Marshall Islands: Government Faces More "Gloom" than "Boom"

Japan-Marshalls to parlay on aid program - In motion, $8 million fish market and a $4 million grant for solar system at Majuro Hospital.

ADB Back as Debt Clears - Past due dating to 2005 cleared and is paying every month

Air Marshall Islands losses cloud its future - President tells Parliament he is interested in selling the airline

Marshalls airline suffers $2.5M loss - $3.4 million in fiscal year 2007, the airline’s revenues tanked last year, dropping to $1 million.

Majuro power company: Generators could break anytime - I don’t want people to panic but this is the reality, said GM David Paul.

Auditors find "seven serious problems" with Health Ministry Audit - Lack of adequate internal control policies and procedures reported also in '06 & '07

Marshalls Airport Project On Hold - Dir. Jack Chong Gum aiming to put a revised project plan out for re-bidding in January.

"BOOM"
AID PROGRAM: The first Japan-Marshall Islands Policy Consultation on Economic Cooperation will be held here today with the aim of improving aid flow to this western Pacific nation.The aim of the high-level talks is to “deepen understanding” about Japanese aid cooperation policies and to discuss specific development projects for Marshall Islands, said Japan charge d’affaires Kazuyuki Ohdaira. One issue for the Marshall Islands is though the country is eligible for Japan-funded aid projects on an annual basis, it has received only one — an upgrade to its main hospital in 2004-05 — this decade. Among the specific plans up for discussion are the requests from the Marshall Islands for funding for a campus for the University of the South Pacific and new ships for outer island services. These are two large budget projects now under consideration by the Japan government, he said.

ADB: mproved relations between the Marshall Islands and the Asian Development Bank are opening the door to the ADB’s first large-scale funding to RMI since the early 2000s. Since March, the RMI has been current with its monthly loan payments to ADB and has cleared off all back dues, a fact that has been favorably noted at the bank’s Manila headquarters.Ading and RMI officials are discussing with ADB two grant options: • Funding to help improve operations at the Marshalls Energy Company. • Support for public sector reform. While everyone agrees that there is a need for reform in the public sector, Nakamitsu said the ADB has no intention of driving reforms in the government here.“The ownership of this has to be under the RMI government,” he said. “It must be home grown. If the government agrees to a plan and brings it to ADB, the bank will be happy to support it.”

"GLOOM"

AIRLINES: The future of the domestic air service in the Marshall Islands is in doubt after a recent audit report highlighting financial mayhem due to mechanical problems with its aircaft.Air Marshall Islands has been owned and managed by the government for nearly 30 years, but with both its planes grounded for several months during 2008, a bail out three million US dollars largely funded by Taiwan has propped up the service.

LOSS: Despite a nearly two-thirds drop in revenue last year, Air Marshall Islands barely cut its expenses, spending $3.9 million in 2007 and $3.6 million in 2008. From September 2007 until April 2008, AMI flew few regular flights as both its computer airplanes were repeatedly grounded with a variety of mechanical problems. Auditors also found five “significant deficiencies” in AMI’s management of its operations. These included such problems as charging customers the wrong prices for cargo, recording prior year expenses to the current year, and lack of timely reconciliation of income and expenses. Another problem area found was a $55,000 transaction that was not supported by valid documents. The audit also points out that AMI had a $1 million loan with a local bank that required payment of $24,700 monthly payment. When AMI didn’t meet its payment schedule, the bank seized the million dollar TCD belonging to MIDB in December 2007.

POWER: Marshalls Energy Company general manager David Paul warned Wednesday’s Marshall Islands Chamber of Commerce meeting that power for the capital is in an unpredictable phase and electricity service could be interrupted if one of the two large engines in its new plant break down.“I don’t want to panic anyone, but the assessment from our mechanical engineers is that the big engines in the new power plant could go tomorrow, next month or in six months,” Paul said. Three of the smaller generators in the old plant are still under repair from damage sustained as a result of a fire three years ago, and while one was recently returned to service, Majuro’s electricity usage is at the point where MEC currently has almost no backup generating capacity. If one of the big six megawatt engines in the new plant is forced to shut down it will force the utility company to ration power, Paul said.

HEALTH: Auditors reported seven serious problems with accountability at the Ministry of Health’s "Health Care Revenue Fund" in 2008, including violations of the government’s procurement code that have remained unsolved despite being identified in audits since 2006.The audit found US$273,771 in purchases during fiscal year 2008 that did not have enough documentation to prove that they followed the government’s procurement law. Auditors said this showed there is a "lack of adequate internal control policies and procedures" governing procurement documentation required by law.Auditors said the Ministry of Health has been advised in the past two audits for fiscal years 2006 and 2007 that it has not followed the procurement law in administering the Health Care Revenue Fund.

AIRPORT: Plans to launch a United States-funded $10 million airport construction project in the Marshall Islands this year have been cancelled because the price bid was about double what the U. S. government had provided. The holdup, according to the government's Marshall Islands Ports Authority and potential contractor Pacific International Inc., is the result of a Marshall Islands Environmental Protection Agency requirement for using imported sand and aggregate, which has caused the price of the project to skyrocket. The U.S. Federal Aviation Administration, which has pumped $40 million into Majuro airport improvements over the past three years, had designated $10 million for a "road realignment" project to move the existing road by the runway about 100 feet away from the runway toward the lagoon. A major landfill project would also set the stage for lengthening the 7,200-foot runway at a later date. Joseph "Jerry" Kramer, PII chief executive officer, said he believes EPA requiring new EIAs for extending an existing quarry, or establishing a new one in a similar area to one where an EIA was already conducted site is hurting development and jacking up the cost to do business.