1991); consolidated figures. - 12 - Table 3.6: KiRmATi - DoMESTIc AIR PASSENGER AND CARGO MOVEMENT SUMMARY: 1984-88 Charters Scheduled Specials, etc, Total Pax Cargo Pax Cargo Pax Cargo m.t. m.t. m.t. 1984 23,167 153.7 - - 23,167 153.7 1985 23,161 158.1 837 2.9 23,998 161.0 1986 24,196 177.3 1,135 2.8 25,331 180.1 1987 24,984 189.5 2,246 5.4 27,130 194.9 1988 24,29i 181.0 3,140 7.1 27,431 188.1 Note: No data is available for the few charters arranged in the period 1978-1981. Source: Kiribati Statistical Yearbook 1988. - 13 - CHAPTER 4 TRANSPORT SECTORS A. LAND TRANSPORT environmental effects and possible social problems due to increased accessibility from the 4.1 Road Infrastructure. There are 70 km urban areas. of road on Tarawa; 35 km of sealed road and 35 km of graveled surface. There is also an 4.3 Upgrading is proposed of a section of the extensive but unrecorded sealed road system on South Tarawa Road in the Betio Area, which Kiritimati which was constructed as part of the will increase the road width to 10 m, to reduce atomic testing facilities. Roads elsewhere are vehicle-pedestrian conflict in a heavily populated made of a graded coral surface or compacted area of Tarawa. Total cost is estimated at reef mud and are usually constructed along the A$220,000. A program of footpath (or road center of the island atoll with small side roads. widening) development is proposed to reduce These roads are adequate for the prevailing low conflic+s which presently occur because of heavy traffic volumes. pedestrian use of the roadway for access and also for recreation purposes. 4.2 Road Investment. Road investment in Kiribati in the 6th Development Plan period has 4.4 Expenditure on road and causeway been directed to the construction of causeways maintenance on Tarawa is between A$40,000- linking islets within atolls. Causeways on A$50,000 per annum. These expenditures are Tarawa have been constructed by using heavy material costs only, as wage and equipment costs civil engineering plant, those on outer islands are carried under other budget categories. The continue to be constructed in the traditional level of provision is considered adequate given manner (piling stones) using local labor. Some the length of road to be maintained and the concern has been expressed about the possible volumes of traffic using the roadway. detrimental effect of causeways on the flushing action of lagoons and the inflow of nutrients. 4.5 The Public Works Department is Recent construction on Tarawa is by the responsible for the construction of all roads and bridging of openings rather than filling. An the maintenance of selected road lengths (the Outer Island Development Program funded by sealed road section) on Tarawa. The Island AIDAB is directed to eventually linking the Councils, and the two urban councils on Tarawa islets in North Tarawa. The total estimated cost (the Betio Town Council and the Teinainano of the program is A$7.5 million over a period of [Tarawa] Urban Council) are responsible for 5 years. The program commenced in 1989 and roads in these jurisdictions. In practice, council approximately $0.5 million was expended to the roads on Tarawa are maintained by the Public end of 1990. A further expenditure of Works Department because of a lack of Council A$670,000 was budgeted for 1991. However, resources. In view of the limited length of a review of the program delivery is now being roadway, continuation of maintenance by the undertaken, arising from concerns for potential - 14 - Departnent under some management agreement independent of vehicle size and weight. The with Councils appears appropriate. fees are collected by councils and are returned as part of general council revenues. Vehicle 4.6 Road construction equipment and other registrations for South Tarawa show a decline plant and vehicles are owned and maintained by since 1984 and substantial variation on a year to the Plant and Vehicle Unit (PVU), established year basis. Possibly, vehicles were not by the Government in 1980 with the objective of registered in 1989 because of stringent financial achieving self sufficiency in vehicle replacement. conditions in that year. Motorcycles account for The PVU hires plant, equipment and vehicles to more than 50 percent of total vehicle Government ministries and departments and sets registrations and are a common form of the hire rate to cover vehicle maintenance, repair transport (together with bicycles) because of and replacement. The PVU can hire to the their low cost, the flat terrain and limited trip private sector and estimates that it attracts some lengths. The latest information of vehicle 70 percent of private hire business. registrations in the Outer Gilbert Islands is for Approximately 90 percent of all PVU business 1985. There were a total of 916 vehicles is with the Government sector. There is registered of which 805 (90 percent) were considerable criticism of the scheme. The PVU motorcycles, 27 cars/pickups, 49 trucks and 35 is concerned that they are left with specialized classed as other. There is no information on the plant which has been requested by Departments number of vehicles in the Line or Phoenix but is underutilized. In addition a number of Islands, including Kiritimati. Ministries do not pay their vehicle hire and arrears are now some AS1 million. Users on 4.9 The roadfireight industy is very small, the other hand claim that hire rates are and is entirely within the private sector. Freight extremely high and despite this equipment is is generally moved on the outer islands by poorly maintained. community owned transport. Private transport is used for the collection and distribution of 4.7 Road Planning. There is no specific goods on Tarawa. policy on road system development. Given the small scale ot the land transport function and the 4.10 Public transport is provided on Tarawa subsistence type of development on the outer by small buses mostly individually owned and islands, it would seem appropriate to leave operated. Services are provided along the spine development of graded tracks between airstrips, road and the maximum fare is $1.10 to travel vessel landings and settlement areas to local the full distance from Betio to Bonriki, a council decision. Ownership of the road distance of approximately 28 km (i.e., an reserve, however, is an emerging problem on implied rate of 3.9 cents per kIm). Tarawa and may become so in other areas as development proceeds. With the exception of 4.11 Road Safety. Road safety is an one small length of road, there is no defined emerging problem in the urbanized areas of road reserve and the land remains in the South Tarawa. The main spine road is used ownership of the adjacent land holders. A both as a vehicle and pedestrian facility and for Protection of Highways Act is being drafted to recreational use in village areas. The narrow prevent the use of land for other purposes (eg. road width (7 meters or less) exacerbates the planting, housing), but the amalgamation and problem, as the width is insufficient to transfer of land to Government is not included. accommodate pedestrians and vehicles safely. A Public Works Department project to provide 4.8 Vehide Registration. Road vehicles are footpaths in South Tarawa, commencing in the required to be registered and licensed. There is Betio area is scheduled for commencement in an annual license fee of A$20 per vehicle, 1992 at an estimated cost of A$35,000. - 15 - Table 4.1: KnIATJ - MOTOR VEHCLE REGIgSRATION: SOUTH YIARAWA 1984.1990 1984 1985 1986 1987 1988 1989 1990 Motorcycle 960 826 786 772 571 416 577 Cars 292 280 250 264 222 168 268 Trucks 45 40 42 49 35 39 57 Buses 32 41 39 73 80 54 106 Tractors 6 6 11 6 1 7 17 Others 14 22 12 13 8 12 19 IL34 LZfl IA 29 L2 Note: Vehicles registered on outer islands are not included. Source: Betio Town Council (BTC) and Tarawa Urban Council (TUC) Vehicle registers. and dredging are required. The quay wall is in B. MARnm TRANSPORT need of urgent maintenance, areas of the western side of the eastern breakwater and the eastern Port and Marine Facilities side of the western breakwater need rehabilitation and much of the western sea wall 4.12 Port Tramc. The Port of Betio on is in very poor condition (Inter-island Transport South Tarawa is the principal port of Kiribati Study, ADB 1991). and the sole port for international shipping. Betlo is also the central point for domestic 4.14 There also appears to be a shortage of shipping services. International and domestic space within the port which complicates traffic freight movement through the port is set out in and storage. Paving of the port area, Table 4.2. The figures exclude Te Mautari fish introducing a traffic management system, exports which, as noted above, are freighted on construction of new warehouses, as well as the company's own vessels. Also excluded are mAling use of free areas to assist the efficiency some domestic cargo by private shipowners for of port opera. 3ns warrant examination. It was which data are not obtained. These domestic also noted that most cargo handling equipment is movements are not substantial. The total in need of proper maintenance and much movement of freight through the port has equipment needs to be replaced. A Port increased, although the volume fluctuates from Rehabilitation and Expansion study has been year to year, due principally to the variations in proposed by ADB. the export of copra, which accounts for almost all exports from Kiribati, except for fish. 4.15 Moveuient of cargo is by lighter/barge to and from the ships' side, using a fixed crane on 4.13 The Port of Betio comprises an outer the quay wall within the basin to load/unload anchorage area for international and larger containers and other cargo from the barges. domestic shipping and a harbor basin connected Given that an alternative of constructing new by a channel which can be used by vessels harbor facilities to enable berthing of drawing up to 2 meters. Maintenance, repair international shipping has been estimated - 16 - Table 4.2: KIRuATI - SEA CARGO SmnpMNS SUmmARY: SOUTH TAAWA, 1985-1989 (freight tonne) Domestic International Total tonnage Year Inwards Outwards Inwards Outwards Inwards Outwards Total 1985 5,444 5,943 25,195 9,008 30,639 14,951 45,590 1986 3,804 5,713 37,672 3,838 41,476 9,551 51,027 1987 3,633 6,428 35,001 4,755 38,634 11,183 49,81i 1988 10,258 8,415 34,331 12,158 44,589 20,573 65,162 1989 7,896 7,380 36,245 1,391 44,141 8,771 52,912 Source: Kiribati Shipping Corporation (KSC), quarterly returns. provisionally at A$20.8 million, the present 4.19 The only other port facility of system is likely to be cost-effective. consequence, Port of London on Kiritimati Island, has severe erosion problems and the 4.16 The Marine Division of the Ministry of passage from anchorage to the lagoon suffers Transport and Communications is responsible from unpredictable sand bed shifts. It is for port operations and the Director of Marine suggested (Inter-island Study, ADB 1991) that acts as Harbor master for both Tarawa and consideration be given to providing port facilities Kiritimati. Lighterage and wharfage charges are at Fanning Island, given the transmigration applied by the Marine Division, but are not taking place and the suitability of the anchorage retained to fund port operations. Rates have not at Fanning Island. Investment in marine been increased for 15 years and revenues are facilities on other islands is limited to reef reported to not cover port cos. blasting to provide passages into lagoon areas. Most islands have no safe anchorage; ships 4.17 An Act has been passed recently by the sailing to the islands have to lie off the reef and legislature (not yet implemented) creating a use work boats to transport passengers and Kiribati Port Authority (responsible for Tarawa general cargo. The program of reef blasting is only). Under the Act the Authority is required developed by the Ministry of Home Affairs and to act commercially. The setting of appropriate Decentralization from requests received from rates for services to meet all costs will be a local councils. The Marine Division of the significant matter in the implementation of the Ministry of Transport and Communications Authority. provides technical assessment and undertakes the works. Given financial and environmental 4.18 The Port division of the Shipping circumstances, on balance, this approach may be Corporation of Kiribati (SCK) provides