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Measure aims to offset rising fuel costs

SUVA, Fiji (Fijilive, Sept. 24, 2008) - Fiji’s shipping franchise contractors have had their subsidy rate on its total operating cost temporarily increased by 8 per cent.

Cabinet approved this increase at its meeting yesterday in response to the impact global fuel price increases were having on the five companies under the franchise scheme.

The increase will expire on December 31 2008, by which time a review of the shipping franchise scheme would be completed.

Interim Minister for Works, Transport and Public Utilities Captain Timoci Natuva said the shipping franchise scheme (SFS) was established by Government in 1996 to provide the traveling public with safe, clean, regular shipping service to uneconomical routes in Fiji’s maritime provinces.

He said it was also established to assist shipping operators contracted under the scheme to improve the standard of vessels and quality of service, and improve trade and livelihood of communities in these provinces in conjunction with other stakeholders.

While the scheme aimed to provide at least two trips per month to the outer islands, he said this did not comply completely with Government policy due to insufficient ships, poor quality of available ships, and poor management of shipping companies.

"Whilst the current subsidy rate of 42 percent of operational cost was suitable five years ago, it is now necessary to review the subsidy rate to ensure that the rate offered is sufficient for the shipping operators to keep afloat with well maintained ships and regular upgrading," Natuva said.

The Fiji Shipping Corporation Limited (FSCL), established in 2004 to take over the administration of the scheme from the Transport ministry and operate it independently, welcomed the temporary increase.

FSCL chief executive officer Simon Narayan told Fijilive that this increase would definitely help the franchise contractors in a big way.

He said it would assist operators in the maintenance of their ships, which was paramount.

"The increased subsidy will also facilitate in their running costs," Narayan said.

He said some contracts were approaching expiry next month and others in March next year.

"So, these new rates will help them finance for better ships, so this is indeed very good news," he added.

Narayan said in monetary value, the increase, from 42 percent to 50 percent, was equivalent to a FJ$2,000 increase.

"Some FJ$2,000 [US$1,000] on each trip, why not? This is not a big amount but it is a start," he said.

Meanwhile, Natuva said the tender documents were being prepared and would be advertised in the daily papers within the next two weeks.

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