Projects

Komodo National Park Community Development Program

Client: PT Putri Naga Komodo
Partners: PNK and The Nature Conservancy

Project overview

Starling Resources worked with Putri Naga Komodo and their partners at The Nature Conservancy Indonesia and Taman Nasional Komodo to support the development of a community grouper mariculture grow-out enterprise in Menjaga, Flores, between PNK a Menjaga village mariculture association (Menjaga Association) and private sector partner.

Challenges

A private sector mariculture operation is in place in Labuan Bajo, Flores; the gateway to Komodo National Park. The Nature Conservancy launched the operation in 1997, and was concluded in June 2005 with the transfer of the operation to a private sector company. The objective of TNC was to establish a successful closed-cycle grouper culture industry in the Komodo area (West Flores, Indonesia) to contribute to the transformation of the live reef fi sh market from unsustainable, capture-based to a sustainable, culture-based one, and to develop sustainable fi sh culture of high-quality reef fi sh as an alternative to non-sustainable fishing practices in and around Komodo National Park. The existing private operation, in order to expand its operations and production of grouper, is seeking to develop relationships and sell them back to the company to market in Indonesia and the region The key challenge to doing so is the need to set-up business and partnership plans and an agreement template to guide the business relationship between the communities and the private mariculture company.

Approach and Outcome

Starling Resources was hired to work with PNK and a Menjaga village mariculture association (Menjaga Association) and their private sector partner, Starling focused primarily on the design and launch of a capable and well organized association from a business and financial skills capacity stand-point. Starling led capacity buidling sessions and developed tools for the assoication to use in starting up its business operations. Starling was also tasked to help design and implement an effective revolving fund mechanism for a loan to be extended to the Menjaga Association to finance the pilot project. Both of these efforts resulted in framework and guiding documents for the partners (and were utilized by a similar, USAID-driven project nearby with the same private sector operation). Because successfully launching the mariculture oepration at the community level depends largely on the accuracy and feasibility of the private sector company business plan and its assumptions, Starling conducted data collection, interviews, site visits, cost modeling, and analysis to:

1. Develop a working grow-out operation cost/financial model to analyze accurate financial and operational assumptions and provide a tool for ongoing sensitivity analysis of certain variables for decision making purposes;

2. Take a closer look at potential risks to the project and the community operation, as well as risks and concerns of extending such a significant loan; and,

3. Facilitate discussions between the comopany and PNK and the association to maintain basic working agreements on how a project might proceed with this new information/analysis.

However, at this stage PNK and their partners continue to evaluate the most appropriate approach and relationship with the private sector operation.

Sensitivity Analysis: There are several risks involved in establishing and investing in a grow-out business, especially related to the key variables defined in the chart below. The chart shows the relationship between the "worst case" scenario for each variable and its impact on (e.g., increase, decrease) the projected financing (loan) requirement, loan repayment period, and revenues over a five year period.