most cost-effective. lighterage, stevedoring and delivery services for the port and sets its own rates. The SCK argue that revenues from the Port Division subsidize the operation of the Shipping DiN.sion and separation of the Port Division operations under a Kiribati Port Authority would result in increased charges to shipping. - 17 - C. IhTRNATIONAL AND DoMSTC In addition, the SCK is looking to replace both SHImNG landing craft by one of a capacity of around 100 tonnes gross. International Shipping 4.22 Private shipping services are run in 4.20 Inward cargo is predominantly from competition with SCK to islands in the Gilberts. Australia and Fiji, and to a lesser extent Japan. During 1989/90 services were also provided to Outward cargo movement is substantially to the the Line Islands whilst the Moanaraoi was under EEC, with copra accounting for over 90 percent repair. The informal sector caters for most of total export tonnes. Three international passenger and freight needs of Abaiang. No services call regularly, the Bali-Hai service from data are available on the relative performance of Japan, the Chief Container service from the Government and private enterprise services, Australia and the Pacific Forum Line from Fiji. but SCK is understood to dominate the market. The Bank/Columbus service calls on demand for A study of the informal shipping sector was the uplift of copra to Europe. The SCK also recommended by the Inter-island Transport operates its own vessels to Fiji. The number of Study. voyages varies but has averaged around 14 per annum since 1983. Shipping services appear 4.23 The formation of the Kiribati Port quite adequate, particularly in view of the Authority will result in the SCK losing its Ports modest amount of cargo available. The number Division and retaining only the shipping of international vessels calling at Betio and the operation, which will be required to operate on type of freight carried is set out in Table 4.3. a commercial basis. It is understood that SCK Ship movements have decreased over the period has earned profits each year, but that there is from 1985 despite the increase in imports. cross subsidization from port to shipping There has been a trend towards containerization operations. The Interisland Transport Study for the import dry cargo, although there is recommended the introduction of regular sailing considerable variation from year to year. schedules and more effective management control systems. However, the study also Domestic Shipping indicates that tariff increases of up to 30 percent will be required to ensure viability of a separate 4.21 The Shipping Division of the SCK shipping operation. operates five vessels on services within Kiribati. Three are motor ships, the largest, the 4.24 Growth in freight and passenger traffic Moanaraoi, being 721 tonnes gross and the other between the islands is expected to be modest, two, the Nei Momi and the Nei Matabuyo are although there could be substantial increases in 450 tonnes gross and 524 tonnes gross, trade to the Line Islands if the resettlement respectively. The other two vessels are landing program is successful. Freight and passenger craft, the Nimanoa and Makumbo of 78 and 72 projections are set out in Table 3.5 above. tonnes gross, respectively. The landing craft are used for services to the northern islands of the Marine Repairs Gilbert Group, the smaller motor ships to the remainder of the Gilberts and the Moanaroi for 4.25 The Betio Shipyard Ltd. was established services to the Line Islands. Services are in December 1988 as a fully owned Government provided at approximately a monthly frequency. company to take over the assets of the Shipyard The Interisland Transport Study (ADB 1991) has Division of the Ministry of Transport and recommended the replacement of the Moanaraoi Communication. It provides repair and by a vessel of some 1,000 tonnes deadweight, a maintenance facilities for the local fleet and can matter being addressed with Japanese funding. slip vessels up to 100 tonnes deadweight. It also - 18 - Table 43: KnumATI OVERSEAS INWARD CARGO BY FREIGHr TWE: SOUTH TARAWA, 1985-1989 (freight tonnes) No. of No. of Breakl/ Year Ships Containers Container Bulk Fuel Total 1985 58 784 15,084 5,020 5,091 25,195 1986 59 652 14,493 17,883 5,295 37,671 1987 49 982 18,735 9,935 6,331 35,001 1988 47 962 13,518 14,067 6,746 34,331 1989 49 1,243 22j640 7,000 6,605 36,245 a Includes SCK Vessels operating internationally. Source: Kiribati Statistics Yoarbook 1988. constructs plywood fishing catamarans and skiffs between Fiji and Majuro via Tarawa and up to 11 meters in length for the Ministry of Funafuti (Tuvalu). Air Nauru operates a weeldy National Resources, for an Outer Island service from Tarawa via Nauru to Suva. Aloha Development Project, and competes on the Airlines of Hawaii previously operated a weekly general market with private fishing boat builders service between Honolulu and Kiritimati, but in South Tarawa. Because of the limited this was terminated recently on commercial capacity of the slipway, the larger SCK vessels grounds. The Government of Kiribati has been are required to travel to Fiji for major negotiating a lease of a suitable aircraft for Air overhauls. An investigation by the ADB in Tungaru to operate the Honolulu-Kiritimati route 1984 resulted in US$0.665 million for the and to extend this service to Tarawa and on to reconstruction of the present slipway and the Nadi. The operation would join the western and construction of an outfitting berth but did not eastern regions of Kiribati and provide a Kiribati support the construction of a 400 tonne capacity controlled service to both Fiji and Hawaii, facility, which had been proposed. In 1990 the fulfilling a priority requirement of the shipyard had a revenue of approximately Government. Visitor arrivals by air in Tarawa A$300,000, with costs of $240,000, (which have increased modestly over the past 10 years included depreciation of equipment and loan and for 1988 numbered 2696 (see Table 3.4). servicing costs). Its capacity to service further Resident use of international air services is also substantial capital investments is limited. limitedi; there were 3,157 resident arrivals and 2,689 resident departures in 1988 through Tarawa. There were 671 visitor and 121 D. AATION resident arrivals by air in Kiritimati in 1988. Air Routes 4.27 Domestic services are operated by Air Tungaru, a wholly Government owned national 4.26 Two international air services are carrier formed in 1977. Services are operated provided to Tarawa. Airline of the Marshall from Tarawa to all islands in the Gilbert Group, Islands (AMI) operates a twice weekly service excluding Banaba. Seventeen services over - 19- fourteen routos ae operated on a 6 days per 4.28 Most businas traffic to and from Tarawa week schedule, such that outward and return is generated by public servints, there being littlo flights link a number of communities. Overall private business travel. As noted above, the freight and passengers movements by Air Government of Kiribati policy of providing Tungaru are shown in Table 3.6. Further details employees and their families with one return trip of freight and passenger movements are in Table by air per year to the home island also generates 4.4 which shows movements between South considerable air raffic. Tarawa and the outer islands of the Gilbert Group. These figures do not show the 4.29 The present fleet of one CASA and two movements of freight and passengers between Trislander aircraft is more than sufficient for the outer islands, nor passengers carried by current operations and only one Trislander is special charter. Comparison of the tables shows required to meet present scheduled services. that whilst overall pawenger traffic has grown at lhe Trislanders are short range aircraft and not approximately 3 percent per annum, the increase suitable for the majority of routes which are is attributed to special and charter traffic and not relatively long stage lengths. Moreover new scheduled services. Similarly much of the certification arrangements will require two growth in cargo traffic has been through the pilots. Cyclical component replacement is operation of special and charter flights. By estimated by Air Tungaru to cost approximately comparison, domestic sea passenger traffic AS200,000 on both aircraft in the near futare. carried by SCK between Tarawa and the outer Consequently Air Tungaw is looking to replace islands of the Gilbert Group has been stable at both aircraft with one of a more suitable type. approximately 4,000 passenger per year in each An additional aircraft wIll be required if services direction. are to be conunenced from Kiritimati to the other Northern Line Islands as part of the Table 4.4: KIRmATI - FREIGHf AND PASSENGER MOv mr: OUTER ISLANDS TO TARAWA, 1984-1988 1984 1985 1986 1987 1988 Freight ('000 lb) North Gilberts 113.1 119.6 135.9 146.0 146.6 Central Gilberts 104.3 105.2 126.3 124.1 116.6 South Gilberts 1105.7 106.8 107.9 12'.3 114.3 I21l 323d 1 331 6 37.34 377.5 Passengers (os.)J North Gilberts 5,186 5,301 6,002 6,222 6,110 Central Gilberts 10,065 10,196 10,735 10,767 10,066 South Gilberts 5,759 5,737 5,533 5,892 5,753 l1 2221.010 21.234 22,881 21.929 Source: Kiribati Statistical Yearbook 1988. 20 - reseolment program. The purchase of both to full ICAO standards for B737 aircraft is under aircraft is estimated to cost AS8 million and is negotiation with the Chinese Government . The proposed within the 1991-1994 plan period. Air works would require runway widening (from 36 Tungaru has not required Government of meters to 60 meters), increase in the reserved Kiribati operating support since 1985, but will width of the runway ([from 100 meters to 150 not be able to meet new aircraft financing costs. meters without an instrument land system or 300 Air fares, which are controlled by the meters with one), and resheeting of the existing Government of Kiribati, had not been increased runway, taxiway and apron. The estimated costs since 1985, but an increase of 25 percent was are in the order of A$9 million, which would requested and approved in July 1991. This increase to AS10 million with the inclusion of a restored parity with real fare costs in 1985. new control tower and extensions to the terminal. The capacity to service the increased Operations and Administration capital investment, based on existing passenger and aircraft movements, appears doubtful. 4.30 The Aviation Division of the Ministry of Transport and Communications is responsible 4.32 Proposals have also been developed by for administration and regulation of the aviation the Government of Kiribati to upgrade the system. All feea and charges collected are runway lighting at Cassidy Airport on Kirimati, returned to consolidated revenue, with the initially by temporary means and later as a exception of airport concession revenues, which permanent arrangement, at an estimate cost of are retained by Air Tungaru. Airport A$360,000. This facility would provide for maintenance, including the airstrips on the outer both the planned international route Honolulu- islands is carried out by the Public Works Kiritimati-Tarawa-Nadi and also for expansion Department of the Ministry of Works and of the domestic services based on Kiritimati and Energy, although airstrip maintenance is the servicing the new settlements on Tabvaeran and responsibility of councils. Teraina Islands. 