Infrastructure Development Plan 2016 - 2025

Federated States of Micronesia INFRASTRUCTURE DEVELOPMENT PLAN FY2016-FY2025 Outline: Introduction, Volume 1 and Annexes FSM Infrastructure Development Plan FY2016-FY2025 Introduction P a g e | i Introduction This Federated States of Micronesia Infrastructure Development Plan FY2016-FY2025 comprises the following: Introduction Foreword by the President Executive Summary Acronyms & Abbreviations Volume 1 Plan Outline Part 1 Context Part 2 Infrastructure Strategy Part 3 Investment Strategy Part 4 Management and Implementation Part 5 Sector Overview Part 6 Institutional Aspects Part 7 Monitoring & Reporting Annexes Annex A Infrastructure Development Responsibility Matrix Annex B Performance Indicators Annex C Bibliography Volume 2 National Infrastructure Development Plan Part 1 Introduction Part 2 Plan Outline Part 3 Infrastructure Development Part 4 Priority Project Outlines Volume 3 Chuuk State Infrastructure Development Plan Part 1 Introduction Part 2 Plan Outline Part 3 Infrastructure Development Part 4 Priority Project Outlines Volume 4 Kosrae State Infrastructure Development Plan Part 1 Introduction Part 2 Plan Outline Part 3 Infrastructure Development Part 4 Priority Project Outlines Volume 5 Pohnpei State Infrastructure Development Plan Part 1 Introduction Part 2 Plan Outline Part 3 Infrastructure Development Part 4 Priority Project Outlines Volume 6 Yap State Infrastructure Development Plan Part 1 Introduction Part 2 Plan Outline Part 3 Infrastructure Development Part 4 Priority Project Outlines The following Federated States of Micronesia Infrastructure Development Plan FY2016-FY2025 documents are available: Federated States of Micronesia Infrastructure Development Plan FY2016-FY2025 (all parts) FSM Infrastructure Development Plan FY2016-FY2025 Outline (Introduction, Volume 1 & Annexes) National Infrastructure Development Plan FY2016-FY2025 (Volume 2) Chuuk State Infrastructure Development Plan FY2016-FY2025 (Volume 3) Kosrae State Infrastructure Development Plan FY2016-FY2025 (Volume 4) Pohnpei State Infrastructure Development Plan FY2016-FY2025 (Volume 5) Yap State Infrastructure Development Plan FY2016-FY2025 (Volume 6) FSM Infrastructure Development Plan FY2016-FY2025 Summary (abbreviated outline and listings of projects) FSM Infrastructure Development Plan FY2016-FY2025 P a g e | ii Introduction FSM Infrastructure Development Plan FY2016-FY2025 Introduction P a g e | iii Foreword by the President Foreword As the 8th President of the Federated States of Micronesia I am pleased to present to you an update of our Infrastructure Development Plan for the period FY2016 – FY2025. This ranks with the most important and significant plans of the last 10 years for FSM as a nation. The key for me is that this Plan presents a truly collaborative approach to infrastructure development for our country. As well as setting out the case for developing infrastructure across the FSM, it documents the priority projects in stand alone State Plans providing a direct connection to communities and their needs. I particularly welcome the inclusion of projects directly linked to climate change adaptation – these are important first steps to a mainstream infrastructure adaptation program in future Plans. FSM citizens can also look forward to schools, hospitals, roads and other facilities that are kept in better condition as we improve the way we manage our infrastructure over its life. A realistic level of funding is included in the Plan, representing 70 percent of FSM’s infrastructure needs over 10 years. This sets the challenge for the FSM governments and our development partners to work together to close the funding gap, beginning with the Development Partners Forum that we will convene in 2016. Finally I recognize the considerable effort that has gone into the Plan from State Infrastructure Planning and Implementation Committees and the State Executives. The assistance of the Asian Development Bank is also acknowledged for providing the technical assistance team that supported the Plan development. I commend this Infrastructure Development Plan to the people of FSM, at home and abroad, and look forward to the support of our development partners as we begin the challenge of delivering on our vision. FSM Infrastructure Development Plan FY2016-FY2025 P a g e | iv Introduction FSM Infrastructure Development Plan FY2016-FY2025 Introduction P a g e | v Executive Summary Plan Investments This Infrastructure Development Plan for the Governments of the Federated States of Micronesia was prepared by the Department of Transportation, Communication and Infrastructure in consultation with the States of Chuuk, Kosrae, Pohnpei and Yap. The Plan covers the infrastructure in ten sectors: electric power, water/wastewater systems, solid waste management, road and pedestrian facilities, maritime transportation, air transportation, telecommunications, education, health and government administrative buildings. The priority infrastructure development projects that make up the majority of the Plan have been identified and prioritized by each of the governments through a structured and transparent process to produce project listings that best meet their development needs over the next 10 years. This included assessing the priority development projects against nine strategic objectives to ensure that they make a strong contribution to one or more of the objectives associated with the FSM’s economic development, social development, environment and institutional capacity. The priority infrastructure development projects in the ten sectors at National and State level plus project management costs, institutional projects and infrastructure maintenance represent a total investment of $1,082 million over the 10-year Plan period. For the first time a project specifically targeted at cross-sector climate change adaptation is included. This project in Yap will be followed in the future by similar projects identified through the Joint National/State Action Plan processes that are now coming on-line across the FSM. The Plan incorporates the following investments by sector and by government: Infrastructure Sector Planned Infrastructure Investment ($ millions) National Chuuk Kosrae Pohnpei Yap All Electric Power - 7.8 17.6 62.6 7.1 95.1 Water/Wastewater Systems - 7.0 14.6 35.7 16.8 74.1 Solid Waste Management - 3.5 0.3 4.5 3.7 12.0 Road and Pedestrian Facilities - 95.0 51.0 45.0 18.1 209.0 Maritime Transportation - 8.5 21.6 6.7 41.9 78.7 Air Transportation 0.5 34.2 31.0 0.6 32.8 99.1 Telecommunications 13.4 - - - - 13.4 Education 69.3 44.7 3.0 73.1 15.7 205.8 Health - 73.0 18.5 15.3 1.7 108.5 Government Administrative Buildings 28.1 - 1.1 5.2 16.9 51.3 Climate Change Adaptation - - - - 4.0 4.0 Program Management 7.5 10.0 4.0 5.0 4.0 30.5 Development Subtotal: 118.7 283.7 162.7 253.8 162.4 981.4 Institutional 2.4 2.0 - - - 4.4 Infrastructure Maintenance 1.2 40.6 12.6 25.5 16.3 96.2 Total Infrastructure Investment: 122.3 326.3 175.3 279.3 178.7 1,082.0 FSM Infrastructure Development Plan FY2016-FY2025 P a g e | vi Introduction Implementation has been planned over three periods; Period 1: FY2016 to FY2019, Period 2: FY2020 to FY2023, Period 3: FY2023 to FY2025. Appropriation of all Amended Compact funding arrears is included in Period 1. The proposed sources of funding for the FSM’s 10 year infrastructure investment program by implementation period are outlined in the following table: Infrastructure Investment Funding Source Funding Amount ($ millions) FY2016 FY2019 FY2020 FY2022 FY2023 FY2025 FY2016 FY2025 FSM National Government 77.2 48.9 48.9 175.0 FSM State Governments (matching maintenance funds) 4.8 3.6 2.4 10.8 Bilateral Development Partners 0.0 0.0 0.0 Amended Compact 207.4 71.7 23.8 302.9 Compact Trust Fund 24.5 24.5 US Federal Agencies 27.0 27.0 European Union 16.5 8.7 10.8 36.0 Japan 20.0 15.0 15.0 50.0 PR China 24.4 15.0 15.0 54.4 UN Climate Adaptation Funds 7.2 11.8 12.0 31.0 Multilateral Development Partners 0.0 0.0 0.0 0.0 Asian Development Bank 17.0 16.5 16.5 50.0 World Bank Group 10.5 10.5 21.0 Total: 401.5 201.7 179.4 782.6 The following charts illustrate the infrastructure investments by sector/activity and by government, as well as infrastructure funding by source. Infrastructure Investments by Government FSM Infrastructure Development Plan FY2016-FY2025 Introduction P a g e | vii Infrastructure Investment by Sector and Activity Infrastructure Funding by Source FSM Infrastructure Development Plan FY2016-FY2025 P a g e | viii Introduction Plan Implementation Accountability for implementing the Plan at State level will lie with the Infrastructure Planning and Implementation Committees that were established more than 10 years ago. An important improvement in this Plan is the establishment of a Project Management Office in each State, responsible to the Committee for the day-to-day planning and implementation of projects, initially on Amended Compact funded projects and progressively for the projects funded from other sources. At National level the Department of Transportation, Communication and Infrastructure will assume the overall program coordination role, supported by the Program Management Unit, and will work closely with the Departments of Finance and Administration and Foreign Affairs as the interfaces with bilateral and multilateral development partners. With a number of projects having already been designed under the initial 2004 Infrastructure Development Plan, implementation of this Plan will begin immediately. FSM Infrastructure Development Plan FY2016-FY2025 Introduction P a g e | ix Acronyms & Abbreviations ADB Asian Development Bank ADF ADB Asian Development Fund AIP FAA Airport Improvement Program Amended Compact Amended Compact of Free Association CC Climate Change CMD Compact Management Division Compact Compact of Free Association COM College of Micronesia CPUC Chuuk Public Utility Corporation CTF Compact Trust Fund DFA Department of Foreign Affairs DOI US Department of Interior DRD Department of Resources and Development DTCI Department of Transportation, Communication and Infrastructure EDF European Development Fund EIA Environmental Impact Assessment ENSO El Niño-Southern Oscillation EU European Union FAA US Federal Aviation Administration FSM Federated States of Micronesia FSMTC FSM Telecommunications Corporation FY Financial Year (1 October to 30 September) GDP Gross Domestic Product ICT Information and Communication Technology IDP Infrastructure Development Plan FY2016 – FY2025 IDP 2004 Infrastructure Development Plan FY2004 – FY2023 IMF Infrastructure Maintenance Fund IPIC Infrastructure Planning and Implementation Committee JEMCO Joint Economic Management Committee JICA Japanese International Cooperation Agency JNAP Joint National Action Plan JSAP Joint State Action Plan KIPIC Kosrae Infrastructure Policy Implementation Committee KSDP Kosrae Strategic Development Plan KUA Kosrae Utilities Authority OCR Ordinary Capital Resources ODA Overseas Development Assistance ODAD Overseas Development Assistance Division OEEM Office of Environment and Emergency Management OIA Office of International Affairs O&M Operations and Maintenance Plan Infrastructure Development Plan FY2016 – FY2025 PMO Project Management Office PMU Program Management Unit PSDP Pohnpei Strategic Development Plan PUC Pohnpei Utilities Corporation RUS USDA Rural Utilities Service SDC Sustainable Development Council SDP Strategic Development Plan (2004 – 2023): Achieving Economic Growth and Self-Reliance SPC Secretariat of the Pacific Communities UNFCCC United Nations Framework Convention on Climate Change USDA US Department of Agriculture US United States of America YSPSC Yap State Public Service Corporation FSM Infrastructure Development Plan FY2016-FY2025 V o l u m e 1 Plan Outline P a g e | i P LA N O U T LI N E Volume 1 Plan Outline Contents Part 1 Context 1 1.1 Country Information 1 1.2 Economic and Strategic Planning 2 1.3 Infrastructure Planning 6 1.4 Environment and Climate 8 1.5 Plan Development Process 11 Part 2 Infrastructure Strategy 15 2.1 Role of Infrastructure 15 2.2 Strategy Objectives 15 2.3 Sector Objectives 16 Part 3 Investment Strategy 19 3.1 FSM Infrastructure Funding 19 3.2 Amended Compact and other US Grant Funding 20 3.3 Bilateral Development Partner Funding 23 3.4 Multilateral Bank Funding 24 3.5 Climate Change Funding 25 3.6 Summary of Available IDP Funding 25 3.7 Plan Funding Requirements 26 Part 4 Management and Implementation 32 4.1 Current Situation 32 4.2 Strategic Considerations and Guiding Principles 32 4.3 Initial Institutional Arrangements 33 4.4 Process Enhancements 36 4.5 Transitional Arrangements and Longer Term Developments 37 Part 5 Sector Overview 39 5.1 Institutional Arrangements 39 5.2 Sector Plans 42 Part 6 Institutional Aspects 44 6.1 Whole of Life Costs 44 6.2 Infrastructure Maintenance 45 6.3 Transition to Contemporary Asset Management 46 6.4 Institutional Projects 49 Part 7 Monitoring & Reporting 53 Annexes 55 Annex A Infrastructure Development Responsibility Matrix 57 Annex B Performance Indicators 59 B.1 Electric Power 59 B.2 Water/Wastewater Systems 59 B.3 Solid Waste Management 60 B.4 Roads and Pedestrian Facilities 61 B.5 Maritime Transportation 62 B.6 Air Transportation 62 B.7 Telecommunications Sector 63 B.8 Education 63 B.9 Health 63 Annex C Bibliography 65 FSM Infrastructure Development Plan FY2016-FY2025 P a g e | ii V o l u m e 1 Plan Outline FSM Infrastructure Development Plan FY2016-FY2025 V o l u m e 1 Plan Outline P a g e | 1 P LA N O U T LI N E Part 1 Context 1.1 Country Information 1.1.1 General and Demographic information The Federated States of Micronesia (FSM) is a sovereign country comprised of 607 small islands spread over more than one million square miles of ocean in the Western Pacific. Only 67 of the islands are inhabited. Total land mass area is small, amounting to 270.8 square miles, with only 6 percent of the land arable. The other two Compact of Free Association nations are its closest neighbors, Marshall Islands to the northeast and Palau to the west. North of the FSM lie the United States territories of Guam and the Northern Mariana Islands. The FSM's population is predominately Micronesian and comprised of eight major ethnolinguistic groups and numerous spoken dialects. Each state has its own languages, culture, local government, and traditional systems. With such diversity, English is the country's official language of government (although less so at the state or municipal levels), and for secondary and tertiary education. Communal values influence politics, daily business and personal transactions in both direct and indirect ways. Twenty-two percent of all inhabitants live in "urban" town areas but may own property elsewhere in their respective states. Land is part of family trusts that pass down land use rights, surface and subsurface, from generation to generation within the extended matrilineal family system. Clans hold many parcels, leading to fractional ownership and uncertain boundaries and titles. By Constitution, only citizens can own land. Domestic corporations that have non-citizen shareholders may not own land. Figure 1 – Map of the Federated States of Micronesia At the time of the 2010 census FSM had a population of 102,843 comprised of: Yap 11,377, Chuuk 48,654, Pohnpei 36,196 and Kosrae 6,616. This population count was a decline of 4,344 persons (-4.1 percent) relative to the 2000 census total. At the state level between 2000 and 2010, Chuuk and Kosrae had negative growth while in Pohnpei and Yap the rate of growth was positive but very low at 0.4 percent and 0.1 percent respectively. Out-migration to the United States and other parts of Micronesia is the primary cause of the overall decline in population with a reducing fertility rate also contributing. Long-range population projections suggest a continuation of little or no population growth for the foreseeable future. Projections to 2030 suggest no population growth from 2010 and less than 10percent total growth up to 2050. The level of urbanization in FSM remains relatively low at 22 FSM Infrastructure Development Plan FY2016-FY2025 P a g e | 2 V o l u m e 1 Plan Outline percent1. Most people live a rural lifestyle largely dependent on their gardens and fishing for daily food requirements, although imported food is an increasing part of the diet. People are attracted to urban centers for incomes directly or indirectly derived from offshore transfers in the form of grants from the United States (US) and other donors. Based on a 2008 poverty assessment2, 11 percent of the population suffered from food poverty, while 29.9 percent of the population suffered from basic needs poverty. The opportunities for income generation are limited, especially in the rural parts of the country. With the stagnation of real incomes since 2005 accentuated by sharp decreases in gross domestic product (GDP) since 2012, poverty will have worsened. 1.1.2 Government Framework The Constitution of the FSM provides for three separate branches of government at the national level similar to those of the U.S. The National Congress, however, is unicameral. It has four at-large senators, one from each state that serves four years, and ten senators who have two-year terms. The President and Vice President are senators at-large elected by Congress rather than by popular vote. The last Congressional election for four-year terms was in March 2015. The 19th FSM Congress elected Pohnpei’s Peter M. Christian to be the eighth President of the Federated States of Micronesia. The nation itself is a loose federation. State affiliation tends to overshadow national identity. The FSM Constitution limits the FSM national government's (executive branch) power and confers "residual powers" to the states, necessitating a complex and lengthy consultative process before the implementation of new national policies, regulations and programs. 1.1.3 Compact of Free Association In 1986 FSM entered into a Compact of Free Association (Compact) with the US. FSM has full control over all aspects of domestic and foreign policy, with the exception of defense and security issues for which the United States is responsible. The Compact also affords the US defense and operating rights in FSM and grants FSM citizens access to US federal programs and favorable provisions for travelling to and working in the US. A second Compact agreement, the Amended Compact of Free Association (Amended Compact), came into effect in 2004 and provides $1.8 billion of funding over twenty years, including contributions to a Compact Trust Fund (CTF) intended to replace the direct financial assistance that concludes in 2023. 