Privatizing ocean transportation to Manu’a discussed in House hearing
Privatizing ocean transportation service for the Manu’a islands was raised during a House Transportation Committee hearing where Port Administration deputy director Christopher King and ASG Shipyard Service Authority chief executive officer Moefa’auo William Emmsley were witnesses to discuss ASG vessels serving the Manu’a islands.
During the hearing last Thursday, Rep. Pulele’iite T. Liamatua Jr., brought up with the witnesses a statement before the same committee a few months back by American Samoa Power Authority executive director Utu Abe Malae, who suggested privatizing ocean transportation service for the Manu’a islands instead of having it handled by the government.
Pulele’iite noted that privatizing Manu’a service was done in the past and wanted to know from the two ASG officials if this is a good thing for the government and what their opinions are if this service is provided by a private company.
King recalled back in 2004/ 2005 when this service was privatized — handled by a local company — and “it was very successful; however, in the end that particular company, had some issues within their company which is why they weren’t able to continue.”
“In my opinion, the only reason why the government is handling this service is because there’s no other company, private company, to step up to do this,” he said, and noted that privatization means a company or a group of people that runs the company will be involved and the company “needs to be successful, it needs to be profitable. Which means that the charges that they charge, maybe, it will be a little bit higher than what the community can handle, and then you’re at the mercy of that company.”
“I guess the beauty of having the government run it is that, the charges can be sort of regulated,” he said. “However, our downfall is that we never see enough money to take care of the vessels and to take care of the entire operation. But I’m in favor of privatization, but that’s my opinion and that’s not necessarily the opinion of the administration. So we would have to discuss that.”
King pointed out that all over the world, government doesn’t run this type of business but in American Samoa, the government is there to make sure that there is service, whether the private industry does it or not.
“And we see that in other areas of the marine industry, where there’s not enough private companies to take care of the needs of the marine industry,” he said. “But if there is a company that wants to start, that’s fine and government should support it in that sense, because otherwise, government is competing against the private sector.”
He went on to explain that in 2004 the government moved to try and privatize ocean transportation with the old MV Manu’atele III, where Port Administration became the manager to make sure that the company provided regular service, that their rates were competitive, and that they met all of the US Coast Guard regulations.
(As reported by Samoa News at the time, the company leased the MV Manu’atele III for its operation.)
“It was in government's best interest to support that private industry to make sure they’re successful,” King said, and noted that the time to transition a company to fully take over ocean service — maybe two or three years of government support to make sure the company can continue to grow until they’re able to do it on their own. “And slowly over the years, we start pulling back and they take on more responsibility.”
“But until we see that type of company come forward, it’s up to us to be able to maintain that service. And we try to do the best we can with what resources we have,” he said.
From the shipyard’s point of view, Moefa’auo first pointed out “maintenance is one of the main key issues” and even the new ASG vessel, that is tentatively scheduled to arrive in mid November, “has to have a very rigorous and stringent maintenance program, because in a few months that brand new boat will probably get into deplorable condition, if maintenance is not maintained.”
For privatization, Moefa’auo said he believes “public-private partnership... is probably the best... business format, for this sort of arrangement... because our market, and our situation here — and I’m speaking as a marine engineer — in American Samoa with respect to maritime industry, is a very costly venture, very expensive.
“You have to deal with stringent Coast Guard regulation, the manning of the vessel, the crewing and captaining, the engineers and even the parts that maintain the vessel is very cost expensive,” he explained.
“Now you’re moving into the area of economics. What would it be affordable for Manu’a residents to have a reasonably good transportation and reliable transportation?” he asked, adding he believes that one of the key issues is “reliability”.
“People cannot build their lives around an unreliable schedule. In other words, if you want to start a business in Manu’a, you have to depend on the reliability of that schedule. That means the boat has to travel on time at a consistent date,” the head of the shipyard explained.
“People can then plan their lives around it, people can plan what ever they want to do knowing that boat will always leave the harbor here, on that date, on that time,” he said.
Moefa’auo believes that public-private partnership, or PPP, “fits the economic situation in Tutuila and Manu’a in this particular case. Now, other industries may have a different view, depending on the volume and depending on their business model. But that’s the model we’re also looking at from the shipyard as well.”
He also informed the House that what he was offering is “just my opinion”.