4.31 BonrikiAirportis theinternationalairport 4.33 A total of 16 other regional airstrips are on South Tarawa and the major airport in in operation in the Gilbert Islands group. These Kiribati, it can accommodate B737 aircraft (but are coral surfaced and are not equipped for night not to full ICAO standards). Cassidy Airport on operation. They are maintained by the Public Kiritimati is also capable of taking jet aircraft Works Department, although they are the and has been used until recently for international responsibility of the island Councils. All services between Kiritimati and Honolulu. At inhabited islands, with the exception of Banaba, present the runway surface at Bonriki can result have an airstrip. Because of the roughness of in potential problems through stone ingestion by the terrain, the construction of an airstrip on jet aircraft. Air Nauru operates specially Banaba is estimated at A$2.5 million. On equipped B737 aircraft with stone suppression existing air routes the replacement of non- air nozzles mounted below the jet inlets. Air directional beacons (NDBs) is required to assist Marshall operates HS.748 propeller driven air navigation and has been proposed by the aircraft. A proposal to upgrade Bonriki Airport Government of Kiribati for the period 1991-1992 at a cost of A$405,000.5 - 21 - CHAPTER 5 TRANSPORT SECTOR DEVELOPMENT NEEDS A. INTRDODUCTON size of the country. However, there has also been recognition of the need to strengthen microeconomic analysis, especially project 5.1 Kiribati comprises 33 very small coral identification and design capability within islands located across a vast area of the Pacific Ministries. However, the lack of integrated Ocean, and remote from neighbors and trading economic development for the resettlement of partners. Consequently, the adequacy and the Line .slands has been noted as a deficiencv efficiency of transport and communication by potential donors, both as a guiding services within the country (especially between framework to the successful implementation and Tarawa and other islands), and between Kiribati sustainability of projects and as a means of and other nations, is vital to the country's marshalling appropriate donor interest and development. participation. 5.2 The sixth National Development Plan B. INSTrIUmIoNAL (1987-1991) and the Second Kiribati Development Conference (held in the Northern 5.4 Investment Justification. Available Line Islands in 1989) emphasize the evid-i,ce (World Bank, 1991) suggests that Government's desire to develop the potential of development expenditure through the the Northern Line Islands through a resettlement Governnment has been directed primarily to th, program. The successful implementation of investment in economic and social infrastructure such a program will depend on the development as a foundation for future growth. This includes of adequate infrastructure, including port, investment in the transport sector which has airstrip and road facilities and appropriate been allocated, in the main, to basic road and shipping and aviation services. In the context of causeway developments, improvements to ship overall development of the nation's limited land repair facilities and inter-island transport, and air resources, the efficiency and effectiveness of the navigation aids and management of aviation nation's sea and air transport services have a services. major impact on the economy. 5.5 Government Accountability. 5.3 A more explicit strategy to guide the Government Ministries and Departments are not further development and operation of some required to prepare annual reports setting out the sectors of the economy would be desirable. performance of their functions and Certain deficiencies have been recognized in the responsibilities, but annual reporting is a preparation of the national development plans requirement of Government corporations. Thus, and a revised approach was adopted to prepare formal accountability to Government and the the 6th National Development Plan. Planning public, exposure of policies, and publicity of functions are typically well organized, given the - 22 - effectiveness and efficiency of operations, does Plan. Projections for future requirements and not extend across all activities of Government. training which might be pursued through pre- service scholarships total 69 professional and 5.6 Transport Strategy. The Government specialist technical people, compared with 53 has recently received the draft of an Interisland (1989) expatriate personnel filling positions in Transport Development Study (ADB, 1991) the public sector. A total of 55 personnel were which addresses domestic transport infrastructure in Pre-service training at 1989. Training for the and service requirements. This study provides upgrading of skills and performance (In-service a better link between transport sector and training) is monitored by the Human Resource economic development objectives, and Planning Unit. The Government has adopted a particularly the transport requirements to support policy of bonding personnel who are awarded the Governments' resettlement program. In-Service training assistance. Use of 'twinning" arrangements with similar overseas 5.7 Aid Environ_ent. External grants and organizations warrants exploration. loans to Kiribati have averaged US$15.0 million per annum during the 1980s (or approximately US$234 per capita), and have been dominated C. GENERAL TRANSoRT SECTOR MSu by bilateral assistance. During this period there has been a move away from aid for technical 5.10 Project Selection and Appraisal. There assistance to development projects. Currently is a need for project formulation to be based on over three-quarters of external assistance is a sound perspective of the strategic role of directed to projects. transport in the Kiribati economy and to reflect associated investment priorities. Moreover, 5.8 Private Sector Participation. As noted projects should include explicit assessment of the above, the Government is committed to a policy capacity of the nation to allocate adequate of privatization of major public enterprises as a resources to address the ongoing operating and means of reducing Government costs while maintenance costs of projects after encouraging greater private sector participation implementation. Several major projects are in investment and enterprise. A preliminary under consideration, such as upgrading of assessment of 44 public enterprises has been Bonriki Airport, Betio Harbor reconstruction and drawn up for possible private investment or Betio Shipyard slipway construction. Existing management by contract. These include major proposals for these three projects involve a total holdings in the transport sector. There is a capital cost of A$33 million. However, a concern by the Government that the privatization number of alternatives exist and these should be policy might result in reduced foreign aid to considered in assessing the net economic and particular sectors. This expectation may financial contributions available from the discourage transfer of appropriate public sector projects. enterprises to the private sector. Since the private sector and the domestic capital market 5.11 Many projects arise which are of small are small and underdeveloped, external financial scale. Often these warrant technical and, despite and management assistance would appear their scale, possible financial assistance. It is necessary if a policy of privatization is to common for several mnodes to be involved (for proceed successfully. example, aircraft fuel positioning on outer islands). There is a need to simplify the 5.9 Human Resource Development. The required procedures including rationalization of Government of Kiribati has established a Human the economic evaluation of individual small Resource Planning Unit, which is responsible for projects. the preparation of a National Human Resource 23 - S.12 Maintenance of road infrastructure is not Councils on Tarawa (35 km). This would a central issue as it is in the other Pacific Island preclude any potential for the creation of countries but major dtficiencies have been noted separate maintenance organizations. The in the maintenance of the Port of Betio. situation on othe. islands should be reviewed as However, the willingness of donors to fund the need for roads develop.6 "rehabilitation' projects may undermine the determination of Governments to commit funds 5.15 Road Investment. In the medium term for maintenance, when there is difficulty theie appears limited need for construction of generating sufficient funds to meet recurrent new roads. Some access systems will be budget requirements. The tendency for required as development occurs in the Northern example, to let assets run down so far that a Line Islands, however, low-cost, cleared, basic 'rehabilitation' project can be justified results in rights of way would appear to be appropriate. a sub-optimum use of capital stock and long period of service deterioration, with associated 5.16 Road Safety and Tramc Operations. excessive service costs to users. The first step Road safety and traffic operations are emerging in improving maintenance management is a issues in the heavily settled areas of South review of existing transport infrastructure to Tarawa. The multiple use of the road by establish the most valuable assets. Based on vehicles and pedestrians, and as a recreation these priorities, maintenance funding area, results in the potential of high vehicle- requirements can be identified. pedestrian accident levels. Additional areas may need to be examined to provide alternatives for 5.13 Institutional Responsibilities. safe recreational activities. Responsibilities for Government transport policy and for infrastructure is shared between the 5.17 Cost Recovery. There appears to be no Ministry of Transport and Communications and formal policy of cost recovery in the land Ministry of Works and Energy. Air and sea transport area. However, the Government has transport services are provided by two applied a vehicle toll (20 cents) to cross the Government owned corporations, both of which Betio-Bairiki Causeway. This is the only have been proposed as potential candidates for example of a 'toll road' facility identified in any privatization. The planned separation of the of the PMCs surveyed. Ports Division of the Shipping Corporation of Kiribati from the Shipping Division, and the 5.18 Government Plant and Vehicles. The creation of the Kiribati Ports Authority to hire scheme for the use of Government plant and replace the Port Division can be expected to v6hicles, including road construction and assist in clarifying functions, preclude cross- maintenance, remains a contentious issue. The subsidization, and enable the shipping service to objective to provide a self-financing mechanism be privatized if desired. for the supply and replacement of the Government fleet is appropriate, but the system has continued to result in non payment of D. LAND TRANSPORT SUBSECTOR charges by some Departments and claims of poor service and inflated hire rates generally. 5.14 Management Systems. Given the very small size of the road system (70 km on Tarawa) a sophisticated management system is not E. MARrTIME SUBSECTOR required. It would be desirable to formalize the present system whereby the Public Works 5.19 Strategy and Polices. The Inter-island Department maintains the sections of road that Transport Development Study (ADB, 1991) are nominally the responsibility of the two addresses the need for a strategy to guide the 24 - development and management of the maritime F. AVITION SUBSECTOR subsector. Maritime infrastructure and financing services for the outer islands, and for the 5.23 Strategy and Polides. Kiribati is in the resettlement program in the Line Islands, need process of negotiating donor assistance (with the careful assessment for the development of these Chinese Government) of approximately AS10 island economies. million, for the upgrading of Bonriki Airport to full B737 standards. In addition, it proposes the 5.20 Domestic Shipping. The decision of the provision of permanent runway lighting at Government to separate the Shipping and Ports Cassidy Airport (Kiritimati) at an estimated cost Divisions of the Shipping Corporation of of A$360,000. These proposed projects will Kiribati will require a more commercial enable the use of the planned Air Nauru B737- approach to the provision of shipping services, 400 series aircraft into Bonriki. They will also as cross subsidization from port activities will no facilitate an air service linking Tarawa and longer be possible. While there has been some Kiritimati, which has been a priority of contestability in the market, the new Government. The direct financial viability of arrangement should provide a more appropriate the proposals appear doubtful given the limited basis for competition. Informal shipping caters tourist and domestic demand. Replacement of for most passenger and freight needs of non-directional beacons at various locations at an Abaiang. A study of this subsector, estimated cost of A$400,000 is also under recommended by the Interisland Transport considerat.on Development Study, and financed by ADB, is planned. 