VANUATU UPDATE POST COVID-19

Vanuatu update

DAVID SPRING PT COLUMNIST Sydney, Australia

Vanuatu suffered a 5.6% annualised decline in GDP in 2021 due to the global COVID-19 border closures. It could have been worse. Agriculture remained strong but tourism, which has traditionally made up around 30% of GDP, effectively ceased overnight in March 2020 and has not yet resumed. This has constrained the government’s ability to fund and borrow for infrastructure investment and restricted the flow of foreign capital and expertise entering the country. Although there is plenty of current geopolitical interest in Pacific infrastructure, spending lead times will be long. In the meantime, the construction industry is relying on small-scale work and opportunities with the few international contractors operating there. Let’s take a closer look.

What’s happening now

The World Bank is continuing to fund existing projects in Vanuatu – the Vanuatu Infrastructure Reconstruction & Investment Project (VIRIP) and South Santo Road. These projects have a combined value of over USD 100m and are well into the delivery phase – VIRIP finishes in 2023 and South Santo in 2025. VIRIP had a broad scope, initially for the reconstruction of roads and buildings following Cyclone Pam, extending to other eligible emergency and recovery works as they arose. The South Santo Road is, as the name suggests, a 66 km road around the south coast of Santo, in need of a major upgrade, including structures. The Australian bilateral program includes infrastructure spending on Roads for Development 2 (R4D2), Cook and Tiroas Barracks and the Supreme Court upgrade. R4D2 is a long-term road maintenance program. The Cook and Tiroas Barracks Redevelopment Project is an upgrade of buildings and infrastructure for the Vanuatu Police Force (VPF) in Port Vila and Luganville. The Supreme Court project, announced in 2020 and co-funded by the NZ Aid programme and the Vanuatu government, is a new facility to replace the historic building destroyed by fire in 2007. A project to construct a Containment Center and Transition Facility at Port Vila Central Hospital are underway, being funded by the Vanuatu government. The Containment Center will provide a facility for the control and isolation of COVID-19 patients. The Transition Facility will provide temporary wards when future hospital upgrade projects shut down existing ward capacity. In all these projects, there is a strong focus on local involvement – local consultants and contractors – as well as providing formal training and upskilling. The use of local firms is in part driven by the necessity generated by COVID-19 border closures. But it also demonstrates the capability of the local industry to undertake projects of appropriate scale. ADB remain in a holding pattern while its transport sector preparatory consultant reviews sector plans and policies. The Brenwe micro-hydro project looks to be up and running again, after a false start when COVID descended in 2020. A modest number of small tenders have been flowing through the government system – equipment and materials purchases, maintenance contracts, rural water supplies, as well as the expansion of apron facilities at Norsup (Northeast Malekula) to cater for ATR72-600 aircraft.

What’s planned

In May there were reports in the Daily Post of an agreement for a Chinese firm to construct an upgrade to Pekoa airport (Luganville, Santo) from its Code C status (Boeing 737 equivalent) to Code E (Boeing 747 equivalent). This is in keeping with Airport Vanuatu’s (AVL) long-term plans for the airport. However, no funding has yet been secured. This will presumably be coming from the government of the People’s Republic of China, to support their owned state enterprise, but remains obscure. AVL may also be required to undertake remedially, and improvement works to Port Vila’s Bauerfield International Airport. The recent flooding of the apron, runway and domestic terminal buildings resulted after torrential rain battered the airport during TC Gina in May this year. The advent of the flooding is surprising, given the USD 50m upgrade to the runway, aprons, and terminal buildings only three years ago. Vanuatu demonstrated fiscal restraint during the COVID downturn. A stable government over the past few years has helped provide business confidence. International borders will reopen on 1 July, bringing much-needed revival to the tourist economy. Donors are operationally established in Port Vila and are positioned to develop new projects. With these economic fundamentals in place, recovery and growth are the likely COVID after-effects.

About the Author

David is an experienced engineer, with over 20 years experience in construction, design and international development. David has been working in Solomon Islands and Vanuatu as a team leader for the past six years, specifically on road and bridgeworks. He worked on intraMinistry roles at the Ministry of infrastructure Development (MID, Solomon Islands) and led the Cyclone Pam road reconstruction project in Vanuatu, understanding donor requirements and how development projects are procured and delivered. Continuing as a Team leader for MID and with some corporate responsibilities for Cardno, David seeks to deliver equitable access for communities, which generate social and economic benefits.