Tenders invited for Capitalisation of Vessel Day Scheme Effort Study
Tenders are invited for Consultants to conduct a Study to provide preliminary advice to VDS participants on the feasibility and the potential benefits and costs of transforming the value of VDS PAEs into capital assets for the purpose of improving access to development finance. Interested applicants should consult the below TERMS OF REFERENCE.
TERMS OF REFERENCE
Study of the Potential Benefits and Risks/Costs of Transforming the Value of VDS PAEs into Capital Assets.
Fishing rights have value. Private rights holders in several countries, including Iceland, Chile, Peru, Namibia, New Zealand and Russia are known to have been able to capitalise this value of rights in ways that have increased the willingness of banks to finance ventures associated with the rights or increased the price that buyers might pay for the business. In general however in these cases the capitalisation has taken the form of a claim/mortgage over assets of the venture, with the capitalisation being reflected in a higher loan ratio or more favourable loan terms.
Some VDS participants have taken the capitalisation process a step further and have used the value of VDS days made available for a venture as their contribution towards the equity of joint ventures. In this way, they have ended up as part owners of a vessel or vessel-owning venture through contributing only the value of VDS access without contributing cash or other assets.
New Zealand has taken the capitalisation of rights further still. Through the QMS (Quota Management System), New Zealand has been able to frame fishing rights that are treated by the accounting and finance sectors as assets for accounting and finance purposes. This means that:
- They can be used as collateral for loans, with the claim on the right as collateral being registered in the same way as a mortgage on a property is treated; and
- They are included as assets in business’s accounts, which means that an increase in the value of a right is accounted as a profit for the business.
During the 2016 Ministerial Study tour to New Zealand, this transformation of the value of rights into capital assets this was recognised as an important feature of the QMS which might be beneficially applied to the VDS. At their 11th Annual Ministerial Meeting, PNA Ministers endorsed the proposal for further study of the potential benefits and costs of transforming the value of VDS PAEs into capital assets.
The primary objective of the Study is to provide preliminary advice to VDS participants on the feasibility and the potential benefits and costs of transforming the value of VDS PAEs into capital assets for the purpose of improving access to development finance.
As part of this work, the Study is also aimed at:
- establishing the value of VDS PAEs for the purposes of measuring the effectiveness of the VDS over time and benchmarking the effect of proposed changes to the VDS; as well as establishing a basis for counting PAEs as assets of VDS participating governments, including for the purpose of the operation of a capital market for PAE; and
- providing advice on including the value of PAEs as assets in the public accounts of VDS participating governments for the purposes of making governments and communities aware of the value of their PAE and their tuna resources and how that value changes over time and is affected by the management and operation of the VDS; as well as strengthening the financial position of VDS participating governments.
Scope of Work
The consultants shall:
- Review relevant information on the VDS
- Consider methods for valuing VDS PAEs and factors likely to affect VDS PAE valuation, including:
- factors associated with the design and operation of the VDS such as the term of PAEs, as well as external factors such as global tuna prices and exchange rates
- possible differences in the value of PAEs among VDS participants; and
- provision of VDS days under different conditions for fleets including domestic fleets
- Recommend an approach to valuing VDS PAEs and provide advice on approaches to increasing the value of VDS PAEs.
Including the value of PAEs as assets in the public accounts
- Assess the scope for, and potential advantages and disadvantages of, including the value of PAEs as assets in the public accounts of VDS participating governments, taking into account International Public Sector Accounting Standards.
- Provide recommendations on the inclusion of the value of PAEs as assets in the public accounts of VDS participating governments.
Development of a capital market for PAE.
- Identify, and consider the experience with, other relevant capital market developments, especially relating to natural resource rights, including capitalisation of fishery quota values in New Zealand.
- Assess the requirements for acceptance by relevant institutions of PAE values as capital assets for the purposes of development financing.
- Assess the potential benefits and risks/costs to VDS participants, individually and collectively, of using the value of VDS PAEs as capital assets which can be borrowed against.
- Provide recommendations on using the value of VDS PAEs as capital assets for the purpose of improving access to development finance, including if appropriate, a process for VDS participating governments to move in that direction. This process should address policy frameworks, legal frameworks, risk management arrangements, institutional / management / accounting arrangements and required systems and processes.
The consultancy is expected to:
- Meet with the PNAO for a briefing on the study;
- Participate, if possible (depending on timing of the work), in a meeting of the Parties to the Palau Arrangement, to discuss the study, present their work plan, and obtain guidance on the study;
- Report regularly to the PNAO CEO for guidance and oversight of the study;
- Consult with public finance authorities of Parties;
- Consult with relevant intergovernmental and private development financing institutions;
- Produce a draft report for circulation and comment by VDS participants and the PNA Office;
- Produce a final report, in the form of a 10-page summary with supporting annexes, incorporating these comments; and
- Present findings to a meeting of the Parties.
The focus of the study will be on the purse seine VDS, but advice will also be provided on the feasibility of capitalisation of longline VDS PAEs.
The consultancy is expected to require a combination of skills and experience in rights-based fisheries management and capital market development.
The consultancy will be managed by the PNA CEO, and consultants will report to the CEO.
Process for Application
Applicants may apply in writing by email addressed to the CEO of the PNA in the address given below as well as provide copies to Dr. Transform Aqorau and Loreen Bigler. The applicants will provide in their application the following:
· A covering letter demonstrating suitability to deliver the assignment set out in the Terms of Reference and ability to meet the terms of Reference
· A brief Curriculum Vitae
· Proposed methodology and approach to the Consultancy
· Details of the Budget quote. This includes the proposed cost of the Consultancy including the estimated cost of travel for consultations with Parties.
Submission of Tenders
Tenders must be received by the close of business on Friday 24 March.
Tenders must be submitted in electronic form only as a single file in pdf format (or otherwise in a format compatible with Microsoft Office 2010) and addressed to:
Mr. Ludwig Kumoru
Chief Executive Officer
PO Box 3992,
Majuro, Marshall Islands, MH 96960
Dr. Transform Aqorau