Vanuatu Government Engages IFC to Advise on Privatization of National Airline

The government of Vanuatu today announced that it is going ahead with the privatization of Air Vanuatu and has engaged IFC to advise on the sale. The government has decided to sell a minority share in the airline as part of its strategy to improve air services.

“Private sector participation in Vanuatu’s aviation sector should help increase investments, lower prices, and improve services,” said Edward Natapei, Deputy Prime Minister and Minister of Infrastructure and Public Utilities. “Air transport links are critical to the success of other industries, such as tourism and high-value exports. Private sector investment is needed to boost services, create jobs, and generate economic growth.”

“IFC has a strong international track record, including its work on the successful creation of Polynesian Blue in Samoa. We believe that IFC is the right partner to help Vanuatu establish an investment framework that is line with best international practices,” added Natapei.

Air Vanuatu, the government-owned national airline, operates international routes to Sydney, Auckland, Brisbane, Nadi in Fiji, and Noumea in New Caledonia, in addition to a number of domestic routes.

IFC has extensive international experience in advising governments on airline sales. “With increasing competition in aviation and the strategic importance of air travel to other sectors, including tourism, it is vital for airlines to boost levels of investment and improve operations. Private sector participation, introduced in a fair and transparent manner, has helped many countries meet these goals,” said Bernie Sheahan, IFC Director of Advisory Services.

IFC works on a cost recovery principle in providing transaction advice to developing countries. AusAID, Australia’s international development agency, has agreed to help fund the project.

“IFC is delighted to be assisting Vanuatu in this transaction. We hope to replicate our success in structuring and awarding the Polynesian Blue investment in Samoa in 2005. The new project provides an opportunity for Vanuatu to establish a sustainable framework for private sector participation in the aviation sector,” said Sheahan.

“This project illustrates IFC’s commitment to encouraging private investment in a priority frontier market,” said Richard Ranken, IFC Director for East Asia and Pacific. “We will use our global advisory expertise, commercial investment experience, and local presence in the Pacific to help Vanuatu attract more international investment. This is a major step in our strategy to support economic growth and development in the region.”

Greater engagement with the Pacific island nations is one of IFC’s strategic priorities in the region. Activities are aimed at stimulating the private sector and improving infrastructure through private investment, reforming state-owned enterprises, promoting indigenous entrepreneurship by supporting small and medium enterprises, encouraging corporate governance, and boosting foreign investment.