From Matangi Tonga Magazine Vol. 14, no. 2, May 1999.

The General Manager of Tonga’s new Port Authority, Tu‘itupou Fotu, believes that there is a desperate need to improve the port facilities, and the management of Tonga’s ports.

He said that the criticism of the PA, by politicians, shipping companies and shipping agencies, was due to their not understanding that there is a need for change. Tu‘itupou said that the effort by politicians to throw out the Port Authority Bill last year, succeeded only in excluding Vava‘u and Ha‘apai from the authority. “It is an unfortunate decision because of the new wharves and the build up that has been taking place in Pangai and Neiafu. These facilities need to be insured and to be well maintained, something that can be done by the Port Authority, but not by government [through the Ministry of Marine and Ports].”

Tu‘itupou, a former secretary of the Ministry of Marine and Ports, was seconded early this year to be the General Manager of the Port Authority for three years. To improve the services offered at Queen Salote Wharf and to maintain the port facilities at a world standard, he said there was a need to take away the management of the port from the ministry and give it to a profit driven entity such as the Port Authority.

Tu‘itupou pointed to the financial difficulty that his ministry had faced in trying to manage the port. He said that government allocated about a $1 million annually for the ministry, “at the end of the financial year the same amount plus a little surplus flows back to the Treasury and goes straight to the Government’s General Revenue.”

The ministry used to be responsible for the handling of cargo on the wharf, and it hired a private company to do this job, but it was government’s responsibility to provide the equipment. Government neglected to maintain some of its commercial assets, and the public had complained about poor facilities and inefficiencies in the handling of cargo in the ports.

To find a solution to these problems Tu‘itupou said government accepted the world-wide conviction that the Private Sector could manage businesses better than government. “That is why the formation of a Port Authority was proposed and was accepted by government. The Port Authority has taken over the commercial operation of the Port of Nuku‘alofa, leaving the ministry to concentrate on regulatory and policy matters—and in the meantime the management of the Port of Neiafu and Pangai.”

Tu‘itupou said that revenue for the Port Authority will come from berthing charges, and the wharf charges. The list of expenses that had to be covered included the salaries of the 52 employees of the Authority, the repayment of loans, depreciation, insurance, employees’ benefits, and income tax. There were also dividends and excess working capital, and the remuneration of the chairman and the directors of the Authority. The board members appointed by Cabinet to serve for a term of three years are: chairman ‘Uhila Liava’a, Deputy

Chairman Kelepi Makakaufaki, and the three directors Lisiate ‘Akolo, Penisimani Vea, and Semi Vete. The two alternate directors are Tevita Lavemaau and Samuela Tukuafu. Tu‘itupou said that a director could serve only two terms with the Authority.

The claim that a more expensive berth rate, and new wharf handling charges would be introduced and that it would mean more expensive imported goods, was shrugged off by Tu‘itupou.

Tu‘itupou said that the new berth rate of eight seniti per gross tonnage per hour was established after careful calculation using the old rate and the number of ships that called into Nuku‘alofa over a period of three years. The new rate is based on the average figure over three years.

“The difference is that it is easier and faster to work out.” Tu‘itupou said that under the old rate six services such as pilotage, harbour dues, light dues, tonnage, mooring and berthing were charged separately. He said that the new rate is the same as the old rate but it was so difficult for some people to accept, that they insisted on either going back to the old method or to a method that would be acceptable for just one company but not for every one.

Meanwhile, Ma‘ake Faka‘osifolau, the Managing Director of Mark Shipping Ltd. is one who believed that the Port of Nuku‘alofa was too small to be managed by a high powered Port Authority. “There are port authorities in New Zealand and Fiji, and they need such a managing body because of the high number of ships that are using their ports, but for Nuku‘alofa with about four or five ships a month, it will be an enormous financial burden,” he said. Ma‘ake favoured the old system when the port was managed by the Ministry of Marine and Ports, operating with a budget from government, “their objective was to offer a service, cover their expenses and make a little profit. What we have now is a profit-driven organisation and the only way that it knows how to make profit is to increase its charges.” Ma‘ake praised the Members of Parliament for Vava‘u and Ha‘apai for their fight to exclude their ports from the authority of the Port Authority.

Ma‘ake predicted that fewer ships would call into Nuku‘alofa if the Port Authority was not able to keep their rates down. “Some of these big container ships will not call into Nuku‘alofa to drop off only a small number of containers if there will be a very high charge based on the GT of the ship. So if the rate is too high the small amount of Tongan cargo will be dumped and lost in some other ports in the Pacific,” he said.

Charge the importers

The Chief Executive of the Pacific Forum Line, John MacLennan, who visited Tonga at the end of March, expressed mixed feeling about the Port Authority. He was pleased that government had made a move to improve the management of the Port. “To be honest with you there has been a lot of inefficiencies down there, there are some old practices that have been going on for many years even before Forum Line came in. So it is good that they have a new operation in place, and we are hoping that they will streamline the operation. If it will be more efficient then it should keep costs down.”

John said that the Port Authority was looking at increasing the berth rate but negotiation was still going on. “Their initial proposal meant that we (the Pacific Forum Line) would pay out over $150,000 per annum, but there has been a lot of discussions and it is not going to cost us as much. It will be more than what we are paying now, but the Port Authority is reviewing their method of charging.”

John said that any rise in the berth rate would eventually hit the men in the street, “the shipping companies can’t absorb the rise, so they will have to charge the importers. The freight charge will remain, but there will be an add on of all the port charges, and the importers will have to pay—and the man on the street will have to pay more.

“If the charges become unbearable then we have to ask ourselves, is it justified to put three ships through Tonga every month or not? They have to be very careful with the cruise ships because they might decide to go somewhere else.”

John was optimistic because of all the capable people in the Port Authority and he said that, “the Port Authority is prepared to listen to our views and they may be able at the end to come up with an acceptable solution.”

Unfair criticism

The Chairman of the Port Authority, ‘Uhila Liava‘a, said that the criticism of the Port Authority was unfair. It was levelled when the PA was not in full control of its own destiny, “there is a lot of data that we are still waiting to come from government, such as our liabilities, assets, boundaries etc. I do not know how long we will wait before we can proceed and take action, but this is a very young organisation and it should be given a chance to grow.”

‘Uhila said that the concern over the possibility of the Port Services Ltd. raising their charges on the handling of cargo on the wharf was ill founded. “The first thing that the Port Authority did was to call for tenders for a company to take over the handling of cargo on the wharf, a former responsibility of the Ministry of Marine and Ports. The Port Services Ltd. won the cargo-handling contract and there is an agreement that they will not increase charges during the first 12 months, starting on February 16. Any rise in charges has to be approved by the Port Authority.”

‘Uhila and Tu‘itupou were convinced that the Port of Nuku‘alofa could become the best port in the Pacific for the trans-shipment of containers. Tu‘itupou said that Nuku‘alofa had more room to expand than say, Suva, and had the potential to have a big and well-managed port.

The Chairman, ‘Uhila, however held a different view on the matter. “We could have the best port in the world but if our economy is not vibrant then nothing much is going to happen in the wharf, so the emphasis should be in trying to get the country out of this economic recession,” he said.

The Port Authority has taken over not only the assets of government, which is the sole owner of the Authority, but also all its liabilities, including a loan of about $4.5 million.