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Table of Contents Commercial in Confidence Development Proposal Wind Emirau Sustainable economic growth for Papua New Guinea… …with a PNG difference Prepared by Edward Car Wind Australia PO Box 377 Kangaroo Ground Victoria, Australia 3097 Tel: 613 9712 0533 [email protected] www.windaustralia.com July 2004 © Copyright Wind Australia 2003 Commercial in Confidence Wind Emirau Project Table of Contents Executive Summary 3 Background 4 Drivers of change Proposal Overview 8 Objectives 15 Marketing Plan 16 Marketing Objectives 21 Pricing 25 SWOT 30 Implementation Plan 34 Operational Issues 39 Infrastructure Development 44 Benefits 53 Ownership 55 Government Assistance Required 58 Risks 60 Financials 61 Glossary 63 Appendix A Developing Sustainable Commercial Fisheries 64 B Project Location 80 C Fish Aggregating Devices (FAD) 83 D Tuna Exports 1996 – June 2001 84 E Assumptions – Summary 89 F Time to Market Scenario 91 2 Commercial in Confidence Wind Emirau Project Executive Summary An International airport and deep-sea port development on Emirau Island will provide a gateway for Papua New Guinea (PNG) to access international markets and export fresh tuna and seafood and establish the largest fresh tuna market in the world. The airport designed for Boeing 747 and the new Airbus 380 will also provide a staging point for control of the vast PNG Designated Fishing Zone (DFZ). Effectively this increases the level of regulation and compliance on visiting international fishing fleets and provides a way of monitoring their impact. Initially the project focus is on developing commercial artisanal fisheries for St Mathias islanders and marketing high quality hand-fished fresh seafoods under a unique brand that promotes the sustainability of the fisheries, the environment and a values- based society. The daily catch, bound for the burgeoning middle classes of Asia, Europe and North America will very quickly increase from 100MT a day to 400MT a day. Effectively one daily freight service raises the contribution fisheries make to PNG‟s GDP from 1% to 6%. The potential to replicate this sustainable artisanal fisheries model to include the New Irelanders, New Britain Islanders and reach all the islands as far as Wewak could be achieved in under three years. The project will also be a social change program of significance. The project will transition island populations from subsistence agricultural and fishing communities to Independent Business Ownership (IBO). The transition will be facilitated by a program that recognises the strength of the values-based culture that underpins the IBO structure. This culture is also a very marketable commodity. As the project progresses through four clearly defined stages of development, eco-tourism will be one of the outcomes. The economic development of Emirau Island and the St Mathias Island group will be based on a philosophy of zero impact development. The development must fit in with the beauty of the place and the beauty of the people. Hence the entire development hinges on a values-based assessment that respects what is there, how it is sustained and how it fits together with the beauty that has survived. There will be no infringement on, or compromising of the beauty in anyway. This development will be a joint venture between the Emirau Trust and Wind Australia. The joint venture will be registered in PNG as Wind Emirau Ltd. The financial surplus generated initially through artisanal fishing will bring the population into line with the western middle class market place, with a Papua New Guinea difference. This is solid sustainable grass roots wealth for PNG. 3 Commercial in Confidence Wind Emirau Project Background Papua New Guinea Papua New Guinea (PNG) enjoys a large marine Exclusive Economic Zone (EEZ) of 200 nautical miles or 5957 million square kilometres, one of the largest marine jurisdictions in the Pacific. It is characterised by the warmest surface waters, averaging 29 degrees Centigrade, and represents the world‟s most abundant, diverse and valuable marine life breeding ground. The fisheries resources range from estuarine, reef and coastal pelagic to deep water and off shore. They include the following species; inland barramundi, threadfin, mangrove crabs, inland and marine prawns, mullet, trevally, mackerel, catfish, baitfish, snapper, shark, tuna and billfish. The fisheries industry can be divided into four general types: coastal subsistence, inland subsistence, small-scale artisanal fisheries and commercial, industrial fisheries. The fisheries resources in the region are largely unexploited with the exception of the highly marketable species of barramundi, beche de mer and local lobster. PNG has some of the most productive tuna fishing in the world. PNG has tuna stocks all year round