1.2 Economic and Strategic Planning 1.2.1 The Economy The FSM economy has languished over the last decade and real GDP growth has averaged -0.4 percent. This has resulted in declining living standards and contributed to net outward migration. An ongoing excess of imports over exports sees a continuing deficit in the trading account of the balance of payments. The economy is firmly tied to overseas aid which is significant relative to domestic revenues at the State level and is dominated by funding coming from the Amended Compact. Most recently the March 2012 JEMCO resolution that no further Amended Compact infrastructure grants will be made until the IDP 2004 is updated has led to a decline in construction activity of 26 percent in FY2013 followed by 41 percent in FY2014. Along with a 15 percent decline in domestic fisheries in 2013 this has contributed to the worst period of economic performance since the start of Amended Compact 1 (Jones, 2011) - The State of Pacific Towns and Cities 2 (World Bank, 2014) - International Development Association and International Finance Corporation Country Partnership Strategy for the Federated States Of Micronesia for the period FY2014 – 2017 FSM Infrastructure Development Plan FY2016-FY2025 V o l u m e 1 Plan Outline P a g e | 3 P LA N O U T LI N E in FY2004 with sharp contractions in GDP of -3.6 percent in FY2013 followed by -3.4 percent in FY2014 as illustrated in Figure 2. At the end of FY2015 there is $111.3 million in unallocated Amended Compact infrastructure funds. Obtaining the release of these funds is critical to restoring construction activity and getting GDP out of negative growth. Infrastructure development will contribute to significant improvement in GDP with the availability of Amended Compact arrears and annual appropriations over the next four years. Figure 2 – Real GDP Levels ($ millions) Source: CMD presentation to JEMCO, August 2015 – “Dismal growth scenario” was the lowest forecast growth scenario in the SDP In view of past economic performance and the end of Amended Compact grants in 2023 the FSM governments developed an economic growth strategy, the 2023 Action Plan (section 1.2.3), the aim of which is to ensure that the transition from Amended Compact grants to CTF revenue does not threaten service delivery. The thrust of the plan is to grow the economy by strengthening the private sector while lessoning the dependence on the public sector. The overall target of 2 percent per annum economic growth is dependent on reforming structure, tax and public administration. The economic growth target also requires improved performance in six key areas: tourism, agriculture, fisheries, energy, information and communication, and infrastructure. Expanding public infrastructure will add to the productive capacity of the economy in the longer term and in the short term create jobs. To facilitate this a key component of the 2023 Action Plan is to accelerate appropriation of the Amended Compact infrastructure arrears of $111.3 million over four years (FY2016 to FY2019). Together with the renewed flow of annual Amended Compact infrastructure funds, this will provide a $207.4 million boost to the construction sector in particular and the economy in general. 1.2.2 Previous Strategic and Infrastructure Planning Strategic Development Plan 2004 – 2023 FSM’s Strategic Development Plan 2004 – 2023: The Next 20 Years, Achieving Economic Growth and Self-Reliance (the SDP) was prepared with broad participation of a wide range of stakeholders and FSM Infrastructure Development Plan FY2016-FY2025 P a g e | 4 V o l u m e 1 Plan Outline provides a road map for social and economic development in FSM for the period 2004 – 2023. The SDP states four main objectives: 1. Stability and security - to maintain economic assistance at levels that support macroeconomic stability; achievement of this objective requires levels of funding close to prevailing levels, to avoid the large periodic step downs in funding that were a characteristic of the first 14- year Compact funding package. 2. Improved enabling environment for economic growth - to be achieved through the FSM commitment to economic reform and the provision of an enabling environment to support open, outward - oriented and private sector led development. 3. Improved education and health status – use of the annual Compact grant to support the provision of basic services in education and health. 4. Assured self-reliance and sustainability - to be achieved through establishment of a Trust Fund that would, after a period of time, replace the annually appropriated transfers from the US. The sustained growth strategy presented in the SDP has six key areas: 1. macroeconomic stability 2. good governance 3. developing an outward-oriented, private sector-led economy 4. investing in human resources (improved health and education services) 5. investing in infrastructure 6. long-term environmental sustainability The SDP consists of three volumes. Volume 1 provides for the macro-economic framework and the policies for each sector, Volume 2 contains the sector planning matrices and Volume 3 is the Infrastructure Development Plan. 1.2.3 Recent Economic and Strategic Planning Working with Development Partners While the US through the Amended Compact and Federal grants is the dominant partner, other main bilateral partners include Australia, China, Japan, the European Union through regional bodies such as the Secretariat of the Pacific Communities, and the United Nations. Historically, FSM’s dialogue and coordination with non-US bilateral development partners has been weak due to the dominance of the Compact, but with 2023 looming has recently been strengthened. An Overseas Development Assistance (ODA) policy was approved by Congress in January, 2014. The purpose of the policy is to establish approaches to managing ODA such that benefits are maximized for all stakeholders. The policy acknowledges, recognizes and respects the unique circumstances of each state but also seeks commonalities across FSM. Implementation of the policy began in 2014. A Development Partners Meeting took place in November, 2012 with the purpose of accelerating implementation of the SDP and seeking development partner support across four broad areas: 1. growing the local economy through enhancing agriculture production and the production of value added agriculture products, maximizing benefits of FSM’s fisheries resources, promoting tourism, developing clean, renewable energy sources 2. developing economic infrastructure, including transport, communications, and power 3. improving health and education services 4. mainstreaming responses to climate change and mitigating threats to the environment A second Development Partners meeting is scheduled for 2016 where development partners will be invited to commit to funding IDP priority projects. FSM Infrastructure Development Plan FY2016-FY2025 V o l u m e 1 Plan Outline P a g e | 5 P LA N O U T LI N E 2023 Action Plan The FSM Governments prepared the 2023 Action Plan in 2014 aimed at addressing the fiscal and economic challenges leading up to and post FY2023. It is based on the mutual principals of Amended Compact which are to “promote the economic advancement, budgetary self-reliance, and economic self sufficiency of the FSM”. The 2023 Action Plan includes a long-term fiscal reform strategy and a long-term sustainable growth strategy with the emphasis on private sector led growth. With infrastructure investments an important driver for economic growth, directly by generating employment and income and indirectly facilitating the development of other sectors of the economy, a key component of the plan is to eliminate the infrastructure funding backlog within four years. 1.2.4 State Strategies Chuuk Chuuk is currently developing a strategic development plan to guide the future development of the State. Kosrae In 2013 the Kosrae Strategic Development Plan: 2014 – 2023 (KSDP) was finalized, recognizing the needs and aspirations of the Kosrae community and stakeholders in Kosrae. The KSDP takes a 10 year view of Kosrae and its place in Federated States of Micronesia and the North Pacific region and the opportunities and concerns that it faces. Additional aspects of the KDSP are included in Volume 4. Pohnpei The Pohnpei State Strategic Development Plan (PSDP) is a strategic policy document intended to organize and integrate existing sector plans and programs, and the SDP to meet the unique needs of Pohnpeian citizens and residents and to present a unified vision of Pohnpei’s future. Additional aspects of the PDSP are included in Volume 5. Yap Yap is currently without its own strategic development plan. 1.2.5 Sector Policies Sector Policies The goals and institutional reforms included in the IDP 2004 for each sector have largely been incorporated into the IDP. More recently policies have been released for the energy and telecommunications sectors, and more relevant objectives in the education sector have been identified in State school repair and construction master plans and in the College of Micronesia Master Plan. Energy Sector Policy The National Energy Policy3 has four primary components: Policy and Planning, Conventional Energy (fossil fuel), Energy Efficiency and Conservation, and Renewable Energy. The policy has targets to increase the share of renewable energy to 30 percent of energy supply by 2020 and to increase energy efficiency by 50 percent, also by 2020. With the electric power sector being an important component of the larger energy sector these targets have been taken into consideration when identifying and prioritizing projects in the IDP. 3 (DRD, DoE, 2010) - Federated States of Micronesia Energy Policy, Volumes I and II FSM Infrastructure Development Plan FY2016-FY2025 P a g e | 6 V o l u m e 1 Plan Outline Telecommunications Sector Policy The Information and Communications Technology (ICT) Policy4 aims at: 1. achieving accessible and affordable communications for all 2. strengthening ICT human resources and increasing human resource development opportunities through ICT 3. improving economic growth and sustainable development through ICT 4. utilizing ICT for good governance 5. creating an enabling ICT environment through policy reform and improved legal frameworks The aims of the policy have been taken into consideration when identifying and prioritizing projects in the IDP. 1.3 Infrastructure Planning 1.3.1 Infrastructure Development Plan 2004-2023 The Infrastructure Development Plan 2004-2023 (IDP 2004) (Volume 3 of the SDP) was prepared by the Department of Transportation, Communication and Infrastructure (DTCI) in consultation with the States and under the guidance of a national IDP Steering Committee. IDP 2004 assessed the state of infrastructure and the needs in nine sectors and incorporated a program and budget covering the period FY2004-FY2023. Special consideration was given to the likely funding available from the Amended Compact and from other sources. The National Vision and Objective statements in IDP 2004 for Infrastructure are: Vision: To improve the life and livelihood of all FSM citizens with affordable, reliable and environmentally sound infrastructure. Objective: To promote the sustainable social and economic development of FSM through the provision and utilization of cost-effective, safe, reliable and sustainable infrastructure. The IDP 2004 included $748 million of indicative funding for infrastructure investments to be implemented over the 20-year period. The IDP 2004 also included a further $878 million of “unfunded projects” for a total of $1,626 million. Amounts by sector are shown in Table 1. Actual funding in FY2004 to FY2015 amounted to $600 million representing 80 percent of IDP 2004 indicative funding with eight years of the IDP 2004 to run. If the withheld Amended Compact funding FY2013 to FY2015 had been granted actual funding would be around 90 percent of the IDP 2004 indicative funding. Compared with the average IDP 2004 funding of $35 million per year, the actual average funding rate of around $58 million per year with full Amended Compact funding demonstrates FSM’s ability to source additional infrastructure funds. 4 (DTCI, DoC, 2012) - Federated States of Micronesia National ICT and Telecommunications Policy FSM Infrastructure Development Plan FY2016-FY2025 V o l u m e 1 Plan Outline P a g e | 7 P LA N O U T LI N E Table 1 – Planned IDP 2004 Sector Investments Sector IDP 2004 Project Totals 2004-2023 ($ Millions) Actual FY2004 to FY20151 Funded Unfunded Total Total ($ millions) % of IDP Funded % of IDP Total Electric Power 81.1 56.9 138.0 48.0 59% 35% Water/Wastewater Systems 141.9 266.2 408.1 41.0 29% 10% Solid Waste Management 40.8 102.5 143.3 0.3 1% 0% Roads and Pedestrian Facilities 120.9 155.6 276.5 56.8 47% 21% Maritime Transportation 88.5 141.6 230.1 32.5 37% 14% Air Transportation 68.4 17.1 85.5 237.8 348% 278% Telecommunications2 51.4 Education 135.4 138.1 273.5 45.8 34% 17% Health 32.5 0.0 32.5 11.2 34% 34% Government Administrative Buildings 27.3 0.0 27.3 17.5 64% 64% Infrastructure Maintenance3 36.2 Program Management (incl. PMU, designs) 10.7 0.0 10.7 21.1 197% 197% TOTAL 747.5 878.0 1,625.5 599.6 80% 37% Notes: 1. Estimate based on Amended Compact Grants, ODA Funding & National & State Government appropriations 2. Telecommunications Systems was included in IDP 2004 as a sector but did not have an investment plan 3. Maintenance funding included in IDP 2004 sector funding 1.3.2 Infrastructure Development Plan 2016 - 2025 This Infrastructure Development Plan FY2016 – FY2025 (the IDP or Plan) outlines the governments of the FSM priorities and plans for major infrastructure initiatives over the next 10 fiscal years. This is the second infrastructure development plan and the prioritization of projects will be reviewed at regular intervals as part of the national and state planning and budgeting processes. The next review of project priorities will be undertaken in FY2019. The IDP includes infrastructure development initiatives of national, state and local significance. It is the result of extensive consultation with infrastructure managers and stakeholders at national, state and local level and covers the following sectors:  electric power  air transportation  water/wastewater systems  telecommunications  solid waste management  education  roads and pedestrian facilities  health  maritime transportation  government administrative buildings FSM Infrastructure Development Plan FY2016-FY2025 P a g e | 8 V o l u m e 1 Plan Outline The IDP presents a systematic approach to infrastructure planning, coordination and implementation, setting out the governments’ priorities for infrastructure investments, developed at the national level and across the states and sectors on a project by project basis. In particular the IDP provides:  the foundation for medium and longer term infrastructure budget planning through its overview of the scale and sequencing of future investment and financing needs  a strengthened institutional framework for infrastructure planning and implementation at program and project levels  an approach for transitioning to whole-of-life asset management  consolidated guidance for FSM’s development partners on the priorities and scope of FSM’s infrastructure needs over the next 10 years 1.3.3 Amended Compact Requirements Article V of the Amended Compact sets out the Pre-Award Requirements for grant assistance including the submission of annual implementation plans developed by the Government of the FSM in conjunction with its budget process. It further goes on to describe additional requirements for infrastructure assistance, including: (e) The Government of the Federated States of Micronesia shall develop and submit a nationwide infrastructure development plan (IDP) to the Government of the United States for review. Projects may be phased over two or more years. The annual implementation plan for the infrastructure sector referred to in (b) above, shall include a list of integrated state and national priorities for new and reconstructed capital infrastructure to be financed by Compact funds, cost requirements, and implementation schedule. This project list and any revision thereto shall be submitted to the Government of the United States. Insofar as Grant funds are involved, the IDP shall be subject to the concurrence of the Committee. 1.4 Environment and Climate The SDP incorporates an Environment Sector Strategic Plan with its own strategic goals, policies and outcomes, including: Strategic Goal 1: Mainstream environmental considerations, including climate change, in national policy and planning as well as in all economic development activities (SDP, section 7.2.1) FSM’s climate change profile and vulnerability and disaster risk reduction have been documented in a range of reports, including:  Analysis of Integrating Disaster Risk Reduction and Climate Change Adaptation in the US Pacific Islands and Freely Associated States5  Climate Change Profile, Federated States of Micronesia6  Climate Variability, Extremes and Change in the Western Tropical Pacific 7 5 (Anderson, 2012) - Analysis of Integrating Disaster Risk Reduction and Climate Change Adaptation in the US Pacific Islands and Freely Associated States, Technical Report 201105, Hazards, Climate, and Environment Program 6 (GCCA, July 2013) - Climate Change Profile, Federated States of Micronesia, Version 2 7 (ABM/CSIRO, 2014) - Climate Variability, Extremes and Change in the Western Tropical Pacific: New Science and Updated Country Reports, Pacific-Australia Climate Change Science and Adaptation Planning Program file:///C:/Users/Samsung/AppData/Roaming/Library/Climate%20change/HCE TRreport ClimateHazards RecommendationSummary.138171615.pdf file:///C:/Users/Samsung/AppData/Roaming/Library/Climate%20change/HCE TRreport ClimateHazards RecommendationSummary.138171615.pdf file:///C:/Users/Samsung/AppData/Roaming/Library/Climate%20change/HCE TRreport ClimateHazards RecommendationSummary.138171615.pdf file:///C:/Users/Samsung/AppData/Roaming/Library/Climate%20change/HCE TRreport ClimateHazards RecommendationSummary.138171615.pdf FSM Infrastructure Development Plan FY2016-FY2025 V o l u m e 1 Plan Outline P a g e | 9 P LA N O U T LI N E 1.4.1 Environmental Planning The Environmental Sector Strategic Plan includes the following outcome measure for Strategic Goal 1: Environmental Impact Assessments (EIA) carried out for 100% of all government and non-government development activities to minimize adverse impacts of development on the nation's environment from 2005 onwards (SDP, section 7.2.1, para 57) Environmental legislation does not necessarily require EIAs on all projects however in keeping with the intent of Strategic Goal 1 and the above outcome measure all IDP projects will comply with relevant environmental planning provisions, unless explicitly exempt. 1.4.2 Current Climate Due to the geographical spread of the FSM, the climate varies on an east to west basis. There is little seasonal variation in temperature with less than 3°F (1.5°C) between the average hottest and coolest months. There are two distinct seasons; a wet season from November to April and a dry season from May to October. Droughts, tropic storms, storm waves, flooding and landslides all affect FSM. FSM’s climate can vary considerably from year to year due to the El Niño-Southern Oscillation (ENSO) that sees both El Niño and La Niña events on a cyclic basis. El Niño events are associated with drier conditions and occasional droughts when associated water and food shortages can occur. During La Niña, above-average numbers of tropical storms occur as well as more rainfall. 1.4.3 Expected Future Climate Predictions of climate change in countries of the Western Pacific, including FSM, has been developed under Pacific-Australia Climate Change Science and Adaptation Planning Program 7. All emissions scenarios show that temperatures will rise in FSM, as will sea level and ocean acidification. The intensity and frequency of days of extreme rainfall are projected to increase and tropical storm frequency is projected to decline. The ENSO is expected to continue to influence variability in FSM’s climate however as there is no consistency in projections of future ENSO activity it is not possible to determine whether inter-annual variability in rainfall will change in the future. For the period to 2100, the latest global climate model projections and climate science findings indicate: 1. El Niño and La Niña events will continue to occur in the future (very high confidence), but there is little consensus on whether these events will change in intensity or frequency; 2. annual mean temperatures and extremely high daily temperatures will continue to rise (very high confidence) 3. average annual rainfall is projected to increase (medium confidence), with more extreme rain events (high confidence) 4. drought frequency is projected to decrease (medium confidence) 5. ocean acidification is expected to continue (very high confidence) 6. the risk of coral bleaching will increase in the future (very high confidence) 7. sea level will continue to rise (very high confidence) 8. wave height is projected to decrease in December–March (low confidence), and waves may be more directed from the south in the June–September (low confidence) FSM Infrastructure Development Plan FY2016-FY2025 P a g e | 10 V o l u m e 1 Plan Outline 1.4.4 Response to Climate Change National Level The National Climate Change Policy of 20098 includes the following key elements related to infrastructure: 1. Mitigation ….. c. To maintain and enhance FSM as a negative carbon country through effective management of our natural sinks, bio-sequestration, promotion of renewable energy and energy efficiency and other appropriate means. d. To prioritize actions that address both mitigation and adaptation such as water development using renewable energy (solar water desalination) and other relevant actions. 