Assume that the Government of Fiji seeks your advice on how to fully privatize inter-island

shipping services to the islands in Lau.

Because of the remoteness of the islands of Lau, the small populations of the islands and

small amount of cargo, commercial shipping services are non-viable to the more remote

southern islands.

Describe how the following forms of privatization may be packaged together to enable the

shipping services to be completely privatized.

Contracting out shipping services under a franchise arrangement.

Leasing of government interisland ships.

Provision of grants to shipping companies to subsidise uneconomic routes