Federated States of Micronesia  

INFRASTRUCTURE DEVELOPMENT PLAN FY2004-FY2023

Prepared by:

DEPARTMENT OF TRANSPORTATION, COMMUNICATIONS & INFRASTRUCTURE

MAY 2004

TABLE OF CONTENTS

EXECUTIVE SUMMARY .......................................................................................................v

1. Introduction..............................................................................................................1

2. Preparation of Infrastructure Development Plan .....................................................2

2.1 Historical Background...................................................................................... 2

2.2 Preparation of Draft Final Report.................................................................... 2

2.3 Final IDP Report .............................................................................................. 3

2.4 Formal Submission of the IDP.......................................................................... 3

2.5 Preparation of Final IDP Document ................................................................ 3

3. Planning Context......................................................................................................4

3.1 FSM Planning Framework ............................................................................... 4

3.2 Public Sector Investment Program ................................................................... 4

3.3 Public and Private Sector Management of Infrastructure................................ 5

3.4 National Government Infrastructure Priorities................................................ 6

4. Financing for Infrastructure Development...............................................................8

4.1 Capital Funding Requirements......................................................................... 8

4.2 Sources of Funds............................................................................................... 8

4.3 Proposed Allocation of Funding for IDP Projects ......................................... 12

5. Proposed Infrastructure Program and Funding......................................................15

5.1 Electric Power ................................................................................................ 15

5.2 Water/Wastewater Systems ............................................................................. 24

5.3 Solid Waste Management................................................................................ 35

5.4 Roads and Pedestrian Facilities ..................................................................... 41

5.5 Maritime Transportation ................................................................................ 51

5.6 Air Transportation .......................................................................................... 61

5.7 Education ........................................................................................................ 68

5.8 Health.............................................................................................................. 79

5.9 Government Administrative Buildings............................................................ 86

5.10 Telecommunications Sector ............................................................................ 90

6. Plan Implementation ..............................................................................................91

6.1 Commitment and Conditions Precedent ......................................................... 91

6.2 Infrastructure Plan Implementation Committees............................................ 92

6.3 Infrastructure Plan Implementation Committees............................................ 93

6.4 Public Sector Institutional Reform, Restructuring and Strengthening ........... 95

6.5 Databases and Planning Studies .................................................................... 99

6.6 IDP Implementation Schedule ...................................................................... 101 Annex A Infrastructure Sector Strategic Planning Matrix ..................................................105 Annex B Proposed Projects to be Undertaken Under IDP by State (US$ ‘000).................113 Annex C Proposed Projects to be Funded Under Amended Compact Infrastructure

Grant (FY2004-2008) by State ............................................................................125

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LIST OF TABLES

Table 3.1 Priority Projects from National Government Perspective 7 Table 4.1 Summary of Proposed IDP – by Sector (US$ ‘000) 9 Table 4.2 Summary of IDP – by Government (US$ ‘000) 9 Table 4.3 Summary of IDP Funding Sources – by Government (US$ ‘000) 10 Table 4.4 Summary of Funding Sources for IDP (US$ millions) 13 Table 4.5 IDP Investment by Sector 14 Table 5.1 Existing Electric Power Generation Systems 15 Table 5.2 Details of Existing Power Distribution Systems 16 Table 5.3 Electrical Power – Proposed Project Implementation Schedule (US$

‘000) 21 Table 5.4 Electrical Power - Funded or Partially Funded Projects (US$ ‘000) 23 Table 5.5 Electric Power - Unfunded Projects (US$ ‘000) 24 Table 5.6 Existing Major Water Supply Systems 25 Table 5.7 Existing Sewerage Systems 26 Table 5.8 Water Supply/Wastewater – Proposed Project Implementation Schedule

(US$ ‘000) 31 Table 5.9 Water/Wastewater – Funded or Partially Funded Projects (US$ ‘000) 33 Table 5.10 Water/Wastewater – Unfunded Projects (US$ ‘000) 34 Table 5.11 Solid Waste Management – Proposed Project Implementation Schedule

(US$ ‘000) 40 Table 5.12 Solid Waste Management – Funded or Partially Funded Projects (US$

‘000) 41 Table 5.13 Solid Waste Management – Unfunded Projects (US$ ‘000) 41 Table 5.14 Existing Road Network 42 Table 5.15 Roads/Pedestrian Facilities – Proposed Project Implementation Schedule

(US$ ‘000) 48 Table 5.16 Roads/Pedestrian Facilities – Funded or Partially Funded Projects (US$

‘000) 49 Table 5.17 Roads/Pedestrian Facilities – Unfunded Projects (US$ ‘000) 50 Table 5.18 Maritime Transportation – Proposed Project Implementation Schedule

(US$ ‘000) 59 Table 5.19 Maritime Transportation – Funded or Partially Funded Projects (US$

‘000) 60 Table 5.20 Maritime Transportation – Unfunded Projects (US$ ‘000) 61 Table 5.21 Air Transportation – Proposed Project Implementation Schedule (US$

‘000) 66 Table 5.22 Air Transportation – Funded or Partially Funded Projects (US$ ‘000) 67 Table 5.23 Air Transportation – Unfunded Projects (US$ ‘000) 67 Table 5.24 Elementary and High Schools in Pohnpei 69 Table 5.25 Elementary and High Schools in Chuuk 70 Table 5.26 Elementary and High Schools in Kosrae 70 Table 5.27 Elementary and High Schools in Yap 71 Table 5.28 Education – Proposed Project Implementation Schedule (US$ ‘000) 76 Table 5.29 Education – Funded or Partially Funded Projects (US$ ‘000) 78

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Table 5.30 Education – Unfunded Projects (US$ ‘000) 79 Table 5.31 Health – Proposed Project Implementation Schedule (US$ ‘000) 85 Table 5.32 Health – Funded or Partially Funded Projects (US$ ‘000) 86 Table 5.33 Government Administration Buildings – Proposed Project

Implementation Schedule (US$ ‘000) 89 Table 6.1 Program Preparation and Management (US$ ‘000) 104

Table B.1 Chuuk State 113 Table B.2 Kosrae State 117 Table B.3 Pohnpei State 119 Table B.4 Yap State 121 Table B.5 National Government 123 Table C.1 Chuuk State 125 Table C.2 Kosrae State 127 Table C.3 Pohnpei State 129 Table C.4 Yap State 130

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ABBREVIATIONS

AC Asphaltic Concrete ADB Asian Development Bank ATSA Air Transport Safety Authority CFA Compact of Free Association COM College of Micronesia CPUC Chuuk Public Utility Corporation DOE Department of Education DTC&I Department of Transportation, Communications and Infrastructure EPIC Economic Policy Implementation Council FAA US Federal Aviation Administration FMI Fisheries and Maritime Institute FPA Fiscal Procedures Agreement FSM Federated States of Micronesia IDP Infrastructure Development Plan IPIC Infrastructure Planning Implementation Committees KSC Kyowa Shipping Company KT&SC Kusaie Terminal and Stevedoring Company KUA Kosrae Utilities Authority NDE National Division of Education NGO Non-Government Organization NSC National Steering Committee OPS-PMU Office of Planning & Statistics – Program Management Unit PICS Pohnpei Island Central School PM&O Philippines, Micronesia Orient Navigation Company PMU Program Management Unit PPA Pohnpei Ports Authority PSIP Public Sector Infrastructure Program PTA Parent Teachers Association PTI Pacific Tuna Industries PUC Pohnpei Utilities Corporation PWMS Pohnpei Waste Management Services SDP Strategic Development Plan SEED State Enterprising Education Department SEPA State Environmental Protection Agency USAID US Agency for International Development USDA US Department of Agriculture US DOI US Department of Interior WRF Waste Recycling Facility YSPA Yap State Ports Authority YSPSC Yap State Public Service Corporation

EXECUTIVE SUMMARY

Plan Preparation

This Infrastructure Development Plan (IDP) was prepared by the Department of Transportation, Communications and Infrastructure (DTC&I) in consultation with the States of Chuuk, Kosrae. Pohnpei and Yap and under the guidance of the FSM National IDP Steering Committee. The Plan assesses the current state of infrastructure in nine sectors: electrical power, water/wastewater, solid waste management, roads and pedestrian facilities, maritime transportation, air transportation, education, health and government buildings and develops a program and budget over the period FY2004-FY2023 to respond to the needs.  Special consideration is given to the likely funding available from the Compact of Free Association and from other sources.

Based on an estimated average funding availability for infrastructure from all sources of $35 million, a total investment of $748 million has been envisaged over the 20-year IDP period in the nine infrastructure sectors. This is made up of the following planned investments:

The program takes into account each of the State Government five-year infrastructure proposals covering the period FY2004-FY2008. The cost for Program Management includes funding for the Program Management Unit (PMU), the planning studies required to conduct detailed project feasibility analysis, and support for some institutional strengthening requirements in the transportation, education and health sectors.

The proposed source of funding for this investment is indicated in the following table:

This represents an average allocation for infrastructure from Compact funds of $18.6 million per annum and $18.0 million from other sources. The charts on the next page illustrate the funding allocation by sector and by government.

Some of the priority projects identified taking into account national interest criteria such as impact on the economy, health and safety of the community, contribution towards development of the FSM workforce, potential for private sector development, viability, sustainability, potential social benefit and environmental impact and risk exposure of the project are:

Weno Power Supply

Pohnpei Airport Runway Rehabilitation

Weno Sewerage

Kosrae Water Supply Improvements

Weno Water Supply Improvements

Rehabilitation of Outer Island Airstrips in all States

New Pohnpei High School

New S. Namoneas High School

Chuuk High School Improvements

New Weno COM-FSM Campus 

Weno West Coast Road

Kosrae Circumferential Road

Dekehtik Port Dredging

Chuuk Lagoon Ferry Terminals

Elementary School Rehabilitation in all States

Renovation of Dispensaries in all States

It is proposed that all of these projects would be commenced within the first five years of the IDP.

Plan Implementation

In order establish accountability for the IDP implementation, it will be necessary to establish Infrastructure Plan Implementation Committees (IPICS) at the national and state levels. In accordance with the thrust in FSM in recent years to reduce the public sector, it is proposed, where appropriate, that existing committees and secretariats take on the role of the IPIC. At the national level, the Economic Policy Implementation Committee (EPIC) could take on the responsibility for infrastructure implementation, with the Department of Transportation, Communications and Infrastructure (DTC&I) assuming the role of national secretariat.

The size of the IDP investment program is such that if it is to be executed successfully and according to schedule, substantial improvement of the implementation capacity currently available in FSM will be required. Further the new Compact Fiscal Procedures Agreement requires stringent documentation related to project approvals and review, budgeting and monitoring prior to draw down of funds. In order to meet these requirements and adhere to the time schedule, a high level of program management, technical skills, financial and reporting skills for detailed planning, technical analysis, resource mobilisation, financial management and reporting systems will be required by the implementing agencies. 

It is proposed that in order to provide the program management skills required to successfully implement the IDP, that a Program Management Unit (PMU) be established at the national level within the DTC&I. The national PMU would be responsible for the development of program management systems, training of national and state personnel in these systems, review of project documentation to ensure compliance with funding agency requirements, preparation of annual consolidated FSM program reviews as well as program management implementation assistance to the states as required. The national PMU would be staffed by personnel from within the DTC&I, but will, at least during the first 3-5 years of the IDP, require assistance from program management and technical specialists hired to strengthen the PMU. The cost of these specialists would need to be drawn from the total infrastructure budget and estimated to be in the order of $900,000 per annum. It is recommended that an amount of 1.2% of the total infrastructure costs funded by the Compact Infrastructure Sector grant be allocated to program management to cover the cost of the PMU.  This represents about 5% of the annual infrastructure costs funded by the Compact during the five years of external assistance to the PMU.

The IDP implementation will commence in 2004.  It is therefore urgent that the program management organizations are agreed upon and established as soon as possible and that the IDP is communicated to the key stakeholders in order to obtain general community support for the program. Early commencement of some of the key planning studies and database development programs is then required to provide the basis for the detailed planning and feasibility analysis of projects to meet the requirements of the funding agencies.

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1. Introduction

The Federated States of Micronesia (FSM) has negotiated new provisions for economic assistance under the Compact of Free Association (CFA) with the United States. As part of the new ‘sector grant’ approach, the US will provide support for infrastructure development under new and rigorous fiscal procedures. The amended Compact and Fiscal Procedures Agreement (FPA) that will be in effect requires that the FSM have a Strategic Development Plan (SDP) in place by December 2003, and a nationwide Infrastructure Development Plan (IDP) in place in advance of awards under the infrastructure development sector. This report comprises the Infrastructure Development Plan.

The FSM Department of Transportation, Communications and Infrastructure (DTC&I) prepared an IDP during 2001/2002 to cover the period 2003-2017. This was prepared with the assistance of Nathan Associates Inc in association with Island State Development Consulting (ISDECO, LLC.) and Sustainable Engineering & Environmental Corporation (SEECO). The final IDP report was submitted in May 2002¹. This report covered eight infrastructure sectors: electric power, water and wastewater systems, solid waste management, roads and pedestrian facilities, maritime transportation, air transportation, education and health. The report discussed the condition of existing infrastructure, infrastructure development priorities, maintenance, institutional issues, cost recovery, support for tourism development, scheduling of projects, plan implementation and sources of investment funding. The Plan is considered to be comprehensive and systematic.

The IDP included in this report is not an alternative version of the IDP prepared in May 2002. Rather, is a summary of that IDP and quotes liberally from the findings and conclusions of the May 2002 report. All projects included in the May 2002 report have been considered in the context of the funding believed likely to be available to the FSM for infrastructure during the period of the IDP which has now been amended to cover the period 2004-2023. In other words, the intention of this report is to produce a realistic IDP that reflects the FSM infrastructure priorities bound by the fiscal constraints of the nation. In this context the infrastructure investment costs for the period 2004-2023 are estimated to be $750 million, compared with the May 2002 report estimate of $1.9 billion. This results in many of the projects proposed in the May 2002 report being unable to be fully funded or even commenced.

The project costings estimated in the May 2002 report have been used in this IDP, since there has been insufficient time to fully evaluate costs for all projects. However, it is considered that the May 2002 costings are high for several of the infrastructure sectors, in particular water supply, wastewater and solid waste management, and this may result in some additional projects being able to be included within the funding constraint than is indicated in this report.

¹ Federated States of Micronesia, Infrastructure Development Plan FY2003-FY2007, Final Report, May 2002

2.        Preparation of Infrastructure Development Plan

2.1          Historical Background

Following the 1999 FSM Second National Economic Summit, it was widely recognized that improvement of the nation’s infrastructure is critical to the expansion of productive sector activities and the development of the private sector. Accordingly, the provision of efficient and cost-effective infrastructure was endorsed by the summit as one of the five guiding principles that should shape the FSM’s strategy to promote private sector development.

In keeping with the guidelines for economic development and indications of procedural requirements from the US Department of Interior (DOI) for the new Compact, the OPS-PMU (Office of Planning & Statistics-Program Management Unit) initiated formulation of a long term IDP in early 2000 under the guidance of the FSM National Steering Committee (FSM NSC). The Committee was created and formed by the President and State Governors to oversee the overall coordination and completion of the IDP. Nathan and Associates, a US consulting firm, was contracted to complete the task within six months effective May 2001.

2.2          Preparation of Draft Final Report

Following four months thorough field investigation and consultation at the national, state and local government levels, the draft final IDP was submitted to the NSC for review and comments in October 2001. The NSC distributed the draft final report to those concerned at the national and state levels with an expectation of receiving comments by November 2001. However, it was not possible to finalise the comments until February 2002. The draft final report was distributed widely at the state level at the Executive and Legislative Branches as well as to all concerned departments, agencies and NGOs.

The National Steering Committee met to discuss the draft final IDP report during November 2001, with the following summary outcomes:

The NSC agreed with the basic features of the draft IDP with respect to resource allocation/investment and priority selection of projects for the respective states and for different sectors, but had some reservations about the study phase proposed for technical assistance.

The NSC agreed in principle to strengthen the existing Infrastructure Departments at the national and state levels in order to enable them to function as IPIC secretariats that will ultimately be responsible to provide policy guidance and direction required by the project implementation agencies.

The NSC agreed that a Program Management Unit is required and should be established at the national level to facilitate successful implementation and monitoring of the IDP, but the costs should be kept under control by utilising existing resources where appropriate.

The NSC agreed that proposed unforeseen pre-conditions, if required, be dealt with and accepted by the IPICs at state and national levels

The NSC accepted the proposals in the draft final IDP report on institutional issues that

would assist in bringing the necessary socio-economic changes to the country.  Detailed comments were received from Chuuk, Pohnpei and Yap States by January 15, 2002 and, where, appropriate, these were addressed in the final draft of the IDP.

2.3 Final IDP Report

Following the comments from the NSC and the states, the final IDP report was prepared in eight volumes, four of which were specific to each of the states. Volumes 1-IV were submitted by August 2002 and the state volumes by April 2003. The final plan proposed a $1.9 billion investment at current rates on approximately750 individual projects during FY2003-FY2017, or 2.34 billion considering a presumed inflation rate of 3% per annum.

2.4 Formal Submission of the IDP

The President formally transmitted the IDP to the State Governments on April 4, 2003 for review and preparation of the Annual Budget submission according to individual state plans and priorities to comply with the FPA under Compact II.

The states were requested to modify and update as appropriate the projects identified in the IDP and ensure their linkage with the other sectoral projects under the FPA. Annual budget format proposals were requested for FY2004, Each of the states provided a list of priority projects for FY2004-FY2008, together with project scopes for FY2004 and these priority projects have been taken into account when developing this final version of the IDP. Details of the priority projects submitted by the states for the first five years of the IDP are indicated in Annex C

Formal submission of the IDP to the US and other donors is still awaiting formal approval by the FSM five governments. Once it has been approved it will be considered as an official long-term Master Plan to link to the preparation of drafting a Medium Term Priority Plan, an Annual Development Plan and Budget Submission in the case of US. To accord with the Compact Grant, ADB loan or other donors, the necessary economic and financial strategies will be developed to fulfil the requirements of that particular agreement or covenant which will vary from donor to donor.

2.5 Preparation of Final IDP Document

As outlined in Section 1, this IDP document is essentially a summary of the May 2002 IDP Final Report, albeit adjusted to comply with the new Compact FPA and the likely available funding for the infrastructure sector during the period 2004-2023. As such it should be read in conjunction with the May 2002 IDP Final Report.

The basis for producing the report was developed by the Economic Policy Implementation Council (EPIC) during their meeting in November 2003. It was resolved during this meeting that the IDP NSC expedites the preparation and review of the draft IDP by December 15, 2003, so that the draft can be considered by the 3^rd FSM Economic Summit.

3. Planning Context

3.1 FSM Planning Framework

The first National and State Economic Summits were held in 1995 and were a significant advance in providing the direction and resolve within the FSM to face changing economic circumstances. Specifically the results of the first Summits increased understanding of the declining fiscal position of the FSM and gave people the political will to embark on a course of public sector reforms and formulate general economic policy. A second Economic Summit was conducted in September 1999 and this resulted in an updated, extended and refined focus for economic development policies, and a renewal of the momentum from the first summit.

