Vanuatu Government Puts Rusted Vessels Up For Bid

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Plan to use ships for profit-making never materialized

By Thompson Marango

PORT VILA, Vanuatu (Vanuatu Daily Post, Jan. 28, 2014) – Eight years after two Chinese-funded vessels were built and handed over, the Vanuatu government is putting up MV Northern Star and MV Southern Star for tender, because the original plans they had for the two ships failed to materialise.

The two ships are now covered in rust, what is left of them that is, as it is understood that most of its easy-to-remove parts have been stolen.

What the government actually gained out of the two brand-new on arrival ships is in question, but what is known is that the two companies to which the government gave the ships owe the government Vt28 million [US$288,660] each.

The Southern Star was the last to cease operations in 2012 after the Minister of Public Utilities and Public Works terminated the contract the government had with the company operating the ship, as it breached their agreement.

The then Minister of Infrastructure and Public Utilities, the late Harry Iauko, alleged in a public meeting, when the contract was terminated, that the ships had been handed over by the government to political allies, which is why the they were rundown.

The two ships were also the center of a controversy in 2012 when the government agreed to compensate Captain Patunvanu for his services in relation to work with the Chinese boat builder on the two ships. He claimed Vt11,620,000 [US$119,794].

Interestingly, ship-designer and engineer Apia Toara claimed he was the designer and still had the blueprints for the two ships, which he had designed after his ship.

According to a very reliable source, the government’s proposed strategy to run the two ships was first initiated by the Government Business Enterprise Unit (GBEU) on the request of the government.

The proposal was for the management of the two ships to be contracted out to a suitable person or company which had to meet the criteria set out by the GBEU.

According to the GBEU’s proposal, the contractor had to be a local company or sole proprietor, have over 5 years of shipping management experience and have sufficient funds to cover three months' rent in advance, to kick-start operations and to cover insurance.

Our source revealed that the proposal set out by the GBEU revolves around the idea that the two ships would be used to generate more funds that would be used to renew a merchant fleet.

The proposal was approved by the Council of Ministers and an expression of interest advertisement was issued which received a lot of interest from private sector players in the merchant marine industry.

"When the two ships arrived the Council of Ministers met and canceled the proposal, but came up with a new plan to give one of the ships to the three northern provinces and the other to the southern provinces," said our source.

He revealed that the original idea was to have the two ships operated by the same company in order to maintain economies of scale, and allow for profit-making routes to subsidise loss-making routes to remote areas.

Unfortunately, the ideas never materialized. When announcing the termination of the companies concerned, the late Minister Iauko confirmed that both companies operating the two ships only made payments for two months of rent, equivalent to only Vt600,000 [US$6,185].

When the contacts were terminated it was discovered that there was no funds left in the companies’ bank accounts.

MV Southern Star and MV Northern Star were put on tender along with two other government vessels, MV Tekoni II and MV Moli Vatu.

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