2. Adaptation a. To require all development activities in FSM to take into account projected climatic changes in the design and implementation as stipulated in the FSM Strategic Development Plan/Infrastructure Development Plan (SDP/IDP). b. To use eco-system based approaches where applicable. 3. Technology Transfer a. To optimize the use of local technologies where available. b. To identify technologies that are locally appropriate. c. To enhance easy access to, and sustainable use of new technologies. 4. Finance a. To maximize the use of local resources through establishment of sustainable financing mechanism to support adaptation, mitigation and resource management initiatives. In 2012 FSM published an Action Plan9 and in 2013 passed a Climate Change Law10, a key requirement being that certain National Departments prepare plans and policies on climate change consistent with the provisions of the Climate Change Policy. In June 2013 Government produced the Nation Wide Integrated Disaster Risk Management and Climate Change Policy11 under which the DTCI will integrate the Policy into its infrastructure development policy and plans. A Council on Environmental Management and Sustainable Development (or Sustainable Development Council) chaired by the Vice-President was established through Presidential Order No. 14. The functions and purposes of the Sustainable Development Council are to advise and make recommendations to the President on matters affecting the environmental management and sustainable development of the FSM. Potential projects and the approach to climate proofing were previously addressed in a study in 200612. In 2014 DTCI prepared a Climate Adaptation Guide for Infrastructure13. This provides a first step in mainstreaming climate change in all infrastructure projects in FSM. State Level Climate Change Action Plans have been developed for Kosrae and Yap; preparation of an Action Plan for Pohnpei is ongoing and for Chuuk has yet to start. 8 (GoFSM, 2009) - Nationwide Climate Change Policy 2009. 9 (GoFSM, 2012) - National Climate Change and Health Action Plan, December 2012. 10 (GoFSM, 2013a) - Eighteenth Congress Of The Federated States Of Micronesia Second Regular Session, 2013 Congressional Bill No. 18-72, C.D.1, C.D.2, C.D.3 Pc No. 18-178 Public Law No. 18-34. 11 (GoFSM, 2013b) - Nation Wide Integrated Disaster Risk Management and Climate Change Policy 12 (ADB Pacific Studies Series, 2006) - Climate Proofing – A Risk-based Approach to Adaptation 13 (DTCI, DoI, 2014) - Climate Adaptation Guide for Infrastructure file:///C:/Users/tbarry/Dropbox/ADB%20TA7927%20Ph2/7.%20Library/Library%20Phase1/Climate%20change/Nationwide Climate Change policy%202009.pdf file:///C:/Users/tbarry/Dropbox/ADB%20TA7927%20Ph2/7.%20Library/1.%20FSM%20Government/11.%20Environment%20&%20Climate%20Change/National%20Climate%20Change%20and%20Health%20Action%20Plan.docx file:///C:/Users/tbarry/Dropbox/ADB%20TA7927%20Ph2/7.%20Library/1.%20FSM%20Government/9.%20Legislation/FSM%20Climate%20Change%20Act%20PUBLIC%20LAW%2018-34.pdf file:///C:/Users/tbarry/Dropbox/ADB%20TA7927%20Ph2/7.%20Library/1.%20FSM%20Government/9.%20Legislation/FSM%20Climate%20Change%20Act%20PUBLIC%20LAW%2018-34.pdf FSM Infrastructure Development Plan FY2016-FY2025 V o l u m e 1 Plan Outline P a g e | 11 P LA N O U T LI N E The current State Action Plans identify requirements for infrastructure under three headings, and their relevance to the IDP are summarized as:  Strengthen the integrity of the development consent process and environmental impact assessments: environmental concerns, including both impacts and geo-hazard issues should be identified:  early in the scoping phase, so that the costs of mitigation can be allowed for when setting budget  during design, so that appropriate mitigation measures are part of the design  during construction to ensure the appropriate environmental management plan is followed and mitigations properly implemented  Apply Land Use Planning: available flood, sea level change and landslide risk maps are used particularly in assessing sites for infrastructure development  Actively Enforce Building Codes: in the absence of formal building codes, adopt and follow standards and practices that are appropriate to the infrastructure being developed, including aspects relevant to climate change adaptation 1.5 Plan Development Process 1.5.1 Components and Overall Approach Development of the IDP involved three main components; infrastructure, institutional and funding, and the overall approach illustrated in Figure 3. Figure 3 – IDP Development Approach The three components are described below. 1.5.2 Infrastructure The infrastructure review determined the current status of infrastructure in the ten sectors across FSM, including the demand for infrastructure and current infrastructure performance. Background reports and data were reviewed and visits were made to the States to learn of the demands and needs from the FSM Infrastructure Development Plan FY2016-FY2025 P a g e | 12 V o l u m e 1 Plan Outline Executive and infrastructure managers. From these sources long lists of sector projects were produced and the results documented in the Infrastructure Review Report. Subsequent to the infrastructure review and long lists of projects, additional interactions at national level and in each State produced a list of priority projects for each jurisdiction with the indicative funding envelopes providing guidance on the total funding available for the priority projects. The additional interactions also collected and/or confirmed all of the information for the documentation of priority projects in the form of the priority project outlines included in Part 4 of each of the following IDP volumes. Project prioritization was undertaken with a group that included representatives of the Executive and Legislature, infrastructure managers and civil society representatives. Inputs to the process included current Infrastructure Planning and Implementation Committee (IPIC) listings and priorities and the long list of projects. The process set out in Figure 4 was followed by the group to identify, prioritize and rate the projects included in their IDP. Figure 4 – Project Prioritization The prioritization group also assessed the contribution that each priority project makes to the Strategic Objectives (section 2.2) to produce a Strategic Rating out of 10. Priority projects were rated for their contribution to each of the nine component objectives using the contribution ratings in Table 2. The Strategic Rating was determined using the following formula: Strategic Rating (out of 10) = ∑ ð�‘…ð�‘Žð�‘¡ð�‘–ð�‘›ð�‘” ð�‘œð�‘“ ð�‘’ð�‘Žð�‘�â„Ž ð�‘ ð�‘¡ð�‘Ÿð�‘Žð�‘¡ð�‘’ð�‘”ð�‘–ð�‘� ð�‘œð�‘�ð�‘—ð�‘’ð�‘�ð�‘¡ð�‘–ð�‘£ð�‘’ / 4.5 The indicative 10 year infrastructure developments from each State project prioritization exercise were consolidated in a report to the Governor for review and endorsement. Any revisions to the information provided have been carried forward into the IDP. •Is a project in the long list infrastructure that the Nation/State needs in the next 10 years? – if yes, add the project to the initial list of priority projects •Considering the indicative funding envelope, is it realistic to expect that all of the initial priority projects can be implemented? – if no, remove projects from the list of priority projects to the point that the total estimate of priority projects was more realistic in the context of the indicative funding envelope Step 1 produce the priority project list •Relative to other projects, should the priority project funded in the first, second or third period of the IDP? (FY2016-FY2019, FY2020-FY2022 or FY2023-FY2025) – indicate the identified period(s) in the list of priority projects •Considering the indicative funding envelope for each period, is it realistic to expect that all of the identified priority projects can be implemented in that period? – if no, revise the funding periods until the total estimate in each period is more realistic in the context of the indicative funding envelope Step 2 prioritize projects by funding period •To what extent does each priority project contribute to the strategic objectives? – indicate the contribution rating against each strategic objective in the list of priority projects •Does the priority project make a strong contribution to the strategic objectives? – reconsider the inclusion of any project that does not make a strong contribution to the strategic objectives Step 3 contribution of priority projects to the strategic objectives FSM Infrastructure Development Plan FY2016-FY2025 V o l u m e 1 Plan Outline P a g e | 13 P LA N O U T LI N E Table 2 – Contribution ratings Rating 1 The project will make little or no contribution to the strategic objective Rating 2 The project will make a low contribution to the strategic objective Rating 3 The project will make a medium contribution to the strategic objective Rating 4 The project will make a high contribution to the strategic objective Rating 5 The project will make a very high contribution to the strategic objective 1.5.3 Institutional Component The review of institutional arrangements & performance determined the strengths and weaknesses of the institutional arrangements that have been in place in the period since 2004. Background reports and data were reviewed, discussions were held with the Program Management Unit (PMU) and visits were made to the States to learn of their IDP implementation issues and expectations. A number of alternative models were developed for consultation on improved arrangements with national and state stakeholders, at the conclusion of which a Report on Institutional Strengthening was finalized. The recommended institutional arrangements were strongly endorsed by all State Governors and supported by the President. Revised institutional arrangements were subsequently developed in more detail, including identification to changes in legislation and regulations. Actions for transitional and longer term development of the institutional arrangements have been identified and incorporated into the IDP. 1.5.4 Funding Component The review of infrastructure funding identified $608 million of indicative baseline funding for infrastructure development expected from traditional sources over the next 10 years, including from:  National Government revenue  Amended Compact  multilateral development banks  bilateral development assistance The indicative funding envelopes set out the availability of infrastructure development funding by source by year for each state and the national program and provided guidance to the identification of priority projects. The indicative funding envelopes did not:  factor in future one-off project funding that is additional to the baseline funding FSM Infrastructure Development Plan FY2016-FY2025 P a g e | 14 V o l u m e 1 Plan Outline  include any provision for UN-related climate change adaptation funding A Funding Envelope Report provided full details of the review of infrastructure funding and the resultant indicative funding envelopes. The infrastructure funding requirements derived from the lists of priority projects exceed the indicative baseline funding, recognizing the availability of additional funding for infrastructure development in addition to the baseline funding. The funding strategy set out in Part 3 incorporates:  an increase in the indicative baseline funding to $751.9 million, including $31 million of climate adaptation funding over 10 years  the annual appropriation of funds by source and by sector over the duration of the IDP FSM Infrastructure Development Plan FY2016-FY2025 V o l u m e 1 Plan Outline P a g e | 15 P LA N O U T LI N E Part 2 Infrastructure Strategy 2.1 Role of Infrastructure Infrastructure is a critical component of the economic and social fabric of society. In the context of the IDP it is the fundamental facilities and systems providing the services and facilities necessary for the economy and society to function. It comprises the roads, bridges, schools, hospitals, ports, airports, water supply, waste water, solid waste, electrical grids and telecommunications; the physical components of interrelated systems providing commodities and services essential to enable, sustain, or enhance societal living conditions. One way to increase economic output quickly is to expand public infrastructure that would add to the productive capacity of the economy in the longer term and create jobs in the near term. A key component of the Action Plan is the accelerated spending of the infrastructure arrears of $126 million over the next four years. Development literature and field experience worldwide underscore the influence of market expanding infrastructure in fostering economic growth and productivity, particularly in emerging economies and there is ample evidence that market expanding infrastructure both raises growth and lowers income inequality. (2023 Action Plan) 2.2 Strategy Objectives 2.2.1 Vision and Objective The national Vision and Objective statements in IDP 2004 remain appropriate for the IDP: Vision: To improve the life and livelihood of all FSM citizens with affordable, reliable and environmentally sound infrastructure. Objective: To promote the sustainable social and economic development of FSM through the provision and utilization of cost-effective, safe, reliable and sustainable infrastructure. 2.2.2 Component Objectives Taking into account the strategic statements in the IDP 2004 and more recently the 2023 Action Plan and the challenges presented by climate change, the component objectives in Figure 5 have been adopted in the IDP. All priority infrastructure projects have been rated against these objectives to ensure the overall alignment of the IDP investments with its strategic objectives. Figure 5 – Component Strategic Objectives Economic Improved investment and economic growth Improved private sector capacity and employment Improved living conditions and income generation Social Improved access to and delivery of public health services Improved access to and delivery of education services Environmental Improved environmental outcomes and conditions Improved natural disaster and climate change resilience Institutional Improved capacity of government infrastructure agencies Improved financial sustainability of infrastructure FSM Infrastructure Development Plan FY2016-FY2025 P a g e | 16 V o l u m e 1 Plan Outline 2.3 Sector Objectives Within the overall infrastructure development objectives each sector has a number of identified goals consistent with those incorporated into the IDP 2004. 2.3.1 Electric Power The Goal is to develop electric power infrastructure to ensure that all areas of the country are provided with electric power in an efficient and effective manner in accordance with demand such that: 1. households are provided with power for basic livelihood purposes 2. local manpower can realize production opportunities and potential 3. power is available for basic services such as schools, hospitals, water and wastewater systems 4. national targets for renewable energy are achieved 2.3.2 Water/Wastewater Systems The Goal is to provide water and wastewater infrastructure that: 1. meets the demand for water supply and wastewater infrastructure in an effective and efficient manner 2. improves existing water abstraction, treatment and distribution systems 3. evaluates and institutes technologically appropriate liquid waste management systems 4. improves and initiates wastewater facilities to increase coverage and contribute towards improvements in public health and environmental conditions 5. contributes towards the prevention of water borne diseases through the provision of potable water supplies 2.3.3 Solid Waste Management The Goal is to provide solid waste management infrastructure that: 1. meets the demand for solid waste infrastructure in an effective and efficient manner 2. evaluates and institutes technologically appropriate solid waste management systems 3. reduces volume of solid waste for disposal by maximizing recycling and separation opportunities thereby minimizing the land area required 4. prevents solid waste having adverse effects on the terrestrial and marine environments 2.3.4 Road and Pedestrian Facilities The Goal is to provide road and pedestrian facilities infrastructure that: 1. enables transportation facilities to be adequate in terms of condition, capacity, reliability and safety to enable market opportunities to be realized for all areas of the country, including labor market opportunities, and to enhance the level of integration of state economies and the national economy 2. meets the demand for road and pedestrian infrastructure in an effective and efficient manner, including concrete/asphalt paving of all primary road systems 3. incorporates pedestrian walkways in the design and construction of roads 4. extends cross-island and inner roads to facilitate agricultural and other development 5. is resilient to the impacts of climate change FSM Infrastructure Development Plan FY2016-FY2025 V o l u m e 1 Plan Outline P a g e | 17 P LA N O U T LI N E 2.3.5 Maritime Transportation The Goal is to provide maritime transportation infrastructure that: 1. enables market opportunities to be realized for all areas of the country, including labor market opportunities, and to enhance the level of integration of state economies and the national economy 2. provides improved dock facilities to meet both fisheries and commercial shipping needs 3. facilitates modern, safe and efficient inter-state and inter-island passenger and cargo vessels 4. coordinates and facilitates the improvement of aids to navigation 2.3.6 Air Transportation The Goal is to provide air transportation infrastructure that: 1. provides adequate air transportation facilities and services in terms of condition, frequency, capacity, reliability and safety to enable market opportunities to be realized for all areas of the country 2. enables air carrier airports to improve safety and eliminate payload restrictions 3. improves all domestic airports to the required standards of safety 2.3.7 Telecommunications Systems The Goal is to provide telecommunications systems infrastructure to: 1. achieve accessible and affordable communications for all 2. strengthen information and communications technology (ICT) human resources and increase human resource development opportunities through ICT 3. improve economic growth and sustainable development through ICT 4. utilize ICT for good governance 5. create an enabling ICT environment through policy reform and improvements in legal frameworks 2.3.8 Education The Goal is to provide education infrastructure that: 1. ensures that the learning experience is enhanced and diversified 2. improves student and faculty interest and morale, and thereby improves the effectiveness of education and significantly increases the student retention rates through graduation from elementary or secondary schools 3. removes constraints on the availability of high school education for all graduates of elementary school, and to provide an array of post-secondary education opportunities for all high school graduates who seek further education 4. continues to assist and strengthen private educational institutions to the nation 5. is supported by facilities improvement programs that address