Largely, the strategic planning framework consists of sector strategic policy frameworks that provide an analysis and forward vision of the National and State economies and sectors, a policy statement and an implementation framework for the Nation and State.  The framework was outlined in a series of eleven separate sector policy matrices that were ultimately endorsed by consensus at the 2^nd Economic Summit. These matrices were roughly divided into Economic Sector Policy Matrices (fisheries, tourism, agriculture) and Social Sector Matrices (health, education, gender). Infrastructure was included as a cross sector issue, as were public sector management, private sector/commerce and industries and environment. The sector policy matrices are intended to elaborate in detail the directions the FSM needs to follow, where the resources should be allocated, the urgency of making progress and a plan for implementation.

Preparation is now in progress for the 3^rd National Economic Summit which is expected to be conducted in early 2004. The IDP and the infrastructure policy matrix included in this report will form an input to the future FSM National Strategic Plan that will be an outcome of the Summit.

The infrastructure sector strategic planning matrix, which forms the basis for the proposed IDP investments, is included as Annex A

3.2 Public Sector Investment Program

The Public Sector Investment Program (PSIP) was endorsed through a participatory process that started at the first of the economic summits in 1995 and 1996 and is, in effect, a preliminary list of the major capital development projects proposed. The intent of the PSIP was to describe the projects, estimate their costs, give priority for funding, indicate the steps required for planning and approval and prepare a schedule for implementation. This process was intended to identify major priorities for investment, link the projects of the state governments to the investment funds likely to be available and ensure consistency and compliance with FSM economic policies and strategies.

The PSIP process has been part of the shift in FSM from 5 year planning to strategic planning to overcome the lack of integration between the 5-year state plans and the on going operational and development budget allocations of each government as well as to create a more flexible, participatory and action-orientated process from planning to actual development.

The PSIP includes projects in four categories; public sector management, infrastructure, human resource development and priority economic sector development. The IDP is a logical extension of this process for the infrastructure sector.

Progress of the PSIP since its implementation has been reasonable, although in all states it has not been possible to fully complete or implement all of the projects due to funding constraints and lack of technical support. Processes in coordination and monitoring of the projects also require additional strengthening. 

3.3 Public and Private Sector Management of Infrastructure

A major objective of the IDP is to move towards achieving technical, financial and commercial sustainability in each of the infrastructure sectors. This will require an acceleration of the growth and diversification in private sector economic activities in infrastructure. Investment, maintenance and operation will need to be done in the most cost­effective manner possible, entailing in many cases an expanded and diversified role for the private sector and a redefined and redeveloped role for government infrastructure agencies.

There are several constraints to growth of the private sector in the FSM economy, including the infrastructure sector, that need to be overcome if conditions are to be such that commercial sustainability in the infrastructure sectors is to be achieved through intervention of the private sector. These include the hitherto large public sector employment and the higher relative wages, lack of skilled labour available to the private sector, dependence on government financing for development over commercial finance, land tenure issues and the difficulty in obtaining land for infrastructure projects, variable transparency and deficiency in the business and investment environment, protective attitudes towards foreign investment and, of course, the general poor state of the infrastructure itself that inhibits foreign investors even within the sector. Many of these constraints have, and continue to be addressed by the FSM in order to improve the environment for private sector involvement in the economy. 

In the infrastructure sector specifically, there has been some progress in attaining commercial sustainability, but much still remains to be done. In the power and water/wastewater sectors, public utility corporations have been created with the requirement that they make the power and water sectors fully self –sustainable through the generation of sufficient revenue to cover all costs. For power, and to a lesser extent, water, charging for services is now widely accepted. Despite this, none of the utility corporations have yet achieved full cost recovery with the water and sewerage operations in all cases suffering severe losses due to insufficient tariffs for water and non-existent tariffs for sewerage services. Further, the spiralling fuel cost is putting great pressure on electricity tariffs and cost recovery.  Another issue is that of provision of power and water facilities to remote areas such as the outer islands which is a social must, but not a financially viable operation.

In the solid waste sector, there is considerable scope for the private sector in collection, recycling and disposal of garbage, although service charges for collection will need to be introduced. There is already some limited private sector involvement in most states in aluminium can disposal, and in Pohnpei with the operation of the dumpsite.

FSM Infrastructure Development Plan

Commercial sustainability of seaports and ferry system operations should be achievable

through arrangements whereby the public sector port authorities enter long term arrangements with private sector investment/operators for operating port infrastructure and providing a variety of services, including ferry operations. However, it would probably be still necessary to provide subsidies for outer island services.

With the exception of emergency air services, it should be possible for air transport to be commercially sustainable. Further, recovery of recurrent costs at airports should also be possible; provided that airport management entities are created that have a commercial orientation. Expansion of passenger terminals at the airports will involve additional concession areas that will generate income for the airport.

In the education sector, the College of Micronesia currently covers more than 50% of its operating costs from revenue collected from student fees, and the proportion is likely to increase as the country realises it potential for growth of the productive economic sectors. Where elementary and secondary school education is concerned, however, cost recovery objectives probably must be kept modest.

In the health sector recurrent costs for maintenance of hospitals, staff salaries and benefits, hospital materials and medicine replenishments should increasingly be generated by payments for curative services received, although this will only occur when the hospital infrastructure and medical services are of a standard to reduce the current level of overseas medical referrals.

3.4          National Government Infrastructure Priorities

In Section 5 of this IDP, priority projects have been ranked according to sector for inclusion in the IDP Capital Investment Program. These projects could also be ranked across sectors and states in accordance with the national government priorities. The infrastructure strategic matrix in Annex A provides the underlying infrastructure goals that reflect the national interest. Criteria by which to rank projects nationally across sector and state include:

Impact of the project on the national economy;

Cost benefit of project, taking into account economic and social benefits;

Contribution of the project towards health and safety of the community;

Contribution of the project towards development of the workforce in FSM to meet the social and economic challenges;

Contribution of the project to institutional strengthening and restructuring of government infrastructure agencies;

Contribution of the project to promoting private sector development; and

Viability, sustainability, potential social benefits and environmental impact, and risk exposure of the infrastructure development project.

Taking into account these criteria, the projects indicated in Table 3.1 are considered to be a priority from the perspective of the national government. 

² Covers only the Phase 1 investment during the period 2004-8

4. Financing for Infrastructure Development

4.1 Capital Funding Requirements

The May 2002 Final IDP report proposed a $1.91 billion investment on infrastructure in the FSM during the period 2003-17. This proposed level of capital expenditures far exceeds that allocated in recent years or likely to be available from all possible funding sources in the future. Section 5 of this report has reviewed the May 2002 IDP giving consideration to the most urgent national and state priorities related to the estimated available funding from the new Compact and other sources³. The summary of program costs is indicated in Table 4.1

4.2 Sources of Funds

4.2.1 FSM Government

The FSM Government shares 70% of the revenue raised from income tax, import tax and Gross Revenue tax with the four states. The FSM revenue collected from fishing rentals is not shared with the states. Twenty (20) percent of the FSM Government revenue share is required to be used for capital works in the health and education sectors, although when the new Compact is approved the state share of the national government revenue may decrease to 50% as the health and education infrastructure needs may be considered to be provided through the Compact funds. The revenue share was increased from 50% to 70% in 1999, before which time, the national government provided grants to state and local governments for local projects. These grants were reduced when the share was increased.

Increased FSM Government revenues resulting from policy reforms related to increasing existing taxes or the introduction of new taxes could in turn increase the revenue available to the states for infrastructure projects. This is considered to be an important initiative to be addressed in FSM, in order for the nation to become more self-reliant and enable adequate maintenance of infrastructure to prolong its effective lifetime. The FSM should give consideration to requesting donor agencies to provide technical assistance with tax reform processes.

4.2.2 State Governments

The level of revenue raising by the state governments comprising largely of State taxes and licenses is low and in the case of Kosrae, for example, contributes little more than 1% of all State revenue although it is higher in the other states. State governments should consider opportunities to raise revenues from a range of government services on the basis of user charges for the cost of services they consume as for example in the supply of water, collection of wastewater and solid waste, for medical services provided and for the use of transportation facilities by means of a road user fee, rentals for use of sea and airport infrastructure.

³ For the sake of project prioritisation, it has been assumed that an average of $35 million will be available on an annual basis, assuming $20 million from Compact funding and $15 million from other sources. 

Financing for Infrastructure Development

4.2.3 Compact of Free Association

The FSM Government’s Compact of Free Association with the USA provides for financial assistance to the FSM. The initial funding period ran for 15 years from 1986 until 2001, and was extended for a further transition period until September 30, 2003.

A new Compact of Free Association (Compact II) is now in the final stages of negotiation and funding is expected to become available by 2004. Under Compact II, the Government of the United States will provide financial assistance on an annual sector Grant basis for a period of 20 years on the basis of $76 million for the first three years, then declining by $800,000 each year over the following 17 years. These grants will be used for assistance in education, health care, public infrastructure, the environment, public sector capacity building and private sector development, or for other areas as mutually agreed, with priorities in the education and health care sectors.

The proportion of Compact II funds to be allocated to public infrastructure or indeed the other sectors is not specified in the FPA, but it is expected that about 20% allocation will be achieved for infrastructure. Further, the FPA specifies that with respect to the public infrastructure sector grant, 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, sea walls, and energy development including renewable energy that cannot be funded through the tariff structure.

It has been estimated that a total of approximately $20 million per annum will be available from Compact II for public sector infrastructure.

4.2.4 Other Funding Sources

Other sources of external funds for public sector infrastructure are described below. It is estimated that, based on past experience, about $15 million per annum will be available from these sources.

Bilateral Aid from US Government Agencies

Agencies such as USAID and USDA provide infrastructure grants and loans to the FSM under favourable terms. Projects currently in the pipeline with the USDA Rural Utilities Services include the Lelu Water Supply Project in Kosrae, a 75:25 grant loan with a total cost of $3.25 million, a possible second water supply project in Kosrae in Malem and a loan for extensions to the water supply system on Pohnpei Island. 

The US Engineering Survey and Assistance Team has also recently confirmed to continue the US desire and readiness to utilise US military personnel and equipment to assist in possible humanitarian assistance projects in the four FSM states. While projects under this assistance program must be budgeted and the expenditure accounted for under the Compact II FPA, the labour cost of the military personnel will not be charged against the project

budget. This opens the opportunity to use this assistance for project planning, scoping and technical studies required for the infrastructure projects to be funded under the Compact.

Asian Development Bank

The Asian Development Bank has provided considerable technical assistance and concessional loan funds to FSM over the past decade. This includes the recently completed Water Supply Project that provided improved water supply facilities for the principal islands of Pohnpei, Chuuk and Yap. New loan projects in the pipeline include a $7.1 million loan for a Basic Social Services Project and the $8 million Omnibus Infrastructure Improvement Project. The Basic Social Services Project will cover the health and education sectors and will include a state-level institutional reform phase and an investment program for upgrading facilities and establishing systematic maintenance programs.  The Omnibus Infrastructure Development Project will provide improvements to the power sector in Weno, water supply systems in Kosrae and Yap and sewerage and water supply on Pohnpei Island.

Japanese Aid

Financial assistance from Japan to the FSM is significant and has averaged approximately $10 million per annum since 1988. Japanese aid supports the purchase of products and services to implement social and economic development projects. It is generally given to FSM states and the national government on a rotational basis. The current project to be implemented during 2004-5 will be the circumferential road for Pohnpei.  In 2005, support will be provided to the national government, possibly in the form of a National General Hospital for referrals to be located in Chuuk, although this concept is still under discussion. In 2006, it is proposed to support Chuuk in the Weno waterfront development. In 2007, support will be provided to Kosrae, either in hospital redevelopment or construction of coastal protection facilities.  Given the difficulty that FSM has had in the past maintaining public facilities such as schools and hospitals, the Japanese Government has some reservations about providing grants for these types of projects, despite the obvious social benefit of doing so.

European Economic Commission

The EC has not been a major donor to FSM in the past, but is understood to be proposing to provide funding for one of the IDP priority projects – the provision of hybrid diesel/solar units for schools and hospitals on the outer islands.

Other multilateral/bilateral donors

These include Australia, New Zealand, Germany, the United Kingdom and the UNDP who tend to provide primarily technical assistance rather than grants or loans for infrastructure.

4.3 Proposed Allocation of Funding for IDP Projects

The infrastructure projects proposed to be implemented during the period 2004-23 under the IDP are discussed in Section 5. Based on the assumed funding availability discussed above, the priorities for Compact II funding outlined in the FPA and the ongoing or planned projects

Financing for Infrastructure Development 13

from the other funding agencies, projects have been allocated to either funding from the Compact or other sources. This is indicated in the sector project tables in Section 5 and is summarised by sector in Table 4.2  The proposed projects and programs to be implemented during the period of the IDP from 2004 until 2023 for each State and the National Government are indicated in Annex B.

The total funding from Compact and other sources for the entire IDP period is indicated in Table 4.3. A summary of the funding sources is shown below in Table 4.4.

This results in a total investment of $748 million during the 20 year IDP period or an average of $37.4 million per year. An average allocation of $18.6 million per annum will be required from the Compact funds and $18 million from other funding sources. The higher than average investments during the period 2005-2008 for the Compact funds reflects the immediate infrastructure needs resulting from under investment in the past and the proposed 5 year plans of the states. The higher than average expenditure from other sources during the period 2008-2013 reflects the power station development in Pohnpei and Chuuk lagoon during that period which is expected to be sources from outside the Compact funding.

4.4 Sector Linkages

As discussed above under 4.2.3, the FPA for Compact II specifies that for the infrastructure grant, first priority is given to education, health, water supply, wastewater and solid waste and second priority to economic development related projects such as roads, airport and seaport improvements and energy related projects.

These priorities have been reflected in the funding allocations for the IDP. Water supply/wastewater and education projects have the largest allocation of IDP funds at 19% and 18% respectively. All proposed health projects have been allocated funding during the IDP period. The allocation of Compact Funds to each of the sectors is shown in Table 4.5.

⁴ The States contribution comprises their share of the Infrastructure Maintenance Fund

While maintenance and renovation projects for education and health facilities have been included for funding under the Compact, those in the power sector have largely been allocated to other loan funds on the assumption that these are income generating projects that will be able to service the loans. Similarly, large projects such as the new Dekehtik power station and the power stations on the Chuuk lagoon islands are considered to be of a scale that funding should be sought from the international funding agencies. On the other hand, improved power supplies are essential for education and health facilities, to operate water supply and wastewater systems and for public safety and Compact funding has been allocated to extend distribution systems to areas where there is no current power supply or to improve the power supply in areas where it is currently inadequate.

Similarly, adequate road networks are essential for providing access to health and education facilities and market opportunities for the population living outside the main centres, especially the circumferential roads in Pohnpei, Weno and Kosrae and in the Chuuk lagoon islands, and Compact funds have also been allocated for this infrastructure. 

Seaport and airport infrastructure has largely been allocated to other funding except for airport runway improvements in Pohnpei and Chuuk and seaport dredging activities, all of which have safety implications for the users of these transportation facilities.  Compact funding has also been provided to improve the Chuuk lagoon and outer island ferry infrastructure systems which are essential to provide the population of those island access to facilities, including those in health and education, that are available to residents of the main centres in FSM.

5. Proposed Infrastructure Program and Funding

5.1 Electric Power

5.1.1 Sector Objectives and Outcomes

The principal objective of developing infrastructure in the electric power sector is 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:

Households are provided with power for basic livelihood purposes

Local manpower can realise production opportunities and potential,

Power is available for basic services such as schools, hospitals, water and wastewater systems

5.1.2 Existing Electric Power Systems

There are electric power systems on each of the principal islands of the four FSM States and also four small systems on other islands. These power generation systems are summarised in Table 5.1

⁵ Operation of the hydro plant is constrained by the supply of water from Nanpil River that is usually committed to the water supply system⁶ There is a micro-hydropower project on Malem River with a rated capacity of 30kW, but it is not yet in service

The status and extent of the power distribution system for each of the existing systems is outlined in Table 5.2

5.1.3 Short Term Needs of Existing Systems

A key strategic objective of this IDP is to ensure that existing infrastructure is rehabilitated as a first priority before implementation of new infrastructure. The immediate needs for rehabilitation of the existing power systems are described below.

Weno Island Power System

As indicated in Table 5.1, of the eight existing power systems on FSM, only the Weno system is having difficulty meeting demand. Further, the power generation plant and the distribution system are in an extremely poor and dangerous condition. As a result, it is estimated that up to 1.0-1.5 MW capacity of standby generation has been installed by public and private sector companies to overcome the frequent power shortages and outages. Continuation of this situation constrains the economy of Chuuk and is a public health risk both from the condition of the facilities and the risk to water and wastewater supplies that rely on the power system. Rectification of this situation should be one of the highest priorities of the State and National Governments.

Pohnpei Island Power System

⁷ Walung Village is not covered by the distribution system since it is beyond the end of the circumferential road. KUA has provide the village with a solar power system not connected to the main distribution system.

Proposed Infrastructure Program and Funding 17

Table 5.1 indicates that the capacity of the Nanpohmal power plant in Pohnpei has ample capacity for the current needs of the island. The need for further expansion of this plant is really a function of economic growth in Pohnpei. In fact demand has been stagnant for several years and future growth in demand can only be predicated on the development of improved infrastructure leading to the expansion of the marine recreation service industry and acceleration in tourism growth, or additional industrial investments as for example, by the beverage industry.

The Pohnpei Utilities Corporation proposes to phase out the Nanpohmal plant, primarily to end the necessity of trucking fuel to the plant, and construct a new plant at a cost of $10.5 million on Dekehtik Island.  PUC is proposing this as a turnkey project and will arrange financing.

Tonoas Power System

The current Tonoas plant is inadequate to meet the future needs of the island and is in poor condition with considerable environmental hazards. It needs to be rehabilitated or replaced, but in an integrated manner with the other Southern Namoneas Islands. 

Kosrae Power System

The ongoing replacement of old poles and lines needs to be continued.

Yap Power Systems

The power system for Yap Proper is currently adequate, but will require some further investment for upgrading of the power plant and extension of the distribution system later in the IDP investment program. The power systems in Ulithi and Woleai are adequate for the foreseeable future.

5.1.4          Short Term Development Needs

Aside from rehabilitation of the existing power systems described in 5.1.3, the most urgent priorities are:

Development of power systems in the Chuuk Lagoon

Provision of diesel/solar units for schools and dispensaries in the outer islands of Pohnpei, Chuuk and Yap.

The economy of the Chuuk lagoon is not an integrated one, and has stagnated for several years. The 2001 population of Southern Namoneas and the Faichuk is over 20,000 and development of the economy in these areas should therefore take some priority in the short term. To accelerate economic growth, and involve the entire population in the market economy, it is essential to provide electric power systems, roads and inter-island ferry

services as well as public health facilities. When these are provided, all areas of the islands will be able to market their produce and realise their considerable tourist potential.

Integrated power systems for the Southern Namoneas group and the Faichuk group may be considered with new centralised power generation plants on Tonoas and Tol respectively. However, these power plants represent considerable investment (an estimated $9 million for each plant) and funding from outside the Compact would need to be sought.  Distribution systems in each of the islands may be funded incrementally through the Compact or as part of the same financing used for the power plants. 