5.24 Airline Operations. Domestic air service links are seen by the Government as key 5.21 Port Operations. An Act has been to ensuring adequate communication for national passed recently (1991), but not yet implemented, cohesion. The "wet lease" of a suitable aircraft to create a Kiribati Port Authority, responsible is being negotiated Oate 1991) for Air Tungaru for the port at Betio. The Act requires the to operate services from Honolulu to Kiritimati authority to meet commercial objectives in the (in place of the recently discontinued service by setting of charges and in the operations of the Air Aloha), and to continue the service to port. The Inter-island Transport Study found Tarawa and on to Nadi once per week. This maintenance, repair and dredging of the port at service would serve an important priority of Betio was in need of urgent attention. A study Government by providing regular air service of port rehabilitation and expansion options is between the western and eastern regions of planned as a technical assistance project (through Kiribati, notwithstanding that the direct financial ADB). viability, as indicated in the 6th Development Plan, remains unlikely. 5.22 Shipyard Operations. The Betio Shipyard Ltd., which is a fully owned 5.25 The costs of major overhauls and the Government company, is required to operate the forthcoming requirement for 2 pilot operation shipyard on a commercial basis. At present has led to a proposal by Air Tungaru to replace (1991) it operates profitably on a modest its Trislander aircraft. Air Tungaru has also revenue base (A$300,000) but does not have the proposed a new aircraft for services in the Line capacity to finance further substantial capital Islands. These proposals add an estimated A$8 investment. A proposal by the Shipyard to fund million to the Government's capital requirements a new slipway at a cost of A$3 million is not in the Aviation sector. Such proposals should be considered financially viable and has not assessed cautiously, given the intentions of other proceeded. regional carriers to re-equip (for example, Air Marshall Islands may move to BAC 111 and 737 - 25 - aircraft). Institutional strengening of Air Tungaru (together with rehabilitation of outer island airstrips) is programmed for ADB financing. 5.26 Provision of airworthiness and air licensing inspection services needs to be addressed on a more comprehensive basis. There is no regional regulatory authority covering technical standards. Accordingly, services are provided currently from Australia and New Zealand. Medium-term stable arrangements should be established-possibly with the Civil Aviation Authority of Fiji. - 26 - Endnotes 1. This transport sector survey is based upon a mission to Kiribati April 24, 1991. The mission members were Colin Gannon (Senior Economist and mission leader), and Ian Gordon (consultant). A draft of this report was discussed with the Government of Kiribati July 16-17, 1992. 2. See World Bank (1989). 3. The five other South Pacific island countries which were members of the World Bank at the time of this study were Fiji, Solomon Islands, Tonga, Vanuatu and Western Samoa. 4. The World Bank country study of the Pacific Island Economies (World Bank, 1991a) presents a more detailed review of the Kiribati economy and its development projects. 5. A draft Air Transport Study, financed by the EC, was submitted to the Government in 1992. 6. Road condition on the outer islands (argely involving tracks) is reported to be poor; no formal maintenance has taken place sin ; the late '70s and early '80s, during airfield construction. There Is no plant on the outer islands. A project document has been prepared (1992) by the PWD for restoration/rehabilitation of feeder roads on outer islands. The project would involve town councils, training with a PWD counterpart based in Betio, and the provision of basic tractor add-on equipment (blade and roller). 2MM.Mns/M9MMN/X.WMM4$01./dj - 27 - BIBLIOGRAPHY Government of Kiribati, Second Kiribati Development Conference, Kiritimati 1989. Government of Kiribati, Sixth National Development Plan 1987-1991. Transport and Road Research Laboratory (1982), The TRRL Road Investment Modelfor Developing Countries (RTIM2), TRRL Laboratory Report 1057. World Bank (1989), South Paciflc Islands Transport Sector Review. World Bank (199la), Towards Higher Growth in Pacffic Island Economies; Lessons fom the 1980s, Report No. 9059-ASIA, Washington, January 18. Kiribati \.cw ON A Nam , 7w. -AbIh [jI AlR IM P I - N Alo -n I ~N&wd_stfw m* oo - 29 - KIRIBATI IRANSPORT SECTOR SURVEY ANNEX 1 - 30- ANNEX 1 CONTENTS 1 INTRODUCTION ....................................... 32 A. Context ........................................... 32 B. Maintenance Management Framework ........................ 32 2 NATURE OF THE MAINTENANCE ISSUE . .35 A. Transport Infrastructure Inventory .35 B. Assessed Maintenance .37 C. Maintenance Practices .41 D. Implications of Inadequate Maintenance .43 E. Maintenance Funding .44 F. Situation Summary .47 3 EQUIVALENT ANNUAL VALUE FOR TRANSPORT INFRASTRUCTURE 50 4 ROAD VEHICLE OPERATING COSTS ......................... 52 -31- ANNEX I LisT OF TABLEs Table No. 1 Kiribati-Management Information Inventory Roads .................. 33 2 Kiribati-Management Information Inventory Ports ................... 33 3 Kiribati-Management Information Inventory Airports ................. 34 4 Estimated Road Length, 1991 (Gilbert Group) ............... 36 5 Kiribati-Road Construction Costs and Values (Gilbert Group).36 6 Kiribati-Estimated Replacement Value Government Port Facilities .... ..... 37 7 Kiribati-Estimated Replacement Value Government Aviation Facilities ..................................... 38 8 Kiribati-Average Annual Road Maintenance Costs, 1991 (Gilbert Group) ...................................... 38 9 Kiribati-Annual Ak erage Maintenance Cost as a Percentage of Replacement Value for Marine Facilities ................... 39 10 Kiribati-Estimated Average Annual Maintenance Cost Marine Facilities, 1991. 40 11 Kiribati-Annual Average Maintenance Cost as a Percentage of Replacement Value for Aviation Facilities .40 12 Kiribati-Recurrent Budget Allocations Roads .41 13 Kiribati-Recurrent Income and Expenditure Marine Division, Ministry of Transport, Communications and Tourism .41 14 Kiribati-Recurrent Income and Expenditure Aviation Division, Ministry of Transport and Communications .42 15 Kiribati-Summary of Infrastructure and Maintenance Values .44 16 Toll Collected Bairiki-Betio Causeway ........................... 44 17 Kiribati-Summary of Cost Recovery .49 18 Kiribati-Summary of Infrastructure Value and Maintenance Costs, 1991 51 19 Kiribati-Road Roughness and Condition .52 20 Vehicle Operating Parameters .54 21 Kiribati-Vehicle Operating Costs .55 LiST OF BoxEs Box No. 2.1 Vehicle Operating Costs ................................... 45 4.1 Traffic Volumes .52 -32 - ANNEX 1 CHAPTER 1 INTRODUCTION A. CoNTExr consists of descriptive observations of the present poor condition of infrastructure. Little 1.1 This annox provides documentation of a analysis has been undertaken of the need for cost survey of the maintenance situation in Kiribati.' effective maintenance. This survey, along with similar surveys for other PMCs, represents the background for the regional analysis of transport infrastructure B. MNIAREANCE MANAGEMENT maintenance presented in Volume One (Part IT) FhmEWORK of this report. 1.4 Tables 1 to 3 indicate the extent of 1.2 Current government policy does not management information available for each address the need for a systematic approach to the transport subsector.2 assessment of maintenance requirements and priorities to assist recurrent budget planning and 1.5 The tables illustrate the almost complete support sustainability of transport infrastructure lack of information available in the road and services. marine subsectors which would assist in the development, operation and maintenance of these 1.3 At present, there are no asset inventories transport systems. Information in the aviation held by the responsible Departments which subsector is directed to meeting international air contain information on asset condition, or any safety requirements. The major deficiencies historical data. Evidence of insufficient relate to information useful to the development maintenance is generally circumstantial and of adequate maintenance management strategies and systems. - 33 - ANNEX 1 Table 1: KiRIDATI-MANAGEMENT INFORMATION INVENTORY ROADS _______ TeThical Oroupir Levdl Road Pavemen Structures TraMe Flnane Activity Reowume ______________________ Inventory t Sectoral Overall budjetary ad P P p p p p P d titical infor-rStion_ _ Network Traffic demand and P U U U U U U physical cbaracteris-tics by link_ Project Specific information U U U U U U U related to coratrue-tion, betterment and _ maintenae_ Operations Maiatene of the U U U U U U U system to provide offctiwv ervice Research and Ued for pecific U U U U U U U Developmen inveatigatom of development of the system or its operatioal efficiency /a Seeper 1. 1.7. A wcceptable bsic information available P - partial basic information available U - information unavailable. Source: Minion review. Table 2: KIRIBATI-MANAGEMENT INFORMATION INVENTORY PORTS _u__onal TechnIcal Crouping /a Fmctaonal _Pu,pe LAvd Senlturu Civil Bulding Plant Trfk Finae Reoum" Worksr Equiprnent Sectoral Overall budgeary aNd P P P P P P P statistical information Network Trafric denad and P P P P P U U physical charateristics by location Project Specific dat - Not Applicable- Operations Maintenanceof the U U U U U U U system to provide effective ervice Reaearch an Used for pecific U U U U U U U Development investigation /a See pan 1. 1.7. A - acepale buic information available P - partil bu. information available U - information unvailable. Source: Miior review. -34- ANNEX 1 Table 3: KRuTI-MANAGKMNT INFoRMN INVNORY AIRPRTS Tehcab" Groupin La ___ ___ Level Cil Buiig Plds & Commu- Traflk FSce Resources Works Equipmet cation _ I Sectorl Ovell P p p p p p p budgetary nd iatistical informtion Network Traffic P P p p p U U demnand and physical chareteristies by beao- Pmjee Specific dab _ Not Applicable - Operatiomi Maintee U U U P p U U of the system to prvovd effective R_lrcb Used for U U U U P U U SEW speific Developmen inve titions t ll See par 1. 1.7. A - acceptable baic infonnation available P - partil baic informtion available U - informtion unvailable. Source: Miuion review. - 35- ANNEX 1 CHAPIER 2 NATURE OF THE MANTENANCE ISSUE A. TRNSPoRT INmAsgF ucTE information is available on pavement condition INVENTORY and no inventory exists of causeways, bridges and culverts. 2.1 Very little data on transport infrastructure are available for Kiribati. Such information 2.4 The information that is available on road which exists is presented below.' lengths is set out in Table 3. No data are available for the Line Islands (principally 2.2 The value of major transport assets in Kiritimati, where a system of sealed and other Kiribati has been established using estimates of roads were constructed by the British about the the replacement cost of identified assets. Where time of atom bomb testing). projects have been completed recently, the replacement cost is assumed equal to the 2.5 The replacement cost of the listed road construction cost, adjusted to present prices. assets is estimated on the basis of current road For older assets the replacement values have construction costs supplied by the Public Works been calculated by comparison with the recorded Division. Costs of construction in Kiribati are value of similar recent assets. By using a relatively low compared with road construction 'replacement' value for the asset, no costs in locations requiring significant consideration has been given to the condition of earthworks and drainage structures, since the the asset. In most cases the actual value of the Kiribati terrain is almost exclusively of a low- asset would be considerably lower than the lying, coral island nature. Lateral drainage is replacement cost, due to age and lack of generally effected without the need for maintenance. significant works. Road, Causeway and Bridge Inventory 2.6 Based on the estimated construction costs and road lengths by road classification (Gilbert 2.3 The Public Works Division, Ministry of Group, see Table 2.2), and allowing a notional Works and Energy, which acts as the road figure of $2.0 million for the replacement cost construction authority, does not maintain an of approximately 30 km of sealed road and $1 inventory of Kiribati land transport assets. As million for unsealed road