the need for maintenance, renovation and construction of new facilities to support quality student instruction 6. is supported by equipment maintenance guidelines 7. is resilient to potential natural disasters and the impacts of climate change 2.3.9 Health The five strategic goals of health care14 are to: 1. improve primary health care services 14 (DHSA, 2013) - Department of Health and Social Affairs Annual Report 2013 FSM Infrastructure Development Plan FY2016-FY2025 P a g e | 18 V o l u m e 1 Plan Outline 2. improve secondary health care services 3. prioritize health promotion services on major health problems 4. develop a sustainable health care financing mechanism 5. improve capacity and accountability systems In support of those goals, the Goal of health infrastructure is to: 1. provide modern and efficient hospital facilities to meet the health needs of the nation 2. facilitate an upgraded the curative health system to minimize the needs for referrals to foreign medical facilities 3. provide health care facilities within reasonable access of all citizens 4. have facilities improvement programs that address the need for maintenance, renovation and construction of new facilities 5. have adequate funds for maintenance to prevent rapid deterioration of facilities 6. be resilient to potential natural disasters and the impacts of climate change 2.3.10 Government Administrative Buildings The Goal is to provide government administrative building infrastructure that: 1. provides modern and efficient facilities required for government personnel to effectively undertake their functions 2. provides an environment that enables equipment used by government personnel to be adequately maintained 3. encourages a high morale and work ethic amongst government employees by providing a suitable work environment 4. provides elected officials with suitable office space and chambers in which to conduct their responsibilities FSM Infrastructure Development Plan FY2016-FY2025 V o l u m e 1 Plan Outline P a g e | 19 P LA N O U T LI N E Part 3 Investment Strategy 3.1 FSM Infrastructure Funding 3.1.1 National Government Fiscal position The National Government has a relatively low level of debt providing latitude for judicious borrowing, including to leverage grant funds from other sources. Infrastructure development Prior to FY2014 national infrastructure projects were funded by donors including a 10 percent allocation from Amended Compact infrastructure grants. In FY2014 the government cut the Amended Compact infrastructure grant allocation to 5 percent and from FY2015 onwards the National Government receives no infrastructure funding from the Amended Compact. As a response to the March 2012 Joint Economic Management Committee (JEMCO) resolution to withhold infrastructure grants pending the updating of the IDP 2004, the National Government is making a specific allocation from its own revenue amounting to $10 million in both FY2015 and FY2016 for State priority infrastructure projects. In addition there have been separate National Government appropriations for outer island airstrip improvements and power generation. The indicative estimate for FY2017 onwards is $11 million as shown in Table 3. Infrastructure maintenance National Government funding for maintenance of national and state assets is set out in Table 3. The National Government provides a general appropriation for maintenance; $3.36 million in FY2016 and FY2017. The indicative estimate for FY2018 onwards is $3.5 million. In addition the National Government appropriates funding for the maintenance of state secondary roads and water supply. The planned/indicative estimate for FY2016 onwards is $2.8 million. Up until FY2014 the National Government received an allocation under the Amended Compact for Infrastructure Maintenance Fund (IMF) funding. The estimated amount of the National Government’s unspent IMF allocation is $430,000, plus the National Government’s matching funds. 3.1.2 State Governments Fiscal position The National Government’s aggregate fiscal outcome in recent years masks the large difference between the performance of the four State Governments. Their performance varies but in FY2014 it was at an all time low. For the first time all States recorded deficits and declines in their economies in the same year. Infrastructure development The States are dependent on development partner funding and National Government appropriations for virtually all infrastructure development. Infrastructure maintenance State governments struggle to match the 5 percent IMF Amended Compact infrastructure funding for maintenance. The Office of International Affairs’ (OIA) process for releasing IMF grants requires physical evidence of the appropriation and deposit of matching funds by the States. The amounts identified for maintenance in Table 3 include the funds required from the States to match the Amended Compact IMF grants. The funds required from FY2016 to FY2023 to match the Amended FSM Infrastructure Development Plan FY2016-FY2025 P a g e | 20 V o l u m e 1 Plan Outline Compact IMF grants and arrears for all States averages $1.9 million per annum. From FY2024 the funds required to match the CTF IMF grants is estimated at $0.6 million per year. Table 3 – FSM Governments infrastructure development and maintenance funding Source: CMD 3.2 Amended Compact and other US Grant Funding The US government provides infrastructure development and maintenance assistance to FSM through Federal grants (and potentially loans) and the Amended Compact. 3.2.1 Amended Compact Under the Amended Compact FSM is to receive payments of $92.7 million per year (2004 dollars) with annual partial adjustments for inflation as sector grants, to finance an annual audit, and as contributions into the CTF. The Amended Compact provides a minimum 30 percent of sector grant funding for public infrastructure ($24 million in FY2015) and sets out the funding priorities. The highest priority shall be given to primary and secondary education capital projects and projects that directly affect health and safety, including water and wastewater projects, solid waste disposal projects, and health care facilities. Second priority shall be given to economic development-related projects, including airport and seaport improvements, roads, sea walls, and energy development including renewable energy that cannot be funded through the rate structure. (Amended Compact, Article II Economic Assistance Implementation) FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024 FY2025 National Government General Maintenance National 150,000 150,000 - - - - - - - Chuuk 460,000 460,000 1,477,700 1,477,700 1,477,700 1,477,700 1,477,700 1,477,700 1,477,700 1,477,700 Kosrae 300,000 300,000 423,500 423,500 423,500 423,500 423,500 423,500 423,500 423,500 Pohnpei - - 984,550 984,550 984,550 984,550 984,550 984,550 984,550 984,550 Yap 300,000 300,000 614,250 614,250 614,250 614,250 614,250 614,250 614,250 614,250 Non-specific 2,150,000 2,150,000 - - - - - - - Indicative - - 3,500,000 3,500,000 3,500,000 3,500,000 3,500,000 3,500,000 3,500,000 3,500,000 Total 3,360,000 3,360,000 3,500,000 3,500,000 3,500,000 3,500,000 3,500,000 3,500,000 3,500,000 3,500,000 National Government state secondary roads, water supply maintenance National - - - - - - - - - Chuuk 1,182,160 1,182,160 1,182,160 1,182,160 1,182,160 1,182,160 1,182,160 1,182,160 1,182,160 1,182,160 Kosrae 338,800 338,800 338,800 338,800 338,800 338,800 338,800 338,800 338,800 338,800 Pohnpei 787,640 787,640 787,640 787,640 787,640 787,640 787,640 787,640 787,640 787,640 Yap 491,400 491,400 491,400 491,400 491,400 491,400 491,400 491,400 491,400 491,400 Indicative 2,800,000 2,800,000 2,800,000 2,800,000 2,800,000 2,800,000 2,800,000 2,800,000 2,800,000 2,800,000 Total 2,800,000 2,800,000 2,800,000 2,800,000 2,800,000 2,800,000 2,800,000 2,800,000 2,800,000 2,800,000 National Government Development Funding National 500,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 Chuuk 4,011,000 4,011,000 4,011,000 4,011,000 4,011,000 4,011,000 4,011,000 4,011,000 4,011,000 4,011,000 Kosrae 1,150,000 1,150,000 1,150,000 1,150,000 1,150,000 1,150,000 1,150,000 1,150,000 1,150,000 1,150,000 Pohnpei 2,672,000 2,672,000 2,672,000 2,672,000 2,672,000 2,672,000 2,672,000 2,672,000 2,672,000 2,672,000 Yap 1,667,000 1,667,000 1,667,000 1,667,000 1,667,000 1,667,000 1,667,000 1,667,000 1,667,000 1,667,000 Total 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 All Governments Matching IMF Funding National - - - - - - - - - Chuuk 507,600 507,288 506,842 506,261 505,545 504,695 503,709 502,589 257,120 261,645 Kosrae 145,475 145,386 145,258 145,091 144,886 144,642 144,360 144,039 73,689 74,986 Pohnpei 338,200 337,992 337,695 337,308 336,831 336,264 335,607 334,861 171,312 174,327 Yap 210,999 210,870 210,684 210,442 210,145 209,791 209,382 208,916 106,880 108,761 IMF Arrears 1,531,268 1,531,268 1,531,268 1,531,268 - - - Total 2,733,542 2,732,804 2,731,746 2,730,370 1,197,407 1,195,392 1,193,058 1,190,405 609,000 619,718 TOTAL DEVELOPMENT 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 TOTAL MAINTENANCE 10,424,809 10,424,071 10,563,014 10,561,637 7,497,407 7,495,392 7,493,058 7,490,405 6,909,000 6,919,718 FSM Infrastructure Development Plan FY2016-FY2025 V o l u m e 1 Plan Outline P a g e | 21 P LA N O U T LI N E Five percent of the sector grant for infrastructure is set aside for the IMF. The FSM Congress legislates the distribution of the Amended Compact sector grants (Table 4). From FY2015 on, all the grants are distributed to the States. Table 4 – Distribution of Amended Compact sector grants FY2012 FY2013 FY2014 FY2015 on National 10.00 % 10.00 % 5.00 % 0.00 % Chuuk 38.00 % 38.00 % 40.11 % 42.22 % Kosrae 10.90 % 10.90 % 11.50 % 12.10 % Pohnpei 25.31 % 25.31 % 26.72 % 28.13 % Yap 15.79 % 15.79 % 16.67 % 17.55 % Source: FSM Congress The allocation of Amended Compact infrastructure grants is undertaken on an annual basis by the US and FSM through JEMCO which has three representatives from the US and two from the FSM. JEMCO decisions are intended to be reached on a consensus basis. In August 2004 JEMCO delegated to the OIA the authority to approve individual projects that comply with the Fiscal Procedure Agreement requirements and conform to the consolidated list of projects that are consistent with the IDP. This resolution delegated the final approval of infrastructure grants to the OIA Grant Manager in Hawaii. From FY2004 to FY2012, JEMCO allocated a total of $204 million for infrastructure. In March 2012 JEMCO passed a resolution that no further Amended Compact infrastructure grants will be made until the IDP 2004 is updated. The combination of the FY2013 to FY2015 funds that have not been allocated by JEMCO and the allocated funds that have not been granted by OIA over FY2004 to FY2012 is equal to $111.3 million (“the arrears”, $105.2 million for development and $6.1 million for IMF). From FY2024 the Amended Compact funding shifts from direct grants to a drawdown from the CTF. The CTF is intended to accumulate sufficient funds by FY2023 to generate income equivalent to the Compact grants. At the current level of the fund and expected future contributions the amount in the CTF in FY2023 is unlikely to be enough for the revenue from the fund (after maintaining the real value of the capital) to match 2023 Compact grants. The indicative infrastructure funding from the CTF from FY2024 is $12.2 million, of which $0.6 million is for the IMF, about half the Amended Compact infrastructure grant amounts in FY2023. This is based on opening capital in FY2024 of $1,015 million, the fund value maintained in real terms and a 4 percent distribution. The indicative Amended Compact/CTF infrastructure funding from FY2016 to FY2025 is shown in Table 5. Over the ten year IDP period the total funds are $327.5 million ($310.6 million for development and $16.9 million for IMF). FSM Infrastructure Development Plan FY2016-FY2025 P a g e | 22 V o l u m e 1 Plan Outline Table 5 – Amended Compact assistance to FSM (including CTF) Source: CMD 3.2.2 US Federal Programs Federal Aviation Administration FSM’s air transportation sector has benefited greatly across all states from the Federal Aviation Administration’s (FAA) Airport Improvement Program15 (AIP). Between FY2004 and FY2015 AIP grants and matching funds totaled $192 million16. An additional $30.5 million of AIP grants and matching funds have been identified for two projects included in the IDP. A number of other IDP priority projects are strong candidates for AIP funding. Department of Agriculture The Rural Utilities Service (RUS) of the US Department of Agriculture (USDA) administers programs that provide infrastructure to rural communities17. FSM qualifies for RUS programs that cover infrastructure in the water/wastewater, solid waste, electric power and telecommunications sectors. FSM Telecommunications Corporation has a current RUS loan and a number of IDP priority projects are strong candidates for RUS program funding. USAID USAID has no regular development program in the FSM, however it responds to requests for disaster relief. 15 www.faa.gov/airports/aip/overview/ 16 (DTCI, DCA, 2015) - Airport Improvement Program in FSM 17 www.rd.usda.gov/about-rd/agencies/rural-utilities-service FY2016 FY2017 FY2018 FY2019 FY20FY20 FY2021 FY2022 FY2023 FY2024 FY2025 Total Amended Compact Infrastructure Grants (30%) 24,045,480 24,030,720 24,009,576 23,982,048 23,948,136 23,907,840 23,861,160 23,808,096 12,180,000 12,394,368 216,167,424 FSM - IMF Grants 1,202,274 1,201,536 1,200,479 1,199,102 1,197,407 1,195,392 1,193,058 1,190,405 609,000 619,718 10,808,371 Infrastructure Development (excl IMF) 22,843,206 22,829,184 22,809,097 22,782,946 22,750,729 22,712,448 22,668,102 22,617,691 11,571,000 11,774,650 205,359,053 Arrears for Development 26,303,998 26,303,998 26,303,998 26,303,998 105,215,990 Arrears for IMF 1,531,268 1,531,268 1,531,268 1,531,268 6,125,070 Total Amended Compact/CTF Funding for Development (including arrears) National 2,786,387 2,786,387 2,786,387 2,786,387 11,145,547 Chuuk 20,084,441 20,078,520 20,070,040 20,058,999 9,605,358 9,589,196 9,570,473 9,549,189 4,885,276 4,971,257 128,462,748 Kosrae 5,636,369 5,634,672 5,632,242 5,629,077 2,752,838 2,748,206 2,742,840 2,736,741 1,400,091 1,424,733 36,337,808 Pohnpei 14,080,773 14,076,828 14,071,178 14,063,822 6,399,780 6,389,012 6,376,537 6,362,357 3,254,922 3,312,209 88,387,418 Yap 6,559,235 6,556,774 6,553,249 6,548,659 3,992,753 3,986,035 3,978,252 3,969,405 2,030,711 2,066,451 46,241,522 Total 49,147,204 49,133,182 49,113,095 49,086,943 22,750,729 22,712,448 22,668,102 22,617,691 11,571,000 11,774,650 310,575,043 Total Amended Compact/CTF for the IMF (including arrears) National 107,403 107,403 107,403 107,403 429,613 Chuuk 1,239,851 1,239,540 1,239,093 1,238,512 505,545 504,695 503,709 502,589 257,120 261,645 7,492,299 Kosrae 358,666 358,576 358,448 358,282 144,886 144,642 144,360 144,039 73,689 74,986 2,160,575 Pohnpei 658,430 658,223 657,925 657,538 336,831 336,264 335,607 334,861 171,312 174,327 4,321,318 Yap 369,191 369,061 368,876 368,634 210,145 209,791 209,382 208,916 106,880 108,761 2,529,636 Total 2,733,542 2,732,804 2,731,746 2,730,370 1,197,407 1,195,392 1,193,058 1,190,405 609,000 619,718 16,933,441 http://www.faa.gov/airports/aip/overview/ http://www.rd.usda.gov/about-rd/agencies/rural-utilities-service FSM Infrastructure Development Plan FY2016-FY2025 V o l u m e 1 Plan Outline P a g e | 23 P LA N O U T LI N E 3.3 Bilateral Development Partner Funding 3.3.1 Australia Australia’s aid program focuses on reforms in support of budgetary and economic self-reliance, environmental management and development coordination. A major area of support has been through Australia’s Pacific Patrol Boat Regional Program, which aims to protect and manage the region’s vital fisheries resources. While maintenance of the three patrol boats is critical to fisheries management under the fixed asset definition of infrastructure these vessels are not a concern of the infrastructure plan. There is currently no Australian participation in FSM’s infrastructure development. 3.3.2 China The Peoples Republic of China assistance to FSM includes infrastructure, agricultural technical assistance and scholarships. Recent infrastructure investments include the Okat Bridge in Kosrae ($12.7 million in FY2014), the Chuuk State Government Complex ($10 million in FY2015) and an untied grant of $9.4 million scheduled for FY2016. Indicative funding for FY2017 to FY2025 is $5 million per year. Future assistance will be better coordinated in line with the FSM ODA Policy and the IDP. 3.3.3 European Union The European Union’s (EU) assistance to FSM is currently focused on renewable energy and is managed by the local office of the Secretariat for the Pacific Communities’ (SPC) Economic Development Division, North Pacific ACP Renewable Energy and Energy Efficiency Project (North-REP). Funding of $10 million has been provided for the five years to FY2015 from the European Development Fund EDF 10 and has been used for solar power in Chuuk, Kosrae and Yap and to refurbish the hydropower station on Pohnpei. EDF 11 which runs from FY2016 to FY2020 has a total funding of $18 million. This has been programmed for village access to electricity/solar for Chuuk, solar and transmission line upgrading for Pohnpei, proper sizing transformers on Kosrae and improving the efficiency and reliability of electricity of the outer islands of Yap. Around 75 percent of expenditure is expected to be used for equipment in FY2016 and FY2017. Funding beyond FY2020 is expected to be similar to EDF 11 levels at $3.6 million per year although the EDF 12 focal sectors are yet to be determined. 3.3.4 Japan Japan’s assistance to FSM is administered by the Japan International Cooperation Agency (JICA) providing technical cooperation and grant aid. Economic and social infrastructure forms the most significant component of grant aid with the most recent projects being the lengthening of the runway plus facility improvements at Pohnpei International Airport completed in 2012 at a cost of $37 million. This was followed by provision of the inter-island passenger and cargo vessel Four Winds in 2015 at a cost of $11.1 million. With the Japanese Government’s record of assistance to FSM over more than 30 years, indicative funding of $4 million per year for infrastructure is included in the IDP. 3.3.5 Summary Estimated bilateral funding over FY2016 to FY2025 amounts to $140.4 million and is shown in Table 6. FSM Infrastructure Development Plan FY2016-FY2025 P a g e | 24 V o l u m e 1 Plan Outline Table 6 – Estimated Bilateral Funding Source: CMD / ODAD / MFA 3.4 Multilateral Bank Funding 3.4.1 Asian Development Bank The ADB provides loans, guarantees, equity investments, grants, and technical assistance to FSM. Loans are financed from ordinary capital resources (OCR) and the Asian Development Fund (ADF). OCR loans are provided at a quasi-market rate. ADF is a donor fund replenished every four years that provides loans at concessional terms (long maturities, lower interest rates) as well as grants. ADB’s indicative lending envelope for the FSM from FY2015 to FY2017 comprising $7.35 million of OCR and $8.73 million from the ADF18 is being utilized for Pohnpei Port. Based on ADB’s country plans and average lending over recent years, an indicative $5 million per year is included in the IDP from FY2018 with follow-on technical assistance grants in FY2016 and FY2017. The IDP’s institutional component includes priority projects that are strong candidates for ADB technical assistance funding. 