I RECENTLY watched a program on ABC TV about a ‘ghost airport’ in Timor-Leste, which was built in 2017 for the proposed Greater Sunrise gas project (its development is still in dispute between Timor Leste and Australia) at the cost of more than $120 million. The ABC reported the facility now sits largely abandoned.
A similar white elephant was built for port-related activities. A new container terminal with a proposed capacity of one million TEU has been constructed at Tibar Bay, about 15 km from the capital Dili, at the cost of US$278 million. This was to replace the old container handling facility in the Port of Dili and has been forecast to attract large transhipment container volumes.
Timor-Leste has a population of about 1.5 million people, a GDP of US$2 billion. It is relatively poor and imports most of its goods. Besides oil, Timor-Leste has limited exports, mainly coffee. Container trade is therefore imbalanced, with imports exceeding exports more than eight-fold. Thus, more than 90% of full import containers entering Tibar Port return empty. This drives up import container pricing as shipping lines need to charge additionally costs on inbound freight to pay for the empty returns.
When I visited the country in 2017 the Port of Dili handled about 50,000 TEU annually. The facility was rundown, with container dwell times of more than 20 days and extensive vessel delays. To address these problems, the government decided to establish a new container handling facility at Tibar Bay as a nation-building project.
For the project, the International Finance Corporation, part of the World Bank, helped build capacity in key Timor-Leste government institutions and established a balance between the interests of government and the private sector. It also arranged finance for the project under a public private partnership set-up. Several expensive consultants determined that the new facility would require a water depth of 15 metres, a quay line of 630 meters and large quay cranes to be able to handle the large ships that were expected to be transhipping thousands of containers through the port. It should be noted that consultants usually charge a percentage of the built cost, so the higher the built cost the larger their fees.
Local fishermen were displaced and deprived of their livelihoods, a large dredging operation was undertaken causing environmental damage and a highway was constructed from the terminal to the capital Dili. Most of the construction of the facility and the highway was undertaken by Chinese companies providing only limited opportunity for the use of local labour.
The concession to build and run the terminal was won by Bolloré Africa Logistics in 2018 and construction began. According to the Bolloré Group in a statement at the time, “the new port will target productivity and performance levels in line with those of the world’s biggest ports”. Stage 1 was completed in 2022. Bolloré was responsible for all investment apart from the initial government subsidy and assumed the traffic risk. Charges for services are based on a tariff schedule defined in the concession agreement and the government receives a TEU royalty fee and other revenue. The capital investment during the initial construction phase was US$278 million, of which US$129 million was funded by the Timorese government and US$148 million was borne by the concessionaire. In late 2022, the Swiss-based MSC Group acquired Bolloré Africa Logistics and rebranded the company as Africa Global Logistics which now owns and operates the terminal.
Now, four years after it was completed in late 2022, two large container cranes and other heavy equipment (all Chinese made) sit idle most of the time and handle an only slightly larger throughput than the old port, using similar small container ships (around 1000 TEU capacity) that used to call at Dili. No transshipment is occurring and the Timor-Leste government is saddled with a large bill for its part of the funding cost.
Similarly to the ghost airport, slick operators and the World Bank painted a picture to the government, which, when subjected to proper scrutiny, would never eventuate. Tibar Port is far away from key hub ports, leading to long and costly sailing routes to reach the port. Furthermore, there are numerous cheaper opportunities available in the region at Indonesian ports and in West Timor (Kupang). Due to the current low volumes at Tibar Port lift costs are relatively high, even to the extent that it is sometimes cheaper to land bridge containers from Kupang to Dili.
It is hoped that the country’s recent admission to ASEAN opens a window to redesign Timor-Leste’s role in regional value chains. Reduced tariffs combined with improving the quality of cross-border transport might provide more opportunities and an increase in container traffic at the underutilised Tibar Port.
The money spent on these so-called nation-building projects, which presents politicians with ribbon-cutting ceremonies and photo opportunities, could have been better spent on other pressing needs. For a fraction of the cost the facility at Dili Port could have been upgraded. Even better, the money could have helped the ailing medical and education sector in Timor-Leste, which would have benefitted the general population rather than mostly foreign corporations.