In addition to the two large power systems to be developed in the Southern Namoneas and Faichuk, three smaller power systems are needed to serve the inner Faichuk Islands of Fanapanges, Udot, Eot and Romanum.

Preparation of a Chuuk Electrification Master Plan⁸ is proposed prior to committing any funds to evaluate development options and investments.  This Plan would need to be prepared towards the end of the first five years of the IDP.

5.1.5          Long Term Development Needs

Long term needs in the power sector necessitated by a requirement for increased power generation capacity are dependent upon predictions of economic growth.  Should implementation of the IDP be slow and private sector development in the country not accelerate as expected, it is likely that economic stagnation will continue.  Under this scenario, the short term development needs outlined in 5.1.4 will probably be sufficient to met demand until the end of the IDP period.

If however, economic growth accelerates through implementation of the IDP and needed private sector investments in tourism facilities and services, fisheries, transportation services, solid waste management and manufacturing, the growth of demand for electricity would also increase and the power generation capacity would need to be expanded. Under this optimistic scenario, the implications of the power industry development would include:

For Pohnpei, rehabilitation of the Nanpohmal plant or expansion of the new Dekehtik plant capacity.

Replacement of two Weno power pant generators with larger generators.

Enhancement of Yap Proper generation capacity.

However, these investments have not been included in the IDP at his stage.

5.1.6          Proposed IDP Investment Program

⁸ See Appendix B, Volume III,Nathan report for TOR for this study

Proposed Infrastructure Program and Funding 19

The IDP report proposed an investment of $137 million for electric power sector investment over the period 2003-2017^9. While this will meet the sector needs as outlined above, it is probably unaffordable given the availability of funding.  A revised capital investment program shown in Table 5.3 has been prepared based on an assumed annual funding from the Compact and other sources for all infrastructure sectors of $35 million per year. This program reflects the state government priorities for the period 2004 to 2008¹⁰ In the case of Pohnpei, the State has not included investments in the power sector in the priority listings as these are considered to be the responsibility of the PUC. Nevertheless, these investments have been included in the IDP Program under funding outside the Compact.

Investments in new power generation for Pohnpei, Southern Namoneas and Faichuk are included in the program, but due to considerable cost, funding additional to that generally available to FSM would need to be sought on the basis of the economic return of these investments. Investment in the Weno Power Plant is also a large investment, but due to the critical nature of this project, it is proposed that it be funded through the Compact or other sources such as ADB.

The timing of the projects as shown in Table 5.3 reflects their priority as follows:

Weno Power Plant and Distribution System

Diesel/Solar Power for Outer Islands in Pohnpei, Chuuk and Yap

Southern Namoneas Power Generation and Distribution

Faichuk Power Generation and Distribution

Faichuk Power Generation and Distribution

Yap Power Plant Upgrade and Distribution Extension

This corresponds to a total sector investment of $81.1 million for the period 2004-2023. Some projects proposed in the May 2002 IDP report either cannot be fully funded during this period of are unable to be commenced. This status of these projects is indicated in Tables 5.4 and 5.5. Unfunded projects include further long term expansion of the Pohnpei, Weno and Yap power plants, upgrading of the Pohnpei distribution systems, investment in office improvements, computer systems and metering for all state systems, diesel/solar systems for households on outer islands in Pohnpei, Chuuk and Yap. Many of these investments could be provided by the utility corporations as they demonstrate improved financial performance.

The Investment Program includes an allowance of 10% of the infrastructure cost funded by the Compact for maintenance. This cost will be funded 50% through the Compact and 50% by the states.

5.1.7 Institutional Restructuring and Strengthening

The major decisions on institutional strengthening have already been taken with the power sector now being managed by utility corporations in all four states. These corporations now

9 FSM Infrastructure Development Plan FY 2003-FY 2017, May 2002 10 See Annex C for listing of state priorities for 2004-2008

need to continue to develop their capability in order to provide more efficient services thereby improving financial performance. The organizations need to outsource an increasing amount of their fieldwork, while concentrating on planning, monitoring, contract management and performance reporting functions. 

The performance, in particular, of the Chuuk Power Utility Corporation has been disappointing and has resulted in the development of a critical situation in both the power and water/wastewater sectors in Chuuk. There may be a need for further intervention by the private sector in the CPUC activities such as in the form of a management contract to operate and maintain the utility systems on a fee for service basis.

21 Proposed Infrastructure Program and Funding

5.2          Water/Wastewater Systems

5.2.1          Sector Objectives and Outcomes

The primary specific objectives of the provision of water and wastewater infrastructure are:

Meet the demand for water supply and wastewater infrastructure in an effective and efficient manner

Improve existing water abstraction, treatment and distribution systems

Evaluate and institute technologically appropriate liquid waste management systems

Improve and initiate wastewater facilities to increase coverage and contribute towards improvements in public health and environmental conditions

Contribute towards the prevention of water borne diseases through the provision of potable water supplies

5.2.2          Existing Water Supply and Wastewater Systems

There are currently 15 major water supply systems in FSM that serve about 37,000 people, or slightly more than one-third of the FSM population. There are also five sewerage systems, serving the principal administrative and commercial areas of the four states. These systems are summarised in Tables 5.6 and 5.7.

11 In addition to the PUC system, there are 41 small rural systems serving communities beyond the PUC service area.

Besides Weno and Tonoas, none of the other inhabited islands of Chuuk lagoon have pressurised water supply systems. Water supplies on these islands derive from rainwater catchments, hand-dug wells, springs and water seeps and individual household systems from surface water courses. These systems are grossly inadequate to maintain appropriate health standards, support an improved economy and realise the tourism potential of the islands.

In Yap, in addition to the three regional systems, there are 23 small scale village water supply systems using springs, streams or seeps as water sources. Some of these go dry during periods of low rainfall.

The outer islands of Pohnpei, Chuuk and Yap obtain fresh water from rainfall catchment systems and from, mostly dug, shallow wells and utilise storage systems.  Although pollution of the freshwater ‘lens’ under each of these islands can be a problem, a number of islands obtain water of reasonably good quality from the wells. For the most part water supplies for these islands appear to be adequate, especially in Yap where outer island water supplies come under the YSPSC.

None of the inhabited islands in the Chuuk lagoon have a wastewater system, beyond channelling whatever wastewater is collected locally into the near-shore areas of the lagoon 

Water supply and sewerage systems in Pohnpei, Chuuk and Yap are operated by the PUC, CPUC and YSPSC respectively. In Kosrae the systems are owned and managed by the municipalities with technical assistance being provided by the Department of Public Works.

5.2.3 Short Term Needs of Existing Systems

A key strategic objective of the IDP is to ensure that existing infrastructure is rehabilitated as a first priority before implementation of new infrastructure. The immediate needs for rehabilitation of existing water supply and wastewater systems are described below.

Pohnpei PUC Water Supply System

The water supply system supplying the current service area in Pohnpei Island is operating satisfactorily and the primary need is to extend the system to other parts of the island. This will be a continuing process as outlined in the strategic plans of the PUC¹² and funding will need to be allocated during the period of the IDP for this purpose.

Weno Water Supply System

Although supported by a recent ADB loan, the wells that constitute the primary source for water supplies continue to provide water of an unsatisfactory quality. There is an urgent need to rehabilitate these wells to ensure a safe, potable water supply for the consumers.

Tonoas Water Supply System

This system is currently providing a satisfactory water supply, but will require rehabilitation during the course of the IDP as many of the system elements are reaching the end of their useful life.

Kosrae Water Systems

Rehabilitation of the existing water supply systems on Kosrae is urgent as none have effective treatment and all are providing water of unsatisfactory quality to the consumers. Many of the existing water distribution pipelines are in poor condition and have inadequate capacity to supply water at an acceptable pressure.

Yap Proper Water Systems

Although there is a need for some rehabilitation works for the Southern Yap water system, the three existing systems on Yap Proper are generally operating satisfactorily and require extensions and augmentations during the course of the IDP, rather than any current rehabilitation.

Kolonia Sewerage System

The sewage treatment plant is nearing the end of its useful life, is under-capacity and will need to be rehabilitated, expanded or relocated at an early stage in the IDP. There is also potential to extend the collection system to some currently uncovered areas when funding is available

Weno Sewerage System

12 Emergency Water/Wastewater Infrastructure Expansion & Extension Plan for Financing, Engineering and Construction, Pohnpei Utilities Corporation, September 2000

The sewage treatment plant has not operated for the past two decades and raw sewage has been pumped through the outfall into the lagoon. The lagoon and its marine life constitute the principle resource for potential economic growth in the state, and continued pollution of lagoon waters could prevent the state from realisation of its economic potential. The collection system is also in poor condition and overflows occur during rainy periods.

Colonia Sewerage System

The current system generally meets the needs of Colonia. There may be a need to extend the sea outfall to reduce pollution in the immediate vicinity of the shoreline or to relocate the treatment plant.

5.2.4 Development Needs during the IDP Period (2004-2023)

System Extension on the Principal Islands

The need for water supply and sewerage system extension and upgrading on the principal islands of the four FSM states are discussed briefly below.

Pohnpei

PUC has plans to provide Pohnpei Island with a single integrated water supply system that will efficiently deliver good quality water to all developed areas of the island. PUC also proposes to provide new sewerage systems in densely populated areas currently without such systems, and to extend the outfalls from sewage treatment plants to beyond the reef surrounding the lagoon. These projects will be constructed incrementally as funds become available during the period of the IDP.

Chuuk

The short term improvements for Weno Island outlined under 5.2.3 will provide a satisfactory water supply service for 85% of residents on Weno Island and a sewage collection service for the main urban area. Subject to funds availability, it will be necessary to provide extensions to areas not currently served and this will also require the construction of a second sewage treatment plant.

Kosrae

Completion of the short-term improvement program for the water supply facilities as described in 5.2.3 will be adequate to satisfactorily serve all communities on the island. Any further long term expansion of the systems will be dependent on the development of the tourism potential on the island that may necessitate some focused expansion during the IDP period

Yap

The most urgent future water development need for Yap Proper is the provision of a piped water supply for the municipalities of Maap and Rumung. Long term sewerage development needs may include the more densely populated areas of Gagil-Tomil and the southern portion of Yap Proper.

Chuuk Lagoon Water Supply/Wastewater Development Needs

Of the 17 inhabited islands of the Chuuk lagoon, only Weno and Tonoas have piped water supply systems.  The current water supplies on the other islands are unreliable and unsafe and provision of water supplies to these communities should be a medium term priority of the IDP. Most of the islands are too small or sparsely populated to justify development of sewerage systems, but the islands of Tonoas, Fefen and Uman should be provided with sewerage in the medium to long term to assist with their tourist potential.

5.2.5          Proposed IDP Investment Program

The May 2002 IDP report proposed an investment of $392 million for water/wastewater sector investment over the period 2003-2017¹³. While this will meet the sector needs as outlined above, it is probably unaffordable given the availability of funding.  A revised capital investment program shown in Table 5.8 has been prepared based on an assumed annual funding from the Compact and other sources for all infrastructure sectors of $35 million per year. This program reflects the state government priorities for the period 2004 to 2008¹⁴. In the case of Pohnpei, the State has not included investments in the water and wastewater sector in the priority listings as these are considered to be the responsibility of the PUC. Nevertheless, these investments have been included in the IDP Program under funding outside the Compact.

Extension to the Pohnpei Island Water System is included in the program but it cannot be completed to cover the entire island within the IDP period unless the PUC is able to access additional funding than is considered to be normally available to FSM.  A similar situation applies to the Kolonia Sewerage System extension and extensions to the water supply and sewerage system extensions on Weno. The immediate improvements required for the Kosrae water systems will be funded during the first five years of the IDP, but any further long term extensions of these systems cannot be funded. 

The IDP includes the provision of water supply systems to the Chuuk lagoon islands during the medium and long term of the IDP, but funds are unlikely to be sufficient to provide complete coverage in all the islands. Funding for the lagoon island water supply systems would need to be a mix of Compact and other funding sources. Sewerage facilities will only be provided in Tonoas and Fefen.

The timing of the projects as shown in Table 5.8 reflects their priority as follows:

Rehabilitation of the Weno Water Supply System

Provision of improved water supplies to the municipalities of Lelu, Malem, Tafunsak and Utwe in Kosrae

Construction of new Weno Island Sewage Treatment Plant

13 FSM Infrastructure Development Plan FY 2003-FY 2017, May 2002 14 See Annex C for listing of state priorities for 2004-2008

Rehabilitation of the existing Weno Sewerage System

Provision of water supplies to the municipalities of Maap and Rumung in Yap

Construction of new Kolonia Sewage Treatment Plant and Sea Outfall

Extension of Pohnpei Water Supply System

Improvements to the sewerage systems in Lelu/Tofo in Kosrae

Rehabilitation of Tonoas Water Supply System

Improvement of water supply systems in Chuuk Outer islands (Halls and Mortlock)

Construction of water supply systems in Southern Namoneas Islands

Construction of water supply systems in Outer and Inner Faichuk Islands

Extension of the sea outfall in Colonia, Yap

Extensions to the water supply systems in Gagil-Tomil and Southern Yap on Yap Proper

This corresponds to a total sector investment of $142 million for the period 2004-2023.  Projects that were proposed in the May 2002 IDP which either cannot be fully funded during this period or are unable to be commenced are indicated in Tables 5.9 and 5.10.

The Investment Program includes an allowance of 10% of the infrastructure cost funded by the Compact for maintenance. This cost will be funded 50% through the Compact and 50% by the states.

The 2002 IDP report recommended that a Water/wastewater Systems Master Plan and Cost Recovery Study to be conducted on commencement of the IDP period. This was to include final designs for the systems improvements. However, the utility corporations and the funding agencies are generally preparing feasibility studies on a project by project basis and detailed design would normally form part of the project cost. This planning activity has therefore been excluded from the IDP.

5.2.6 Institutional Restructuring and Strengthening

Currently in Pohnpei, Yap and Chuuk, public utility corporations have responsibility for both the power and the water sectors. The Kosrae Utilities Authority (KUA) in Kosrae, however, only has responsibility for the power sector. In order to approach commercial sustainability, a part of the institutional restructuring program is to shift overall responsibility for the development and maintenance of the Kosrae water supply and wastewater systems to the KUA. Public utility water divisions on the principal islands and lagoon islands should be commercially sustainable. Kosrae must introduce the concept of charging for water sector services and sector oversight and full maintenance responsibility of KUA.

There is also a need for institutional reform of the CPUC where operation and maintenance of both the power and water sectors has been unsatisfactory and neither sector, especially water and wastewater, has achieved anywhere near commercial sustainability. Institutional reform may include options such as providing the private sector with a management contract to operate and maintain the power, water supply and wastewater systems. 

5.3          Solid Waste Management

5.3.1          Sector Objectives and Outcomes

The primary specific objectives of the provision of solid waste management infrastructure are:

Meet the demand for solid waste infrastructure in an effective and efficient manner

Evaluate and institute technologically appropriate solid waste management systems

Reduce volume of solid waste for disposal by maximising recycling and separation opportunities and by extending the life of equipment and appliances that otherwise add to the solid waste quantities, thereby minimising the land area required.

Prevent solid waste having adverse effects on the terrestrial and marine environments

5.3.2          Existing Solid Waste Management Systems

There are limited solid waste collection facilities in each of the principal islands of each state and dumpsites are located in the main centres of Pohnpei, Yap and Chuuk and in each municipality of Kosrae.  None of these facilities approaches an acceptable landfill. In each state the government has plans to develop a new landfill site, but has been constrained by land and funding availability. The situation is most critical in Chuuk where the current dumpsite is neither secure nor environmentally acceptable and where solid waste of all descriptions is visible in all parts of Weno.  Details of the solid waste facilities in each state are described below.

Pohnpei

The only solid waste facility on Pohnpei is the dumpsite on Dekethik Island on the east side of the causeway at its northern end. The facility has an operations shed, a battery recovery shed, and separated areas for aluminium can compaction and storage and fuel drum sludge product extraction and storage. The larger potion of the area is used for trash intended for disposal, without recovery efforts. A private company, Pohnpei Waste Management Services (PWMS) provides most trash collection services, although the Kolonia Municipal Government provides collection services for about half the residents and commercial establishments in the town. The State Department of Public Works has had overall responsibility for the sector.

There is no effective recycling operation, but PWMS is making an attempt to set up recovery operations for aluminium cans, car batteries and oil sludge.

Chuuk

The existing solid waste facilities on Chuuk comprise the Fanipat dumpsite on Weno, a small site on Tonoas Island and the Weno Recycling Facility (WRF). The latter has responsibility for collection, compaction and shipment of aluminium cans although it is currently not operating effectively. Responsibility for solid waste management rests with the Department of Public Works.

The site has no fence, no buildings and no personnel. There are also several unofficial dumpsites along Weno roads and abundant uncollected trash, car bodies and derelict equipment all over the island. Trash collection is scheduled three times a week, but is reportedly not reliably operated.

The official dumpsite on Tonoas Island is near the village of Sampras. It serves a large part of the island and most Tonoas residents deliver their household wastes to the facility.

On other islands of the lagoon, the absence of roads means that each community generally has its own local dumpsite. 

Kosrae

The solid waste facilities in Kosrae comprise five dumpsites and an aluminium can compaction and storage facility.  The dumpsites are:

Lelu Municipality dumpsite which is the largest of the five and occupies a hillside opposite the KUA power plant. Cover material is available for this site, but it should ideally be moved to a bona fide landfill facility. This is the only site to have a public collection service. A dump truck is employed for roadside collection of trash along the circumferential road, two times per week.

The Tafunsak Municipality dumpsite, a small area located east of the airport and commercial port

The Malem Municipality dumpsite, a small area located south of the Lelu causeway along the circumferential road

Very small dumpsites located at Utwe and Walung village.

In all cases the dumpsites are located near residential and/or administrative areas, none have fences or any evidence of an organised operation.

There are two more or less satisfactory operations to reduce trash, namely an aluminium can operation and the recovery of oil sludge.

No state government body is specifically charged with responsibility for solid waste management, but this role is taken on by default by the Department of Public Works. The Kosrae State Government prepared a Solid Waste Management Plan in 1997, but the plan has yet to be implemented. An effort has been made to decentralise responsibility for the sector, and municipal governments have now been empowered to deal with solid waste management at the municipal level. 

Yap

The only Yap solid waste management facility is the Fitkabeetinaem landfill adjacent to the YSPSC power plant west of Colonia. Waste is regularly collected once or twice a week from a wide area by Department of Public Works and Transportation for delivery to the landfill,

Proposed Infrastructure Program and Funding 37

where it is dumped and compacted. It is estimated that about 60% of the waste generated in Yap Proper being collected.

An aluminium can collection operation has been taken on by a local company, the WAAB Transportation Company.

5.3.3          Approach to Solid Waste Management

As a result of the limited land area in FSM, the primary strategy for solid waste management should be to minimise the area needed for landfill. The options are to prevent waste accumulation in the first place, or to divert waste to a process leading to its immediate or eventual reuse. Some limited efforts have already been made to divert wastes from landfills through incineration (hospital waste) or recycling (oil sludge and aluminium cans).