on Kiritimati, the set out in Table 1.1, there are no data which estimated replacement cost of road assets is would assist with the strategic planning, work A$8.59 million (1991 prices). programming, project development or operational control of the road system. There 2.7 The completion in 1987 of the major are no accurate figures for the total length of causeway (with bridge over the mid-length road or of classes of road, except for the length fishing vessel channel) connecting Bairiki with of sealed road on South Tarawa. No Betio Island added a major item to road transport infrastructure, being of greater present -36 - ANNEX 1 Table 4: KiRIDATI-EsTIMATED ROAD LENGTH, 1991 (GILBERT GRoUP) (km) Formed Surfaced Sealed District Road/Track Road Road Total Northern 152 53 205 Tarawa 30 12 36 78 Central 95 159 254 Southern 219 65 _ _284 Total 496 289 36 821 Source: Public Works Division, Ministry of Works and Energy day replacement value, A$15.7 million, than all 2.9 No inventory item or value is included other elements together. for the three short causeways on South Tarawa or for the many rubble causeways constructed on 2.8 The recently completed (1990) bridge outlying islands by local forces. However, their linking South Tarawa to Buota, just north of numbers, lengths, heights, widths, etc. should be Bonriki airport and having a present day recorded, both as infrastructure assets which replacement value of $161,000 is of significance require maintenance and because future planning since it represents the first important example in may consider the need to introduce openings Kiribati of a connection between individual through them for environmental reasons. Details islands of an atoll, completed without of the future causeway construction, including obstructing access of marine waters from the bridges or openings where present, should be open ocean to the lagoon. This is understood to fully recorded for inventory/maintenance be environmentally more satisfactory than the purposes. usual causeway constructed from coral rubble which prevents such access. The estimated total replacement cost of roads, Betio causeway, and Buota bridge is A$24.45 million (1991 dollars). Table 5: KIRIBATI-ROAD CONSTRUCTION COSTS AND VALUES (GILBERT GROUP) (AS millions, 1991 prices) Weighted Average Length Replacement Road Type Construction Cost (kmn) (kln) Cost Sealed roads 0.060 36 2.16 Surfaced Road 0.005 289 1.45 Formed Road 0.004 496 1.98 Total Road Replacement Cost (Gilbert Group) 5.59 Source: Mission Estimates. - 37- ANNEX 1 Marine Infrastructure Inventory Table 6: KDMATI-ESTIMATED 2.10 There is no consolidated inventory of REnACEMENT VALUES marine infrastructure assets. The Public Works GOVERNMENT MARN FACILTIES Division, Ministry of Works and Energy has (A$ million, 1991 prices) supplied the 1987 construction cost of the Betio fisheries jetty, which has been escalated to 1991 Location Facility Replacement values. Original construction costs of the Value breakwaters/moles and of the quay, harbor Betio BreakwnAes/ 4.5 basin, etc., are not known. Replacement costs moks 4.3 at present day rates have been estimated. The Wharves nd 1.4 Port Division of the Shipping Corporation of low" 1.0 Kiribati provides port and cargo services to Dredgd shipping and the Betio Shipyard Limited Obu su provides ship repair and maintenance services. Both have facilities and plant which are not Sub-ToWl 11.2 included in the inventory since they are intended Outer Wharve| Pzincwy 1.0 to operate as self-financing and maintaining and JeW Louion por organizations. i on Kirima 2. 11 The Port of London on Kiritimati is the Total Mann Repant Cost 12.2 only other Kiribati port of significance. It was source: PubL;c Work Division and Mission Estimate. constructed during the Second World War, is affected by shifting sand bars and is operated by a single barge lightering to vessels at anchor. 2.13 The total replacement value of Repair work at the port and dredging of the government aviation assets is estimated (see channel could reinstate access to shipping. A Table 7) at A$6.8 million (1991 prices). notional figure of A$1 million is shown tabulated. The estimated replacement cost of all Government facilities is set out in Table 2.3 and B. ASSESSED MANrEnANCE totals A$12.2 million (1991 prices). Roads, Causeways and Bridges Aviation Infrastructure Inventory 2.14 Average annual road maintenance costs 2.12 The Ministry o f Transport, are presented here based on realistic estimates of Communications and Tourism does not have an work required to maintain the roads in the asset inventory in a form which provides for an context of traffic volumes and the use of asset management system. Estimated available materials and equipment. The replacement costs for the present facilities at estimates include periodic reseal and resurface Bonriki Airport have been provided by maintenance costs, reduced to an average annual Department of Works, as well as an overall equivalent cost. A provisional estimate is replacement cost of Outer Island airstrips. No included for formed roads. The estimated costs estimates are available for Cassidy Airport due are set out in Table 8. to lack of inventory data: a notional figure of 60 percent of the replacement value of facilities 2.15 Added to the Gilbert Group cost is an at Bonriki has been included. estimated of A$0.100 million for annual maintenance for all other I-Kiribati roads. The -38- ANNEX 1 Table 7: KiRIDATI-GovERNMENT Table 8: KIRIATI-AVERAGE ANNUAL AVIATION FACILITIES 8: MAMnANCE CO u19 REPLACEMENT VALUE, 1991 ROAD MiNTENANCE COSTS, 1991 (A$ million, 1991 prices) (GILDERT GROUP) Location/Item Facility Value Cost/km Total Road Type A$ Length cost Bonriki A$ * Runway, taxiway, 1. S_millo-n apron 0.7 Sealed road 2,500 36 0.090 * Teminal, Control 0.8 Surfaced 250 289 0.072 Tower 0.3 road 100 496 0.050 * Other buildingsFomdoa * Access road, fencing, 3.3 Formed Load landscaping and TOTAL 0.212 parking- Subtotal Source: Mission Estimates. Cassidy 2.0 roads in the network should be maintained to a Outer lslnd Aistrips 1.1 standard commensurate with the needs of normal Subtotal 3.1 two-wheel drive vehicles. In view of the very low traffic demands consideration needs to be Air Navigation Facilities 0.4 given to the identification of those links in the Subtotal 0.4 road system which should be formally maintained to an appropriate standard. The Total Aviation 6.8 remainder could be left to communities to Replacement Cost _____________ maintain, if sections of the road system were seen to be of value for local access, or if not, Source: Public Works Division and Mission mnates, abandoned. estimated annual maintenance cost assumes that 2.17 Major causeways and bridges require the road system is in good maintainable special consideration due to their exposure to condition and that maintenance is directed at marine conditions. Causeways will require preserving design standards. This is simply not repair and maintenance due to erosion and sand the case as field inspection and discussion with drift, and bridges will require attention to various personnel reveals. However no abutment scour and superstructure maintenance, pavement or structure inventory exists from particularly if of painted or galvanized steel. which to calculate the backlog of the The estimated annual maintenance cost is taken rehabilitation or reconstruction needs. Evidence as 0.3 percent of capital cost of bridge or from discussions suggests that much of the road causeway. For the facilities identified system is in poor condition, particularly that on previously, i.e. the Bairiki-Betio Causeway and Kiritimati. A conservative estimate would be the Buota bridge, this amounts to $48,000. No that half of the road system is in need of major rehabilitation backlog cost is identified for these zrehabilitation or reconstruction. This implies a two recent structures. All other causeways on backlog of rehabilitation needs in excess of A$4 South Tarawa and elsewhere are included in the million (1991 prices). relevant road maintenance and rehabilitation figures above. Total road, causeway and bridge 2.16 The estimated annual maintenance and rehabilitation and annual maintenance rehabilitation requirements presume that all -39- ANNEX 1 requirements are therefore estimated to be 2.20 Betio Port may be the subject of a major A$0.360 million and A$4.0 million respectively. expansion project. Assessment of this project should address the rehabilitation matters and Marine Infrastructure strongly emphasize cost-effective management and financing of the ongoing maintenance 2.18 Annual average maintenance costs for the requirements of an upgraded port. marine subsector have been calculated by applying industry wide guideline percentage Aviation Infrastructure factors to the estimated replacement values of marine structures and equipment. Because 2.21 Annual maintenance costs for the aviation costings of replacement value are aggregated, subsector also have been calculated by applying rather than individumlly detailed, general percentage figures to the estimated replacement percentages have been used (see Table 9). On value of facilities. No specific source document the basis of these data, the estimated average has been identified which provides indicative annual maintenance cost is A$63,000 (1991 values, as is the case for marine infrastructure. prices) for facilities at the main port of Betio and Percentage values have been based on general A$10,000 (1991 prices) for London port on figures for building maintenance, building plant Kiritimati (see Table 10). This represents a total maintenance and civil works maintenance in the annual maintenance requirement of A$0.073 case of major airports. For outer island airstrips million (1991 prices). the annual costs of maintaining the runway and general cleared area have been estimated as a lump sum amount (1991 prices). These figures Table 9: KIRIBATI-MARINE FAcILrTIEs include periodic as well as routine maintenance ANNUAL AVERAGE MANTENANCE COST (see Table 11). The estimated average annual AS A PERCENTAGE OF REPLACEMENT VALuE maintenance requirement for aviation infrastructure at Bonriki Airport, is A$43,000 Fadlity Percent of (1991 prices) and for the regional facilities l__________________ Capital Value A$39,000 (1991 prices). The total for all l Breakwaters/moles 0.1 facilities is AS0.082 million (1991 prices). * Wharves and jetties 1.0 2.22 Rehabilitation requirements at the two * Dredged basin 0.1 major airports, Bonriki and Cassidy, are of major significance including runway Source: Ports Authority of Fiji, UNDP, and reinstatement and upgrading of buildings and Mission Evaluation. navigation facilities. The estimated value of works needed is A$1.6 million. This figure also 2.19 It is apparent that the Betio harbor includes amounts required to bring the outer breakwaters/moles are in urgent need of island airstrips to readily maintainable standards. rehabilitation and that maintenance dredging of the channel and port basin is also urgently 2.23 Major upgrading of Bonriki Airport to required. Quay wall repairs are also needed. full B737 standards is under consideration. The recently completed fisheries jetty is in good Again assessment of the project should address condition. An estimated rehabilitation cost for the need for managing and funding ongoing the facilities at Betio Port and the Port of maintenance of the facility. London is A$2.4 million. -40 - ANNEX 1 Table 10: KIRBATI-MAINE FACILITIES AVERAGE ANNuAL MAINTENANCE COSr (AS, 1991 prices) Value Factor Average Annual Item AS million (percent) Maintenance AS Betio * Breakwaters/moles 4.3 0.1 4,000 * Wharves & Jetties 4.S 1.0 45,000 * Dredged basin 1.4 0.1 14,000 Sub-Total 63,000 Port of London 1.0 1.0 10,000 TOTAL 73,000 Source: Mission Estimates. Table 11: KJBATI-AVIATION FACILITIES ANNuAL AVERAGE MANTENANCE COST As A PERCENTAGE OF REPLACEMENT VALUE (AS, 1991 prices) Facility Value Factor Average Annual AS (percent) Maintenance millions A$S Bonriki Airo * Terminal and other buildings 1.5 1.0 15,000 * Runway/aprons/taxiways, etc. 1.5 1.5 23,000 * Ancillary works 0.3 1.5 5,000 Sub-Total 43,000 Cassidy Airprt_= * Lump sum estimate n.a. 20,000 Outer Island Airstrips * Lump sum estimate n.a. 11,000 Air Navigation Facilities 0.4 2 8,000 TOTAL 82,000 Source: Mission estimates. - 41- ANNEX 1 Table 13: KIRIBATI-RECURRENT INCOME C. MANTANCE PRACTICES AND EXPENDITURE MAINE DmSION, 