Executive Summary

 Infrastructure development is the main source of linkage in trading and accessing potential market and sustaining production over the years. The scattered islands and remote villages with its relatively distributed population and rough road contributes to high cost of operation in terms of trading among agricultural commodities such as transport services and social economical services provided by the Government over the past 30 years. The island of Pentecost has been known for the past years as the main supplier of kava to the main urban centers (Port Vila and Luganville) and will continue to provide and sustain income/employment for local farmers and urban retailors. The opening up of the kava trade recently in Europe (Germany) after the ban of importation for the past 10 years will contribute to the increasing demand externally for kava juice and powder. The current green kava price of VT 800 - VT1, 000 per kilo have push farmers to concentrate on kava planting and less forecast on other commodities production. For many locals the commodities nowadays label as the locals “Green Gold” have increase purchasing power within the domestic local economy.

The propose 28.8 kilometer tar seal road from Central Pentecost to South Pentecost will cost the Government through concessional loan agreement around VT 4.4 billion, However upon the cost benefit analysis under taken in assessing and evaluating the benefits and potential along the distance road the potential benefit within the medium and long term outweigh the cost. The result of the analysis undertakes indicates that there are substantial advantages in the construction of the new road upgrade projects and the performance of most of the partially indicators collected during the economic assessment feedback indicates great potential still not utilize on the propose route. Traffic on the new road projects is much higher 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 project roads would remain under-utilized during the initial years.