3.4.2 World Bank Group The World Bank’s program focuses on two themes that support FSM’s SDP: 1. strengthening the enabling environment for private sector development to help sustain growth; and 2. promoting a sustainable medium term fiscal situation to improve service delivery19 Up until FY2014 the World Bank has assisted FSM with a mix of investments, technical assistance and analytical activities. The World Bank’s engagement with FSM over the Country Partnership Strategy period (2014 – 2016) in FSM includes the following infrastructure-related sectors: 1. improving electricity supply and efficiency including increased use of renewable energy 2. enhancing telecommunications access and affordability 3. improving the management of the impact of climate change and natural hazards Most significantly the Palau-FSM Regional Connectivity Project will bring fiber-optic connectivity to Yap and Chuuk, improved satellite connectivity to Kosrae and establishment of the FSM Telecommunication Regulation Authority. The FSM component of the project is financed by a FSM IDA17 grant allocation ($12.4 million) and FSM’s portion of the regional grant allocation ($38.6 million). 18 (ADB, 2014) - Country Operations Business Plan October 2014, Federated States of Micronesia 2015–2017 19 (World Bank, 2014) - International Development Association and International Finance Corporation Country Partnership Strategy for the Federated States Of Micronesia for the period FY2014 – 2017 FY2016 FY2017 FY2018 FY2019 FY20FY20 FY2021 FY2022 FY2023 FY2024 FY2025 China (PRC) Total 9,400,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 EU EDF 11 ($18m, 2015-2020) 6,750,000 6,750,000 1,500,000 1,500,000 1,500,000 - Indicative - - - - - 3,600,000 3,600,000 3,600,000 3,600,000 3,600,000 Total 6,750,000 6,750,000 1,500,000 1,500,000 1,500,000 3,600,000 3,600,000 3,600,000 3,600,000 3,600,000 Japan Total 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 Total Bilateral 21,150,000 16,750,000 11,500,000 11,500,000 11,500,000 13,600,000 13,600,000 13,600,000 13,600,000 13,600,000 FSM Infrastructure Development Plan FY2016-FY2025 V o l u m e 1 Plan Outline P a g e | 25 P LA N O U T LI N E The Energy Sector Development project (IDA 16 $14.4 million) includes improvements to electric power generation and energy master planning. The IDP includes indicative World Bank funding for infrastructure of $3.5 million per year from FY2019. 3.4.3 Multilateral Bank Summary Table 7 shows total multilateral bank grants of $26 million over FY2016 to FY2025 and $45 million of debt funding making a total of $71 million available over the period of the IDP. Table 7 – Estimated Multilateral Bank Funding Source: CMD / ODAD 3.5 Climate Change Funding A major source of Climate Change (CC) financing is through the United Nations Framework Convention on Climate Change (UNFCCC). FSM’s first proposal to the UNFCCC Adaptation Fund, “Enhancing the climate change resilience of vulnerable island communities in FSM”, seeks $8.9 million for coastal management infrastructure over five years from FY2016 (total $9 million available to FSM for FY2016 to FY2020). The IDP includes additional Adaptation Fund funding of $2 million per year from FY2021. Funding under the Green Climate Fund (GCF) will depend on international funding pledges being honored by 2020. FSM is receiving technical assistance to prepare proposals for this funding and the IDP includes indicative GCF funding of $2 million per year from FY2020. Total climate change funding projected over FY2016 to FY2025 from the Adaptation Fund and the Green Climate Fund amounts to $31 million. 3.6 Summary of Available IDP Funding Total available funding for the IDP over FY2016 to FY2025 is estimated at $751.9 million of which $655.7 million is for development and $96.2 million for maintenance. The annual total annual amounts are shown in Table 8 and Figure 6. Each state receives a funding allocation under the IDP according to the source of funding. Amended Compact funds are split according the formula set by the FSM Congress. Funds associated with bilateral donors, multilateral banks and climate change may be for specific projects, in which case there is a direct allocation to the appropriate state. The underpinning nature of infrastructure warrants a more even distribution of infrastructure funding than the Amended Compact funding formula. The IDP allocates these funds to a pool and then distributes 25 percent each to Chuuk and Pohnpei, 20 percent to Kosrae and Yap and the remaining 10 percent to the National Government. On this basis Chuuk is allocated 40 percent of total available infrastructure funding, Pohnpei 27 percent, Yap 17 percent, Kosrae 14 percent and the National Government 2 percent. FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024 FY2025 ADB Grants Total 500,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 Loan Total - 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 Total ADB 500,000 5,500,000 5,500,000 5,500,000 5,500,000 5,500,000 5,500,000 5,500,000 5,500,000 5,500,000 World Bank Indicative 3,500,000 3,500,000 3,500,000 3,500,000 3,500,000 3,500,000 Total World Bank - - - - 3,500,000 3,500,000 3,500,000 3,500,000 3,500,000 3,500,000 ADB and WB Grants Total 500,000 500,000 500,000 500,000 4,000,000 4,000,000 4,000,000 4,000,000 4,000,000 4,000,000 ADB and WB Grants & Debt Total 500,000 5,500,000 5,500,000 5,500,000 9,000,000 9,000,000 9,000,000 9,000,000 9,000,000 9,000,000 FSM Infrastructure Development Plan FY2016-FY2025 P a g e | 26 V o l u m e 1 Plan Outline Table 8 – Total Available IDP Funding Figure 6 – Total Available IDP Funding 3.7 Plan Funding Requirements 3.7.1 Overall Funding Requirements Infrastructure development The overall funding requirements for infrastructure development are shown in Table 9 ($981 million) exceed available infrastructure development funding ($656 million) by around 50 percent. The equivalent measure between total project costs and available funding in IDP 2004 is 117 percent. FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024 FY2025 Total IDP Funding Development 107,252,204 80,778,182 76,033,095 76,006,943 54,620,729 56,652,448 56,608,102 56,557,691 45,511,000 45,714,650 Maintenance 11,412,083 11,410,607 11,763,493 11,760,740 8,694,814 8,690,784 8,686,116 8,680,810 7,518,000 7,539,437 TOTAL 118,664,287 92,188,789 87,796,587 87,767,683 63,315,543 65,343,232 65,294,218 65,238,501 53,029,000 53,254,086 National Development 1,786,387 3,286,387 3,286,387 3,286,387 500,000 500,000 500,000 500,000 500,000 500,000 Maintenance 364,807 364,807 214,807 214,807 - - - - - TOTAL 2,151,193 3,651,193 3,501,193 3,501,193 500,000 500,000 500,000 500,000 500,000 500,000 Chuuk Development 58,457,941 30,102,020 28,781,040 28,769,999 19,691,358 20,250,196 20,231,473 20,210,189 15,546,276 15,632,257 Maintenance 4,659,363 4,658,739 5,138,047 5,136,885 3,670,950 3,669,249 3,667,278 3,665,038 3,174,100 3,183,150 TOTAL 63,117,303 34,760,760 33,919,087 33,906,883 23,362,308 23,919,445 23,898,751 23,875,227 18,720,376 18,815,407 Kosrae Development 11,476,369 11,594,672 10,542,242 10,539,077 8,762,838 9,218,206 9,212,840 9,206,741 7,870,091 7,894,733 Maintenance 1,786,131 1,785,953 1,479,197 1,478,864 1,052,072 1,051,585 1,051,020 1,050,378 909,678 912,272 TOTAL 13,262,500 13,380,625 12,021,438 12,017,941 9,814,911 10,269,791 10,263,860 10,257,119 8,779,769 8,807,004 Pohnpei Development 22,615,273 22,761,328 21,443,178 21,435,822 15,146,780 15,711,012 15,698,537 15,684,357 12,576,922 12,634,209 Maintenance 2,642,001 2,641,586 3,088,041 3,087,267 2,445,851 2,444,718 2,443,404 2,441,912 2,114,813 2,120,844 TOTAL 25,257,274 25,402,914 24,531,219 24,523,088 17,592,631 18,155,729 18,141,942 18,126,268 14,691,736 14,755,053 Yap Development 12,916,235 13,033,774 11,980,249 11,975,659 10,519,753 10,973,035 10,965,252 10,956,405 9,017,711 9,053,451 Maintenance 1,959,782 1,959,523 1,843,402 1,842,918 1,525,940 1,525,233 1,524,413 1,523,482 1,319,409 1,323,171 TOTAL 14,876,016 14,993,296 13,823,650 13,818,577 12,045,693 12,498,267 12,489,665 12,479,887 10,337,120 10,376,622 FSM Infrastructure Development Plan FY2016-FY2025 V o l u m e 1 Plan Outline P a g e | 27 P LA N O U T LI N E The additional funding required to cover the indicated shortfall is reasonable: 1. in the context of section 1.3.2, infrastructure funding between FY2004 and FY2015 was more than 60 percent above the pro-rata IDP 2004 funding over 12 years (assuming full Amended Compact infrastructure development grants), 2. given that no funding has been included from significant US Federal programs, 3. with other development partners providing large one-off project funding in the past outside of their annual funding envelopes, and 4. with climate change funding is likely to increase. Table 9 – IDP Development Funding Requirement Infrastructure maintenance The overall funding requirement of $96.2 million for infrastructure maintenance is shown in Table 10. This requirement matches with the available funding for infrastructure management. Table 10 – Total IDP Maintenance Funding Requirement 3.7.2 Appropriation Profiles Infrastructure development Each government identified and prioritized the projects included in the IDP. The estimated infrastructure development appropriations align with these priorities, taking into account a number of constraints and demands particularly for the first IDP period (FY2016 to FY2019). Projects that are already designed and ready to move to construction are profiled for appropriation in FY2016. The remaining projects prioritized into the first IDP period are profiled taking account of the logistics, the need to develop the State PMOs and their short-term capacity, and considering their different support demands. These demands included projects where goods are to be purchased, that can be scheduled in an early year; projects where a limited amount of design is required, and construction procurement can follow on immediately, such as road rehabilitation; and projects where a full design is required, which will require procurement of a design consultant entity. FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024 FY2025 Total IDP Development Funding Requirement 80,597,000 40,416,000 81,935,000 266,928,000 136,323,000 109,873,000 111,667,000 73,013,000 36,889,000 40,262,000 National 1,378,000 10,731,000 10,263,000 46,356,000 8,608,000 1,372,000 17,201,000 2,738,000 6,348,000 13,748,000 Chuuk 39,030,000 10,594,000 27,703,000 83,995,000 41,598,000 39,839,000 29,324,000 8,425,000 1,000,000 1,000,000 Kosrae 22,420,000 4,590,000 17,534,000 25,678,000 24,940,000 25,263,000 6,000,000 10,332,000 18,400,000 7,253,000 Pohnpei 16,720,000 7,779,000 12,598,000 65,835,000 29,130,000 21,324,000 46,564,000 33,821,000 2,852,000 15,673,000 Yap 1,049,000 6,722,000 13,837,000 45,064,000 32,047,000 22,075,000 12,578,000 17,697,000 8,289,000 2,588,000 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024 FY2025 Total IDP Maintenance Funding Requirement 11,412,083 11,410,607 11,763,493 11,760,740 8,694,814 8,690,784 8,686,116 8,680,810 7,518,000 7,539,437 National 364,807 364,807 214,807 214,807 - - - - - Chuuk 4,659,363 4,658,739 5,138,047 5,136,885 3,670,950 3,669,249 3,667,278 3,665,038 3,174,100 3,183,150 Kosrae 1,786,131 1,785,953 1,479,197 1,478,864 1,052,072 1,051,585 1,051,020 1,050,378 909,678 912,272 Pohnpei 2,642,001 2,641,586 3,088,041 3,087,267 2,445,851 2,444,718 2,443,404 2,441,912 2,114,813 2,120,844 Yap 1,959,782 1,959,523 1,843,402 1,842,918 1,525,940 1,525,233 1,524,413 1,523,482 1,319,409 1,323,171 FSM Infrastructure Development Plan FY2016-FY2025 P a g e | 28 V o l u m e 1 Plan Outline Projects in the other IDP periods (FY2020 to FY2022 and FY2023 to FY2025) are profiled more on the basis of smoothing overall resource demand on the State PMOs and consultant and contractors resources. The estimated annual and cumulative appropriation profiles are shown at Figure 7. Figure 7 – Infrastructure Development Appropriations Profile Infrastructure maintenance The profiling of the infrastructure maintenance appropriations also matches the available funding profile with the estimated annual and cumulative appropriation profiles shown at Figure 8. Figure 8 – Infrastructure Maintenance Appropriations Profile 3.7.3 Available Funding and Estimated Appropriations Infrastructure development The IDP appropriation profile broadly balances with the available funding over the first four years as shown at Figure 9A. In the first three years available funding is greater than is required due to the FSM Infrastructure Development Plan FY2016-FY2025 V o l u m e 1 Plan Outline P a g e | 29 P LA N O U T LI N E backlog of design and procurement required as a result of the March 2012 JEMCO resolution. From FY2019 onwards the requirement for funding exceeds the available funds. The different governments have significantly different funding versus appropriation profiles as is highlighted in Figure 9B to Figure 9F. From FY2019 onwards estimated appropriations exceed available funding so additional funding needs to be identified and/or priorities reassessed to defer projects or remove them from the IDP. The planned review of the IDP in FY2019 will provide the opportunity to undertake this reassessment. Figure 9 – Available Funding and Estimated Appropriations A. IDP Cumulative Appropriations and Funding B. National Government Cumulative Appropriations and Funding National Government funding is less than planned appropriations from FY2017, which becomes significant from FY2019 and the shortfall increases in subsequent years. FSM Infrastructure Development Plan FY2016-FY2025 P a g e | 30 V o l u m e 1 Plan Outline C. Chuuk State Cumulative Appropriations and Funding Chuuk planned appropriations do not exceed available funding until FY2020, reach a peak shortfall in FY2022 and then decline to almost balance by FY2025. D. Kosrae State Cumulative Appropriations and Funding Kosrae planned appropriations are close to matching available funding until FY2019. From then on the funding gap increases to around $50 million by FY2021 and remains at this level for the remainder of the planning period. The funding required for the Kosrae State Hospital construction grant in FY2016 exceeds Kosrae’s Amended Compact arrears and FY2016 appropriation. FSM Infrastructure Development Plan FY2016-FY2025 V o l u m e 1 Plan Outline P a g e | 31 P LA N O U T LI N E E. Pohnpei State Cumulative Appropriations and Funding Pohnpei’s priority projects can be funded until FY2020. From then on a shortfall opens up to peak in FY2023 and remains significant until the end of the planning period. F. Yap State Cumulative Appropriations and Funding Without any projects ready for construction in Yap there is a significant surplus of available funding until FY2019. Subsequently the funding shortfall opens up and remains substantial until the end of the planning period. Infrastructure maintenance With infrastructure maintenance appropriations intended to match the availability of funding, there is no issue with the funding shortfalls. Rather, the challenge for infrastructure maintenance is for the States to provide the matching funds so that the Amended Compact IMF funding can be utilized as it becomes available. FSM Infrastructure Development Plan FY2016-FY2025 P a g e | 32 V o l u m e 1 Plan Outline Part 4 Management and Implementation 4.1 Current Situation IPICs were established in each State and at National level to coordinate IDP 2004 infrastructure implementation. At National level the Economic Policy Implementation Committee fulfilled the IPIC role although this and the Pohnpei State IPIC are no longer active. Within the National Government, DTCI has responsibility for the delivery of infrastructure, including Amended Compact projects, and similar departments deliver infrastructure at State level. Large development partner programs have their own implementation units. Overall there is no consistency of implementation processes. Amended Compact situation The PMU was established in 2005 by regulation to deliver Amended Compact funded infrastructure projects in IDP 2004 and is currently a section within DTCI with contracted staff. The PMU is responsible for both program management and project management for all Amended Compact development projects. This includes: for program management: systems, procedures, compliance with Amended Compact requirements and FSM IDP regulations, preparation of consolidated annual FSM program reviews and program liaison with the States for project management: all documentation and procurement for design, construction and contract supervision services, review of preliminary and final designs with some consultation with the States and direct contract supervision by PMU staff located in the States Issues with the current PMU arrangements include: 1. there is no clear and uniform process for the progression of a project, from the initial listing in the IDP, through pre design, detailed design and construction 2. State IPIC are not involved in scope changes 3. PMU project managers and engineers located in the States are not accessible by the State stakeholders 4. the flow of information between all the stakeholders is poorly documented and inconsistent 4.2 Strategic Considerations and Guiding Principles 4.2.1 Strategic considerations Future institutional arrangements will incorporate the following strategic considerations: Strong and strategic oversight at the program level – strategic oversight is a government function that will not be outsourced, although it can be reinforced with contracted expertise Involvement of the States – State involvement is critical to planning and implementing clearly defined projects that meet stakeholder requirements Autonomy of the States – the autonomy of the States in planning and implementing their programs is recognized in the institutional arrangements, notwithstanding the need to work to a consistent set of processes Local capability to be developed – there will be a clear path for “localizing” the institutional arrangements over time and ensuring that those arrangements endure beyond the end of the IDP FSM Infrastructure Development Plan FY2016-FY2025 V o l u m e 1 Plan Outline P a g e | 33 P LA N O U T LI N E International best practice will be considered – best practice program delivery arrangements such as “Centers of Excellence” will be considered to efficiently utilize resources and maintain consistency across the program 4.2.2 Guiding principles In addition to the strategic considerations, the institutional arrangements are designed to achieve the following principles: 1. program and project management processes ensure transparency of decision making 2. competitive bidding processes will be followed to ensure best value outcomes 3. there will be appropriate standards and sanction and segregation of roles and functions to maintain probity and integrity 4. capability building of local resources will be a primary responsibility of any external resource 4.3 Initial Institutional Arrangements The initial institutional arrangements in this section takes into account the above strategic consideration and guiding principles and will apply to all Amended Compact funded infrastructure delivery. 4.3.1 Strategic oversight A reformed PMU residing within DTCI will collate information for program level Amended Compact infrastructure delivery. The National Government to US Government interface will be through the Department of Finance and Administration. Jointly CMD and PMU will develop and implement coordinated processes for controlling both financial and delivery aspects of the Amended Compact infrastructure program. In time it is intended that this oversight arrangement will apply to all infrastructure programs as a long term development initiative with the Government to Government/Development Partner interface being managed by CMD or the Aid Coordination Group depending on the funding source. 4.3.2 Governance Effective State IPICs provide the basis for strong governance of infrastructure delivery at the State program and project level once the coordinated control processes have been established. Most importantly the upgraded role of the IPICs and establishment of the implementation framework outlined below will allow the devolution of planning and implementation responsibilities to the States without compromising control, integrity and governance. The reinstatement of the Pohnpei State IPIC is a priority action for the incoming State Executive. 