1990-1991 Roads (AS) 2.24 Readily available data pertaining to the 1990 Budget Public Works Division (PWD) provides separate 1 expenditure budgets for each of its functions. Income The budget for Roads, therefore, is separately * Port Dues 10,000 12,000 identified. The line budgeting procedures of * Wharfage 11,000 10,000 Government separately identify office and staff * Berthage 10,000 10,000 support, hire of plant, fuel and maintenance of * Pilotage 3,000 3,000 roads. The line item for maintenance of roads * Registration of Ships 10,000 10,000 is understood to cover the external costs Total 43,500 45,000 (purchases external from government) of road l maintenance . Exp Office 5,000 5,000 * Maintenance 20,000 20,000 2.25 The PWD budget allocations for 1990 Hire Charges (vebicles 6,000 6,000 and 1991 are set out in Table 12. Advice from plant) 5,000 5,000 PWD indicates that for 1991, the total * Other Ships/Tugs expenditure on road maintenance may be taken T as the total for Maintennce in Table 12, plus 80 Total 36,000 36,000 percent of the figures for both Plant hire and Of which maintenance is Fuel, plus 30 percent of the figure for Office estimated as: 25,000 25,000 and staff support, amounting in total to * Wharves, hardstand, $247,000. buildings Total Maintenance 25,000 25,000 Table 12: KIRIBATI-ROADS RECURRENT Source: Ministry of Transport, Communications and BUDGET ALLOCATIONS, 1990-1991 Tourism. (A$) inventory adds to the problem of providing an _____________ _ 1990 1991 effective maintenance system. Office and staff support 36,000 16,000 Plant hire 189,000 197,000 Ports Maintenance of Roads 50,000 48,000 Fuel 35,000 46,000 2.27 The Marine Division of the Ministry of TOTAL 310,000 307,000 Transport, Communications and Tourism is responsible for the operation and maintenance of Source: Public Works Division. the Port of Betio on Tarawa and the Port of London on Kiritimati. Actual maintenance work is carried out by the Public Works Division. 2.26 The present system of budget allocation and cost reporting does not provide information 2.28 The Marine Division chart of accounts on a program or project cost basis and the actual includes an item for maintenance which has expenditure attributable to road maintenance remained consistently at AS20,000 for the last cannot be identified. The lack of a road few years. Figures for 1990 and 1991 are set -42 - ANNEX 1 out in Table 13. An estimate of the amount actually attributable to the maintenance function Table 14: KIRIBATI-RECuJRRENT INCOME is included in the table. AND EXPENDITURE AVIATION DIVISION (AS, current prices) Aviation Budget 2.29 There is budget appropriation to the 1990 1991 Aviation Division of the Ministry of Transport, Income Communications and Tourism for airport * Airport fee 50,500 80,000 maintenance, with the work being carried out by l the Public Works Division. * Staff and labor costs 53,600 57,900 * Office 1,600 1,800 2.30 Air Tunguru, the national airline, pays a * Utits 8,000 10,000 small landing fee, understood to be AS6, to * Airdeld maitran 41,000 23,000 Outlying Island Councils but has difficulty in * Communications, ensuring that the local airstrips are regularly licenses and standards 26,000 26,000 maintained to the required standards. Similarly, (ICAO) 130,200 118,700 but more importantly, there is difficulty with Total nont-directional beacons being out of action, which in bad weather has resulted in cancelled Source: Ministry of Trnsport, Communications and flights. Tourism. 2.31 Air Tunguru has been responsible in the preceding sections are summarized in Table 15. past for collecting and passing on to the Aviation The estimates are derived from a very limited Division the landing fees paid by foreign database. The objective of the estimates is to carriers. It is understood that in recent years no provide an indicative quantified perspective of landing fees have been payable by Air Tunguru the present situation for the purpose of to Civil Aviation on its own account for the use illustrating the nature and scale of the transport of airport facilities. It is also understood that infrastructure maintenance issue. The current Civil Aviation is making arrangements to collect replacement value of transport infrastructure has overseas airline landing fees directly. been based on data assembled on the quantity of Table 2.11 sets out recurrent income and infrastructure and unit construction costs. The expenditure and indicates an expenditure on maintenance overhang (i.e., rehabilitation airport maintenance of $41,000 in 1990, i.e. requirements resulting from past inadequate A$44,000 in 1991 dollars. A similar amount maintenance) is based on brief Mission was expended in 1989, which will therefore be evaluation of nees: full rehabilitation needs are taken as the appropriate maintenance amount, very likely to be greater than presented in even though the budgeted figure for 1991 is only Table 15. The expenditure required to approximately half this value. adequately maintain current infrastructure, suitably rehabilitated so that it is maintainable, is estimated on the basis of unit maintenance costs Summary for roads and a proportion of the replacement value of marine and aviation infrastructure. 2.32 The estimated replacement value of This level of expenditure is used as an transport infrastructure, maintenance overhang, approximation of the amount assessed for assessed maintenance needs and actual aassessed" or warranted maintenance (i.e., maintenance expenditure derived in this and maintenance expenditure which results in a -43- ANNEX 1 minimum life cycle cost for the asset at a given continuing service of road infrastructure.' The design standard). Assessed maintenance does same principle applies to maintenance of not Imply it is warranted. This requires a infrastructure in the maritime and aviation benefit-cost appraisal of individual assets. sectors. Current actual maintenance expenditure is derived from budget data. 2.36 Reduced expenditure on maintenance is offset by more rapid deterioration of 2.33 The replacement value of Government infrastructure than would be the case with transport infrastructure is estimated at A$43.5 optimal maintenance. Indicative estimates of the million or A$680 per capita. The infrastructure equivalent annual capital cost of infrastructure has, however, deteriorated considerably, and with current and assessed maintenance is derived road rehabilitation needs are equal to 16 percent below. The increase in the cost is summarized of the total replacement value of the road in Table 2.12. The cost to the Government of system. Current maintenance expenditure on more rapid deterioration of its transport transport infrastructure is only 24 percent of that infrastructure is approximately 6.5 times higher estimated as being required. If there was no than the cost of improved maintenance. accrued maintenance liability for the current infrastructure, an additional A$0.366 million 2.37 In addition to the higher costs which would be required annually for "assessed" accrue to the Government and donors from maintenance of the infrastructure.' The current inadequate maintenance, users of the transport maintenance overhang will require expenditure system incur higher costs. For road users, this greater than the assessed maintenance of includes increased vehicle operating costs; these A$0.483 million per year if the average in turn may result in further decline in economic condition of infrastructure is to be imDroved. efficiency through reduced accessibility and increased spoilage of products, and suppressed 2.34 Inadequate maintenance results in more foregone productive economic activity, if the rapid deterioration of infrastructure than need be increased costs make a potential industry the case. An estimate of the increase in the unviable. The current poor road conditions equivalent annual cost of infrastructure resulting increase total user costs by around 12 percent from poor maintenance is also presented in through increased fuel and tire use and Table 2.12. This item is discussed in the next additional wear and tear on vehicles (see Box 1 section. on Vehicle Operating Costs). Similarly, increases in port costs which result from inadequately maintained port infrastructure will D. IMPLICATIONS OF INADEQUATE add to the cost of imported goods and make M ENANCE exports, most of which pass through sea ports, less competitive on international markets. For 2.35 The limited maintenance effort applied to example, inadequate maintenance of wharves roads in Kiribati has reduced their effective lives and jetties may result in reduced safe working to about eight years for sealed roads and much loads for forklifts and vehicles and consequent less for unsealed roads. The cost of restoring increases in the costs of handling cargo. deteriorated roads has been estimated at three to Tourism could be severely affected if deficient five times greater than the cost of timely and maintenance results in unreliability and delay of effective maintenance (World Bank, 1988). services due to closure of airports - deterioration Increased expenditure on timely and effective of the airport terminal could also have an maintenance can reduce the total life cycle adverse effect on user perception and marketing replacement, maintenance and user costs for the credibility. -44 - ANNEX 1 Table IS: KIRIBATI-SUMMARY OF INFRASTRUCTURE AND MAINTENANCE VALUES, 1991 (AS million, 1991 prices) l _____________________________ Road Marine Aviation Total Replacement Cost 24.5 12.2 6.8 43.S Maintenance Overhang la 4.0 2.4 1.6 8.0 Asessed Average Annual Maintenance Requirements / 0,360 0.073 0.082 0.515 Estimated Current Annual Maintenance Expenditure 0.247 0.025 0.044 0.316 (as percentage of assessed requirement) l_______________________________________________ (69) (34) (54) (61) Additional Expenditure to Achieve Assesed 0.113 0.048 0.038 0.199 Maintenance /c Additional Annual Capital Expenditure arising from 0.719 0.292 0.289 1.300 |Inadequate Maintenance 1_ hadoqttm m - /a Cost required to rehabiitate infrastructure to a sound standard, i.e. the standard through time which would have been the cae with optimal maintenance and for which the assessed annual maintenance expenditure is sufficient to adequately maintain the infrstructure. /b Expenditure required for optimal maintenance. /c Difference between current annual expenditure on maintenance and the equivalent annual expenditure assessed as being optimal. /d Difference between equivalent annual capital cost for replacement of assets with optimal and current maintenance - see below. Source: Mission estimate. 2.40 Tolls are charged for travel across the E. MAINTENANCE FUNDING Bairiki-Betio causeway at the rates of 20 cents per car and 80 cents for buses. Collections for 2.38 There is no hypothecation of revenue to recent years are tabulated in Table 2.13. These maintenance of road or aviation infrastructure in changes are accumulated in a fund specifically Kiribati. Nor is there a formal policy on cost- allocated to the maintenance of this causeway. recovery in the road sector where specific fees for use of the road system are not imposed. Table 16: KIRIBATI-TOLL COLLECTED BAIRIKi-BETIO CAUSEWAY, 1988-1990 Roads 1988 j 1989 1990 2.39 There are no specific charges for use of A5138,000 |_A_126,900 AS108,200 the road system in Kiribati with the exception of ASA the toll charged for crossing the Bairiki-Betio Source: Ministry of Trasport, Communications causeway. Road users contribute to the cost of and Tourism and mission estimates. developing and maintaining the road system indirectly through: (a) an initial license fee and annual registration charges; (b) driving license 2.41 Import duties on new motor vehicles are fees; (c) import duty on vehicles, spare parts and set out in the Kiribati Customs Tariff Schedules. (d) fuel excise. Basic duty rates are as follows: - 45- ANNEX 1 Box 2.1: VEHICLE OPERATING COSTS Vehicle operating costs rise rapidly as roads deteriorate, more so on gravel than sealed roads as shown below: Road Condition Sealed Road Gravel Road Good 0.2941/ 0.312 Fair 0.303 (3%) 2/ 0.347 (1IX) Poor 0.34S (17%) 0.406 (30%) There is an almost complete absence of data on traffic volume by road type and condition. Therefore, it is not possible to estimate, with any measure of accuracy, the tatal cost of operating vohicles over the road network in its current condition and the coat with roads in good condition. However, working assumptions, based on judgment, have been made to provide an indicative estimate of such vehicle oporating coas. Based on say 600 registered vehicles (i.e. excluding the large number of motorcycles) travelling an average of 14,000 km per year (say, 30 percent of which is on gravel roads) and with a third of the roads in poor, fair and good condition respectively, total annual economic vehicle operating costs will be A$2.7 million. The equivalent cost if roads are in good condition is A$2.5 million, i.e., current vehicle operating costs are 8 percent higher than would be the case if roads were in good condition. Foreign costs account for 78 percent of these costs. The AS0.2 million difference between vehicle operating costs on good and poor roads thus represents an incremental import bill of AS0. 