Document of The World Bank

FOR OFFICIAL USE ONLY Public Disclosure Authorized

Report No. 3054b-AL

Public Disclosure Authorized STAFF APPRAISAL REPORT

ALGERIA

FIRST TELECOMMUNICATIONS PROJECT

November 22, 1983 Public Disclosure Authorized Public Disclosure Authorized

Industry Department

This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS

Currency Unit = Algerian Dinar (DA)

US$1.00 = DA 4.60

DA 1.00 = US$0.217

DA 1,000,000 = US$217,391.3

FISCAL YEAR

January 1 - December 31

WEIGHTS AND MEASURES

All weights and measures are in metric units. FOR OFFICIALUSE ONLY

LIST OF ABBREVIATIONS, ACRONYMSAND DEFINITIONS USED Acronyms and organization names relate to the French title of the organization, as used in Algeria

Carrier : A system providing a number of telephone or telegraph circuits (channels) through one transmission bearer (cable, open wire or radio) CDC : Cour des Comptes, Government Audit Institution Channel : One circuit of a carrier system carrying speech or telegraphic signals Crossbar switching: An automatic telephone switching system utilising a connecting matrix with horizontal bars and vertical bridges Daira : A subdistrict of the territorial organization in Algeria DEL : Direct exchange line (telephone) DGP General Directorate of Posts (Direction Générale des Postes) DGT General Directorate of Telecommunications (Direction Générale des Télécommunications) DOT : Operational Directorate for Telecommunications ENTC : National Telecommunications Enterprise (Manufacturing of telecommunication equipment) Erlang : Unit of telephone traffic intensity. One erlang is the intensity in a traffic route continuously occupied carrying a total traffic of 60 call-minutes per hour Gentex Telegraph exchange switching system used in public telegraph service between telegraph offices Hz, MHz, GHz Hertz, megahertz, gigahertz: frequency units equal to one cycle per second, one million cycles per second, and 1,000 millin cycles per second respectively HF, VHF, UHF High frequency radio system up to 30 MHz, very high frequency between 30-300 MHz, ultra high frequency beyond 300 MHz respectively IGF Inspection Générale des Finances (Inspectorate General of the Ministry of Finance) ITO Institut des Télécommunications d'Oran ITU International Telecommunication Union Microwave Normally applied to radio systems working at frequencies above 1,000 MHz MIP Management Improvement Program of the Algerian P&T Open wire A transmission medium using a pair of uninsulated metal wires speaced apart on glass, porcelain or plastic insulators and strung on a pole route PCO Public call office PCM Pulse code modulation used in digital transmission systems to provide a number of telephone circuits on a bearer circuit (open wire, cable, radio)

This document has a restricteddistribution and may be used by recipientsonly in the performanceof their official duties. Its contents may not otherwisebe disclosed without World Bank authorization. - ii -

LIST OF ABBREVIATIONS, ACRONYMS AND DEFINITIONS USED (Cont'd)

P&T : Ministry of Posts and Telecommunications RTA : Radiodiffusion Télévision Algérienne, a division of the Ministry of Information SNTF : Société Nationale des Transports Ferroviaires (Railways Transports National Company) SONATITE : Société Nationale des Travaux d'Infrastructure pour les Télécommunications (Infrastructural Works for Télécommunications) SONATRACH Société Nationale pour la Recherche et la Production, le Transport, la Transformation et la Commercialisation des Hydrocarbures (Hydrocarbons) SONELEC Société Nationale de Fabrication et de Montage du Matériel Electrique et Electronique (Electrical and Electronics Industry) SONELGAZ Société Nationale de l'Electricité et du Gaz (Power and Gas) Telex Automatic teleprinter system TFYP Algerian Third Five-Year National Plan (1980-84) UNDP United Nations Development Programme UNDP/WB Study : UNDP/World Bank Preinvestment Study for Telecommunications in Algeria (UNDP Project No. 79/005) Wilaya : Regional of the political and administrative organization in Algeria (see also Daira) ALGERIA

MINISTRY OF POSTS AND TELECOMMUNICATIONS (P&T)

GENERAL DIRECTORATE OF TELECOMMUNICATIONS (DGT)

FIRST TELECOMMUNICATIONS PROJECT

STAFF APPRAISAL REPORT

TABLE OF CONTENTS

Page No.