4.3.3 Implementation model The implementation model retains the PMU within DTCI but restructures the unit to focus on Program Management. The PMU will provide ongoing support to each State to ensure standards are developed and shared, subsequent design and construction contracts are consistent with appropriate risk management and provide peer review expertise as required. Project Management, from initial planning, through design to construction completion, is devolved to the States by the formation of four Project Management Offices (PMOs). The PMOs will undertake all the project management activities from initial design through to construction and completion. The general structure of the implementation model is shown in Figure 10. FSM Infrastructure Development Plan FY2016-FY2025 P a g e | 34 V o l u m e 1 Plan Outline Figure 10 – Organization Chart of Infrastructure Delivery A key part of the model is for a single external party to undertake the initial PMO role in each State. Each State will have its own contract with the external party establishing direct accountability to each State. This arrangement provides an optimum balance between State responsibility and consistency and efficiency across the four States. The model addresses the key aspects of delivering an infrastructure program across FSM by:  establishing an immediate increase in project management capacity by engaging the external party to operate in each State  providing the States with direct involvement in the planning and implementation of their State program and projects  retaining PMU to provide guidance on standards and contracts, risk management and conduct peer reviews and program management oversight  retaining PMU as a National Government entity to ensure appropriate controls and segregation of duties  having PMU provide central coordination of Amended Compact activities and institutional interfaces on program delivery matters, including tracking and reporting of program status, expenditure and funding availability  using one external party to undertake all four PMO roles to provide consistency across all States in terms of project management approaches, processes and methodologies  enabling performance comparison between States to facilitate continuous improvement and identification of particular weaknesses and solutions  providing opportunities for State government employees to build skills and knowledge by working as part of or with the external PMO entity  obligating the external PMO entity to developed capacity in each State  sharing knowledge on technical and project management matters across all States via the PMU  providing a foundation for the delivery of all infrastructure programs and projects over time  providing greater opportunities for local companies to be involved in design and construction contracts FSM Infrastructure Development Plan FY2016-FY2025 V o l u m e 1 Plan Outline P a g e | 35 P LA N O U T LI N E In the case of the Pohnpei State PMO, additional support will be provided to DTCI to assist in delivery of National Amended Compact infrastructure projects. Proposed PMU Structure The PMU’s current technical/engineering focus needs to change. In addition to a Program Manager and administration support, the following skills and expertise are required refocus the unit in its program management and coordination role: Contracting/Procurement Expertise  establish, maintain and support standard procurement and contract documentation  provide ongoing guidance to the States on scope definition, contract duration, special conditions of contract and risk management  conduct peer reviews  manage the prequalification of design consultants and contractors Program Management Skills  manage the current and future program portfolio, including tracking each project on a time, cost and quality basis in support of the States  preparing periodic reports  working with the States to plan and adjust programs to offset delays  liaising with the funding agency on technical and other matters Engineering Expertise  support the engineering staff in each State by advising/developing appropriate local standards  conducting peer reviews of design consultant proposals and design submissions, where required  establishing and managing a consolidated engineering library including designs, standards and cost information for use across FSM  assisting with the prequalification of design consultants and contractors  supporting and building project management capacity of DTCI staff engaged in project management of National infrastructure projects Proposed State Project Management Offices Each State PMO will initially have external party resources to establish its project management capability supplemented by State and other FSM resources. The following resources will be required in each PMO. Project Management skills A Project Manager/PMO Manager is required in each State with larger State programs potentially requiring additional project manager(s). Contracting Officers Each PMO requires staff with the ability to undertake procurement and contracting responsibilities. A Project Manager may be able to undertake this role in States with smaller programs. Resident Engineers and Inspectors Resident Engineers and Inspectors are required in each State PMO and these could be State employees or other local resources. Other local resources can be progressively brought in as part of the capacity building process to initially understudy experienced staff. FSM Infrastructure Development Plan FY2016-FY2025 P a g e | 36 V o l u m e 1 Plan Outline Technical Specialists From time to time specialist technical advice may be required on complex or challenging projects and the contract with the external party will enable technical specialists to work within the PMO on a short term basis. General Considerations The cost of each PMO is estimated to be between 5 and 7 percent of the State program which is within international benchmarks and internationally recognized as a legitimate program cost. The IDP includes provision for the required funds for the PMU and State PMOs; the PMU funds will continue to come from the National Government, and the PMO funds are part of the Amended Compact component of each State’s infrastructure development program (noting that Amended Compact PMO funding is dedicated to the delivery of Amended Compact projects). The external party engaged to manage the PMO will be excluded from participating in any further contract for the design, construction or supervision on an IDP project for which it has project management responsibilities to ensure probity is maintained. The external party will be contractually bound to build local project management capacity in each State and will have its capacity building plans and performance regularly reviewed by IPIC. The link between each State PMO and the PMU is very important. The PMU will provide strong process guidance, contracting expertise, engineering standards and OIA liaison, legitimizing its role and avoiding being isolated from the PMOs. The roles and responsibilities for each party involved in planning, implementation and management of the IDP’s Amended Compact component are documented in Annex A. 4.4 Process Enhancements All infrastructure projects require defined project management processes from pre-design through funds release, design and construction to successful completion. Best practice processes incorporate key steps, hold points, client reviews and concise and complete documentation to support such processes. It is also good practice to release funds at two stages; initially to release funds to enable the full project design to be undertaken and then, prior to the construction procurement process commencing, the funding required for construction. This approach facilitates the orderly progress of the project while ensuring that after design there is a review of the project scope, time and cost and any changes are formally signed off before committing funds for construction. Pre-Design and initial funds release The PMO will fully document the project scope and formally agree this information with its IPIC, including:  project outline, scope and justification  other options considered if relevant  reference to IDP, sector and prioritization  whole of life cost estimate broken down to estimates for project management, design, construction and maintenance  delivery strategy, including number and type of contracts, project phasing and timing, links to other projects and arrangements for construction supervision  risks and issues that need to be resolved, for instance site access or geotechnical data  outline program broken down to include key review points at say 30 percent design, end of design and construction completion FSM Infrastructure Development Plan FY2016-FY2025 V o l u m e 1 Plan Outline P a g e | 37 P LA N O U T LI N E The project will be submitted for the release of initial (generally design) funds once endorsed by the IPIC. Once the initial funds have been appropriated, the PMO will conduct (if required) a competitive procurement process in accordance with the prevailing procurement process and regulations to identify and contract the design consultant. Design and construction funds release The PMO will formally review each project with the IPIC twice during design. The PMO will also hold regular client meetings with sector representatives. The IPIC reviews will be held when the design is 30 percent complete and when it is 100 percent complete (but still subject to review). The 30 percent design review will ensure that designs remain on an agreed path before significant design costs are incurred. Following a design being accepted as complete a second submission will be made to the funding agency for the appropriation of construction funds. Construction procurement Once construction funds have been appropriated, the PMO will conduct a competitive procurement process in accordance with the prevailing procurement process and regulations to identify and contract the construction contractor and any required supervision consultant. Variations The PMO will process variations generally as follows:  variations in scope require IPIC approval to ensure project outcomes remain fully agreed  variations in scope or cost that require additional funding will be endorsed by IPIC before submission to Government and/or OIA (as required) for approval  change orders to a contract will be processed in accordance with the PMU’s contract management manual Completion The PMO will prepare a Project Completion Report for endorsement by the IPIC. This report will include analysis of the project on a time, cost and quality basis and the PMO will ensure that all contract completion activities are finalized, including provision of as-built drawings and operations and maintenance (O&M) manuals. 4.5 Transitional Arrangements and Longer Term Developments 4.5.1 Transitional arrangements The target for the implementation model to be in place is Q3 FY2016. Transition to the implementation model The transition from the existing arrangements to the State-focused implementation model is complex and needs to be completed quickly to minimize any further delays in infrastructure delivery. DTCI will establish the overall transition program and responsibilities and manage its implementation. The role of PMU during the transition period will be three-fold: 1. to refocus itself on the evolved program management role identified in the implementation model, including the recruitment of staff to fill any gaps in required skills and expertise 2. support DTCI in implementing the transition program 3. continue to manage on-going projects until the PMOs are in place and ready to take responsibility for their infrastructure delivery FSM Infrastructure Development Plan FY2016-FY2025 P a g e | 38 V o l u m e 1 Plan Outline The overall transition program will involve DTCI working closely with State representatives to: 1. define the scope of services required to meet the PMU and State requirements for project management services and capacity building 2. undertake a procurement process to identify the preferred external party that is best suited and able to fulfill the role and functions identified for the PMO in each State, including the ability to build the capacity of local resources 3. develop a draft contract agreement for each State to negotiate with the preferred external party – the draft contract agreements will have common general terms, conditions and schedules and any requirements that may be particular to any State Each State will then enter into its own contract with the external party. Other transition activities In parallel with the transition to the implementation model: The Attorney General will prepare legislation required to facilitate and support the institutional arrangements and work with State counterparts to make complementary changes to State legislation. The Secretaries of Finance and Administration and TCI will prepare replacement Procurement Regulations for IDP Projects to establish a single set of regulations for procurement of Amended Compact funded contracts and work with State counterparts on any complementary changes to State regulations. 4.5.2 Longer term developments The institutional arrangements, including the implementation model, provide enhanced delivery for Amended Compact funded infrastructure with strong governance at State level and coordination of the program at a National level. When fully established and optimized, discussions will be held with development partners to deliver their infrastructure projects under the same arrangements. This has a number of advantages including:  ensuring that the expertise, both private sector and that developed through capacity building, is employed to deliver all infrastructure  providing development partners with clearly identified National and State-based entities to interface with on infrastructure projects  ensuring FSM maximizes the infrastructure development funding opportunities available  ensuring high standards of consistent governance and process are applied to all infrastructure projects The funding of the PMO under such a revised arrangement will need to be agreed with the development partners. FSM Infrastructure Development Plan FY2016-FY2025 V o l u m e 1 Plan Outline P a g e | 39 P LA N O U T LI N E Part 5 Sector Overview 5.1 Institutional Arrangements 5.1.1 Power and Water Sector Utilities The public utilities corporations/authorities created during the 1990s continue to improve their management, financial, technical and service delivery capacities and performance, assisted by ongoing infrastructure investment from external funding sources. Broadly the utilities are now at the point that their management and administration and O&M activities are covered by tariff revenue. However service extension and rehabilitation will require external funding for the foreseeable future. All power utilities are actively planning and implementing renewable energy projects and are moving steadily towards the Energy Policy targets. Water and wastewater services in Kosrae remain the responsibility of the Department of Transportation and Infrastructure. However a framework exists for future infrastructure projects to include transfer of responsibilities to the Kosrae Utilities Authority (KUA). Chuuk Public Utilities Corporation (CPUC) receives Amended Compact funding support for four managerial positions. This support is due to finish no later than FY2018. The Pacific Power Utilities Benchmarking Report Fiscal Year 201220 rates the performance of the FSM electric power utilities with their overall financial performance shown in Table 11. Table 11 – Electric Power Utilities Performance Electric Power Utility Operating Ratio1 Chuuk Public Utilities Corporation 108.2 percent Kosrae Utilities Authority 111.4 percent Pohnpei Utilities Corporation 109.1 percent Yap State Public Services Corporation 106.8 percent Pacific Average 98 percent Note: 1. “OR” = [(total operating costs + depreciation) / (total revenue)] x 100 OR below 100 indicates profitability The Pacific Water and Wastewater Utilities Benchmarking Report 201321 rates the performance of the FSM water utilities with their overall performance shown in Table 12. Table 12 – Water Utilities Performance Water Utility Overall Efficiency Indicator Operating Cost Recovery Ratio Chuuk Public Utilities Corporation 18 percent 30 percent Pohnpei Utilities Corporation 66 percent 169 percent Yap State Public Services Corporation (2012) 47 percent 127 percent Southern Yap Water Authority (2011) 89 percent 92 percent 20 (PPA, 2012) - Pacific Power Utilities Benchmarking Report Fiscal Year 2012 21 (PWWA, 2013) - Pacific Water and Wastewater Utilities Benchmarking Report 2013 FSM Infrastructure Development Plan FY2016-FY2025 P a g e | 40 V o l u m e 1 Plan Outline Gagil-Tomil Water Authority 96 percent 103 percent Pacific Benchmark 70 percent 120 percent Note: 2013 indicators unless noted Operating Cost Recovery Ratio: operating revenues (excluding subsidies) operating costs (excluding depreciation and debt servicing) CPUC only started water billing in July 2012 with on-going new meter installation – further gains in operating cost recovery ratio were made in 201422 5.1.2 Solid Waste Management There are effective, regulated solid waste management systems in place for the primary state population/activity centers and there is developing private sector involvement in solid waste management services. All primary landfill sites utilize the Fukuoka method and there is increasing separation of recyclable and hazardous wastes from general refuse. Operational costs are funded from general revenues and there are currently no environmental levies on industry or consumers. The solid waste management regulators and operators have identified the need for additional investment to improve existing facilities, develop new facilities and extend the scope and coverage of solid waste management, albeit still limited to the main population activity centers. 5.1.3 Roads and Pedestrian Facilities Road and pedestrian facilities are largely the responsibility of state departments for infrastructure/public works. Although improvements to the condition of roads and bridges are required, the road networks in the primary population/activity centers are largely in place with the exception of the Southern Namoneas and Faichuk groups in Chuuk lagoon. The key institutional challenge is to introduce an approach to road and bridge asset management that delivers safe and serviceable road conditions at optimum whole-of-life costs. Extensive development of both public sector road management capacity (including planning, inspection and contract management capacity), and private sector maintenance and construction capacity is required. 5.1.4 Maritime Transportation Port development and management is the responsibility of independent authorities in Kosrae, Pohnpei and Yap that retain revenue generated from operations and have responsibility for operating costs and making investments. In Chuuk the port is the responsibility of the Department of Transportation and Public Works. These agencies have broader responsibilities for navigational aids throughout their respective States although this is limited in practice. The private sector provides stevedoring services at the major ports. Regulation of maritime safety and security is a national responsibility within DTCI and is a key component of planned revisions to transportation legislation. The capacity of DTCI’s Marine Division in this area is currently limited and will be developed as part of implementing revised legislation. There are opportunities to leverage regional capabilities in this area through the Micronesia Shipping Commission. 