Case Studies

In late 2018, the Pacific Private Sector Development Initiative (PSDI) was asked to support the preparation and execution of a competitive tender for a cargo-handling concession at the port of Nuku’alofa, Tonga. This builds on earlier assistance to the Ministry of Public Enterprises to develop a performance improvement strategy for the Ports Authority of Tonga (PAT) that identifies opportunities to mobilize private sector capital and expertise. The Strategic Review, which identified opportunities to improve PAT’s operating efficiency, service delivery, and financial sustainability was endorsed by Tonga’s Cabinet in November 2018. This led to the establishment of the Public–Private Partnership Working Group.

In 2019, PSDI assisted the working group in preparing a cargo-handling concession, with the aim of contracting a sole provider to integrate all cargo-handling services at the Queen Salote International Wharf. These services had been provided in a segmented manner and through short-term contracts, disincentivizing investment in equipment and training. The proposed concession is designed to improve port operating efficiency, develop the Tongan stevedoring services sector, and reduce fiscal risks for PAT. PSDI assistance included support for a competitive tender process that reached the final bid evaluation stage. However, the tender was paused at the request of the Cabinet in August 2019.

In August 2020, the Cabinet instructed the PAT board to conduct a new tender process, reserved for Tongan-owned companies. PSDI supported the new tender process, issuing tender documents in February 2021 and supporting the working group to complete its bid evaluation in July 2021. The PAT board reviewed and endorsed the report in September 2021. The Cabinet subsequently endorsed the bid evaluation report and instructed PAT to negotiate a contract with the first-ranked bidder. As the PAT board had changed in early 2022, it required a new briefing and negotiation strategy. This final hurdle was cleared in June 2022, securing the agreement of the PAT board to begin contract negotiations.

This transaction support for a potential public–private partnership illustrates the benefits of one of PSDI’s key features—the flexibility to quickly mobilize while the appetite for reform is strong, to demobilize when activities are put on hold, and to quickly remobilize once activities can be resumed. During the coronavirus disease (COVID-19), PSDI was able to restart and implement the tender process despite the suspension of in-country missions. The transition to remote work was straightforward, in large part because of the strength and depth of PSDI’s existing relationships.

This case study is taken from the PSDI FY2022 Annual Progress Report. Read the full report here.