I. THE TELECOMMUNICATIONS SECTOR ...... A. Background and Organization ...... 1 B. Access to Service. 2 C. Telephone Service Usage. 3 D. Existing Facilities and Quality of Service ...... 4 E. Demand for Service. 5 F. Sector Objectives. 5 G. Sector Constraints. 6 H. The Bank's Role ...... 7

II. THE PROGRAM AND THE PROJECT ...... 8 A. The Plan and the Program. 8 B. Program of Works Under the Expanded Third Plan Program . 8 C. The Project ...... 9 D. Project Costs ...... 10 E. Contingencies ...... 12 F. Procurement ...... 12 G. Project Implementation ...... 13 H. Disbursements ...... 13 I. Performance Indicators ...... 14

This report is based on the findings of a Bank appraisal mission which visited Algeria in January/February 1980, comprised of Messrs. M. Scoffier (Engineer), H. Busz (Financial Analyst), and D. Cleevely (Economist, Consultant). The report was updated by another mission of Messrs. Scoffier and Busz in /April 1983. - ii -

TABLE OF CONTENTS (Continued)

Page No.

III. ECONOMIC ANALYSIS ...... 14 A. Telecommunications and Development ...... 14 B. Distribution of Benefits .15 C. Tariff Policies .16 D. Least Cost Solution .17 E. Return on Investment .18 F. Risk .19 G. Environmental and Health Aspects ...... 19

IV. THE IMPLEMENTING AGENCY ...... 19 A. Organization and Management ...... 19 B. Telecommunications Branch ...... 20 C. Postal/Financial Branch ...... 21 D. Data Processing ...... 21 E. Management Information System ...... 21 F. Staff ...... 21 G. Training ...... 22 H. Accounting ...... 22 I. Billing and Collection ...... 23 J. External Auditing Arrangements ...... 24 K. Budget Preparation and Control ...... 24 L. Insurance ...... 24 M. Management Improvement Program ...... 25

V. FINANCIAL ASPECTS ...... 26 A. Background ...... 26 B. Past Financial Policy t...... 26 C. Past Performance ...... 27 D. Present Financial Position ...... 27 E. Accounts Receivable ...... 28 F. Future Financial Policy ...... 29 G. Financing Plan ...... 29 H. Future Finances ...... 30

VI. AGREEMENTS REACHED AND RECOMMENDATION ...... 31 A. Agreements Reached . . * ...... 31 B. Recommendation ...... 32 - iii -

LIST OF ANNEXES AND CHARTS

Page No.

1. International Telephone Statistics, 1981 ...... 33 2. Telephone Exchange Installations and Waiting List ...... 34 3. Distribution of Access to Telephone Service by Size of Urban Centers ...... 37 4. Basic Data on and Description of Existing Telecommunications Facilities ...... 38 5. Past Growth of Local Telephone Network ...... 39 6. Past evolution of Registered Demand for Telephone Connections 40 7. Distribution of Population and Registered Demand for Telephone Connections, by Wilaya ...... 41 8. Changes in Selected Parameters over DGT's Program Period and Forecast Growth of Exchange Capacity, Connected Lines, Telephone Demand and Telex Subscribers (1979-87) ...... 42 9. Summary Costs of DGT's Development Plan (1980-89) ...... 44 10. Forecast of Automatic Exchange Capacity to be Installed Under DGT's Expanded Program ...... 45 11. Growth of Local Telephone Network ...... 46 12. Construction Costs of DGT's Expanded Program Under the Third Plan ...... 47 13. Project Description ...... 48 14. Estimated Project Costs ...... 52 15. Project Implementation Schedule ...... 53 16. Schedule of Disbursements ...... 54 17. Performance Indicators - Telecommunications ...... 55 18. Summary of Telecommunications Tariffs ...... 56 19. Comparison of Yearly Costs to Subscribers of Telephone Service for Sample Usage in Algeria and Twelve Other . . . 59 20. Return on Investments...... 60 21. Organization Chart ...... 62 22. Summary of Telecommunications Training Programs and Facilities ...... 63 23. Technical Assistance and Training - Timetable (IBRD 25053) . . 66 24. Income Statements .67 25. Funds Flow Statements .68 26. Balance Sheets .69 27. Notes and Assumptions for the Financial Projections, 1983-90 . 70 28. Related Documents and Data Available in the Project File . . . 73