22 (CPUC, 2014) - CPUC – Annual Report FY 2014 FSM Infrastructure Development Plan FY2016-FY2025 V o l u m e 1 Plan Outline P a g e | 41 P LA N O U T LI N E 5.1.5 Air Transportation In the IDP “airport” refers to the international airports, one in each State, and “airstrip” refers to the aircraft landing facilities on the outer islands. Airport development and management is the responsibility of independent authorities in Kosrae and Pohnpei that retain revenue generated from operations and have responsibility for operating costs and making investments. In Chuuk and Yap the airport is the responsibility of the Department of Transportation and Public Works. The Civil Aviation Division within DTCI provides an oversight function of all airports and outer island airstrips and works closely with the US Federal Aviation Agency on aviation safety and security. DTCI’s Civil Aviation and Infrastructure Divisions liaise with the State departments responsible for outer island airstrip infrastructure and maintenance. Regulation of aviation safety and security is also a key component of planned revisions to transportation legislation. The capacity of Civil Aviation Division will need to be developed as part of the introduction of the revised legislation. Again there are opportunities to leverage regional capabilities in the area of aviation safety and security. 5.1.6 Telecommunications The FSM Telecommunications Act of 2014 established the FSM Telecommunication Regulation Authority and opened the door to market competition. Establishing and building the Authority’s capacity is part of the current regional telecommunications connectivity project. FSM Telecommunications Corporation (FSMTC) currently remains the sole telecommunications provider and continues to improve management, financial, technical and service delivery capacities and performance. FSMTC is proactive in leveraging external investments, particularly connections to the international fiber optic network, to bring contemporary telecommunications services and pricing to consumers. FSMTC’s financial position has reached the point that it is able to enter into at least concessional loans to invest in new infrastructure and facilities. 5.1.7 Education There are Boards of Education in each State and the College of Micronesia (COM) has a Board to manage its affairs. Sector coordination is undertaken through the FSM Association of Chief State School Officers comprised of the Secretary of Education, State Directors of Education and the COM President. 5.1.8 Health Within the health sector there are a number of regulatory responsibilities that include licensing medical professionals and setting food safety standards. There is also a Healthcare Coalition established under a memorandum of understanding comprised of the Secretary of Health, State Directors of Health and the head of private health provider Genesis. The role of the Coalition is to coordinate on operational and emergency response matters, ensuring that medical resources across the whole of FSM can be mobilized as and when required. The Coalition also acts as FSM’s oversight group on projects and grants in the health sector. 5.1.9 Government Administrative Buildings The national or state infrastructure/public works agency is responsible for government administrative buildings. FSM Infrastructure Development Plan FY2016-FY2025 P a g e | 42 V o l u m e 1 Plan Outline 5.2 Sector Plans 5.2.1 Current Sector Plans Table 13 – Sector Plans and Studies Sector Title Status Air Transportation Airport Master Plan (all States) Completed 2012 Maritime Transportation Regional Study on Maritime Transport Systems in the North Pacific Countries Draft May 2015 Pohnpei Port Scoping Study Completed in 2011 Electric Power Regional Energy Plan In Progress Solid Waste Management FSM draft National Solid Waste Management Strategy 2010-2014 Unknown Education School Facility Repair and Construction Master Plan (Chuuk, Pohnpei & Yap) Completed 2012/13 College of Micronesia - FSM Space Utilization and Facilities Master Plan (all campuses) Completed 2013 Climate Change Kosrae Joint State Action Plan Kosrae Shoreline Management Plan Yap Joint State Action Plan Completed 2015 Completed 2014 Completed 2015 Tourism National Tourism Policy and State Investment Plans Draft 2015 5.2.2 Proposed Sector Plans Maritime Transportation The domestic maritime transportation sector requires plans for each State. An early and appropriate maritime project in each State will be selected to prepare the first stage of the maritime sector plan by identifying and documenting all existing maritime assets, including jetties, landing places, nature of access from land and sea. This information will also form part of the asset register as described in section 6.3. Most sector planning can be done in isolation from the other sectors however an integrated approach to air and maritime transportation planning for the outer islands is important so that the two modes complement rather than compete with each other, avoiding the risk of separately planned services failing. Air Transportation The intended development of Airport Safety and Security Plans under the AIP is an important step towards having IDP air transportation projects considered for implementation funding under this program. Education An Education Sector Infrastructure Code will be developed at State level, with coordination at National level, to set minimum spatial planning standards for education buildings, additional to Building Codes. FSM Infrastructure Development Plan FY2016-FY2025 V o l u m e 1 Plan Outline P a g e | 43 P LA N O U T LI N E This will be generated out of the early design stages of initial projects and compiled as standard documents by the PMU. Health A Health Sector Infrastructure Code will be developed at State level, with coordination at National level, to set minimum spatial planning standards for health buildings, additional to Building Codes. This will be generated out of the early design stages of initial projects and compiled as standard documents by the PMU. FSM Infrastructure Development Plan FY2016-FY2025 P a g e | 44 V o l u m e 1 Plan Outline Part 6 Institutional Aspects 6.1 Whole of Life Costs The costs associated with new infrastructure do not end with purchase or construction. It is one step in the life cycle of an asset that begins with the initial identification of needs through to the disposal of the asset at the end of its useful life. The stages of the asset life cycle include: concept and planning, detailed design specification, construction/supply, contract supervision, operation and maintenance and disposal/decommissioning. Each stage requires planning and coordination and involves costs and time. When all these costs are combined, the total may be more than double the cost of the initial purchase/construction price23. Neglecting to consider and budget for whole of life costs results in preventative maintenance not being undertaken and a generally shorter life than expected. With the cost-effectiveness of preventative maintenance well established23, this represents a waste of scarce resources and imposes an unnecessary burden of infrastructure renewal on future budgets where money could be better utilized elsewhere. The provision of adequate funding for preventative maintenance as part of a whole of life approach to asset management is a key institutional issue for FSM, like other Pacific Island countries. The IDP distinguishes between the costs of keeping an asset in a usable condition (maintenance costs) and the costs of using the asset to deliver services (operating costs). Maintenance costs are generally related to standardized activities of a routine or periodic nature that can be reasonably estimated. Operating costs on the other hand are related to service delivery that can be highly variable over the life of an asset and between similar assets used in similar situations. Each of the priority projects included in the National and State IDP volumes incorporate an estimate of the maintenance costs over the life of resulting asset, providing an estimate of the whole of life cost of owning the asset and keeping it in a usable condition (but not operating it and delivering services). Unlike maintenance costs, FSM sector managers have a reasonable understanding of, and make reasonable budgetary provision for, the cost of operating their assets. Standardized maintenance cost factors for the IDP sectors are shown in Table 14. Table 14 – Maintenance Cost Factors Sectors & Components Life (Years) Maintenance Costs per annum (percent Construction Cost1) Maintenance Costs over Asset Life (percent of Construction Cost) (A) (B) (A x B) Electric Power Poles & wires 20 2.5 percent 50 percent Solar Power (feed-in) 20 3.0 percent 60 percent Diesel Generators 15 15.0 percent 225 percent Water/Wastewater Systems Pipes, Tanks 50 2.0 percent 125 percent Plants 30 4.0 percent 120 percent Solid Waste Management 20 2.0 percent 40 percent 23 (PIAC, 2013) - Infrastructure Management in the Pacific FSM Infrastructure Development Plan FY2016-FY2025 V o l u m e 1 Plan Outline P a g e | 45 P LA N O U T LI N E Sectors & Components Life (Years) Maintenance Costs per annum (percent Construction Cost1) Maintenance Costs over Asset Life (percent of Construction Cost) (A) (B) (A x B) Roads and Pedestrian Facilities Paved Roads 20 3.5 percent 70 percent Bridges 50 3.0 percent 150 percent Maritime Transportation Docks 50 3.0 percent 150 percent Other Facilities 20 3.0 percent 60 percent Air Transportation Runways & Aprons 20 12.0 percent 240 percent Other Facilities 20 3.0 percent 60 percent Telecommunication Systems 50 8.0 percent 400 percent Health 50 4.0 percent 200 percent Education 50 2.5 percent 125 percent Government Administrative Buildings 50 3.0 percent 150 percent Vehicles, Plant and Equipment 10 20.0 percent 200 percent Vessels 20 20.0 percent 400 percent Notes: Based on 8 percent discount rate applied to whole of life maintenance costs In addition to the quoted reference23, total maintenance costs per annum are based on broad assessments internationally of similar types and standards of infrastructure 6.2 Infrastructure Maintenance Like other Pacific Island countries FSM has difficulty in achieving key infrastructure maintenance objectives: cost effective asset preservation, and acceptable levels of infrastructure safety and amenity. Virtually all sectors in all jurisdictions consider that funding for infrastructure maintenance is inadequate. The exception is in the utility sectors where tariff revenue now provides a reasonable amount for preventative maintenance of water, wastewater and electric power assets (and the delivery of services). Effectively 10 percent of Amended Compact infrastructure funds are set aside for maintenance (5 percent Amended Compact and 5 percent matching funds) and the National Government allocates maintenance funds from local revenue. Despite funding being available for infrastructure maintenance, there is little in the way of formal infrastructure maintenance programs other than in the utility sectors. The capacity of the States to match the available Amended Compact IMF funding is a major constraint that is compounded by the OIA’s requirements for releasing those funds. The unspent Amended Compact IMF funds through to FY2015 are $6.1 million (around $12.2 million in total with the matching funds). Although the annual funding for maintenance from IMF and National Government sources is in the order of $6 million, this is still a relatively small proportion of the total maintenance needs across FSM. FSM Infrastructure Development Plan FY2016-FY2025 P a g e | 46 V o l u m e 1 Plan Outline Adopting an average maintenance funding rate of 3 percent from Table 14, the IDP infrastructure development program by itself will generate a maintenance funding requirement between 4 and 5 times the current level of maintenance funding without even considering the maintenance funding requirement for existing infrastructure assets. Improving the maintenance of FSM’s infrastructure is a major institutional challenge that needs to be addressed through the IDP, not just with the infrastructure sector agencies, but with the governments and their policies, strategies and management of financial resources. The following section 6.3 sets out the FSM’s planned transition to contemporary asset management, supported by technical assistance projects that are part of the IDP institutional component. 6.3 Transition to Contemporary Asset Management 6.3.1 Introduction Good quality and sustainable infrastructure is vital to the national economy. It delivers essential services, drives economic growth and is a significant contributor to the quality of life of the population. With the buildup of infrastructure assets over the years and questions over the level of investment beyond 2023, it is essential that the FSM takes steps towards an approach to asset management that minimizes costs on a whole-of-life basis. The broad objective is to minimize the life-cycle cost of infrastructure assets whilst maintaining acceptable levels of amenity and serviceability. This contrasts with the “build then rebuild” approach that is characterized by the asset being replaced before the intended design life being reached and low levels of serviceability and amenity over much of the asset life. These two approaches are illustrated in Figure 11. Figure 11 – Asset Lifecycle Approaches 0 50 100 150 200 250 300 350 400 450 500 0 10 20 30 40 50 60 70 80 90 100 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 C o st S e rv ic e a b il it y & A m e n it y Time Build-Rebuild Approach Acceptable level of Serviceability & Amenity Level of Serviceability & Amenity Rebuild FSM Infrastructure Development Plan FY2016-FY2025 V o l u m e 1 Plan Outline P a g e | 47 P LA N O U T LI N E The whole of life costs can be heavily influenced by the design of infrastructure assets so it is critical that designs are sympathetic to the prevailing climatic conditions and skills and equipment available in the FSM. In summary, the whole of life approach is founded on the principles of: 1. maintaining the serviceability and amenity of assets at acceptable levels in the most cost effective manner, and 2. infrastructure design and construction that is appropriate to the FSM The core benefits that will accrue to the FSM from this approach are: 1. the total capital and recurrent investment in infrastructure assets is minimized over the whole of life, and 2. assets generally meet the users’ needs for serviceability and amenity and avoid the cost and other impacts that arise from sub-standard assets 6.3.2 Implementing Whole-of-Life Asset Management DTCI is the National Government’s lead agency for planning and implementing a whole-of-life approach to asset management and will work in close coordination and cooperation with its counterpart agencies in the States. Policy The FSM Governments will establish an infrastructure asset management policy that includes an overall policy statement, elements of policy specific to infrastructure sub-sectors and responsibilities for policy application and implementation. A core principle will be “keeping good assets good”, that is resources should be prioritized to ensure that assets of good standard do not deteriorate unnecessarily and incur higher whole of life costs and/or fail to meet the required standards for serviceability and amenity. Strategies The infrastructure asset management policy will be supported by an overall strategy and separate sector strategies. These strategies will describe the approaches and methodologies that the FSM Governments will follow in implementing the policy, including: 1. strategy objectives and performance measures (e.g. condition and safety of roads, quality and availability of water) 2. classification of assets 3. broad allocation of available resources between and within sub-sectors 0 50 100 150 200 250 300 350 400 450 500 0 10 20 30 40 50 60 70 80 90 100 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 C o st S e rv ic e a b il it y & A m e n it y Time Whole of Life Approach Acceptable level of Serviceability & Amenity FSM Infrastructure Development Plan FY2016-FY2025 P a g e | 48 V o l u m e 1 Plan Outline 4. addressing the backlog of sub-standard infrastructure to bring it to a standard that makes ongoing maintenance cost effective 5. action plans for implementing the asset management policy and strategies at sub-sector level Information Implementation of the policy and strategies is highly dependent on the availability and quality of asset information, particularly the following components: asset registers – records of ownership, location, physical, administrative and cost information for individual assets that provide base information for asset management planning, programming and evaluation collection tools – systems, procedures, equipment and resources that ensure that asset register information is collected and is complete, timely and of suitable quality analysis and modelling tools – systems, procedures, equipment and resources that facilitate analysis of asset register information to prepare programs and evaluate the effectiveness of asset management – this can vary from integrated spreadsheets to specialist modelling software Programs With the above policy, strategies and information in place, it will be possible to develop asset management programs for each sector in each State, separated out for each asset category and program component (see below). Asset management programs will be integrated into Government budget planning processes and have a single set of guidelines to provide a national basis for budget targets, criteria and prioritization. Programs will be prepared on an annual basis with a three year outlook – an “approved” program and budget for Year 1 and “indicative” programs and budgets in Years 2 and 3. This will permit the infrastructure agencies to plan and implement asset management programs more efficiently, particularly through multi-year maintenance contract arrangements. Accountability for and management of the programs will be integrated into the Government processes that include ongoing performance reporting and annual program evaluation. Program Components Each sector program will include the following asset management program components: routine maintenance – maintenance undertaken on a continuous basis to address minor defects before they contribute to further damage or deterioration to the asset, such as potholes in roads, leaks in water supply systems or broken windows in Government buildings periodic maintenance – maintenance undertaken on a cyclic basis to restore at least some of the serviceability and amenity of assets that are lost over time and to protect against further unnecessary deterioration such as resurfacing of roads, painting of Government buildings or intensive cleaning of water treatment facilities rehabilitation – work that is undertaken to “renew” the asset when routine and/or periodic maintenance is no longer cost-effective, for example replacing failed hard-stand dock areas, replacing cladding of timber buildings or replacing lengths of water supply lines that are continually leaking FSM Infrastructure Development Plan FY2016-FY2025 V o l u m e 1 Plan Outline P a g e | 49 P LA N O U T LI N E Capital Investment Projects A capital investment project will generally be required when: 1. asset management program components are no longer cost-effective in maintaining the serviceability and amenity of the asset, for example to maintain a bridge to carry its design load or to maintain a building in a safe condition 2. the capacity or function of the asset no longer meets the needs of users, for example a road needs to carry more traffic, a water supply main needs to supply more water or a dispensary needs additional space to treat more patients 6.4 Institutional Projects Asset Management The IDP includes an institutional project to support the implementation of whole of life asset management in the FSM through technical assistance and capacity building, including: Policy and Strategies – establish the overall asset management policy and strategy and sector strategies with the participation and commitment of all governments and stakeholders, including a basis for adequate and sustainable funding over and above capital investment Asset Identification, Ownership and Registration – develop registers of infrastructure assets and progressively add details of ownership/responsibility, category, condition and maintenance need Capacity – plan then develop and implement asset management capacity in terms of: People – dedicated and sufficient resources with responsibility and skills for collecting and analyzing asset information and planning, managing and implementing asset management programs Processes – procedures, guidelines and tools for evaluating and prioritizing asset management needs and monitoring and reporting the effectiveness of programs Technology – appropriate systems to support the collection, recording, analysis, monitoring and reporting of asset management information Budgets – adequate budget for a sustainable asset management capacity and optimized asset management programs Private sector service providers – a sustainable and competitive pool of service providers to undertake asset management activities Transportation Regulation The IDP includes a technical assistance project to support DTCI’s implementation of revised maritime and air transportation safety and security regulations, including any regional integration or cooperation. FSM Building Code At present projects are generally designed in accordance with international codes, standards and guidelines, but with only limited account taken of the specific circumstances of FSM. Some guidelines have been developed for specific aspects including seismic and wind loading and are summarized in Climate Adaptation Guide for Infrastructure24. It is therefore intended that a National Building Code will be developed, with State specific requirements where appropriate. The Code will be based on the International Building Code and other US based codes and standards, but take account of the requirements of FSM and incorporate existing state and national guidelines. 