Some approaches to accomplish this are:

Use policy also to achieve a shift from non-biodegradable trash that is difficult to divert from landfills to other types that are easier to divert.

Set up an institutional arrangement for reaching agreement on solid waste sector policy, strategy for implementation of policy, and action plans for diversion of solid waste from landfills, and to monitor solid waste prevention and diversion.

Carry out planning efforts to assist in trash avoidance, diversion, and disposal.

Establish regulatory and oversight authority and arrangements in the sector, and carry out any necessary institutional development efforts that might be necessary to make responsible government bodies fully effective.

Enter into appropriate regular trash collection, sorting, and disposal arrangements.

Select optimal locations for landfills, and enter into satisfactory arrangements for landfill development, operation, monitoring, and eventually closure.

The FSM also needs to develop an inventory of all the solid waste that could usefully be collected in one-time-only collection efforts, such as partially submerged and barely submerged vessel hulks, derelict road vehicles, derelict containers, derelict construction and maintenance equipment, office equipment, and household appliances like refrigerators and washing machines

In order to develop these approaches further it is proposed that a Solid Waste Disposal Needs Minimisation Study¹⁵ will be prepared to outline policies for solid waste volume reduction and strategies for diverting waste where possible from landfills.

5.3.4          Development Needs during the IDP Period (2004-2023)

Development on the Principal Islands

15 See Appendix B, Volume III,Nathan report for TOR for this study

New landfill developments are required on each of the main islands. These requirements have been projected for some time in each of the states but, with the exception of Pohnpei, where a potential site does appear to be available, land acquisition has been a major constraint. Following completion of the Solid Waste Needs Minimisation Study, it is proposed that a Solid Waste Management Landfills Plan¹⁵ be prepared at a time when prospects for reduction in volumes can be assessed and potential sites can be evaluated and confirmed. It is unlikely that due to the time taken for land acquisition that any construction of a new landfill could commence until towards the end of the first five years of the IDP. In the interim period, some rehabilitation of the existing dumpsites, especially in Weno, need to be addressed to contain immediate environmental damage.

Chuuk Lagoon

Landfill options for the islands of Chuuk lagoon range from operating a landfill on every inhabited island, to having landfills on none, and moving trash to uninhabitated islands. The recommended option that will need to be verified in the Solid Waste Management Landfills Plan is to construct three new landfills on Weno, Fefen and on one of the Outer Faichuk Islands together with trash loading/unloading facilities for small barge accommodation, with trash separation areas at appropriate locations on each island. Trash loading points for small barge accommodation would be provided on the coast of the other inhabited islands.

The landfill on Weno would also take the Fono and Piis-Paneu trash as well as Weno, that on Fefen would serve Southern Namoneas, and that on Faichuk would serve those closely grouped four islands as well as the four inhabited Inner Faichuk Islands.

5.3.5 Proposed IDP Investment Program

The draft IDP completed in 2002 proposed an investment of $149 million for solid waste management investment over the period 2003-2017^16. While this will meet the sector needs as outlined above, it is probably unaffordable given the availability of funding.  It is also a high cost for the development required, but assumes the adoption of U.S. Environmental Protection Agency Guidelines for ensuring that landfills have no adverse effects on groundwater and the area surrounding a landfill.

A revised capital investment program shown in Table 5.11 has been prepared based on an assumed annual funding from the Compact and other sources for all infrastructure sectors of $35 million per year. This program reflects the state government priorities for the period 2004 to 2008^17.  This includes the development of new landfills on the principal islands, but not the full development cost as indicated in the 2002 IDP report.  While sufficient land should be purchased to allow full development, the development costs can be incremental. The funding does not allow for development of landfills for the Chuuk lagoon islands (except Weno) and these will either need to be developed through funding in addition to that which can be normally expected or deferred until after the IDP period. Funding outside the

16 FSM Infrastructure Development Plan FY 2003-FY 2017, May 2002 17 See Annex C for listing of state priorities for 2004-2008

Compact is largely envisaged for development of the landfills as these projects should be suitable for at least soft loans, or could be developed by the private sector.

The IDP also includes an allowance for a National Solid Waste Policy & Recycling Fund which is a capital fund to assist in the implementation of a solid waste management policy for avoidance of waste and to increase diversion of unavoidable waste from landfills. The Fund will also be used to establish trash diversion activities, such as community composting areas, waste compaction and packing operations, crushing and grinding operations and small reprocessing operations.

The timing of the projects as shown in Table 5.11 reflects their priority as follows:

Rehabilitation of the existing Weno dumpsite

Closure of existing landfill sites in Pohnpei and Yap

Construction of new landfill sites in each of the four principal islands

This corresponds to a total sector investment of $41 million for the period 2004-2023.  Projects that were proposed in the May 2002 IDP which either cannot be fully funded during this period or are unable to be commenced are indicated in Tables 5.12 and 5.13.

The Investment Program includes an allowance of 10% of the infrastructure cost funded by the Compact for maintenance. This cost will be funded 50% through the Compact and 50% by the states.

5.3.6 Institutional Restructuring and Strengthening

Currently there is no effective solid waste management in FSM. The State Departments of Public Works have been assigned a waste collection function in each of the four states, and the public utility corporations have some legal responsibility for the sector (Yap) or are proposed to take on responsibility (Pohnpei).

The 2002 IDP report recommended that the State Environmental Protection Agencies (SEPA) be provided with the responsibility for making solid waste management fully effective throughout the State. It is not proposed to implement this recommendation at this point in time as the SEPA has environmental and regulatory functions that could constitute a conflict of interest. It is recommended that the thrust be to contract out solid waste management to the private sector under the oversight of either the municipalities or the State Public Works. While providing the utility corporations with responsibility may be a long term solution, for the present it is considered that the corporations should concentrate on their current role of making the power and water/wastewater sectors commercially viable. 

5.4          Roads and Pedestrian Facilities

5.4.1          Sector Objectives and Outcomes

The primary specific objectives of the provision of roads and pedestrian facilities infrastructure are:

To provide the infrastructure to enable transportation facilities to be adequate in terms of condition, capacity, reliability and safety to enable market opportunities to be realised for all areas of the country, including labour market opportunities, and to enhance the level of integration of state economies and the national economy.

To meet the demand for road and pedestrian infrastructure in an effective and efficient manner, including concrete/asphalt paving of all primary road systems. 

To incorporate pedestrian walkways in the design and construction of roads

To complete cross-island road and inner roads to facilitate agricultural and other development.

5.4.2          Existing Road Networks and Pedestrian Facilities

The combined road network length of the four FSM states is approximately 200 miles, of which about 60% is paved. The road networks in each of the four states are briefly described below in Table 5.14

Aside from the road networks indicated in the above table, the islands in Chuuk lagoon have footpaths connecting the coastal villages. Roads on Tol and Uman have now deteriorated to the state where they serve as footpaths rather than roads. Some outer islands have roads that are now in a seriously deteriorated condition. The outer islands of Woleai and Ulithi in Yap have motor vehicles. The road transport on Woleai is basically wheel tracks that encircle the island. On Ulithi, the road pavement consists of a sub-base layer of coral material. 

Pedestrian facilities are very limited in the FSM, with the exception of unimproved trails on the principal islands.

5.4.3 Short Term Needs of Existing Road Networks

A key strategic objective of this IDP is to ensure that existing infrastructure is rehabilitated as a first priority before implementation of new infrastructure. The immediate needs for rehabilitation of existing road network are discussed below.

Pohnpei Road Network

The Pohnpei Island circumferential road is in critical condition where it remains unpaved

(14.5 miles) and is, for the most part, in unsatisfactory condition where it is paved. Lateral drainage is mostly absent, as are properly shaped road shoulders.  The AC pavement, which theoretically should have a life measured in decades in FSM, because of the low volumes of heavy vehicle traffic, is deteriorating in many locations due to standing water on the road surface. No construction work should proceed on this road until the road is adequately designed to include super-elevation on curves, cross-fall, properly shaped shoulders that are not elevated above the pavement edge, and lateral drainage, preferably lined for permanence.

Weno Road Network

The Weno Island circumferential road is in critical condition.  The west coast segment of the road, however, probably should be shifted inland to allow for desirable development of the commercial port area, a fishing port, two separate ferry terminals for a lagoon ferry operation and for larger, outer island ferries, a small boats basin, and a recreational wharf, with related tourism facilities.  A plan will need to be prepared for redevelopment of the entire waterfront area, which means that this segment of the Weno circumferential road might be designed and reconstructed in 2005 or 2006 after the completion of this plan.  Work can get underway earlier on other portions of the road, including construction of the missing two-mile segment through a mangrove swamp area.  Past inadequate attention to drainage is responsible for the current critical state of the road, and any new construction effort must ensure that drainage will be entirely adequate.

Yap Road Network

The critical needs of the Yap Proper road network are limited to the replacement of two short, under-strength bridges in Colonia. Otherwise, upgrading of the surface of the trunk road to AC pavement standard is desirable.  The desirability of this project, however, is not based on any identified inadequacy of the trunk road, which is kept in well-maintained condition. Rather, pavement upgrading is desirable to reduce road maintenance

requirements, and particularly the need for large quantities of crushed coral to keep a low­standard surface in satisfactory operating condition.

Kosrae Road Network

The Kosrae road sector has no critical needs, although it is desirable that the seven miles of circumferential road awaiting paving be paved before deterioration of the unpaved road sets in. The Kosrae State Government considers that extension of the road to Walung (requiring

3.2 miles of new construction) is critical, but the Walung residents themselves seem less concerned with ending their isolation.  Nevertheless, whenever the paving project is implemented, it would be logical to extend the road end from its current location to a Walung village access road.

5.4.4 Development Needs during the IDP Period (2004-2023)

Principal Islands

Pohnpei

Rehabilitation of the paved circumferential road and upgrading of the unpaved section will be commenced as an early priority project and will be continued incrementally during the course of the IDP depending on available funding. This program will include the provision of adequate drainage, road shoulders along the entire length of the road and replacement of the road’s 62 old, narrow bridges. The Japanese Government will be providing assistance for this road upgrading starting 2004.

Improvement of urban street networks and traffic control infrastructure in Kolonia will also be required during the initial five years of the IDP and at later intervals during the IDP period.

Chuuk

Upgrading of the Weno circumferential road will be commenced as an early priority project and will be continued incrementally during the course of the IDP dependent on available funding. The road alignment of the middle portion of the west coast section will need to be changed as discussed above. This is an urgent project, but the construction of the middle portion of the west coast section will need to wait for completion of the Weno Island Waterfront Redevelopment Plan in order that its alignment can be established.

Improvement of urban street networks and traffic control infrastructure in the urban centre will also be required during the initial five years of the IDP and at later intervals during the IDP period.

Kosrae

Completion and upgrading of the Kosrae circumferential road will be commenced as an early priority project and will be continued throughout the course of the IDP. Improvements to the Lelu causeway to provide adequate pedestrian access will also be completed during the initial five years of the IDP.

Yap

Aside from the reconstruction of the two bridges in Colonia that will be completed as an early priority project, upgrading of the North-South Trunk road to bring the road to good AC pavement standard will be completed during the IDP period.

Pedestrian Facilities

Development of improved pedestrian facilities such as sidewalks, bicycle/pedestrian paths, trails and boardwalks are also required in each of the principal islands to improve pedestrian safety and enhance the tourism experience generally. However, it is difficult at this stage to identify funding to enable these works to be completed to the level envisaged in the 2002 IDP report. Sidewalks in urban areas should be funded as part of the road network.

Chuuk Lagoon Road Network Requirements

Aside from Weno Island, there are other islands in the Chuuk lagoon that require road network development, although some of the islands are too small for motorised vehicles to be useful. The Chuuk State Government development plan¹⁸ indicates that eleven islands, in addition to Weno and Tonoas, could be usefully provided with a road.

The Outer Faichuk Islands comprising Tol, Polle, Wonei and Paata are so closely grouped that a single continuous circumferential road with length of approximately 40 miles can be provided. The connection between Wonei and Paata will, however, require a causeway. This road, together with an electric power system, is essential for economic development of these islands.

The current rehabilitation of the Tonoas circumferential road should be upgraded to an AC paved road with appropriate drainage and road shoulders. 

The existing circumferential road in Fefen is in very poor condition and is impassable in places due to erosion. This road should be upgraded to a two-lane AC paved road with appropriate drainage and road shoulders. Fefen has considerable tourism potential and has the potential to supply the tourism industry with fresh flowers, fruits and vegetables.  The road is also needed for the Southern Namoneas landfill facility, proposed to be established on the island as discussed in Section 5.3

Uman Island has essentially a circumferential footpath and it is recommended to upgrade this to a two lane paved AC road with appropriate drainage and road shoulders.

Short unpaved roads of two or three miles in length are recommended for the lagoon islands of Fanapanges, Romanum, Parem and Etten, but it is unlikely that funding will be available for these works during the IDP period.

18 Chuuk State Infrastructure Development Plan (2001-2020)

5.4.5          Proposed IDP Investment Program

The 2002 IDP report proposed an investment of $292 million for road network and pedestrian facility investment over the period 2003-2017¹⁹. While this will meet the sector needs as outlined above, it is probably unaffordable given the availability of funding.  A revised capital investment program shown in Table 5.15. has been prepared based on an assumed annual funding from the Compact and other sources for all infrastructure sectors of $35 million per year. This program reflects the state government priorities for the period 2004 to 2008²⁰. The program includes the upgrading of circumferential roads in the principal island of all four states although completion of this upgrading may require additional funds than those which have in the past been available to FSM.

Upgrading and construction of roads in Tonoas, Fefen, Tol, Paata, Polle and Wonei will also be undertaken although not all can be completed within the IDP period with the available funding.

It is proposed that a Primary Roads Master Plan²¹ be prepared to develop feasibility studies for the proposed primary road networks that are proposed to be funded under the IDP including those in the Chuuk lagoon island. These feasibility studies will be required to obtain funding for many of these projects. Detailed design activities should, however be funded as part of the construction cost.

A Weno Island Waterfront Redevelopment Plan¹⁹ should also be prepared in coordination with the Primary Roads Master Plan. This will provide guidance on the alignment of the Weno west coast road by establishing the most appropriate location for marine facilities on the island. Further, the Japanese Government is proposing to support the improvement of the harbour facilities in Weno starting 2006, and completion of the redevelopment plan would be timely to focus this investment as part of an integrated port development.

The timing of the projects as shown in Table 5.15 reflects their priority as follows:

Upgrading of Weno West Coast Road

Reconstruction of bridges in Colonia, Yap

Rehabilitation and upgrading of circumferential road in Pohnpei, including rehabilitation of bridges and drainage

Construction of new circumferential road and damaged seawall in Kosrae

Upgrading of North-South Trunk Road in Yap

Rehabilitation of Tonoas circumferential road

Construction of cross-island road in Kosrae

Street lighting and road appurtenance improvements in Kolonia, Pohnpei

19 FSM Infrastructure Development Plan FY 2003-FY 2017, May 2002 20 See Annex C for listing of state priorities for 2004-2008 21 See Appendix B, Volume 3, Nathan report for TOR for this study

Upgrading of circumferential road in Kosrae 

Construction of Fefen circumferential road

Construction of Faichuk circumferential road

This corresponds to a total sector investment of $124 million for the period 2004-2023.  Projects that were proposed in the May 2002 IDP which either cannot be fully funded during this period or are unable to be commenced are indicated in Tables 5.16 and 5.17. These projects for which funding has not been identified include proposed primary road construction in the Inner Faichuk Islands, secondary road construction and improvements in all four states, the Dekehtik causeway improvements, and pedestrian facilities in all four states,

The Investment Program includes an allowance of 10% of the infrastructure cost funded by the Compact for maintenance. This cost will be funded 50% through the Compact and 50% by the states.

5.4.6 Institutional Restructuring and Strengthening

There are three types of institutional reform that are needed in the roads and pedestrian facility sector:

The public body responsible for roads should become a sector manager, rather than a construction organization. Road design and construction should be outsourced to the private sector.

Road and pedestrian facility maintenance should be funded through dedicated funds created for the purpose.

A mechanism for shifting all road and pedestrian facility construction and maintenance work to the private sector must be created.

It is important that a high standard of design and construction is maintained for the road network, together with an effective and well funded maintenance program.  Under these circumstances, there will never be the need for a road sector development program of the magnitude of that included in the IDP. With the implementation of the IDP program, road capacity will be perpetually sufficient on most islands.

Table 5.17, continued

5.5          Maritime Transportation

5.5.1          Sector Objectives and Outcomes

The primary specific objectives of the provision maritime transportation infrastructure are:

To provide the facilities necessary to enable market opportunities to be realised for all areas of the country, including labour market opportunities, and to enhance the level of integration of state economies and the national economy.

To realise the fisheries potential of all four states of the FSM in a manner that ensures sustainability of that sector

To provide improved dock facilities to meet both fisheries and commercial shipping needs

To facilitate the provision of modern, safe and efficient inter-state and inter-island passenger and cargo vessels

To continue to coordinate and facilitate the improvement of aids to navigation

5.5.2          Existing Maritime Transportation Systems

FSM is a maritime nation, with a long tradition of maritime transportation and exploitation of marine resources.  Much of the country’s tourism potential derives from the variety of marine recreational activities that can eventually be offered in each of the four states, especially in the lagoons and encompassing reefs of the principal islands.  The FSM maritime sector must be developed to adequately serve international trade, inter-island trade and person movements, the fishing industry, and recreational activities for both FSM residents and visiting tourists. Currently, most of these objectives are not being fully achieved by the maritime sector.

Commercial Ports

The four major ports in the four states are more-or-less adequate in that they have adequate capacity to meet current demand, and the physical condition of their principal infrastructure is quite satisfactory.  The situation at each of the principal ports is briefly discussed below.

Dekehtik Port, Pohnpei

The port is owned and operated by the Pohnpei Ports Authority (PPA). The port has a 323 meter quay, part of which is leased by Caroline Fisheries. Commercial port operations are constrained therefore along the quay, but also behind it by an old, fairly large hotel which is located where open or covered storage areas ought to be. There is an area of 1.8 acres for container open storage however, and there are two transit sheds in reasonably good condition with a combined capacity of about 1700 square feet of floor space.

The port’s critical problem is its entrance channel, which is narrow and shallow at places making it necessary for large vessels to weave entering into and leaving the harbour. If one of these vessels sinks or grounds, the port will be unusable to commercial shipping for a considerable period.

Weno Port, Chuuk

Weno Port is located on the west coast of Weno Island.  There is fairly deep water almost up to the shore, so there is no need for a marked entrance channel to the port.  This openness to the sea, however, is also a disadvantage to port operations. Rough water in the port area occurs fairly frequently, making the rubber fenders along the quay face essential for prevention of damage to both the quay and vessels at berth.  The quays are in good condition, with a portion of the quay being relatively new.  The port has no perimeter fence and essentially no security whatever. An estimated 35 percent of the port area is unusable for operations because it is strewn with derelict vehicles, containers, other equipment, and scrap metal and uncollected cargo. The warehouses have not been maintained, and are in such bad shape that replacement, rather than rehabilitation, is warranted.  Besides having at least one­third of its cargo handling and storage areas unavailable for operations, two of the port’s vessel berths are occupied for prolonged, indefinite periods, by the two vessels assigned to Chuuk State for serving the outer islands.