MAP: National Trunk and International Networks (IBRD 15110RI)

I. THE TELECOMMUNICATIONS SECTOR

A. Background and Organization

1.01 Algeria is a large covering slightly less than 2.4 million square kilometers bordering the Mediterranean Sea. The population in January 1983 was estimated to be about 20.6 million. About 95% of the population occupies the coastal 18% of Algeria's land surface at a density of 39 people per square kilometer. The other 5% occupy the remaining 82% of the land surface in the arid south at a density of 0.4 people per square kilometer. The population of Algeria's urban centers is growing rapidly at an average 6.8% per year, compared to 3.1% per year for the country as a whole. Agriculture, services, governnent and industry are concentrated in the north, while the economy of the south is mainly dependent on gas, oil, minerals, tourism and seminomadic subsistence. Algeria has a centrally planned economy, operating via representative and administrative centers at the national level and in 31 (wilayas), 160 subdistricts (daira) and 704 communes, into which the national is divided.

1.02 The Ministry of Posts and Telecommunications (P&T) is in charge of the government monopolies of postal and public telecommunications services in the country. Its responsibilities and organization are governed by presidential ordinances and decrees, which also define its administration and operation as a government department in charge of major public services (see paras 4.01 to 4.04). P&T's Director General of Telecommunications (DGT) is in charge of the telecommunications branch (see para 4.03). DGT provides and operates the public domestic and international telephone, telegraph, telex and data transmission services. It also operates special telecommunications services such as maritime radio and provides circuits for the Algerian Radio and Television (RTA), the Ministry of the Interior, and the Army. Other organizations operate their own specialized telecommunications systems with P&T's authorization. These include SONATRACH (hydrocarbons), SONELGAZ (electricity and gas), SNTF (railways), Air and Sea Navigation and Ports Authorities, Air Algerie, meteorological services, and others. The use of DGT's network by other agencies is supervised and regulated by an interministerial committee, which also establishes the fees to be paid to P&T.

1.03 In accordance with the government's policy of progressive national self-sufficiency in important sectors, a manufacturing industry for the production and installation of telecommunications equipment was established in 1974. Under the Ministry of Heavy Industry, the electronic branch of SONELEC in Algiers produces some small-capacity pair cables and one type of small diameter coaxial cable, and lays and joints them for P&T; since 1980 it also produces crossbar switching equipment and telephone sets in Tlemcen, where current levels of production are about 60,000 exchange lines and 80,000 telephone sets per year. In January 1983, the Tlemcen manufacturing complex was transferred to a newly created National Telecommunications Enterprise (ENTC). SONELEC/ENTC's production of telecommunications equipment is entirely absorbed by P&T. Under P&T's - 2 - supervision, SONATITE is in charge of the country's private branch telephony. It installs, connects and maintains private branch exchanges and subscriber terminal installations, and also installs for P&T switching equipment from Tlemcen. Under the Third Plan, SONATITE has established a civil works branch for the construction of P&T's local networks and buildings, and is expanding its cable laying and jointing branch.