24 (DTCI, DoI, 2014) – Climate Adaptation Guide for Infrastructure FSM Infrastructure Development Plan FY2016-FY2025 P a g e | 50 V o l u m e 1 Plan Outline Chuuk Land Registry The IDP includes a project to support the efforts of Chuuk State to reestablish its land title records. This will involve the recovery of records kept in Guam and Hawaii, identification of land title boundaries through consultation with stakeholders and survey, and recording legally sufficient title information. Successful implementation of the Chuuk IDP education and health sector programs depends on establishing public ownership over school and dispensary land through this and the targeted land definition and acquisition projects included in Volume 3. However the benefits of the project will be more far-reaching than just the implementation of the IDP projects. List of Institutional Projects The IDP institutional projects are listed in Table 15 and outlined in the following project proformas. Table 15 – Institutional Projects ID Project Title Required Funding ($) Target Period IN/1 Asset Management Technical Assistance 2,000,000 All IN/2 National Building Code 200,000 1 IN/3 Strengthen Transportation Regulation 200,000 1 IN/4 Re-establish Chuuk Land Title Records 2,000,000 2 Total Funding Required 4,400,000 Project I 1 – Asset Management Technical Assistance (IN/1) Project Title: Asset Management Technical Assistance Sector: Institutional Estimated Cost: 2,000,000 Project Description/Scope: Plan, develop and implement a contemporary approach to asset management for infrastructure across FSM, including:  Policy and Strategies  Asset Registers  Capacity Development involving:  People  Processes  Systems and Equipment  Budgets  Private sector service providers Agencies Responsible: DTCI in conjunction with sector managers at national and state level Project Objectives/ Outcomes: Implement a whole of life approach to asset management such that costs are minimized and asset are maintained to acceptable levels of safety and amenity Project Justification: Whole of life infrastructure costs are not minimized, asset management is not adequately funded and adequate levels of safety and amenity are not maintained Project Status: Concept Inclusions: To be defined as part of TA scoping Exclusions: To be defined as part of TA scoping Risks & Dependencies: To be identified as part of TA scoping FSM Infrastructure Development Plan FY2016-FY2025 V o l u m e 1 Plan Outline P a g e | 51 P LA N O U T LI N E Project I 2 – National Building Code (IN/3) Project Title: National Building Code Sector: Institutional Estimated Cost: 200,000 Project Description/Scope: Develop and implement a National Building Code appropriate to the FSM based on the International Building Code and other relevant codes and standards and incorporating specific aspects on a state by-state basis including seismic and wind loading. Agencies Responsible: DTCI Project Objectives/ Outcomes: FSM infrastructure is designed and constructed according to relevant and appropriate codes and standards Project Justification: At present projects are generally designed in accordance with international codes, standards and guidelines, but with only limited account taken of the specific circumstances of FSM Project Status: Concept Inclusions: State-specific provisions and implementation at national and state levels Exclusions: To be defined as part of TA scoping Risks & Dependencies: Available codes and standards do not adequately cover FSM’s needs Project I 3 – Strengthen Transportation Regulation (IN/3) Project Title: Strengthen Transportation Regulation Sector: Institutional Estimated Cost: 200,000 Project Description/Scope: Provide assistance to establish the regulatory arrangements included in the revised transportation legislation, including the development of management, process and resource capacity Agencies Responsible: DTCI – Divisions of Civil Aviation and Marine Project Objectives/ Outcomes: Undertake transportation regulation in accordance with revised legislation Project Justification: FSM has identified gaps in its regulation of transportation and revised legislation is being developed – establishing the regulatory agencies and developing management, process and resource capacity is critical to fulfilling the objectives of the revised legislation Project Status: Legislation is being prepared Inclusions: To be defined as part of TA scoping Exclusions: To be defined as part of TA scoping Risks & Dependencies: To be identified as part of TA scoping FSM Infrastructure Development Plan FY2016-FY2025 P a g e | 52 V o l u m e 1 Plan Outline Project I 4 – Reestablish Chuuk Land Title Records (IN/4) Project Title: Re-establish Chuuk Land Title Records Sector: Institutional Estimated Cost: 2,000,000 Project Description/Scope: Reestablish Chuuk’s land title records from:  Information held by institutions in Guam and Hawaii  Collecting and registering of additional land tenure and title information  Consulting and negotiating with stakeholders Agencies Responsible: Division of Commerce and Industry Project Objectives/ Outcomes: Reestablish definitive land title records for Chuuk Project Justification: Most matters dealing with land title in Chuuk are impacted by the absence of definitive land title records Project Status: Planning Inclusions: Establishment of land title records from existing and reconstructed information Exclusions: Supporting/enabling legislation Risks & Dependencies: Lack of legislative support for reestablishment of land title records FSM Infrastructure Development Plan FY2016-FY2025 V o l u m e 1 Plan Outline P a g e | 53 P LA N O U T LI N E Part 7 Monitoring & Reporting Performance Indicators A range of performance indicators that are influenced by the infrastructure in each sector (other than government administrative buildings) are included in Annex B. The indicators cover aspects including accessibility, quality, efficiency, safety and affordability/financial sustainability. Monitoring and Evaluation Infrastructure managers and IPICs will monitor ongoing infrastructure performance to identify and plan improvements to infrastructure performance and service delivery and changes in the IDP priority projects and priorities. Reporting The performance indicators will be measured on an annual (fiscal year) basis and reported by the National Government within 3 months of the end of the fiscal year. FSM Infrastructure Development Plan FY2016-FY2025 P a g e | 54 V o l u m e 1 Plan Outline FSM Infrastructure Development Plan FY2016-FY2025 Annexes Page | 55 A N N E X E S Annexes Annex A Infrastructure Development Responsibility Matrix 57 Annex B Performance Indicators 59 B.1 Electric Power 59 B.2 Water/Wastewater Systems 59 B.3 Solid Waste Management 60 B.4 Roads and Pedestrian Facilities 61 B.5 Maritime Transportation 62 B.6 Air Transportation 62 B.7 Telecommunications Sector 63 B.8 Education 63 B.9 Health 63 Annex C Bibliography 65 FSM Infrastructure Development Plan FY2016-FY2025 P a g e | 56 Annexes FSM Infrastructure Development Plan FY2016-FY2025 Annexes Page | 57 A N N E X E S Annex A Infrastructure Development Responsibility Matrix FSM Agency A id C o o rd in a ti o n G ro u p C o m p a ct M a n a g e m e n t D iv is io n D T C I S ta te I P IC s P M U 1 S ta te P M O s1 Activity Preparing the Annual Implementation Plan Accountable Responsible Consulted Collating submissions to JEMCO and OIA Accountable Responsible Consulted Collating other aid submissions (EU, JICA, etc.) Accountable Responsible Consulted Program coordination and performance analysis Accountable Responsible Informed Manage transition to the PMU/PMO model Accountable Responsible Consulted Project completion analysis and lessons learnt Accountable Responsible Consulted Knowledge management (design criteria, standards, terms, conditions) Accountable Responsible Informed Design consultant pre qualification Accountable Responsible Informed Design consultant selection Accountable Responsible Contractor pre-qualification Accountable Responsible Informed Contractor selection Responsible Peer reviews Accountable Responsible Consulted Project management Accountable Responsible Forward project programs and cash flows - Compact Accountable Responsible Forward project programs and cash flows –EU, JICA… Accountable Responsible Planning and design Accountable Responsible FSM Infrastructure Development Plan FY2016-FY2025 P a g e | 58 Annexes FSM Agency A id C o o rd in a ti o n G ro u p C o m p a ct M a n a g e m e n t D iv is io n D T C I S ta te I P IC s P M U 1 S ta te P M O s1 Activity Construction supervision Accountable Responsible Scope and design verification Accountable Responsible Capacity Building Accountable Informed Responsible Variation control Accountable Responsible Notes: 1. PMU and PMO involvement in non-Compact infrastructure development projects is a longer term development and subject to agreement of the relevant funding agencies FSM Infrastructure Development Plan FY2016-FY2025 Annexes Page | 59 E R R O R ! R E F E R E N C E S O U R C E N O T F O U N D . A N N E X E S Annex B Performance Indicators B.1 Electric Power Operational performance indicators for FSM electric power utilities are available from the annual Pacific Power Utilities Benchmarking Report prepared by the Pacific Power Association (www.ppa.org.fj) Indicator Baseline Year Chuuk Kosrae Pohnpei Yap Accessibility Indicators 1. Households with access to grid connected electrification (percent) 2012 80 77 96 57 2. Electricity production (000 kWh) 2012 13,866 5,463 32,351 12,255 3. Electricity load factor (percent) 2012 59.2 54.8 62.4 67.0 Quality Indicators 4. System Average Interruption Frequency (SAIFI) events per customer 2012 (a) (a) (a) 16.7 5. System Average Interruption Duration (SAIDI) mins per customer 2012 78,120 845 (a) 17,704 Efficiency Indicators 6. Specific fuel oil consumption (kWh per liter) 2012 3.68 3.58 3.23 3.81 7. Distribution losses (percent of output) 2012 28.1 1.8 19.0 25.1 8. Renewable energy share (percent) 2012 0.0 0.0 0.0 0.2 Affordability Indicators 9. Average residential end-user electricity tariff (cents/kWh) 2012 0.56 0.40 0.49 0.44 10. Average commercial end-user electricity tariff (cents/kWh) 2012 0.59 0.42 0.49 0.46 Notes: (a) Information not included in the PPA Benchmarking Report http://www.ppa.org.fj/ FSM Infrastructure Development Plan FY2016-FY2025 P a g e | 60 Annexes B.2 Water/Wastewater Systems Operational performance indicators for FSM water and wastewater utilities are available from the annual Pacific Water and Wastewater Utilities Benchmarking Report produced by the Pacific Water and Wastes Association (www.pwwa.ws) Indicator Baseline Year Chuuk CPUC Kosrae DTI Pohnpei PUC Yap YSPSC GTWA SYWA Accessibility Indicators 1. Access to improved urban water source (percent total population) 2012 90 82 (a) 93 92 100 2. Access to improved urban sanitation (percent total population) 2012 63 40 (a) 70 n/a n/a 3. Availability of water supply in piped water supply systems (average hours per day) 2012 24 20 (a) 24 24 24 Efficiency Indicators 4. Employees (per 1000 connections) 2013 14.6 9.6 7.2 14.9 (2012) 8.0 (a) 5. Non –revenue water (percent of water produced) 2013 72 100 16 47 (2012) 4 (a) Affordability and Financial Sustainability Indicators 6. Cost recovery (tariff revenue/operating cost (percent)) 2013 30 n/a 169 127 (2012) 103 92 (2011) 7. Average tariff for water services ($ per 1,000 gal) 2013 1.55 n/a 2.08 1.51 2.27 1.70 Safety Indicators 8. No. of drinking water safety plans in place 2013 1 2 3 1 1 0 9. Drinking water quality compliance (%) – residual chlorine/microbiological 2013 100 / 85 0 / 50 83 / 96 90 / 90 100 / 71 0 / 70 Notes: (a) Information not included in the PWWA Benchmarking Report http://www.pwwa.ws/ FSM Infrastructure Development Plan FY2016-FY2025 Annexes Page | 61 E R R O R ! R E F E R E N C E S O U R C E N O T F O U N D . A N N E X E S B.3 Solid Waste Management Indicator Baseline Year Chuuk Kosrae Pohnpei Yap Accessibility Indicators 1. Access to regular solid waste collection service in urban areas ( percent of urban population) 20 2. Frequency of solid waste collection service in urban areas (number per week) 20 Quality Indicator 3. Facilities with up-to-date environmental monitoring reports readily available (number) 20 Efficiency Indicator 4. Cost of waste disposed ($ per capita) 20 Sustainability Indicators 5. Systems for sorting solid/recyclable/hazardous wastes (number) 20 6. Exported recyclable commodities or waste (number of shipping containers) 20 B.4 Roads and Pedestrian Facilities Indicator Baseline Year Chuuk Kosrae Pohnpei Yap Accessibility Indicators 1. Total road network (miles) 20 2. Paved roads (miles) 20 3. Unpaved roads (miles) 20 4. Registered motor vehicles (number) 2013 362 801 5,275 2,564 Quality Indicator 5. Condition of roads (percent of road network in poor condition) 20 Efficiency Indicator 6. Road network receiving regular routine maintenance (percent of road network) 20 FSM Infrastructure Development Plan FY2016-FY2025 P a g e | 62 Annexes B.5 Maritime Transportation Indicator Baseline Year Chuuk Kosrae Pohnpei Yap Accessibility Indicators 1. International container services (annual number of container ships) 2014 72 30 53 48 2. Container throughput (annual number of containers (TEU) imported & exported) 2014 1,155 421 714 Quality Indicator 3. Vessel turnaround time (average time in days) 2014 <1.0 1.0 Efficiency Indicator 4. Delay waiting to enter port (average time in days) 20 Affordability Indicator 5. Port charges ($/Twenty-foot Equivalent Unit) 20 Safety Indicator 6. Maritime incidents (Number) 20 B.6 Air Transportation Indicator Baseline Year Chuuk Kosrae Pohnpei Yap Accessibility Indicators 1. Operational airports/airstrips (number) 2015 1/3 1/- 1/3 1/2 2. Scheduled international airport in-bound passenger flights (average flights per week) 2015 7 6 8 3 3. Scheduled airstrip in-bound flights (average flights per week) 20 n/a 4. Cost of international airfreight ($/ton-mile) 20 Quality Indicator 5. IATA Level of Service for international airports 20 Safety Indicators 6. Aviation incidents (number) 20 7. ICAO safety audit indicator for international airports 20 FSM Infrastructure Development Plan FY2016-FY2025 Annexes Page | 63 E R R O R ! R E F E R E N C E S O U R C E N O T F O U N D . A N N E X E S B.7 Telecommunications Sector Indicator Baseline Year Chuuk Kosrae Pohnpei Yap Accessibility Indicators 1. Mobile-cellular network coverage (percent of population) 20 2. Fixed broadband internet subscriptions (percent of population) 20 3. 3G (minimum) mobile-cellular network coverage (percent of population) 20 4. 4G (minimum) mobile-cellular network coverage (percent of population) 20 Quality Indicator 5. Internet bandwidth (Mbit/s per capita) 20 Affordability Indicators 6. Cost of mobile-cellular prepaid ($ per minute local call) 2015 0.50 0.50 0.50 0.50 7. Cost of international mobile-cellular ($ per minute call to Hawaii) 2015 0.75 0.75 0.75 0.75 8. Cost of 3G data ($ per MB for pre-paid) 2015 0.08 0.08 0.08 0.08 9. Cost of fixed internet ($/month for 512 kbps service) 2015 65 65 65 65 B.8 Education Indicator Baseline Year Chuuk Kosrae Pohnpei Yap Quality Indicator 1. Schools meeting the FSM School Accreditation Standards (percent) 2014 6 100 82 15 B.9 Health Indicator Baseline Year Chuuk Kosrae Pohnpei Yap Accessibility Indicator 1. Patient encounters provided in homes and dispensaries (number) 2014 77,156 8,738 135,604 18,281 Efficiency Indicator 2. Average length of stay in State hospitals (days) 2014 4.9 5.3 4.6 4.8 FSM Infrastructure Development Plan FY2016-FY2025 P a g e | 64 Annexes FSM Infrastructure Development Plan FY2016-FY2025 Annexes Page | 65 E R R O R ! R E F E R E N C E S O U R C E N O T F O U N D . 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Aloterre Consulting. (2012p). Pohnpei State School Facility Repair and Construction Master Plan. Aloterre Consulting. Aloterre Consulting. (2012y). Yap State School Facility Repair and Construction Master Plan. Aloterre Consulting. Anderson, C. L. (2012). Analysis of Integrating Disaster Risk Reduction and Climate Change Adaptation in the US Pacific Islands and Freely Associated States, Technical Report 201105, Hazards, Climate, and Environment Program. Social Science Research Institute, University of Hawai`i at Mānoa. COM. (-). Infrastructure Development Plan, College of Micronesia-FSM, undated (extracted from the COM Master Plan (op cit)). College of Micronesia. COM. (2013). College of Micronesia – FSM Space Utilization and Facilities Master Plan Study, Beca International Consultants. College of Micronesia. CPUC. (2014). CPUC – Annual Report FY 2014. Chuuk Public Utilities Corporation. DHSA. (2013). Department of Health and Social Affairs Annual Report 2013. 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Leo A Daly. (2012c). Chuuk International Airport Final Master Plan. Leo A Daly. Leo A Daly. (2012k). Kosrae International Airport Final Master Plan. Leo A Daly. Leo A Daly. (2012y). Yap international Airport Final Master Plan. Leo A Daly. NIWA. (2013). Kosrae Shoreline Management Plan, NIWA Client Repot No HAM2013-133. National Institute of Water & Atmospheric Research Ltd. PIAC. (2013). Infrastructure Management in the Pacific. Pacific Infrastructure Advisory Centre. PPA. (2012). Pacific Power Utilities Benchmarking Report Fiscal Year 2012. Pacific Power Association. PWWA. (2013). Pacific Water and Wastewater Utilities Benchmarking Report. Pacific Water and Wastes Association. Stanley Consultants. (2013). Needs Assessment Study, Chuuk State Hospital. Stanley Consultants. World Bank. (2014). World Bank 2014. International Development Association and International Finance Corporation Country Partnership Strategy for the Federated States Of Micronesia for the period FY2014 – 2017. World Bank Group.