Economic Assesement for Luganville Main Wharf renovation and extension Project

Executive Summary

The Agricultural and Services Sector potential in Luganville Santo has been kept at bay for the past 33 years. The result of the analysis undertakes indicates that there are substantial advantages in the construction and rehabilitation and Extension of Port Luganville Main wharf upgrade projects and the performance of most of the indicators collected during the economic assessment feedback indicates great potential still to be utilize in Santo Rural and Urban areas. The economic assessment also considers the option of the increasing wharfage fees since the last increase was made in 1992 and the fees still remain the same to date. Vessels berthing on the new wharf upgrade extension projects would be higher once completed and as consequences both users and societies are better off, as total savings are higher and externalities lower than the user fee option. With the introduction of a user fee system, basically to generate revenues for financing the loan or maintenance purposes, the new upgrade wharf would outweigh the cost of construction during the initial years. This is can be attributed to the fact that both Container and tourist boats can berth at the same time along the existing wharf networks and would be high enough to induce a significant proportion of the demand to pay for the increased stevedoring fees advantages allowed by the new wharf upgrade extension projects.

Introduction

 The new rehabilitation and extension of Port Luganville Main wharf is a commercial port that usually on average handles closed to 100,000 tons of freight annually (around 82 boats including tankers and 17 tourist boats arrive in 2012). The proposed port is accessible to existing tarsal roads and located around 1 kilometer to Luganville town.

Significant growth in the handling of the port’s primary commodities, as well as the expansion of the types of commodities received, is currently limited by the main wharf’s size and the damage wharf structure due to natural disasters. Recently the port has been approached by various tourism stakeholders (Luganville Tourism association) in improving the wharf’s deteriorating conditions in order to encourage more large tonnage capacity tourist boats to the ports.

The current length of the ports’ longest wharf is 270 meters and is insufficient for providing full service for all cargo currently served and tourist boat arrivals due to wharf berth space availability. In addition, new business that require the ability to transfer certain heavy cargo off large vessels and into trucks cannot currently be served, due to the physical conditions of the wharf. The proposed rehabilitation and extension of Port Luganville main wharf project would lengthen the existing wharf at the port by 231 meters east towards samanson wharf with total length of berth at 361 meter, providing the opportunity to better serve existing customers and potentially expand customer base.

The total cost of the proposed project would be around US 93.4 million dollars equivalent to VT 8,840 million Loan provided by bank of china as a soft loan to the Vanuatu Government with 2 percent interest with repayment over a period of 22 years including grace period of 5 years. The Benefit-Cost Analysis described in the following sections estimates the benefits and cost associated with the proposed infrastructure improvement. The construction work will be undertaken by a Chinese company (Shanghai Construction Group) schedule to commence in June 2014 and ends in June 2017, a period of 3 years.

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