16 million per year. 1/ Average economic vehicle operating costs in AS/km (see Chapter 4, below). Vehicle financial operating costs are 35 percent greater. 2/ Increase compared with the cost on a road in good condition. * Public transport type passenger Import duty for petrol and diesel is A$1.50 per motor vehicles 25% 10 liters and A$0.O5 per 10 liters respectively. * Motor cars of more than 1,000 cc but less than 1,500 cc capacity 60% 2.42 A higher rate of duty on equipment and * Motor cars of more than 1,500 supplies for the road transport sector relative to cc capacity 80% other imports can be interpreted as an indirect * Trucks of gross vehicle weight means for charging users of the road system; not exceeding 5 tonnes 60% higher duty in this sector also reflects * Trucks of gross vehicle weight fiscal/general revenue raising objectives. exceeding 5 tonnes 35% Imposing tax "mark-ups" where price elasticities are relatively low ("Ramsey" pricing) might * Motor vehicle parts and justify higher tariffs for the road transport accessories 50% subsector, with higher tariffs for road transport * Motor cycles of less than resources being a fiscal measure, and not treated 100 cc capacity 60% as cost-recovery. Alternatively, all income from * Motor cycles of more than duties can be considered as contributing to cost- 100 cc capacity 80% recovery, to the extent that the duties are imposed on road transport users, and revenue from the duties is less than that required for full -46 - ANNEX I cost-recovery. (The regional analysis presented problematic that grant assistance will be in Volume One of this study presents the effect available to fiund the present maintenance of all identifiable revenue from duties being overhang and the increased amount required for treated as cost-recovery.) Limited available the adequate maintenance of the road system. aggregate data does not provide a clear Therefore the Government will need to initiate indication of the average level of duty on motor means to increase its sources of funds, in vehicles and fuel compared with all imports as a particular by increasing and rationalizing the whole. charges imposed on road users. Increased road user charges need to be carefully considered as 2.43 Basic vehicle registration and bus and a significant fiscal burden already falls in road taxi operator fees are as follows: users and raises transport costs. * Commercial vehicles exceeding 2.45 Two key equity issues relate to cost- 1 tonne A$90.00 recovery in the land transport subsector: (a) the * Private vehicles A$30.00 geographical distribution of sources of receipts * Motorcycles over S0 cc A$18.00 and disbursements of revenue in the subsector; * Bus and taxi operator A$200.00 and (b) the apportionment of costs and revenue by vehicle category. Approximately 70 percent Based on the numbers of vehicles registered in of the road and causeway assets (by value) are the different categories and the relevant located on Tarawa Island. Data on the number registration and license fees, the revenue from of registered vehicles on the other islands are this source has been estimated at A$62,000 not available, but it is likely that at least a (1991). By way of comparison, the total similar proportion of vehicles are located on minimum annual cost of sustaining the road Tarawa. A much higher proportion of economic system (i.e., with the road system in activity also occurs on the Island. The maintainable condition and assessed annual substantial gap between revenue and expenditure maintenance undertaken) is estimated to be for roads in these other regions, and the limited A$2.358 million (1991 prices), comprising: financial resources on them, reinforces the need to carefully establish that part of the road * Current Maintenance A$0.247 million network which has key economic and social * Incremental Maintenance value and to seek the most efficient means for Needs A$0. 113 million ensuring maintenance of the basic road network * Annual Capital Charge A$1.998 million - including adoption of appropriate standards. A major proportion of the road network involves Alternative maintenance strategies to that low traffic volumes (1ess than 100 vehicles per embodied in this funding will result in higher day). Such roads, typically gravel and earth overall costs of sustaining the road formed, provide accessibility as a social service. infrastructure, and in addition, higher user Fixed costs for maintaining these roads are vehicle operating costs. high-over 75 percent. In such circumstances, a lower share of revenue for cost recovery will 2.44 Notwithstanding the general revenue derive from specific vehicle-related fees; a raising purpose of import duties on vehicles and higher share will need to be supported by more fuel, if only a proportion of this is considered an indirect and general taxes.6 indirect user charge, it is evident that road users do not currently meet the costs of providing the 2.46 The second equity issue pertains to the road system. The present serious deterioration attribution of cost and revenue to vehicle types. of existing roads represents a substantial Trucks cause considerable damage to the road contingent and unfunded liability. It is system, disproportionately more than their share -47 - ANNEX 1 of total vehicle kilometrs by all road vehicles. Tables 14 and 15). The revenue is almost Road user charges should be designed to reflect entirely attributable to aviation activity at this incremental cost to the system. To the Bonriki Airport. contrary, import duty on trucks is generally less than the import duty on other road vehicles, and 2.50 In summary, costs and revenue associated it is less likely that the share of revenue from with development, operations and maintenance import duty on trucks will contribute adequately of the Civil Aviation Division facilities are to recovery for roads. The present threefold estimated for 1991 at: difference between the annual registration tax for trucks and cars (A$90 end AS30 per annum) AS'000 makes only a minor contribution to the Income 80 difference in damage imposed on the road system by the two types of vehicles. Given the Operating Expenditure very smalsize of the vehicle flt and road use * With Current MaIntnance 119 in Kiribati, the net benefits of better designed * Incremental Maintenance Needs 38 user charges need to be weighed against the costs of implementation and enforcement. Operating Surplus (Loss) (77) Less: Annual Capital Charge 649 Ports Net Surplus (Loss) (726) 2.47 Data in Tables 13 and 15 indicate 2.51 Revenue would need to be increased ten estimated costs and revenue associated with times from the present AS0.080 million to development, operations and maintenance of the AS0.806 million to generate sufficient revenue ports and other activities of the Marine Division to cover the cost of operating the airport of the Ministry of Transport, Communications facilities and sustaining the infrastructure. As and Tourism in 1991 to be about: with the other transport sectors, further revenue is required to fund rehabilitation of infrastructure A$'000 which has deteriorated from inadequate Income 45 maintenance in the past. Consideration is required of means for funding the development Operating Expenditure and maintenance of Cassidy Airport on * With Current Maintenance 36 Kiritimati and of airfields on the outer islands. * Incremental Maintenance Needs 48 Operating Surplus (Loss) (39) F. SrITuAON SummARY Less: Annual Capital Charge 884 Net Surplus (Loss) (923) 2.52 The previous sections of this survey indicate the problems facing the Government of 2.48 MarineDivisionrevenuefallsfarshortof Kiribati in providing for the maintenance and that needed to achieve an operating surplus and rehabilitation of the nation's transport provide sufficient for maintenance and capital infrastructure. The analysis reflects the replacement. rudimentary nature of the information which is available to assess asset management needs, even Airports from the most general perspective. 2.49 Income is collected by the Ministry of 2.53 The replacement value of transport Transport, Communications and Tourism mostly infrastructure (excluding the vehicles, vessels through boarding charges and landing fees (see and aircraft which use the system) in Kiribati is -48- ANNEX 1 eatimated to be A$43.5 million (US$33.5 2.57 At present, virtually all maintenance is million) (1991 prices). The average equivale*t undertaken by the PWD using force account annual assessed maintenance for the transport labor and Government-owned equipment. This system is esmated conservatively at A$0.515 approach fails to give sufficient consideration to million (US$0.397 million). The annual the separation of management and technical assessed maintenance is on average equal to activities, and has resulted in almost exclusive some 1.2 percent of the replacement value of the emphasis on the latter. The approach also places assets; this ranges from 0.6 percent for marine heavy demands on the limited number of infrastructure to 1.5 percent for roads. qualified staff in the Department, and fails to take advantage of the greater flexibility available 2.54 The estimated annual assessed outlays for in private companies and the community. asset maintenance presume that the system has been well maintained in the past and that 2.58 An indication of cost recovery with rehabilitaion or reconstruction requirements optimum maintenance for each transport mode should only relate to the general ageing of tha presented in Table 17 indicates substantial system. Tbis is not the present situation in under-recovery of costs for road and aviation Kiribati. transport. Use of current maintenance expenditure and the equivalent, higher annual 2.55 Much of the infrastructure has been built capital charges would result in a lower level of or reconstructed in the past 10 years and cost recovery. possibly little remains of original investments made more than say 30 years ago, which can be 2.59 Assessments of all existing taken as the average life of transport infrastructure and determination of what infrastructure. The expected value of one year's assets (and at what standard) warrant replacement of assets would be about A$1.4 (assessed) maintenance is needed. Attention million, if the construction of the assets had should also be given to identifying maintenance been spread uniformly over the past 30 years. priorities and recurring higher cost recovery By comparison, the present estimated through direct and indirect user charges. rehabilitation and replacement needs (based on the maintenance overhang) are likely to be more than A$8.0 million (1991 prices). This estimate is based on very imprecise data, but is indicative of the backlog in restoration needs. 