Republic of Nauru NAURU Economic Infrastructure Strategy and Investment Plan November 2011 This is a publication of the Government of Nauru. This report was prepared by Andrew McIntyre, Brian Bell, Allen Ashish Sebastian and Samuel Grundler as individual consultants under the guidance and with support of the Pacific Infrastructure Advisory Centre (PIAC) in Sydney, Australia. PIAC operates under the coordination of the Pacific Region Infrastructure Facility (PRIF), a partnership for improved infrastructure in the Pacific Region between the Asian Development Bank, the Australian Agency for International Development, the European Commission, the European Investment Bank, the New Zealand Ministry for Foreign Affairs and Trade, and the World Bank Group. The views expressed in this report are those of the authors and do not necessarily reflect the views and policies of any of the PRIF Partners, the governments they represent, or their governing bodies. The PRIF Partners do not guarantee the accuracy of the data included in this publication and accept no responsibility for any consequence of their use. Republic of Nauru NAURU Economic Infrastructure Strategy and Investment Plan November 2011 Nauru Economic Infrastructure Strategy & Investment Plan TABLE OF CONTENTS EXECUTIVE SUMMARY ...................................................................................................... v I. INTRODUCTION ............................................................................................................... 1 II. INFRASTRUCTURE NEEDS ............................................................................................ 7 A. Infrastructure Drivers ................................................................................................. 7 B. Key Economic Infrastructure Drivers .......................................................................... 7 C. Key Social Infrastructure Drivers................................................................................ 8 III. INFRASTRUCTURE ANALYSIS .................................................................................... 10 A. Population ............................................................................................................... 10 B. Water ....................................................................................................................... 12 C. Sanitation and Waste Management ......................................................................... 16 D. Power ...................................................................................................................... 19 E. Telecommunication and Media ................................................................................ 21 F. Airports .................................................................................................................... 22 G. Roads and Land Transport ...................................................................................... 24 H. Maritime ................................................................................................................... 26 I. Government Buildings ............................................................................................. 27 J. Overview of Planned Investments ............................................................................ 30 IV. PRIORITIZING INFRASTRUCTURE INVESTMENT ..................................................... 32 A. The MCA Process ................................................................................................... 32 B. Options Development .............................................................................................. 35 V. LIFE CYCLE COSTS ...................................................................................................... 37 A. Whole of Life Costs.................................................................................................. 37 B. Current Operating and R&M Expenditure ................................................................ 38 VI. FUNDING STRATEGY .................................................................................................. 42 A. Demand for Infrastructure Finance .......................................................................... 42 B. Current Capacity of Capital Markets ........................................................................ 46 C. Overall Funding Strategy ......................................................................................... 51 VII. SECTOR PRIORITY PROGRAMS ............................................................................... 53 A. Water ....................................................................................................................... 53 B. Sanitation & Waste Management ............................................................................. 54 C. Power ...................................................................................................................... 54 i Nauru Economic Infrastructure Strategy & Investment Plan D. Telecom ................................................................................................................... 55 E. Road & Land Transport ........................................................................................... 55 F. Air ............................................................................................................................ 56 G. Maritime ................................................................................................................... 57 H. Government Buildings ............................................................................................. 57 I. Health Buildings ....................................................................................................... 58 J. Education Buildings ................................................................................................. 58 VII. THE WAY FORWARD .................................................................................................. 60 A. Improved Coordination ............................................................................................ 60 B. Improved Sector Planning........................................................................................ 60 C. Strategic Asset Management ................................................................................... 61 D. Streamline Processes .............................................................................................. 61 E. NEISIP Review ........................................................................................................ 62 Annexes A Infrastructure Stocktake 64 B High Priority Project Information Sheets 101 C List of Persons Met 118 D Bibliography of Reports Reviewed 120 E Breakdown of the NEISIP into Capital, Maintenance and Operating Cost Components 122 ii Nauru Economic Infrastructure Strategy & Investment Plan Abbreviations ADB Asian Development Bank AMU Aid Management Unit AusAID Australian Agency for International Development CIE Ministry of Commerce, Industry and Environment DOT Department of Transport DPPD Development Planning and Policy Division ESCAP United Nations Economic and Social Commission for Asia and the Pacific ICAO International Civil Aviation Organization ICT Information & Communication Technology IDG Internationally-agreed Development Goals IWRM Integrated Water and Resources Management lpd Liters per person per day MCA Multi Criteria Analysis MDG Millennium Development Goal MFEP Ministry of Finance and Economic Planning MoD Ministry of Education MTC Ministry of Transport & Communications NDC National Development Committee NIA Nauru International Airport NICC National Infrastructure Coordinating Committee NEISIP Nauru Economic Infrastructure Strategy and Investment Plan NRC Nauru Rehabilitation Corporation NSDS National Sustainable Development Strategy NUA Nauru Utilities Authority O&M Operation and Maintenance PACTAM Pacific Technical Assistance Mechanism (AusAID) PIAC Pacific Infrastructure Advisory Centre PIPI Pacific Infrastructure Performance Indicators R/O Reverse Osmosis Units RoN Republic of Nauru RONPHOS Republic of Nauru Phosphate Company SOE State Owned Enterprise SOPAC South Pacific Commission Applied Geo-science & Technology Division SWM Solid Waste Management TA Technical Assistance TOR Terms of Reference CURRENCY EQUIVALENTS (as of February 15, 2011) Currency Unit – A$ (Australian dollar)) AUD 1.00 = USD 1.00 USD 1.00 = AUD 1.00 iii Nauru Economic Infrastructure Strategy & Investment Plan iv Nauru Economic Infrastructure Strategy & Investment Plan EXECUTIVE SUMMARY Introduction In the decade to 2005, financial mismanagement and government missteps caused Nauru incomes and living standards to plunge. In 2005, Nauru embarked on a program of change, including the development of a 20 year National Sustainable Development Strategy (NSDS). The NSDS and its 2009 update, aim for Nauru to achieve growth by building on economic infrastructure and advancing structural reforms. As part of this effort, the Government of Nauru decided to formulate and develop a Strategic Plan for Economic Infrastructure in Nauru that would identify and prioritize infrastructure investments, and set out recommendations for addressing the country’s infrastructure requirements for growth and economic development. Besides economic infrastructure, this plan also includes the infrastructure requirements of the social and health sectors. Objectives The Nauru Economic