Okat Port, Kosrae

Okat Port is a natural harbor on the northwest coast of Kosrae.  Kusaie Terminal & Stevedoring Company (KT&SC) has operated the port since it was built in 1984.  The port has a quay 168 meters in length with alongside water depth of approximately 9.1 meters.  The quay apron is approximately 19 meters in width, and in very good condition.  Behind a portion of this apron is a sizable building that belonged to Pacific Tuna Industries (PTI), until PTI ceased operation in January 2001.  The exterior of this building is in quite good shape, but the interior is in poor condition, although its flash freezing system is still in working order. The port also has nearly two acres for container open storage, a warehouse of 1,050 square meters floor space, and eight refrigerated container (reefer) plugs.  An Okat Port improvement project, financed by the Japanese Government, was completed in February 2001, so the port is generally in good condition.  Philippines, Micronesia & Orient Navigation Company (PM&O) and Kyowa Shipping Company (KSC) have been serving the port, with PM&O calling every 21 days and KSC calling once a month. The quay is adequate for serving only one of these vessels at a time, but, considering the call frequency, that is sufficient. The port entrance channel is approximately 0.85 mile in length, and has good water depth along its centreline, but might desirably be widened somewhat, as the PM&O vessels approach the maximum size that can safely negotiate the channel.  

Proposed Infrastructure Program and Funding 53

Yap Port

Yap Port is located on the Colonia Peninsula extending into Tamil Bay.  Currently the port is administered by the Department of Public Works and Transportation, but legislation has been considered to establish a Yap State Port Authority (YSPA).  The quay has an old, 140-meter section, at the northwest end, and a 112-meter section was added in the 1990s.  The 112­meter section was constructed as the first phase of a port master plan, but then in contravention of that plan, a fisheries investor was permitted to construct a refrigerated warehouse of 2,730 square meters of floor area just 25 meters from the face of the new shipping berth. The existence of this facility, currently unused, has severely disrupted container handling and storage operations at the port. Waab Stevedoring Company leases the old section of the quay, and performs most cargo-handling services.  PM&O, Kyowa, Kambara Lines, and Palau Shipping call at the port.  The port entrance channel is about 2.25 miles in length, and sections of the channel pose navigation difficulties because of narrowness, a 40-degree turn, reef outcroppings posing navigational hazards, and a swift current, and the turning basin is fairly small (diameter of around 400 meters).  To dock at the commercial pier, a vessel must make a 70-degree turn to starboard, and do this by pivoting off the anchor.

Small Ports

Most of the Chuuk lagoon islands do not have an adequate dock to accommodate ferries.  Most islands had a useful dock during the Japanese administration, but these facilities are now mostly in advanced stages of deterioration.  The islands of Tonoas, Fefen, and Romanum have adequate docks, however, and both Uman and Etten have docks that could be satisfactorily rehabilitated for ferry accommodation.

The outer islands are virtually bereft of dock facilities and at present, loading/unloading operations are generally hazardous.  Potential does, however, exist for making the operations at most islands much less hazardous.

Domestic Shipping Services

Domestic shipping services are largely limited to services being provided to the outer islands by the Pohnpei, Chuuk and Yap State Governments, National Government interstate services, primarily cargo services, and what might be characterized as “emergency services” being provided to the Chuuk State outer islands by a variety of privately-owned and operated vessels.

The four vessels being used by the state governments were all constructed in the 1977-1978 period. The vessels have lifeboat capacity for 125 persons but reportedly the total often exceeds that number.  Because of its large population and several groups of outer islands, Chuuk State uses two vessels, the Micro Dawn and the Micro Trader.  Yap State employs the Micro Spirit while Pohnpei State uses the Micro Glory.

Both of the vessels operated by the Chuuk State Government are sitting for indefinite periods at the Weno commercial port, awaiting engine repairs.

The vessel operated by the Yap State Government and the vessel operated by the Pohnpei Government underwent, in 2000 and 2001, respectively, major repair and rehabilitation efforts, and therefore are once again able to keep fairly regular service schedules.  

Fisheries Facilities

As discussed above, fisheries facilities in the new section of Yap Port and at Dekehtik Port are causing problems for the container-handling operations at those ports.  At Okat Port in Kosrae, the quay is satisfactory for commercial shipping operations due to the reduced numbers of fishing vessels at the port.  At Weno Port, a fisheries equipment maintenance operation contributes to commercial shipping space constraints at the port.  In Yap, Pohnpei, and Chuuk States, the fisheries sector also has dedicated facilities, as briefly discussed below.

Yap State has the most extensive fisheries port in FSM and the port is operationally separate from the commercial port, which constitutes an advantage for both facilities. The fisheries port facilities are generally in good condition, and adequate in design and capacity.  

Weno has a fisheries pier that is also separate from the commercial port.  The quay is in satisfactory condition, but requires new fenders to prevent damage to the quay and fishing vessels. The pier and its related facilities are adequate for current demand, although a more vibrant and varied fisheries industry in Chuuk State would require a more developed fisheries port.

The new 100-meter dedicated fisheries quay at Dekehtik Port will hopefully make possible removal of some or even all of the fisheries operations along what should be the commercial shipping quay. Whereas the new quay will probably be sufficient to serve off-loading fishing vessels, it is unclear that a good balance is being provided between off-loading capacity, and processing, packing, and storage capacity.

5.5.3 Short Term Needs of Existing Systems

A key strategic objective of this Infrastructure Development Plan is to ensure that existing infrastructure is rehabilitated as a first priority before implementation of new infrastructure. The immediate needs for improvement of the ports in each state discussed below.

Dekehtik Port, Pohnpei

The most urgent need is the improvement of the Dekehtik port entrance channel. This should be preceded by a hydrographic survey of the entrance channel and turning basin in order to define a desirable dredging program for the area. 

The Pohnpei Port also needs to reclaim the commercial key for cargo purposes, shifting all fisheries port operations to the new, dedicated quay for fisheries. The space behind the apron, partly occupied by a hotel needs to be secured by PPA to ensure that the two-berth commercial quay will have adequate open storage space for container handling operations.

Weno Port, Chuuk.

Weno Port needs in the short term to: raze existing warehouses; clean up the entire port area; remove a fisheries equipment maintenance operation from the port; build a security fence and establish effective security in the port, including removal of squatters and a commercial food service establishment; provide new warehousing, probably requiring less area than at present; and end disabled government vessel occupation of two commercial berths.

Okat Port, Kosrae

Okat Port needs to convert the large building, formerly owned by PTI, to cargo storage area usable for port operations. The PTI building is immediately behind the apron, and could be used for stuffing and emptying of containers, as well as for storage of commodities, including Kosrae citrus fruit

Yap Port

Yap Port can be made more efficient by destroying the fisheries structure constructed behind the new portion of the commercial quay. This building is not being used by the fisheries industry, in any case, and has serious disruptive efforts on container handling and storage operations at the port.

5.5.4 Development Needs during the IDP Period (2004-2023)

Commercial Ports

In the long term, both fisheries operations and passenger service operations should be entirely removed from the commercial ports so that much of the long-term capacity requirements can be obtained simply by freeing up existing space. The short term improvements discussed in the previous section will help make the four ports much more efficient than they presently are and accommodate a higher throughput without any significant further investment during the IDP period.

Fisheries Port Development

Pohnpei

The new quay dedicated to fisheries will not be sufficient in the long term and a second phase expansion will be required with sufficient room behind the quay face for all necessary fish processing and storage facilities, and for vessel and fishing equipment maintenance areas. This, however, may not be able to be funded during the IDP period under the current foreseeable funding constraints.

Chuuk

The Weno fishing port currently serves only longliners and needs to be redeveloped to serve the entire fisheries industry. Other islands in the lagoon also have needs for fishing ports, although development of ferry services in the lagoon will make it unnecessary for each island proceeding during the IDP period.

Kosrae

Kosrae is not expected to require any development of its fishing ports during the IDP period

Yap

The Yap State Government is implementing a long-term port master plan that includes fisheries port development. A new fisheries wharf, cold storage facility as well as major fish processing and packing facilities are proposed, but funding needs to be identified. 

Chuuk Lagoon Ferry Services

To integrate the economy of Chuuk lagoon, it is essential to establish an adequate ferry service, providing safe, reliable service connections among the inhabited islands. The principal ferry terminal for this system will be on the Weno west coast.  This facility will be part of the redevelopment of the Weno waterfront that will be envisaged in the Weno Island Waterfront Development Plan described in Section 5.4. The Japanese Government is also proposing to provide assistance to improvement of the Weno waterfront area commencing in 2006.

Once the Weno terminal is established, renovation of the existing docks in Tonoas and Fefen will equip them for regular accommodation of inter-island ferries. Both Tonoas and Fefen will require second terminals located diagonally across the islands to minimise ferry trip distances from different directions. The smaller island of Romanum has an adequate dock, whilst the islands of Etten and Uman have docks that can be made adequate through rehabilitation.

The four closely grouped Outer Faichuk Islands will require three terminals, with the islands of Paata and Wonei being jointly served by a terminal along the planned causeway between them.  New ferry docks will need to be provided on the islands of Parem, Siis, Udot, Fanapaanges, Fono and Piis-Paneu.

Outer Island Ferry Services

Improvement of maritime transportation services to the outer islands of Pohnpei, Chuuk and Yap states involves:

For some inhabited islands, where appropriate, improvement of access to the lagoons by dredging. This would need to be preceded by hydrographic survey and mapping activities to define the dredging programs.

Construction of dock facilities on one or more inhabited island of an atoll, where accessible and where direct service by ocean-going vessels is realistically possible In cases where the atoll lagoon is not accessible, an anchored detached and floating dock can be constructed to assist with the transfer of passengers and cargo from ocean-going vessels to small boats

Construction of fuel stations on Nukuoro, Puluwat, Satawan, Onoun, Ulithi and Woleai to fuel outer island ferries on their longer routes

On the principal islands in each of the three states, construction of separate outer island ferry terminals apart from the commercial port operations

After completion of hydrographic and dredging activities, a navigational aids program to improve the safety of the outer island ferry services.

5.5.5          Proposed IDP Investment Program

The 2002 IDP report proposed an investment of $235 million for maritime transportation system investment over the period 2003-2017²². While this will meet the sector needs as outlined above, it is probably unaffordable given the availability of funding.  A revised capital investment program shown in Table 5.18. has been prepared based on an assumed annual funding from the Compact and other sources for all infrastructure sectors of $35 million per year. This program reflects the state government priorities for the period 2004 to 2008^23.  The program includes immediate investment requirements for commercial ports in Pohnpei, Weno, and Yap, commencement of dredging programs at Dekehtik Port, Yap Port and the Pohnpei outer islands and development of ferry systems for Chuuk lagoon and the outer islands of Pohnpei, Chuuk and Yap through the construction of ferry terminals and docks.

It is proposed that a Maritime Transportation Development Plan²⁴ be prepared to prepare feasibility studies for the projects proposed to be funded under the IDP. This would be preceded by a hydrographic surveying and mapping effort to define the required dredging programs. Detailed design activities should, however be funded as part of the construction cost.

The timing of the projects as shown in Table 5.18 reflects their priority as follows:

Construction of dock and ferry terminal at Colonia for outer island ferry services

Construction of dock and ferry terminals on Weno, Southern Namoneas and Faichuk for Chuuk lagoon and outer island ferry system

Short –term improvements for commercial ports in each of the four states

Construction of dock and ferry terminal at Dekehtik Port for outer island ferry services

Dredging programs for Dekehtik and Yap Ports and Pohnpei outer islands 

This corresponds to a total sector investment of $89 million for the period 2004-2023.  Projects that were proposed in the May 2002 IDP which either cannot be fully funded during

22 FSM Infrastructure Development Plan FY 2003-FY 2017, May 2002 23 See Annex C for listing of state priorities for 2004-2008²⁴ See Appendix B, Volume 3, Nathan Report for TOR for this study.

this period or are unable to be commenced are indicated in Tables 5.19 and 5.20. These projects for which funding has not been identified include proposed completion of dredging programs in Pohnpei and Yap Ports,  completion of the Chuuk lagoon ferry terminals and facilities for the outer island ferry services in Pohnpei, Chuuk and Yap as well as improvements to the fisheries facilities at ports in Pohnpei, Chuuk and Yap. For the latter, investment from the private sector may be sought given the likely shortfall in other sources of funding for these developments.

The Investment Program includes an allowance of 10% of the infrastructure cost funded by the Compact for maintenance. This cost will be funded 50% through the Compact and 50% by the states. An additional allocation has been included for a Small Ports Fund that will provide for outer island dock maintenance which will require government subsidies, unlike the commercial ports that should be self-sustaining from income generated from operations.

5.5.6 Institutional Restructuring and Strengthening

The two areas in the maritime transportation sector requiring institutional reform are:

Seaport development and management

Maritime safety, including protection of the marine environment

With regard to port development and management, it is suggested that the creation of independent state port authorities to own and operate all port facilities is the most appropriate direction. The independent authority should retain all revenue generated from operations; have full responsibility for making investments and for its debt servicing and operating costs.

With regard to maritime safety, there is a need to create at the national level a Maritime Safety Authority to address needs related to navigational aids, coastal communication stations, inspection of vessels for seaworthiness and safety equipping, certification of training standards for vessel crews and search and rescue services.  

The IDP has allocated funding for the establishment of a Maritime Safety Authority.  It is proposed that a Maritime Safety Capital Fund be employed by the Maritime Safety Authority to carry out improvements required for maritime safety purposes. These improvements will include the provision of navigational aids, provision of coastal communication stations and the establishment of maritime safety emergency systems such as search and rescue in each of the four states. 

5.6          Air Transportation

5.6.1          Sector Objectives and Outcomes

The primary specific objectives of the provision of air transportation infrastructure are:

•             To provide adequate air transportation facilities and services in terms of  condition, frequency, capacity, reliability and safety to enable market opportunities to be realised for all areas of the country.

•             To enable the air carrier airports to improve safety and eliminate payload restrictions

•             To improve all domestic airports to the required standards of safety

5.6.2          Existing Air Transportation Infrastructure

Each of the four FSM states has an international airport.  These airports are small by international airport standards, with relatively short runways, aprons with capacity for two international service aircraft, and short taxiways connecting the runways and aprons.  The airport terminals are roughly adequate for current levels of traffic, except that the Yap Airport has wholly inadequate space for passenger check-in.  Facilities are inadequate for

cargo accommodation, particularly the export of sashimi-quality tuna.  Parking and interface with public transportation are not satisfactory.

Traffic at the international airports is very limited, and traffic control towers are therefore not required. The U.S. Federal Aviation Administration (FAA) has provided FSM continuous support in the installation, operation, and maintenance of navigational aids and telecommunications equipment at the four international airports.

There are no interstate air transport services in FSM, except as legs of international flights. 

Outer Island Airstrips

Three of the five Pohnpei outer islands, namely Pingelap, Sapwuahfik and Mokil have short airstrips that permit use of aircraft. The Pingelap airstrip requires near term attention as one end of the runway reportedly dips toward the sea and constitutes a risk for air service operations. The Sapwuahfil and Mokil airstrips are reportedly in satisfactory condition.

Three of the twenty-four municipalities in the Chuuk outer islands have airstrips, namely Onoun (Namonuito Atoll), Ta (Lower Mortlocks), and Houk (Western Islands). Air transport services have not been provided to these airstrips for several years and it is generally believed that they are not in operating condition.

There are three airstrips on Yap outer islands, namely on Ulithi, Fais and Woleai. The Ulithi runway is in good condition, that on Fais is operable but the condition is such that landing of aircraft can be somewhat risky and that on Woleai cannot be used due to the condition of the runway.

5.6.3 Short Term Needs of Existing Air Transportation Infrastructure

A key strategic objective of this Infrastructure Development Plan is to ensure that existing infrastructure is rehabilitated as a first priority before implementation of new infrastructure. The immediate needs for improvement of the airports in each state discussed below.

Pohnpei International Airport

The runway, taxiway and apron pavements at Pohnpei International Airport all urgently require pavement overlay, as serious pavement deterioration is occurring at many locations.  This is especially dangerous because of the B737-800 aircraft being employed in FSM by Continental Airlines.  These aircraft are appropriate for the short runways at FSM airports, and are fuel efficient, but they have low-slung engines.  As pavement deteriorates to the point of creating loose gravel, there is a real danger that stones will be sucked up into the aircraft engines, causing engine damage and possibly an accident. 

At about the 4200-foot mark measured from the west end of the runway, there is a construction defect. The pavement has inadequate support beneath it and gradually subsides, creating a depression in the runway. A permanent solution to this problem would not be costly or difficult, but would entail airport closure for a period of three or four weeks.  Since the need for repair of this section coincides with the urgent need for pavement overlay, it would seem logical to combine the two projects into a single project. If done together, the pavement ought not again to require attention until after the IDP period

Chuuk , Kosrae and Yap International Airports

The runways at each of these airports are in satisfactory condition. Passenger terminal needs are less urgent, but will in each case need to be expanded and modernised. Cargo terminals with cold storage facilities also need to be established at each of the airports. The runway in Chuuk has recently received a pavement overlay and is now in excellent condition. However, there is still some outstanding repayment to be made for these works as well as for the acquisition of the land where the runway is located. Improvements to the airport terminal are in progress, but this improvement program needs to be expanded and accelerated to bring the airport up to international standard. The initial five year capital improvement program has included these projects, including the land acquisition payment, since it is clearly in the interest of the Government to hold title for the land of an international airport.

Outer Island Airstrips

 Airstrips at Pinelap in Pohnpei, Woleai and Fais in Yap and Onuon, Ta and Houk in Chuuk are in poor condition and need improvements in the short term to make them operable. It is recommended that the Woleai airport be an upgrading project to convert the existing airport into a small airport capable of accommodating small to medium-sizes turboprop aircraft. This would enable a new domestic turboprop service between Chuuk and Yap to have Woleai as a regular or occasional immediate stop.

5.6.4 Development Needs during the IDP Period (2004-2023)

International Airport Runways

All FSM state governments would like to extend their airport runways sufficiently to accommodate larger aircraft which could operate direct flights over distances of 2,000 miles or more without any load restrictions. An earlier pre-feasibility study conducted by Japanese consultants in 1997 concluded that a Pohnpei airport runway extension to 8,000 feet might be economically feasible provided that a development program to achieve successful tourism were also designed and implemented. While it is true that extension of the runways of one or more of the international airports would generate some amount of benefits for tourism, trade and international travel by FSM citizens, it is questionable whether these benefits would outweigh the costs of runway extension. The other issue is that of safety and whether the four international airport runways need to be extended for some minimum distance for reasons of safety.

The 2002 IDP report concluded that, in the cases of Pohnpei, Kosrae and Yap airports, where short extensions of the runway would not be prohibitively expensive, short extensions, at least, might be usefully implemented. Whether or not longer extensions might be justified will depend on estimates of incremental tourist traffic volumes that might result from the institution of direct flights, especially between FSM and Japan.  Extension of the Chuuk runway would be expensive since it has fairly deep water at both ends of the runway.