1.04 As of December 31, 1982, P&T employed 27,870 personnel, of which 15,800 are for telecommunications services, representing 39 staff per 1,000 direct exchange lines in service (see para 4.07). With 2,300 SONELEC/ENTC personnel for production of telecommunications equipment, 900 SONATITE personnel for telecommunications installations and maintenance, and an estimated 1,000 staff for operation and installation of specialized telecommunications systems in SONATRACH, SONELGAZ, SNTF, air and sea navigation services and Radio Television Algerienne (RTA), this represents a total employment of about 20,000 in the telecommunications sector, or approximately 2% of the country's work force.

B. Access to Service

1.05 As of December 31, 1982, there were 410,209 telephone direct exchange lines in service (DELs) in Algeria, a telephone density of 2.0 DELs per 100 population. While slightly above average compared to neighboring countries, this density was two to three times lower than in countries with a similar GNP per capita, such as Turkey and Mexico. Annex 1 sets out international telephone statistics. As shown in the table below, existing telephone service is substantially concentrated in the metropolitan centers of Algiers, Oran, Constantine and Annaba, which had an average telephone density of 4.7 DELs per 100 population at the end of 1982, while telephone density in the rest of the country was only 1.4 DELs per 100 population.

Telephone Distribution in Principal Urban and Other Areas of Algeria

Popu- DELs as lation DELs as % of as % of % of Population Country Country Popu- (In Thousands) DELs Total Total lation

Algiers 2,250 114,300 27.9 10.9 5.1 Oran/Constantine/Annaba 1,550 64,550 15.7 7.5 4.2 Other areas 16,800 231,359 56.4 81.5 1.4 Total 20,600 410,209 100.0 100.0 2.0

1.06 All regions (wilayas), (daira) and most communes have some telephone service. Annex 2 gives the distribution by wilaya of telephone exchange capacity, DELs in service and outstanding applications, and Annex 3 shows the distribution of access to telephone service in urban - 3 - centers of various population size. All places with more that 5,000 inhabitants and 290 of the 322 places with 2,500 to 5,000 inhabitants have some local and/or long distance telephone facilities. However, in many of these places, service is limited to only one or a few telephones; furthermore, a large proportion of the places with less than 2,500 inhabitants which account for a substantial portion of the country's population have no telephone service at all. Telegraph service is available at 1,500 post offices across the country. Telex service on average meets about 78% of the registered demand in Algiers, Oran, Constantine and Annaba, and is being introduced in 18 other wilayas; the telex density of 1.1 DELs per 1,000 employed persons is comparable to that of other countries of similar levels of economic activity.

1.07 In order to obtain a telephone, applicants must register on a waiting list. Connections are made according to the date of application and the priority assigned to the applicant. Applicants with high priority include those involved in health care, government and security. The waiting list totaled 263,760 at the end of 1982. Thus only 61% of registered demand for telephone line connections is being met on average for the whole country (70% in the main metropolitan centers, 50% elsewhere). New applications in areas currently served often take several years before they are met. On average, the 1982 waiting list would take five years to clear if new DELs continued to be added at the rate achieved in that year.

C. Telephone Service Usage

1.08 According to P&T's classification of subscribers, at the end of 1978, 39% of the DELs were installed in business premises (9% nationalized industries, 12% administration, 18% private business) and 61% were installed in residential premises. However, the ratio of business telephones to total number of telephones is considerably higher (about 57%); given the widespread use of private branch exchanges this is a better indicator of the business subscribers' share of access to telephone service.

1.09 Traffic generated in automatic exchange areas by business and government connections accounts for almost 75% of the total. The Algiers generates more than 55% of all telecommunications revenues, though it accounts for only 28% of the DELs in service. It is estimated that approximately 48% of the revenue from call charges corresponds to local traffic, 38% to interurban traffic and 14% to international traffic. The pattern of long distance traffic reflects the distribution of the economic activity between Algiers and the three principal northern regions of Oran, Constantine and Annaba. However, completion of the ongoing works under P&T's current development program is expected to gradually improve telephone access and usage in other regional centers. - 4 -