Papua New Guinea‟s commercial fisheries are primarily for export to meet the demand of the rapidly expanding market for sashimi-grade tuna and consist of purse seiner and longline fishing. Prime quality „yellow fin‟ and „big eye‟ tuna is exported in fresh chilled form to Japan by air. The low quality fish is canned and airfreighted to Australia and beyond, or sold on the domestic market. Most of the recorded annual catch of around 200,000MT (metric tonnes) is taken by fishing nations licensed to operate in PNG 1 waters. Various fleets have historically fished for tuna in the PNG Designated Fishing Zone (DFZ), including domestic and foreign pole-and-line fleets and foreign longline fleets. Current operations predominantly involve longline and purse seine fleets from Korea, Taiwan, USA and the Philippines. These countries have various bilateral and multilateral fishing agreements (Tuna Access Agreements) in place and pay access fees to the PNG Government. The number of vessels total 162, operating out of the Western and Central Pacific areas and this includes 20 vessels locally based in PNG. 1 The total foreign vessels catch in 2000 is estimated at 160,000MT worth approximately US$400 million. 4 Commercial in Confidence Wind Emirau Project Proposal Overview - cont Estimates given by the South Pacific Commission puts the tuna harvest between 240,000MT and 350,000MT per year. The total resource yield has the potential to reach a sustainable 800,000MT per annum. Fisheries sector Papua New Guinea has the sovereign right to explore, exploit, management conserve and manage living natural resources within its 200 nautical mile Exclusive Economic Zone (EEZ). The 2000 2 Fisheries Act accordingly places an obligation on the Government to ensure the conservation and optimum utilisation of these resources. The Papua New Guinea fisheries sector is experiencing a major restructure and reorganisation in its administration and management. The Government‟s intention being to increase the participation of Papua New Guineans in all aspects of the industry from fishing to marketing. To establish a domestic longline tuna fish industry, PNG denied overseas-based longliners access to PNG waters, effective from March 1987. This was formalised in August 1995 when the Government issued a Gazettal Notice stipulating that foreign longliners, having holding facilities capable of storing tuna at less than 40 C were disallowed from operating in PNG waters. This effectively reduced the ability of fishing fleets to stay on the fishing grounds for months on end utilising a mothership freezing operation. Thirteen years after closing PNG waters to foreign longline fishing, progress in establishing shore-based fleets has been slow. Papua New Guinea currently supports a small, but expanding, fleet of around 20 active longliner vessels producing sashimi- grade tuna destined primarily to markets in Japan. For infrastructure and logistical reasons the majority of these vessels are based in Port Moresby. In 1998, this fleet exported an estimated 1,000MT of fresh product. The PNG fisheries industries contribute approximately 1% to PNG‟s Gross Domestic Product (GDP) or KI00 million. The industry employs 3,500 individuals in the formal fisheries sector. So although the economic value of fisheries in the GDP is small, the importance of fisheries to the overall population, and in particular to subsistence cultures, is significant. 2 The Fisheries Act 2000 and Fisheries Regulation 2000 lay down the general framework for the terms and conditions for the management, development and regulation of fishing, including fisheries management and development, access agreements, fishing licenses and prohibited fishing related activities. 5 Commercial in Confidence Wind Emirau Project Proposal Overview - cont Hence to facilitate the development of the domestic fishing industry the Government has also undertaken a number of major infrastructure developments in the maritime provinces. These developments include the construction of the Kavieng and Manus designated longline wharves and processing plants; including the Wewak tuna loining factory and assistance with incentives for the Lae and Madang mackerel and tuna canneries. However it is the transport industry that determines the economic viability of most business activity in PNG. The deteriorating state of roads and the high cost of air and sea transport - as a direct result of the devaluation of the Kina - has effectively played a part in hampering the promotion of, and any significant growth in, agriculture, tourism, fisheries and related industries. In addition the PNG experience with large-scale developments has often resulted in rural PNG communities being negatively impacted. These developments have invariably been socially
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