5.6.5          Proposed IDP Investment Program

The draft IDP completed in 2002 proposed an investment of $77 million for air transportation infrastructure investment over the period 2003-2017²⁵. While this will meet the sector needs as outlined above, it is probably unaffordable given the availability of funding.  A revised capital investment program shown in Table 5.21. has been prepared based on an assumed annual funding from the Compact and other sources for all infrastructure sectors of $35 million per year. This program reflects the state government priorities for the period 2004 to 2008.^26.  This program includes runway rehabilitation and extension for Pohnpei, Yap and Kosrae airports, loan repayment for work completed on Chuuk runway and land acquisition costs for Chuuk airport, airport terminal improvements in at all four international airports and improvement of airstrips in the outer islands of Pingelap, Woleai, Fais, Onuon, Murilo, Ta and Houk.

It is proposed that an Air Transportation Development Plan²⁷ be prepared to prepare feasibility studies for the projects proposed to be funded under the IDP. Detailed design activities should, however be funded as part of the construction cost.

The timing of the projects as shown in Table 5.21 reflects their priority as follows:

Runway, Taxiway and Apron rehabilitation at Pohnpei International Airport Airport

Runway Extension at Pohnpei International Airport.

Loan repayment for work completed on Chuuk runway and airport land acquisition costs

Airport Terminal improvements/expansions at Pohnpei, Chuuk, Kosrae and Yap airports

Improvement/upgrading of airstrips at the outer islands of Pingelap, Woleai, Fais Onuon, Ta and Houk

This corresponds to a total sector investment of $69 million for the period 2004-2023.  Projects that were proposed in the May 2002 IDP which either cannot be fully funded during this period or are unable to be commenced are indicated in Tables 5.22 and 5.23. These projects include the improvement of outer island airstrips that are already serviceable. The IDP program does not include major long term commercial airport terminal expansion. This may best be achieved through private sector investment under BOT arrangements or joint venture undertakings between the private sector and the airport entities as these are potentially commercially sustainable activities. 

25 FSM Infrastructure Development Plan FY 2003-FY 2017, May 2002 26 See Annex C for listing of state priorities for 2004-2008²⁷ See Appendix B, Volume 3,Nathan Report for TOR for this study

The Investment Program includes an allowance of 10% of the infrastructure cost funded by the Compact for maintenance. This cost will be funded 50% through the Compact and 50% by the states. An additional allocation has been included for a Small Airports Fund which will provide for maintenance of outer island airstrips that will require government subsidies, unlike the commercial airports that should be self-sustaining from income generated from operations.

5.6.6 Institutional Restructuring and Strengthening

The two areas in the air transportation sector requiring institutional reform are:

Establishment of airport authorities or corporations

Establishment of a Air Transportation Safety Authority (ATSA)

The airport entities should be streamlined, specialised, commercially oriented and autonomous. All revenue generated by the airports should be retained by the airport entities to cover all costs of operation and maintenance, and the costs of eventual replacement of equipment.

The ASTA should be formed to assume the air transport responsibilities of the sector while continuing to rely on the FAA for assistance in the changeover to the new global air navigation and management systems. In addition to traffic control, the ASTA would be responsible for setting up and enforcing standards for commercial aircraft airworthiness, commercial and non-commercial pilot qualifications and airport safety and cleanliness standards. 

5.7          Education

5.7.1          Sector Objectives and Outcomes

The primary specific objectives of the provision of infrastructure for the education sector are:

To ensure that the learning experience is enhanced and diversified. To improve student and faculty interest and morale, and thereby improve the effectiveness of education and significantly increase the student retention rates through graduation from elementary or secondary schools

To remove 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

To continue to assist and strengthen private educational institutions to the nation

To develop facilities improvement programs that address the need for maintenance, renovation and construction of new facilities to support quality student instruction

To develop equipment maintenance guidelines

5.7.2          Existing Education System Facilities

The principal issues related to the existing public school infrastructure are as follows:

In general, public elementary and secondary schools are poorly maintained with failure of power and water supplies a common occurrence. A large number of schools, particularly in Chuuk State, are in a severely deteriorated condition.

There are severe shortages of school furniture, blackboards or whiteboards, wall maps, equipment, tools, utensils and books. These shortages appear to derive from inadequate sector and individual facility management, in particular lack of proper recurrent budgeting.

Few schools have diversified capacity, such as an auditorium, covered sports area, cafeteria, music rooms or adequate facilities for vocational training, home economics and arts and crafts

 These issues, amongst other constraints such as inadequately qualified teachers, low retention rates of students, inappropriate school curricula and lack of vocational training mean that schools are far from meeting the qualified manpower needs of the FSM.

Details of the existing elementary and secondary school infrastructure in each of the states are described below.

Pohnpei

Pohnpei State has 33 public schools, only one of which is a high school.  The Pohnpei Central Island School (PICS) can accommodate only 1600 students, so there are many elementary school graduates that cannot be accommodated at the school. The southern portion of the circumferential road is unpaved and in very poor condition, and it is therefore difficult for students from that portion of the island to commute to PICS on a daily basis.  There are also students from Pohnpei’s outer islands that need accommodation, preferably in a PICS dormitory.  The dormitories have capacity for only 120 students (60 male and 60 female), so several hundred students must seek off-campus accommodations.  A planned second public high school in the southern portion of Pohnpei Island will considerably reduce current constraints on high school capacity, and particularly on dormitory capacity.  Also, upgrading of the circumferential road will make travel between the southern and northern parts of Pohnpei Island much faster and easier, thereby making daily commutes to PICS a satisfactory option, and further limiting demand for on-campus dormitory living.

Each of the five outer island municipalities in Pohnpei has one elementary school. It is reported that all five schools have only a single school building, and none have electricity or water supplies. None of the structures are new, and require at least a rehabilitation effort, but might preferably be rebuilt as more modern facilities.

The breakdown of public elementary and high schools in Pohnpei as of 2001 is indicated in Table 5.24.

Chuuk

Chuuk State has 94 public schools, including eight high schools.  Although there are a few exceptions, in general the conditions of these schools are poor. Inadequate budgeting for maintenance is a principal cause of poor school condition, and, even when funded, maintenance schemes and procedures appear to be less than optimal. 

However, the education sector in Chuuk State is placed in a disadvantageous position by the wholesale inadequacy of other infrastructure sectors.  Many schools do not have an access road, or even an improved trail.  On most islands, schools have no electric power or running water and available water is of poor quality.  Even on Weno Island, where infrastructure is more developed, electricity is unreliable, drainage is virtually non-existent, road conditions are poor, and pressurized water supply is not potable.

The breakdown of public elementary and high schools in Chuuk as of 2001 is indicated in Table 5.25.

Kosrae

Kosrae has seven public schools, one of which is the Kosrae High School.  The Walung elementary school is a prime example of a community taking full responsibility for its local school, including its design, construction, maintenance, and management.  The school is in excellent condition, and has adequate capacity to accommodate student body growth in the future. Most other Kosrae schools are kept in more-or-less satisfactory condition.

The breakdown of public elementary and high schools in Kosrae as of 2001 is indicated in Table 5.26.

Table 5.26 Elementary and High Schools in Kosrae 

Yap

Yap State has 33 public schools of which 13 are on the four closely grouped islands of Yap Proper, and the remaining 20 are on the outer islands.  Three of the schools are high schools. Yap High School serves all of Yap Proper, and there are high schools also on the Falalop Islands of both Ulithi and Woleai atolls.  The Woleai high school is new, and has left the Ulithi Outer Islands High School with excess capacity, since the high school no longer needs to serve the eastern islands.

The breakdown of public elementary and high schools in Yap as of 2001 is indicated in Table 5.27.

College of Micronesia

The COM-FSM national campus at Palikir  has 73 acres of land, which is not yet fully occupied, and the area allows for significant expansion of facilities. Existing buildings are well constructed and maintained.  A large gymnasium has been recently constructed.

The Pohnpei campus is in Kolonia, and occupies the original site of the national campus. This site is no longer adequate, and the campus is suffering severe land area constraints.  Most of the school’s buildings, however, are single-story structures, fairly old, and in fair-to­poor condition, so that redevelopment is under consideration by the campus administration

The Kosrae COM-FSM campus has just a limited area adjacent to the Kosrae High School.  Currently, the COM-FSM Kosrae campus has a multi-purpose building, constructed in 1997, under an FSM Congress appropriation. The building houses the campus administration, a computer laboratory, a science laboratory, and a standard classroom. The school does not have its own library, but uses the fairly well developed library that serves the high school and the community.

The existing Chuuk campus of COM-FSM is located on Weno Island and occupies several old buildings, at high rental cost.  In spring 2001, 600 students were enrolled, and an estimated 200 applicants to enter  had to be turned away because of capacity constraints.  The campus administration acquired, a few years ago, a three-acre site for building a campus, and plans call for constructing a school that could accommodate 1,000 students, but without any dormitories. 

There is a small COM-FSM campus in Yap.  The campus accommodates fewer than 100 students, and offers courses for teaching elementary school and pre-school children.  In addition to the COM-FSM campus in Yap State, COM-FSM has established and operates there the FSM Fisheries and Maritime Institute (FMI). 

5.7.3 Short Term Needs of Education Infrastructure

There is a myriad of short-term facility rehabilitation, upgrading and new education needs in the FSM education sector, but the most important single project is a second high school for Pohnpei. Currently the student retention rate drops from more than 70% in eighth grade to only 44% in ninth, and the principal reason for this is the constraint on high school capacity. This will be provided through the construction of the Pohnlangas High school in Madolenihmw municipality.

A second priority project is the development of a new Weno Island campus of COM-FSM. There is also a lack of sports facilities for schools on Weno and it is proposed to provide a single sports facility to cover all schools on Weno Island.

Details of the many other needs of the elementary and secondary school infrastructure should be finalised subject to the completion of an Elementary and Secondary Schools design study proposed to be undertaken as part of the IDP. This study will address, amongst other things, the need to minimise land area when developing schools to address the land constraint issues that arise in FSM.

5.7.4 Development Needs during the IDP Period (2004-2023)

Elementary Education

There are probably sufficient elementary schools for the student population, but the facilities at the schools are generally inadequate. Most of the elementary schools need to be provided with additional facilities such as appropriate sports facilities, arts and craft areas, a music room and a school cafeteria. Design of the schools should be improved through provision of adequate lighting and use of materials such as aluminium roofing and steel frames that are less subject to rapid deterioration than is the present case.

Secondary Education

While the number of elementary schools is probably now adequate for the school population, this is not the case with secondary schools where capacity is the main constraint to students continuing beyond the end of elementary school and is a principal factor in the lack of qualified manpower in FSM. As can be seen from Tables 5.24 to 5.27 there is a current capacity for over 23,000 elementary school students, but only 5500 secondary school students. Construction of additional secondary schools or expansion of the existing schools is therefore an important priority in the education needs of the nation. In addition the secondary schools must have increased diversified classroom capacity such as additional science laboratories, shops for provision of vocational education and ‘hands on’ experience and home economics facilities.

Post-secondary Education

The development of post-secondary education in FSM is a key need as severe shortages of qualified manpower threaten the sustainability of all the infrastructure sectors. There is a need to develop the engineers, architects and managers who will have the qualifications needed, and will reside and work in the FSM.

With this in mind, the COM-FSM needs to raise and broaden its goals in regard to meeting FSM qualified manpower needs. The five FSM governments, with support from the private sector, need to work with COM-FSM to set new, higher goals with an assurance that funding will be available to enable them to do so.

5.7.5 Proposed IDP Investment Program

The 2002 IDP report proposed an investment of $244 million for education facility investment over the period 2003-201728. While this will meet the sector needs as outlined above, it is probably unaffordable given the availability of funding. A revised capital investment program shown in Table 5,28 has been prepared based on an assumed annual funding from the Compact and other sources for all infrastructure sectors of $35 million per

28 FSM Infrastructure Development Plan FY 2003-FY 2017, May 2002

year. This program reflects the state government priorities for the period 2004 to 2008²⁹. This program includes construction of new high schools in Pohnpei, Southern Namoneas, Chuuk and Walung, Kosrae, a continuous upgrading of elementary schools in all states, construction of a new COM Weno campus and development activities at the COM-FSM National campus and the state campuses in Pohnpei, Kosrae and Yap.

It is proposed that an Elementary & Secondary Schools Design Study³⁰ be prepared. This study will survey all existing public elementary and secondary schools in FSM and, in consultation with the community will prepare school management and development plans. The study will develop design and construction standards for schools that will result in more sustainable infrastructure. Detailed design activities should, however be funded as part of the construction cost.

The timing of the projects as shown in Table 5.28 reflects their priority as follows:

Improvements at Chuuk High School and Weno Junior High

Improvements at Kosrae High School

Improvements to high schools in Chuuk and Yap

Construction of a sports facility for schools on Weno Island

Commencement of program of improvements at elementary schools in all four states

Construction of Pohnlangas High School in Pohnpei

Construction of new high school in Walung, Kosrae

Construction of new high school in Southern Namoneas, Chuuk

Development of new COM-FSM campus in Weno

Redevelopment of COM-FSM Pohnpei State Campus

Development of enlarged COM-FSM campus in Kosrae.

Improvements to COM-FSM campus in Yap

This corresponds to a total sector investment of $134 million for the period 2004-2023.  Projects that were proposed in the May 2002 IDP which either cannot be fully funded during this period or are unable to be commenced are indicated in Tables 5.29 and 5.30. These projects for which funding has not been identified include completing the improvement projects for the elementary schools in all states, development of second state campuses for COM-FSM in Pohnpei and Chuuk, a proposed COM-FSM Nursing School campus in Kosrae and a proposed COM-FSM Fisheries and Maritime Institute in Yap

The Investment Program includes an allowance of 10% of the infrastructure cost funded by the Compact for maintenance. This cost will be funded 50% through the Compact and 50% by the states. An annual allocation has also been included for provision of essential equipment required in the elementary and secondary schools.

29 See Annex C for listing of state priorities for 2004-2008

5.7.6 Institutional Restructuring and Strengthening

The public sector offices responsible for the education sector of the Federated States of Micronesia (FSM) are:

At the National Government level, the National Division of Education (NDE) of the Department of Health, Education and Social Affairs.

At the State Government level, in Chuuk, Kosrae and Pohnpei States, the Department of Education (DOE), and in Yap State, the State Enterprising Education Department (SEED). 

Boards of Education in Yap, Chuuk, and Pohnpei States.

College of Micronesia-FSM (COM-FSM), with a national campus at Palikir, four state campuses, and the Fisheries & Maritime Institute (FMI) in Yap State. 

At the local level, there are parent-teacher associations (PTAs) and school boards.  In Yap State, progress appears to have been made in strengthening school boards and engendering community ownership of local schools. The other states do not seem to have made significant progress in this regard.

There are two principal recommendations for institutional reform and strengthening in the education sector:

The establishment of community school boards in Pohnpei, Kosrae and Chuuk, similar to those already in place in Yap.

Creation of a National Board of Education, an advisory body with a broad mandate of concern for public education, including post-secondary education.

The National Board of Education would oversee implementation of the IDP investment and recurrent cost programs, advise on education sector policies, and conduct inspections of education sector operations in the four states.

5.8          Health

5.8.1          Sector Objectives and Outcomes

The primary specific objectives of the provision of infrastructure for the health sector are:

To construct modern and efficient hospital facilities to meet the health needs of the nation 

To upgrade the curative health system to minimise the needs for referrals to foreign medical facilities.

To develop the capability and provide for a national referral hospital

To provide health care facilities within reasonable access of all citizens

To develop facilities improvement programs that address the need for maintenance, renovation and construction of new facilities. 

To ensure adequate funds for maintenance are budgeted to prevent rapid deterioration of facilities.

5.8.2          Existing Health System Facilities

Elementary and Secondary Education Facilities

The principal issues related to the existing health infrastructure are as follows:

The state hospitals are in poor condition, primarily due to a lack of budget for maintenance (except in Yap state), although improvements are now in place through a $2 million US DOI grant with matching funds from each state

Many items of equipment are out of order, primarily because of lack of capacity for maintenance of hospital equipment.

Demand for hospital care is high, given the high incidence of water-borne diseases, the high incidence of road accidents and the many ‘lifestyle’ health problems. 

Each FSM state has a state hospital. All hospital buildings are structurally sound and adequate in terms of in-patient capacity. Of the four hospitals, only the Kosrae State Hospital is poorly designed for its purpose. All the hospitals require some renovation and rehabilitation efforts. The efforts most urgently required at the four state hospitals are being addressed through $2 million grant support from the US DOI with a matching amount from the states. Further investment will, however, be required in the long term to bring these hospitals up to the required standards

The outer islands of Pohnpei, Chuuk and Yap states also benefit from a medical ship, the Sea Haven, owned and operated by Pacific Missionary Aviation staffed by medical volunteers.

Details of the existing health infrastructure in each of the states are described below.

Pohnpei State Hospital

Pohnpei State hospital is a 104-bed facility constructed in 1978. At the present time the hospital is adequate for the population it serves and the functional/spatial layout of the hospital rooms is adequate. There are some structural problems with the building as well as problems with the plumbing and air conditioning systems. While the maintenance of the hospital is in general quite satisfactory, there are areas where the maintenance staff lacks expertise such as in air conditioning, electrical, carpentry and bio-medical equipment operation and repair. There is no expertise on-island to maintain and repair sophisticated medical equipment, and some cases spare parts for the equipment in use cannot be obtained as the equipment is now out of date

Pohnpei Dispensaries

There are seven dispensaries on Pohnpei Island at Kolonia, Sokehs, Saladak, Madolenihmw, Pohnlangas, Wone and Lukopw. The dispensaries at Pohnlanagas, Wone and Lukopw have been fairly well maintained and only require minor repairs. The Madolenihmw and Sokehs dispensaries are also in fairly good repair but require some structural improvement. The Saladak and Kolonia dispensaries are in less good condition.

In general, the dispensaries have often lacked equipment, drugs and other supplies and are irregularly staffed with health assistants, nurses and/or medical officers. The municipalities are responsible for maintaining their dispensaries, but the Pohnpei DHS is now attempting to reform the system by arranging for the municipalities to enter into formal, signed agreements with the DHS to support, use and maintain the dispensaries within their respective borders in exchange for increased personnel support from DHS and adequate supplies of medicines.

The five outer island dispensaries are in poor condition and need to be replaced. Each of these dispensaries has only a health assistant as staff and there is no immediate prospect of this situation changing. The PMA Sea Haven also occasionally serves some of the Pohnpei outer islands, but much of the ship’s time is spent among the more numerous outer islands in Chuuk and Yap

Chuuk State Hospital

The Chuuk State Hospital is a 140-bed facility constructed in 1971.  The size of the hospital appears adequate for the population it serves. The hospital suffered from many structural as well as mechanical and electrical equipment defects, which have to some extent been rectified under the recent hospital improvements program. However, there is no maintenance budget for the hospital and no on-island expertise to maintain and repair sophisticated medical equipment.

Chuuk Dispensaries

There are 14 dispensaries in the Chuuk lagoon, although it is understood that three of these are no longer operated. The other lagoon dispensaries have also not been performing well, in part due to lack of supplies at these facilities, but also due in some cases to disputes with landowners.