2.56 The historic levels of actual maintenance expenditure are difficult to establish and hence to assess. Departmental budget allocations and costing procedures are not designed to provide information on a program/functional basis (e.g., maintenance task). The lack of function based financial data is a constraint to understanding and managing maintenance. An apportionment of recurrent Departmental expenditures for all transport modes indicates that some A$0.316 million was spent on maintenance in 1991, which represents 61 percent of assessed average annual maintenance requirements. - 49 - ANNEX 1 Table 17: KIRIBATI-SUmmARY OF COST RECOVERY, 1991 (AS 000's, 1991 Prices) Roads Marine Aviation 1 Income • Direct 62 45 80 * Indirect (Loss) ..La . Total 62 45 80 Operating Expenditure * With Current Maintenance 247 36 119 * Incremental Maintenance Needs 113 48 38 Operating Surplus (Loss) (298) (39) (77) Less: Annual Capital Charge 1,998 884 649 Net Surplus ss) (2,296) (923) (726) La Share of import duty in excess of average rate of duty for all imports. Data not available. Source: Mission estimates. - 50 - ANNEX 1 CHAPTER 3 EQUIVALENT ANNUAL VALUE FOR TRANSPORT INFRASTRUCTURE 3.1 Introduction. Inadequate maintenance and result in deterioration of this element of ke results in more rapid deterioration of transport fixed component. The lives of the fixed infrastructure than would be the case with components of infrastructure adopted for the optimum maintenance. This Annex estimates the current assessment are presented in Table 18. extent of this effect. Typical lives of the renewable components of infrastructure with current maintenance and 3.2 Infrastructure Value. The value of optimum maintenance are also presented in current infrastructure estimated in Section A of Table 18. Chapter 2 is summarized in Table 18. The cost of this infrastructure comprises two parts; a 3.5 Equivalent Capital Cost. The fixed component and a renewable component. equivalent annual capital cost of infrastructure The former includes, for example, clearing and with current maintenance patterns and with construction of the base for a road. optimum maintenance are shown in Table 18. An opportunity cost of capital of 7 percent is 3.3 The renewable component of used. The data illustrate that the current infrastructure is that part which periodically equivalent annual capital cost with current requires reconstruction, for example the surface maintenance patterns is about 37 percent greater of a road. The approximate proportion of the than would be the case of optimum maintenance total cost of infrastructure which is fixed and was undertaken. renewable is described in Table 1. 1. The estimates are drawn from construction cost estimates for typical construction projects. 3.4 Economic Life. With optimum maintenance, the fixed component of infrastructure should have a life of at least 50 years. By definition, all elements of the fixed component of infTastructure should not be affected by the level of maintenance. This is not necessarily the case, however, in practice. For example, poor maintenance of a road may result in inadequate drainage and pot-holing. Water can then penetrate the base structure of the road Table 18: KJRIBAThSuMMARY OF INI1tAS=RUCmURE VALVE AND MAFnANCE CoSS, 1991 (A$ '000, 1991 prices) TOTAL mm u.- C ---m, p MMW wh ~ 04p u. 1d a" & &ar_ Tod Du & _34o Ts m _M we. 0 G Tow mm rghinm VA 4.10 4.430 ISI 2454 4, 33 2.4, 12.2 4.1 23 4W CM 40.45 _ m e_ ^ . ... .. .4.. . 2.45 .. .. .. .ao m. AM md A _ 340 172 4 3 4 51 14 13 0 25 4 *2 515 C __ __ 2. 7 .. 25 .. 44 316 _____ 695 4% 3 % 6a% _ 1wO_ 113 4 34 199 * ftmIC Sib_d A_ qi* Ca yd 1.9m O_ _m * 310 429 1.219 Z737 326 n4 174 It4 4s 57 Wno _ 447 621 1.649 719 355 40 342 1.17 45 253 74 649 353 __mmm Id Cm 97 192 430 29 96 is 202 34 67 17 931 4.03 :.d cmwomo as WscWs as mas es as NM 0% 1 4__ 90% 3% USf 3% 0%3 4%0 _b C #35% 10% 20 Mtl on loss us on N Wdb ofim_ moomm3 50 30 so 5D so 1 30 TM 34 2D 3 40 40 4i 1s Wm _0~ unemm4 16 5 32 0 5s o10 K I TM_ | 2 le 20 32 to _ 7 avowb- _ 96" _ b_ ._- - - - = * _ - on"m .1 dw pm d 7. p i a bd p-m w& nd lb m pd et to % * __ _~~~~~~~~~~~~~~~~~~~~~~~~~~~~~_ _~~~~~~- -52- ANNEX I CHAPTER 4 ROAD VEHICLE OPERATIG COSTS 4.1 Introduction. Vehicle operating costs average annual cost over the economic have boen established using the RTIM2 model,7 life of vehicles. with two exceptions: (a) The model to determine road roughness Box 4.1: TRAmC VOLUMES (based on, for example, the number of vehicle passes since the last grading on The distribution of traffic volumes over the unpaved roads) has not been used as road network is highly skewed. Data on traffic traffic volumes are commonly very low, volume, is not available but observations indicate nd the rate of road deterioration will be Ithat traffic on the sealed road on South Tarawa is of and te rae of oad eteroratin wil bethe order of 1,000 vehicles per day. This would of heavily affected by environmental course vary along its length, being a maximum in conditions in addition to traffic activity. the Betio and Bairiki areas. Indications are that Moreover, no systematic data are elsewhere in Kiribati the roads carry less than 10 available on the present condition of vehicles per day and the most heavily trafficked roads. For indicative purposes three roads are unlikely to exceed volume. of 50 vehicles road conditions have been adopted, as per day. shown in Table 19. 1 Table 19: KIRIBATI-ROAD ROUGHNESS 4.2 Vehicle Features. Representative vehicle AND CONDmTION types (from the Toyota range) for the most commonly found types of vehicles in use in Road Roughness (nun/lan) Kiribati are: Road Condition Gravel Road Sealed * Car (Corolla, 4 door) Road * Light Utility (Hilux Pickup) Good 3,000 2,000 * Light Truck (Dyna Diesel 3 tonne Truck) Fair 5,000 3,000 * Diesel Bus (Hiace, 12 seater) Poor 8,000 5,000 Other vehicles will have operating costs similar Source: Mission estimates, to these vehicles. Features of these vehicles which influence operating costs are presented in Table 20. The data has been obtained from investigations in Kiribati. The share of each (b) Data on the age profile of vehicles in vehicle type is based on the share of registered Kiribati and scrappage rates are not vehicles and the estimated annual distance available, and the cost of capital and travelled by each vehicle category. The number depreciation have been based on the -53- ANNEX 1 of vehicles registered in 1990 (South Tarawa) 4.5 The principal items with a substantial was: imported component are fuel, oil, tires, spare parts for maintenance and capital charges. Motor cars 268 About a quarter of these costs can be attributed Trucks 57 to local distribution and retailing; however, there Buses 106 is an import component to these latter costs. Motor cycles 577 This component is estimated as 55 percent, the Other 36 share of net imports in GDP in Kiribati.9 Total 1,044 Applying this proportion to other components of vehicle operating costs, the foreign cost Some of these vehicles span the four vehicle component of financial vehicle operating costs is categories for which operating costs have been estimated to be 83 percent. derived. Specific data to disaggregate the vehicle types is not available, but it is estimated 4.6 Average vehicle operating costs on gravel that 15 percent of cars are light utilities, one- and sealed roads in the three conditions third of trucks are similar to utilities. This described in Table 19 are presented in Box 1 in results in the distribution of vehicles types as the main text. shown in Table 20; the distribution is similar to that in other Pacific countries currently being 4.7 Total savings in vehicle operating costs reviewed. are based on representative traffic volumes (see Box 2). 4.3 Vehicle resource consumption for travel on good sealed roads derived from the RTIM model is also presented in Table 20. 4.4 Vehicle Operating Costs. Total vehicle operating costs, in AS per kilometer (1991 prices), for travel on sealed roads and gravel roads in good condition are described in Table 21. (Note that economic operating costs are 74 percent of financial costs.) These figures are used as a datum from which vehicle operatihg costs are estimated for sealed roads in fair and poor condition and unsealed roads (in each of the three conditions) using road roughness as described in Table 19, and relationships in the RTIM model.' The vehicle operating costs are summarized in Box I in the main text. Traffic volumes are low (see Box 2) and representive volumes have been used in estimating total vehicle operating cost savings. -54 - ANNEX I Table 20: VEHcLE OPERATING PARAMETERS: SEALED ROADS IN GOOD CONDITION, 1991 Car Ught Diesel Light l ____________________________________ __________ Utility Bus Truck Physical Daa Free Speed 60 50 60 45 Power-Weight Ratio (BHP/t) NA NA NA 25 Gross Vehicle Weight (t) 1.0 1.0 1.5 3.0 Annual Use: Distance (kim) 12,500 14,750 12,500 17,000 Time (hours) 500 600 500 680 Average Speed 25 25 25 25 Effective Life (years) 10 10 10 10 Average Vehicle Age (years) 4 4 5 5 Vehicle Crew: Driver 0 1 1 1 Other 0 1 1 1 Traffic Composition 38% 22% 23% 17% Unit PriceData (1991 prices) (i) Financial Prices Vehicle 18,000 15,000 24,000 23,000 Tire 120 120 140 140 Fuel 0.75 0.75 0.60 0.60 Oil 6.00 6.00 6.00 6.00 Driver Time (/hr) 0.71 0.71 0.71 0.71 Crew Time (/hr) 0.21 0.21 0.21 0.21 Maintenance Labor (/hr) 0.71 0.71 0.71 0.71 Insurance 700 600 1,000 900 Annual Registration 25 40 27 55 Real Interest Rate 7% 7% 7% 7% (ii) Economic Prices Li Vehicle 11,920 9,000 19,680 15,230 Tire 86 86 100 100 Fuel 0.42 0.42 0.42 0.42 Oil 5.00 5.00 5.00 5.00 da Excludes taxes and duties. Source: Mission estimates. - 55- ANNEX 1 Table 21: KIRIBATI-VEHICLE OPERATING COSTS ON PAVED ROADS IN GOOD CONDITION, 1991 L& (AS/kmn, 1991 Values) Car Light Diesel Light Average Utility Bus Truck l Sealed Road (road roughness = 2,000 mm/km) Financia Cost Fuel 0.054 0.050 0.068 0.081 0.061 Oil 0.007 0.011 0.011 0.024 0.012 Tires 0.017 0.017 0.019 0.046 0.022 Maintenance 0.021 0.021 0.035 0.029 0.026 Interest and Depreciation 0.205 0.145 0.273 0.193 0.205 Licenses and Insurance 0.058 0.043 0.082 0.056 0.060 Driver and Crew 0.000 0.019 0.016 0.021 0.011 Total 0.362 0.306 0.505 0.450 0.396 Economic Cost Fuel 0.030 0.028 0.047 0.056 0.038 Oil 0.006 0.009 0.009 0.020 0.010 Tires 0.012 0.012 0.014 0.033 0.016 Maintenance 0.014 0.013 0.029 0.019 0.018 Interest and Depreciation 0.136 0.087 0.224 0.128 0.144 Insurance 0.056 0.041 0.080 0.053 0.058 Driver and Crew 0.000 0.019 0.016 0.021 0.011 Total 0.254 0.209 0.420 0.330 0.294 La Vehicle operating costs for paved roads in good condition (roughness index 2,000 mm/km) are used as the datum, against which vehicle operating costs for other road types (unsealed and earth) and road conditions (fair and poor) are estimated. The total annual cost of owning and operating vehicles is expressed in A$/km; variations in operating costs with road condition are tested only for fuel, oil, tires and maintenance. Source: Mission estimates and RTIM model. -56 - ANNEX 1 Endnotes 1. The survey of the maintenance situation presented here is based upon a World Bank mission visit to Kiribati December 2-5, 1991. 2. These tables are based on a classification system outlined in Volume One, Part II. The notional classifications used in the marine and aviation subsectors are subject to further refinement. 3. To derive information a questionnaire setting out the data required was circulated, prior to the mission visit, and used as the reference for discussions with the relevant Ministries and Departments. Data are also drawn from the previous subsectoral reports on transport ii KXiribati. 4. This level ses aside any trade-off with additional costs of management, administration and implementation to secure assessed maintenance. This issue is discussed In Volume One (Part II). 5. At the same time the costs (in addition to maintenance expenditure) of putting in place effective maintenance, such as the administrative and management of personnel, training and information, need to be factored in. Implementation of improved maintenance needs to be cost effective and the costs should be less than the direct savings in infrastructure costs. This issue is addressed in Volume One, Part II of this report. 6. The structure of road user charges and other fees/taxes for road cost recovery is more complex in such situations. This issue of providing reliable access to small, often remote, communities also arises in maritime and aviation with small wharves and airfields. 7. Transport and Road Research Laboratory (1982). S. The vehicle operating costs are summarized in Box 2.1 in Volume One of this report. 9. Based on data for 1988 when imports, exports and GDP were AS28.2 million, A$5.8 million and A$41. 1 million respectively. ^~~~~~~~~4 W U~ - T q . .1.. fi..... ~ PACIFIC OCEAN ~~~~~KIRIBATI TRANSRT SECTOR STUDY , ~ ~ ~ ~ ~ IW 4 . m. i :R uw4 u i-T> .WT sj @ ,OS CA* T ~~iubss1w *~SW*SW pa Mmimiu.Ak.- .-_ _ _ _ _ _ _ _ _ _ _ _ _ __';''_ __'_ _ I t S . . v u e * M L E T*qMM -mkMMm A liS' 1* 4W MASA 'SAUJ - 0 AI4. I . 0 4 * l~~~Idad -^ ; 1 , AX r4d. Ri~~~~~~~~~~~~~~~~~~t 0 - R LLE* I X G#E iv vc 1;,wwaws^ VW AUSTRALU VI G .Jr _ ~~150;E 165 O65 20Dmd.im a0m oo 2oit I.__|, p p~~~~~~~hS 6