Dispensaries tend to operate more effectively on the outer islands due to the absence of other health facilities and significant community support. although there are problems of inadequate supplies and limited qualified medical services. There are nominally 57 dispensaries in the outer islands, but most are nothing more than an arrangement with an individual paid to control and dispense small stocks of medicines.

Two prefabricated super dispensaries have been constructed in recent years, one of which serves the Faichuk Islands and the other, the outer islands. The Chuuk State Government proposes to increase this network of super dispensaries.

Kosrae State Hospital

The Kosrae State Hospital is a 40-bed facility, constructed in 1971. Due to the many ad-hoc additions that have been made over the years to the hospital, generally the functional-spatial layout is not satisfactory and results in inefficient and ineffective operations. However, the capacity of the hospital is adequate for the population that it serves.

The hospital requires many improvements in terms of the building structure, ventilation, lighting, plumbing, air conditioning as well in repair of out of order equipment. Moreover, there is no systematic approach to preventative and routine maintenance and no on-island expertise to repair sophisticated medical equipment. In general the overall sanitary conditions in the hospital are unsatisfactory and there appears to be a serious need for improved management, supervision and training of custodial staff.  

Other Kosrae Health Facilities

The only dispensary in Kosrae State is a structure in the village of Walung that once belonged to the school, but is now being converted to use as a dispensary. This will, however, require renovation of the building to make it suitable.

Kosrae has health centres that are housed in municipal buildings, but do not have drugs on hand, as do dispensaries. These centres are primarily used for immunisation programs and for pre-natal care, and doctors and other medical personnel visit on a regular basis, generally once a week.

Yap State Hospital

Yap State Hospital is a 43-bed facility constructed in 1979 and is considered to be adequate and appropriate for the population that it serves. The building appears to be structurally sound and the functional/spatial layout efficient and effective.  Maintenance is reasonable and the staff has expertise in air conditioning, electrical and diesel mechanics, although there appears to be no systematic approach to preventative and routine maintenance. As in the other states, there is no on-island expertise in sophisticated medical equipment and some of the equipment is now out-dated and no spare parts are available.

Yap Dispensaries

The majority of the 30 dispensaries in Yap State are constructed of timber and corrugated iron and have been severely affected by termites and rust. They are in poor condition and require almost continuous maintenance and repair. Those on Yap Proper have been closed for several years and will require extensive repair and renovation.

5.8.3 Short Term Needs of Health Infrastructure 

The most urgent short-term need in the health infrastructure sector is the rehabilitation of the four state hospitals. This is currently being done through a $2 million US DOI grant with matching funds from the states.  There is also a need to renovate and, in some cases, reconstruct the dispensaries in all states.

5.8.4 Development Needs during the IDP Period (2004-2023)

The objectives of the health sector during the IDP period are reducing the incidence of illness and reduce the demand upon the FSM health system and to upgrade the system to minimise the need for referrals to foreign medical facilities. The former can be achieved through improvements in other infrastructure sectors such as water/wastewater, education and roads. The second can be achieved through improving the standards of the medical facilities at the four State hospitals and in providing appropriate health care at the dispensaries to reduce the load on the State Hospitals.

In order to reduce referrals to foreign medical services, the merits of converting what are essentially four state health systems into a national system which is able to develop different specialisations in medical services at the four state hospitals has also been discussed in FSM in recent years. In the longer term, it may be appropriate to construct a new National Referral Hospital. This has been considered for funding by the Japanese Government, and is still under discussion.

5.8.5 Proposed IDP Investment Program

The draft IDP completed in 2002 proposed an investment of $35 million for health facility investment over the period 2003-2017³¹. Given the funding already available for the renovation of the state hospitals, and the funding likely to be available for the sector over the IDP period, it is believed that all of the proposed health facilities can be constructed during the 20 year period. Table 5.31 indicates the program for this investment over the period 2004-2023 . This program reflects the state government priorities for the period 2004 to 2008³². The program includes construction of new hospital in Kosrae, some additional improvements in hospitals over and above those being implemented under the current US DOI grant and upgrading of all dispensaries where required and the construction of a National Referral Hospital.

It is proposed that some funding be allocated for activities related to a study to be prepared of the process of transforming the four state health systems into a national system, including a more detailed study of the health needs from a national perspective and the preparation of a more detailed health infrastructure investment program. In particular the study will investigate and recommend institutional working relationships between the State Health Service Divisions, the National Division of Health and a proposed National Public Health Board.

The timing of the projects as shown in Table 5.31 reflects their priority as follows:

Renovations of dispensaries and construction of new dispensaries in all states.

Construction of super dispensaries on Chuuk lagoon an outer islands.

Construction of a new Kosrae State Hospital

Upgrading of state hospitals in Pohnpei, Chuuk and Yap

Construction of a National Referral Hospital

The Investment Program includes an allowance of 10% of the infrastructure cost funded by the Compact for maintenance. This cost will be funded 50% through the Compact and 50% by the states. An annual allocation has also been provided for the provision of essential equipment required by the hospitals and dispensaries.

5.8.6 Institutional Restructuring and Strengthening

31 FSM Infrastructure Development Plan FY 2003-FY 2017, May 2002 32 See Annex C for listing of state priorities for 2004-2008

There are two principal recommendations for institutional reform and strengthening in the health sector:

The establishment or strengthening of Hospital Boards with private sector membership to take on primary responsibility for ensuring that all facilities are being properly used  and maintained.

The establishment of a National Public Health Board, an advisory body that will take a holistic approach to the health sector through advising on health policy, coordination with other agencies on health problem prevention and have an oversight on health sector operations in the four states

5.9          Government Administrative Buildings

5.9.1          Sector Objectives and Outcomes

Government buildings, such as schools and hospitals, are to a large extent covered under the other infrastructure sectors. However, there is also a need to improve existing and construct new government administrative buildings to serve the functions of the Executive and Legislative branches in administering the government’s programs. This was not included in the May 2002 IDP report, but is considered to be an infrastructure cost that should come under the IDP.

The primary specific objectives of the provision of infrastructure for government administrative functions are:

To construct modern and efficient facilities required for government personnel to effectively undertake their functions

To provide an environment that enables equipment used by government personnel to be adequately maintained 

To encourage a high morale and work ethic amongst government employees by providing a suitable work environment

To provide elected officials with suitable office space and chambers in which to conduct their responsibilities

5.9.2 Existing Government Administrative Buildings

These vary from state to state. In Pohnpei, most of the government administrative buildings are fairly old and are not in an appropriate condition in which to undertake government business. This applies both to the Executive and Legislative branches that are housed in one compound, as well as the various government buildings scattered around Kolonia. In Chuuk, the situation is even worse than Pohnpei. Most government administrative buildings are in a very poor condition and need either renovation or complete replacement. This applies to both the Executive and Legislative branches. In Kosrae, a new building for the Office of the Governor and related departments was commissioned in 2003 and will be suitable for the remainder of the IDP period.  However, offices for the legislators still remain to be improved, together with various other government offices scattered around Tofol. In Yap, the government offices are in better condition than those in Chuuk and Pohnpei, but will require improvements during the period of the IDP. There is a more urgent need for an appropriate conference centre to enable inter-government and international meetings and fora to be facilitated.  

5.9.3          Short Term Needs for Government Administrative Buildings

The most urgent short-term for government administrative buildings is the development of a new complexes for the Executive branches in Pohnpei and Chuuk, rehabilitation of other existing government buildings in both states and  construction of a state government conference centre in Yap. The conference centre in Yap could also be hired out to the public for conferences thereby earning revenue for the state government and promoting Yap as a location for inter-state meetings and conferences

5.9.4          Development Needs during the IDP Period (2004-2023)

With the exception of Kosrae, all states will need new Executive complexes during the IDP period. A rehabilitation program for other Government administrative buildings will also need to be developed for all states, including Kosrae. This program will be commenced in Pohnpei during 2004 and will continue in the other states during the period 2009 until 2023. New Legislative Branch complexes are also required in all states during the IDP period, but will not be implemented until later in the IDP period.  With the exception of the short term needs in Pohnpei and Yap as outlined above, it is likely that the remainder of the infrastructure required will be funded outside of the Compact.

The program for rehabilitation of government buildings includes the post offices in each of the four states that is proposed to be funded under the National Government allocation of the Compact. A new post office will be constructed in Kosrae and the existing facilities rehabilitated in the other states.

The FSM national government complex in Palikir is adequate and is currently in good condition. No additional funding is required during the IDP period for this complex.

5.9.5 Proposed IDP Investment Program

The draft IDP completed in 2002 did not make an allowance for the construction of government administrative buildings, but is considered that an investment of approximately $27 million will be required to provide appropriate facilities for state government personnel during the IDP period. Details of the requirements, the costings and the schedule are shown in Table 5.32. This should be sufficient for all requirements for government administrative building investment over the period 2004-2023.  This program also reflects the state government priorities for the period 2004 to 2008^33. The program includes construction of new Executive Government complexes in Pohnei, Chuuk and Yap, a government conference centre in Yap, rehabilitation of government buildings in all states and new Legislative branch complexes in all states.

The timing of the projects as shown in Figure 5.32 reflects their priority as follows:

Construction of a State Government Conference Centre in Yap

Construction of a new Executive Government Complex in Pohnpei

Rehabilitation of Government buildings in Pohnpei

Construction of a new Executive Government Complex in Chuuk Construct

Rehabilitation of government buildings in all states

Construction of new Legislative complexes in all states

The Investment Program includes an allowance of 10% of the infrastructure cost funded by the Compact for maintenance. This cost will be funded 50% through the Compact and 50% by the states.

33 See Annex C for listing of state priorities for 2004-2008

5.10 Telecommunications Sector

The FSM Telecommunications Corporation (FSM Telecom) has rebuilt FSM’s domestic network enabling thousands of families and businesses to receive improved and fisrt time service. Yet this was only the first step as there are many communities living on outer islands currently without service or with limited radio communications capabilities. To reach these outer communities FSM Telecom is deploying a combination of fixed/mobile cellular, very small aperture satellite terminals and wireless local loop technologies.

The FSM is developing a National IT Plan for the use of communications and information technology to enhance the delivery and capabilities of a wide range of services including health, education, emergency and disaster relief, tourism, marketing, e-commerce, government services and law enforcement. A critical aspect of the National IT Plan must be connectivity of the FSM to the world via a fibre optic cable; a submarine cable will provide the much-needed broadband connectivity for hospitals, educational institutions, libraries, businesses etc.

The cost of developing these communications links is high. A submarine fibre optic cable will cost at least $30 million and probably much more to connect all four states. Connecting all four states to the cable is necessary to eliminate satellite delays and to provide the broadband connectivity necessary for all of the states to be able to take advantage of the many benefits this technology will bring. 

The 2002 Draft IDP included an allocation of $30 million for the laying of a submarine cable to connect all four states. While this is an important project and will provide economic and social benefits to FSM, it has not been included in this IDP since it may cost well in excess of that amount and is probably too large a project to be funded from the annual sector grants or the funding generally available from other sources. Additional funding sources either from the private sector or in addition to those that have been generally available for FSM in the past will need to be identified for this infrastructure.

6.        Plan Implementation

6.1          Commitment and Conditions Precedent

6.1.1          Public Information and Commitment

Section 5 of this IDP has outlined a series of infrastructure projects that it is proposed will be funded from a variety of funding sources during the 20 year time frame of the Plan. Some of these projects, that reflect immediate priorities, will be able to be commenced in 2004 or 2005 because necessary planning and design efforts have already been completed.  Implementation of most of the 20 year investment program, however, will only proceed after inputs from some of the in-depth planning efforts described in Section 5. This will result in a continuing re-evaluation of the Plan as these planning efforts are completed and as priorities of the national and state governments necessarily are re-evaluated over time.

Further, in order for major investment projects to obtain funding, these proposals will need to be subjected to full feasibility study including financial and economic analysis before funding agencies are likely to approve the funding. This is already recognized for the Compact funding under the Fiscal Procedures Agreement.

In order for the IDP to proceed along the time frame indicated in this report, social and political activities need to be proceeding in parallel with the technical planning studies. These social and political activities need to address the following issues:

Land tenure problems which tend to seriously impede implementation of many infrastructure projects and which are especially critical in Chuuk State.

Involvement of the private sector in infrastructure planning, design, construction and O&M

Awareness by the community of the importance of environmental preservation of the natural assets of the nation.

A public commitment to the importance of education with the removal of constraints on entrance to high schools, improvement of student retention rates, and on the expansion of post-secondary educational opportunities.

In this context, there is a need for the national and state governments and society in general, to agree on the basic, economic, social, environmental and political goals and commit themselves to the achievement of these goals. This should be a significant outcome of the National Economic Summit due to be conducted early in 2004 and should be reflected in the National Strategic Plan.

6.1.2 Conditions Precedent

Conditions precedent to IDP implementation are intended to motivate governments to take actions to preclude possible impediments to effective and efficient implementation. The conditions precedent for the IDP have not yet been agreed, but it is suggested that the following activities are required prior to IDP implementation. 

Creation of a State Infrastructure Plan Implementation Committees (IPIC), or assignment of IPIC responsibilities to an existing committee or other suitable entity. 

Dissemination of the IDP to a wide spectrum of public and private sector stakeholders.

Conduct of a stakeholder meeting for the purpose of discussing the IDP and the social and political issues that need to be addressed

Statement by the State IPICS to the effect that the proposed arrangements for the Program Management Unit (PMU) have been reviewed and mechanisms for the working arrangements between the states and the PMU have been agreed. 

Following the conduct of these actions, the national and state IPICs would meet to discuss IDP implementation procedures and reporting responsibilities, and to assess possible needs for further conditions precedent to IDP implementation.

6.2          Infrastructure Plan Implementation Committees

6.2.1 Plan Implementation Responsibilities

The national government and the five state governments need to establish accountability for the IDP implementation process. It is proposed that five Infrastructure Plan Implementation Committees (IPIC) be established, one at the national level and one at each state level. Members of these committees that will be responsible for driving IDP processes should have a diversified membership that represents the several infrastructure and beneficiary sectors. In accordance with the thrust in FSM in recent years to reduce the public sector, it is proposed, where appropriate, that existing committees and secretariats take on the role of the IPIC. The National Steering Committee for the IDP has indicated that the national Economic Policy Implementation Committee (EPIC) will be assigned to take on the responsibility for IDP implementation and the Department of Transportation, Communications and Infrastructure (DTC&I) will take on the duties of the national secretariat.

6.2.2          IPIC Functions and Schedule

The proposed Terms of Reference for the IPICS can be found in Volume III of the draft 2002 IDP report. It is critical that the IPICs be established or become functional as soon as possible after approval of the IDP since an early function will be in ‘selling’ the IDP throughout FSM through a process of wide consultation.

As soon as possible after the commencement of the IDP period, a launch meeting or workshop should be conducted in order to communicate the Plan’s fundamental social, economic and environmental objectives and obtain public and institutional commitment to implementation of the Plan.

Following the launch meeting, it is proposed that a second workshop be conducted to agree on IPIC implementation procedures, and especially to develop effective working relationships between the state and national levels. An IPIC Functions and Procedures Document should be prepared prior to this meeting for discussion purposes and finalised after the meeting, by no later than March 2004. The IPIC should also ensure early implementation of the critical IDP projects scheduled to commence in 2004 for which significant planning and design activities are not required or have been completed. Agreement by the IPICs on the form of program management (see section 6.3) will be required at the commencement of implementation of the IDP by January 2004, and the scale of the planning, institutional and database activities to be conducted under the IDP will need to be agreed during 2004 to allow these programs to proceed.

The national IPIC, with the assistance of the four state IPICs and the PMU, will need to produce and distribute its first annual report on IDP implementation as soon as possible after December 2004.

The estimated cost for maintaining the IPICs is indicated in Table 6.1.

6.3          Infrastructure Plan Implementation Committees

6.3.1          Need for Program Management Units

The size of the IDP investment program is such that if it is to be executed successfully and according to schedule, substantial improvement of the implementation capacity currently available in FSM will be required. Further, the Terms and Conditions of Infrastructure Assistance of the Fiscal Procedures Agreement for the Compact (which represents over 50% of the IDP budget) requires, amongst others, the following documentation prior to draw down of funds.

Evidence of title leasehold agreement, or other legal authority for use of the land upon which the capital improvement project is to be constructed.

A detailed project budget of costs for planning, engineering and design, real estate costs, supervision and administration, construction, construction management and inspection

A scope of work that describes the work to be performed and the schedule for planning through to completion of construction. A certified professional engineer or architect shall sign both the scope of work and budget for each construction project.

Prior to the draw down of funds for actual project construction, the Government of the United States may request to review a set of the construction plans and specifications, a revised detailed cost estimate and a detailed construction schedule.

Reporting requirements in accordance with the FPA will require quarterly reports submitted within 30 days after the end of the quarter to which it applies. The report shall include accounting information and a status of progress for each project funded by the Compact grant. A Federal Cash Transactions Report also needs to be submitted on a quarterly basis. This report will need to provide actual dates, project identification and amounts of draw down for the quarter.

The FPA also outlines the required Procurement procedures for all Compact grants which require documentation on tender evaluation, methods of procurement permissible for different contract amounts and the required program monitoring, performance reporting and records retention.

It is clear that the IDP will require a high level of program management, technical skills, financial and reporting skills to undertake the detailed planning, technical analysis, resource mobilisation, financial management, and reporting systems to meet the requirements of the funding agencies and to successfully implement the IDP. During the initial year, there will need to be a period of developing systems for program management and providing the capacity building necessary to implement these systems. This capacity needs to be built within the national level secretariat of the IPIC to provide support to the states as necessary and to ensure that project documentation is in order to meet the requirements of the FPA and the other funding agencies.

The required program management activities are outlined in more detail in Volume III of the draft 2002 IDP

6.3.2 Structure of Program Management Organization

It is proposed that Program Management Units (PMU) be established both within the national level secretariat (that is, within the DTC&I), and within the state secretariats. The state PMUs would be responsible for program management at the state level including annual state program reviews, bidding and award of contracts, contract supervision and reporting to the national PMU on project performance. The national PMU would be responsible for development of program management systems, training of national and state personnel in these systems, review of project documentation to ensure compliance with funding agency requirements, preparation of annual consolidated FSM program reviews and consolidated FSM performance reports as well as program management implementation assistance to the states as required. 

The national PMU may be staffed by existing personnel from the DTC&I but will, at least during the first 3-5 years of the IDP, require assistance from either a Program Management consultant or recruitment of several key staff on an individual basis. The latter is probably the less expensive option if appropriate personnel can be recruited. The PMU needs to include at least one registered engineer or architect to sign the scope of work and budget for each project funded through the Compact in accordance with the FPA. The minimum requirement would be two senior expatriate personnel; a Team Leader with a background in Program Management/Contracts and a Civil Engineer with the required administrative assistance. Given the extent of the program in Chuuk, it may be also appropriate to include an additional Project Engineer to be located in Chuuk to assist the Chuuk State PMU implement the program. The cost for this assistance would be in the order of $600,000 per annum, as indicated in Table 6.1. This represents less than 2% of the average infrastructure budget under the IDP and is low by standards of the program management costs of other programs such as the recent ADB funded Water Supply and Sanitation Looan, where the PMU costs were in excess of 10% of the loan amount.

6.3.3          Mechanisms of Funding the National PMU

There are several options for funding the assistance package required by the national PMU.

It could be provided as an aid package either through the US Government in addition to the Compact Infrastructure Fund or another aid agency. This could include concessional loan funding from ADB.

It could be provided through an allocation of in the order of 3% of the Compact Infrastructure funds for Program Management through the same mechanism as the 5% allocation for maintenance. This would deducted from the amount used for the implementation of each project.

It could be provided through the Compact Infrastructure funds, on the basis that the states would contribute, say 3% of their allocation of the Infrastructure fund, but then be billed against this based on the actual amount of assistance provided by the national PMU to the states. This billing would then be drawn down against the initial contribution. 

Another variation on the second option is that there would be no fixed contribution from the states, but that they would be billed based on the actual amount of assistance provide by the national PMU and would be expected to pay from their infrastructure fund based on the billing.

Since no funds have been allocated to the PMU for the 2004 budget, it will be necessary to obtain grant support outside the Compact infrastructure funding for at least the first year while the systems are being established and the value of the PMU assistance is being evaluated by the States. Following an initial one or two years of grant assistance, it is recommended that future PMU assistance funds are drawn from the Compact infrastructure funds on the basis of the second option described above. Since the IDP is expected to commence in early 2004, and there are significant program management needs during the first year of implementation, it is essential that funding agencies be approached as a matter of urgency regarding funding for the national PMU assistance.

6.4          Public Sector Institutional Reform, Restructuring and Strengthening

The need for public sector reform, restructuring and strengthening in each of the infrastructure sectors has been discussed to some extent in Section 5 and is further summarised in the following section. The 2002 IDP report allocated funding for a range of institutional strengthening studies to be conducted in the first few years of the IDP. It is considered that several of these programs can be funded internally as part of the overall government restructuring program so these studies have been reduced accordingly. Details of the studies still requiring funding is indicated in Table 6.1.

6.4.1          Public Sector Utilities

The electric power and water/wastewater sectors are the two IDP sectors where public sector institutional reform, restructuring and strengthening has already been accomplished to a considerable extent. The four FSM States created public utilities corporations or authorities,

during the 1990s, to upgrade public sector capability for meeting its responsibilities in the power and water sectors. In Pohnpei, Chuuk, and Yap States, the public utilities corporations have responsibility for both the power and the water sectors, whereas the Kosrae Utilities Authority (KUA) has responsibility for the power sector only. The YSPSC also has legal responsibility for solid waste management.  However, YSPSC authority over the solid waste management sector had not actually become effective, as of December 2003.

Management of all of these public utility corporations recognize there are further needs for institutional strengthening.  Before institutional strengthening programs can be determined, however, it is advisable to consider the possibilities for further reform and restructuring.  Specifically:

There needs to be established a regulatory authority for the power and water sectors. This role could possibly be taken by a branch of the state environmental protection agencies

The water sector in Kosrae needs to be transferred to the KUA to enable cost recovery to be achieved through user pay systems

The public utility corporations need to outsource development and maintenance programs currently undertaken in-house to reduce costs and increase efficiency.

Once agreement is reached on the ultimate goals of public utility corporation reform and restructuring, needs for strengthening can better be identified.  There are at least two areas where institutional strengthening will be important in the early years of the IDP period:

Strengthening boards of directors through additional training and extending the selection of members beyond FSM to foreign utilities that are more advanced technologically and in terms of financial sustainability, thereby increasing the level of know-how on the boards.

Strengthening oversight capability, especially for entrance into well designed contracts, and effective management of contracts.

6.4.2          Solid Waste Management

Although the states of Kosrae, Yap, and Pohnpei made progress in setting up solid waste management systems during the 1990s, none of these states yet has an adequate institutional approach to the sector, and the state of Chuuk has yet to effectively begin to meet solid waste management needs. 

In order even start to develop an acceptable solid waste management program in any of the states, institutional change must be effected urgently. The recommended approach is:

•             Legislate to place overall authority for solid waste management to an appropriate government agency that could be either the municipalities of the state public works departments. Assigning responsibility for solid waste management at this stage to the public corporations is not considered appropriate given the need for the corporations to first achieve financial sustainability for the power and water sectors.

Encourage outsourcing of most of the solid waste management activities leaving the role of the responsible government agency as one of essentially contract management and performance reporting

Provide the state environmental agencies with the authority to enforce legislation to relating to effective solid waste management.

Establish Solid Waste Minimisation Councils in each state to arrive at a strategy for diverting large proportions of prospective future solid waste away from landfills.

6.4.3          Roads and Pedestrian Facilities

The principal recommendation for institutional reform in the roads sector is to reduce the size of the road agencies that have not been effective in providing adequate road maintenance and increasing the degree of outsourcing for construction and maintenance. The role of the road agencies could be limited to planning, inspection and contract management.

6.4.4 Maritime Transportation

There are two areas of institutional concern in the maritime transportation sector – port development and management; and maritime safety.

It is recommended that the other states follow the lead of Yap and create an independent port authority that will retain all revenue generated from operations, and will have full responsibility for making investments and for its debt service and operating costs. It is not recommended that seaports and airports are combined in a single organization such as is the current situation in Pohnpei.

With regard to maritime safety, there is a need to create at the national government level a Maritime Safety Authority. This Authority would be responsible for ensuring navigational aids are provided, coordination of the hydrographic survey and mapping activities, provision of coastal communication stations, inspection and certification of vessels for seaworthiness, certification of crew training standards, control of loading of vessels and search and rescue needs.

6.4.5 Air Transportation

The air transportation sector requires institutional changes comparable to those just discussed for the maritime transportation sector.  

State airport authorities are needed for administration of the international airports and to assist their respective state governments in the development, maintenance and operation of small airports and airstrips, with work on small airports proceeding through contracts with private contractors.

A national Air Transportation Safety Authority (ATSA) is needed to make it possible for FSM to meet its air traffic safety obligations and to regulate domestic air transportation services.

ATSA will have oversight duties, including inspection of air traffic safety facilities and equipment, airport runway inspection, domestic airline maintenance operations inspection, domestic commercial aircraft inspection, and pilot testing, certification, and licensing. Private contractors will carry out other air traffic safety functions, including air traffic control, aircraft guidance system installation and maintenance, and meeting flight information region (FIR) responsibilities.

The airport authorities will be mainly concerned with development, maintenance and operation of their respective airports, and will enter into a variety of agreements and contracts for this purpose.

6.4.6 Education

There are four main institutional initiatives recommended for the education sector.

Increased coordination between the College of Micronesia and other post-secondary and training programs in order that COM-FSM can design programs appropriate for the workforce needs of FSM;

Increased coordination between secondary education and post-secondary education in order that the post-secondary institutes can design programs that address the anticipated knowledge of students on completion of secondary school;

Establishment of a national Board of Education that would provide the necessary guidance to ensure the education programs address the future workforce needs of FSM, together with strengthening of the State Boards of Education to provide inputs into this function; and

Establishment of School Community Boards in each state, as has occurred in Yap in order to obtain community involvement to ensure that the schools are well maintained and in all respects adequate to the task of educating their students

With regard to the latter, an effective school board will include among its members leaders of the community and school officials.  It is useful, also, to have at least one member on each board that is knowledgeable about the ultimate objectives of elementary and secondary education, again to ensure that a measure of coordination is developed and maintained.

6.4.7 Health

As the health sector is currently developed and operated, it comprises four state systems, and does not effectively constitute a national system. Currently each of the four state governments has a Department of Health Services responsible for running the state hospital, dispensaries, and for carrying out public health campaigns. However, the condition of the health infrastructure tends to be sub-standard. Transformation of the health sector into a national system could significantly raise health standards in the country.  In order to do this, there must be a national institution that is capable of identifying the potentials for specialization and coordination, developing an action plan for realization of the identified potentials, and driving the implementation effort.

In order to achieve this, it is recommended to create a National Public Health Board (NPHB) with responsibilities for advising on health policies, advising and handling coordination with other economic sectors on health problem prevention programs and public information campaigns and conducting regular inspections of health sector operations in the four states, and advising the NDH on any needs for penalties or other actions to improve standards of performance and/or cost control.

6.5 Databases and Planning Studies

As it currently exists, the IDP represents the product of a broad-brush planning effort, amended to take into account the comments of the four FSM State Governments and of the IDP National Steering Committee (NSC) on the draft IDP report.  For the most part, investments included in the IDP are urgently required by FSM, and this is especially true for investments scheduled for the first quinquennium of the IDP period.  Nevertheless, there are design options for most of these projects, and they should therefore be subjected to more in­depth evaluation, including feasibility analysis. Once assessed as feasible, preparation of final designs, construction specifications and cost estimates can proceed, but these activities would be considered as part of the construction cost of the project.

However, even before most planning efforts get underway, there are needs to prepare for effective planning, by providing some basic databases and maps.  Much of the database development required is ongoing, and there is only a need in such a case to supplement funding, and thereby make possible accelerated completion of the database development and mapping efforts.

Only when the various planning efforts have been completed, with results finalized on the basis of comments received on the draft reports and designs, will it become possible to “finalize” the IDP.  Even after finalization, there will be continuing needs for monitoring implementation progress, and amending the implementation schedule to keep it as realistic as possible.

Details of the proposed planning studies and database development are indicated in Table 6.1

6.5.1 Database Development

There is a need for an up-to-date GIS on the FSM and each of its islands and surrounding seas. Much of this information should become available by the time that the first of the recommended planning studies get underway in 2004, when all of the geographic information should also be available.  

Hydrographic surveying and mapping is also needed, for planning in the maritime transportation sector.

6.5.2 Planning Studies and Schedule

The planning studies that need to be carried out during 2004 to 2008 are identified and briefly discussed below. The Terms of Reference for the planning studies are included in Appendix B of Volume III of the 2002 IDP report. The scope of some of these studies has

been reduced, since the preparation of detailed designs and specifications for the infrastructure projects should be included in the construction cost.

Chuuk Lagoon Electrification Master Plan.  The Plan will produce outline designs for the electrification of inhabited islands of the Chuuk lagoon.  For the smaller islands, hybrid diesel/solar energy systems will be considered.  The Plan will identify all system maintenance and operational needs, and will identify appropriate rate structures and levels for full cost recovery.

Solid Waste Disposal Needs Minimization Study.  The study will recommend a strategy for reduction of the total amount of solid waste that needs to be disposed of at landfills.  Strategies will include policy introduction to limit some types of solid waste, waste material recycling within FSM or shipment to external recycling locations, and other approaches for minimizing needs to dispose of solid waste.

Solid Waste Management Landfills Plan. The Landfills Plan will be conducted several months after the Disposal Needs Minimization Study, in order to ascertain how effectively waste quantities are being reduced or diverted from requiring disposal at landfills.  The Landfills Plan will recommend an effective and efficient system of disposal for each of the principal islands, and other islands of the Chuuk lagoon, and will examine in a more general manner needs for waste disposal on the outer islands.

Primary Roads Master Plan. The Plan will provide final outlines for completion and upgrading of existing circumferential and other primary roads, and for recommended new roads on islands of the Chuuk lagoon. During conduct of the PRMP, it is intended that road agency staff will be fully involved, in part for technology transfer purposes.

Weno Island Waterfront Redevelopment Plan.  There is a need to redesign the Weno Island western waterfront for purposes of serving adequately the sea transport services industry, the fishing industry, and the tourism industry. The construction of a passenger ferry terminal is critical for establishing regular public ferry services within the lagoon, and also for improving the longer distance ferry services to the Chuuk State outer islands.  The Weno Island Waterfront Redevelopment Plan will also give attention to the plan implementation process and in particular to dealing effectively with land tenure considerations.

Air Transportation Development Plan.  This planning study will provide outline designs for airport improvement projects, including passenger terminal expansion projects, runway extensions that the study finds feasible, apron area expansion, and any other recommended improvement projects.  In addition to the four international airports, the study will give consideration to upgrading the Woleai airstrip to airport status, enabling turboprop aircraft to stop there when operating between the Chuuk and Yap airports.  The planning effort will also consider the needs for new airstrips on the outer islands. 

Maritime Transportation Development Plan.  This planning study will provide outline designs for recommended port development projects, including entrance channel improvement projects, the rehabilitation or upgrading of existing wharves and quays, expansion of storage and holding areas, and other improvements, and will provide specifications for appropriate vessels to provide new or improved maritime transport services. Passenger ship and ferry terminal areas, outside of the commercial ports, will be identified, with recommendations for their capacity, design, shore-based equipment and facilities, and operations. For all ports and terminals, recommendations will be made for attaining financial sustainability.

Elementary & Secondary Schools Design Study.  The study will survey all existing public elementary and secondary schools in FSM, and will hold community meetings to discuss each school. The study will then identify design implications of these objectives relative to existing school facilities and areas, and will reach agreement with leaders of the community on preliminary designs. The study will also consider and make recommendations regarding national and state Board of Education membership, responsibilities, and procedures. 

College of Micronesia-FSM Master Plan Study.  The study will provide final plans for expanding the national and state campuses of COM-FSM to meet the needs of the nation in terms of the numbers and qualifications of manpower required for economic sustainability.  

Health Sector Master Plan Study.  The study will recommend an approach for transforming four state health systems into a national system. The study will give consideration to health problem prevention, as well as curative services, and will recommend an array of desirable prevention initiatives.  The study will recommend institutional working relationships between state Health Service Divisions, a National Health Service Division, and a National Public Health Board (NPHB).

Risk Assessment Related to Natural Hazards. These studies should be conducted at the state level and focus on existing risks to infrastructure (e.g typhoon, landslides, drought) as well as determining how those risks will be increased as a result of changes in the future, including the consequences of global climate change. The study will develop guidelines and identify and recommend other measures to ensure the exposure of infrastructure to current and future risks are reduced to acceptable levels

6.6 IDP Implementation Schedule

6.6.1 IDP Finalization

It is now anticipated that with the submission of this report, that the IDP will be approved by the state and national governments at the National Economic Summit in early 2004. The recommended planning efforts are needed, however, for in-depth analysis of the IDP investment program, and there will undoubtedly be many changes deriving from those study efforts.

Each of the planning studies will need to have its own National Steering Committee, which will provide comments and guidance during the course of study. When the draft report for a planning study becomes available, however, review should be extended beyond the NSC, to all of the state governments involved and to the national and state IPICs and the core stakeholder groups that are appropriate to the sector in question. Ideally, a national

stakeholder workshop should be held after completion of the draft report for each planning study, and IDP funds for IPICs reflect the costs of holding such national workshops.  

The national IPIC, through the national PMU, is charged with making recommendations on how the IDP is to be changed to take into account finalized planning study findings and recommendations.  If the planning schedule can be maintained, as currently set forth in the IDP, all planning efforts will have been finished by early in 2007.  Thus, at that point in time, the IDP can be finalized, in the sense that it will then incorporate all of the results of in-depth planning studies.  Should there be delays in project implementation, however, the IDP will require further adjustment after 2007, in order that it is kept realistic in regard to implementation schedule.

6.6.2 Proposed Schedule

The schedule for implementation of the IDP is very ambitious. The implementation period can essentially be divided into four stages as follows:

Preparations, including establishment of IDP management.

Conduct of planning studies.

Project implementation.

Setting up mechanisms to provide assurance of adequate funding to meet maintenance needs and other critical recurrent costs.

The preparation stage must be completed by mid-2004 or it will prove impossible to keep to schedule during the first IDP year. Planning studies are scheduled for 2003-2007, and the importance of coordination among these studies makes it critical that none of them be delayed. The implementation of some projects for which detailed planning has been completed or is in progress can proceed during the 2004-2007 planning period. There are some critical projects in this group, including Pohnpei Airport pavement overlay and rehabilitation of Weno Power plant generators and other facilities.  Most project implementation, however, can only get underway after 2006, as final designs and construction specifications become available.

Recurrent funds would not normally be included in an investment program.  However, the past record of maintenance of infrastructure, or rather the lack of attention to maintenance, argues for giving special attention to this funding need and this is required for the Compact funding under the Fiscal Procedures Agreement. Moreover, schools and hospitals require replenishment of equipment, furniture and materials, since there are chronic, serious shortages that must be addressed.

6.6.3 Schedule Adherence Concerns

The size of the IDP far exceeds any investment program implemented in the FSM to date, and in the past the record of implementation capacity of the five FSM governments has not been good. This emphasises the importance of developing an effective PMU at the national level, with adequate resources to manage a program of this magnitude, provide the required documentation to the funding agencies to maintain the program funds flow and provide assurance on the standard of construction of all projects implemented under the program

Now that the IDP report has been finalized, there is also a need for a major effort on the part of all five FSM governments to ensure that the FSM private sector is fully involved with IDP implementation from mid-2004 onward.  This report is recommending that the IPICs hold meetings at the state and national levels with stakeholders to discuss the IDP and its implementation in detail, and to obtain general stakeholder support and commitment.  Core stakeholder groups (CSGs) should be formed for each sector in each state to give good assurance that the private sector will remain fully involved with IDP implementation throughout the IDP period.

Provided that the five governments and their respective IPICs can ensure early 2004 mobilization for the PMU, this will help considerably to maintain implementation momentum through the end of the planning study period.  A good beginning will help the IPICs to keep to IDP implementation schedule through the end of the period.

6.6.4 Schedule Adjustment

PMU will be responsible for recommending annual adjustment of the IDP implementation schedule. Initially the adjustments required will include those made on the basis of recommendations of planning studies, as these recommendations shall be confirmed or amended by stakeholder meetings held for that purpose.  Schedule adjustment will also be necessary for any delays in conduct of planning studies and/or in implementation of capital investment projects.

Whenever the nature and scope of projects require adjustment, the concerned state governments will need to be involved in the adjustment decisions.  When adjustment is being made only to reflect implementation delays, however, the national IPIC would appear to be the appropriate body to make adjustment decisions. 

Depending on how well IDP implementation proceeds, the repeated need to adjust implementation schedules for one or more infrastructure sector and/or for one or more FSM state could become embarrassing.  Even so, it is important that adjustments continue to be made.  If current schedules for implementation become unrealistic, the IDP could become irrelevant. If, on the other hand, necessary adjustments are made throughout the implementation period, the IDP can be kept relevant for each of nine infrastructure sectors in each of four FSM states.

Annex A Infrastructure Sector Strategic Planning Matrix 

Annex B Proposed Projects to be Undertaken Under IDP by State (US$ ‘000)

115 Annex B: Proposed Projects to be Undertaken Under IDP by State

117 Annex B: Proposed Projects to be Undertaken Under IDP by State

119 Annex B: Proposed Projects to be Undertaken Under IDP by State

121 Annex B: Proposed Projects to be Undertaken Under IDP by State

123 Annex B: Proposed Projects to be Undertaken Under IDP by State

Annex C Proposed Projects to be Funded Under Amended Compact Infrastructure Grant (FY2004-2008) by State

125

Annex C: Proposed Projects (FY2004-2008) by State 127

Annex C: Proposed Projects (FY2004-2008) by State 129

Table C.3 Pohnpei State