D. Existing Facilities and Quality of Service

1.10 As of December 31, 1982, Algeria had 410,209 DELs in service and a total of about 660,000 telephones. Only about 63% of the exchanges' capacity had been connected to subscribers, due to delays in expanding the local cable networks and subscribers' plant. This situation is improving and exchange fill has been growing steadily since 1979 under P&T's program. Long distance services between the main northern along the coast are provided by coaxial cable and microwave systems. From this main axis there are southern spurs to Bechar, Ouargla and Touggourt, and branches to other regional centers, using coaxial and carrier pair cables and microwave systems. Other parts of the country are served by a domestic satellite system comprising 16 small earth stations for telephone and TV channels, complemented by open wire and HF radio systems. International services are provided by six submarine cables to Europe of low to large capacity depending upon their age (4,180 circuits in total), by microwave and cable systems to neighboring countries and by satellite relays using both Atlantic and Indian Ocean satellites. Some HF radio circuits are also still in use for communication over low traffic routes where modern facilities are not available. Basic data on existing telecommunications facilities are given in Annex 4. Annex 5 shows the past growth of telephone exchange capacity and DELs in service for the 1970-82 period. Further details on existing services and on their growth during recent years are available in the project file.

1.11 Lack of timely and adequately planned investment coupled with rapid growth in demand in the past have caused the telephone network to exhibit a number of deficiencies which have led to poor service. Although the dial tone is obtained relatively quickly, about 5% of local calls, 20% of long distance calls within regional areas, and 50% of other long distance calls fail due to equipment congestion at busy hours, or malfunction. Equipment congestion partly arises from far above normal traffic intensity per DEL, which reflects heavy usage of an insufficient number of telephones. Equipment congestion in subscriber dialed long distance service (a facility available in most large automatic exchanges, which account for about 88% of DELs; rural and semiurban subscribers have operator-assisted long distance service) is further aggravated by lack of timely provision of transmission and trunk switching equipment. In addition, there is subscriber lines congestion, i.e., telephone lines being engaged an excessively high proportion of time. Repeat call attempts to reach occupied telephones further compounds congestion of both equipment and subscribers' lines. The overall proportion of initial call attempts failed is thus likely to be even higher than the above figures. Observations of equipment malfunction indicate that, on average, each DEL experiences one breakdown per year (0.9 in Algiers, 1.2 in the rest of the country) and only about 74% of the faults are cleared within two days of being reported. These figures are poorer than what is considered acceptable practice.

1.12 Access to international service is available to all subscribers. Over half the traffic is subscriber dialed, a facility which is available - 5 -

to Il European and 2 African countries. Operator-dialed international service is available with ten other countries, including the USA, Canada, Japan, countries in northern Europe, Saudi Arabia and Syria. These 23 countries account for about 80% of the world's telephones. Although the quality of service is generally good, especially in Algiers, at times severe congestion occurs on subscriber dialed routes, leading users to prefer booking calls via the international operator at a higher cost to the DGT. In the rest of the country access to, and quality of, international services are limited by the inadequate domestic trunk network capability.

E. Demand for Service

1.13 As of December 31, 1982, there was a registered waiting list of 263,800 (64% of existing DELs). Past evolution of registered demand and existing service is given in Annex 6, and regional distribution of this demand as at end 1982 is shown in Annex 7. Since 1979, the yearly growth rate of the waiting list averaged about 29%, which compares with yearly average growth rates in DELs and in total expressed demand of 16% and 20% respectively. Under the circumstances, it is difficult to forecast the total demand for the telephone service as many would-be applicants are put off by the long delays they expect before obtaining connection to the service and the poor quality of service. Based on rough estimates, it is estimated that, at the end of the year 1990, there will be a potential market for one million business lines and two million residential lines. This projection takes into account present available sectoral information as well as prevailing economic and population growth assumptions.

1.14 Current registered demand varies greatly according to the type of place, ranging from 5 DELs per 100 population in Algiers, to 4 in the other metropolitan centers, 0.8 to 3.7 in the chief , and 0.3 in the rural areas. It is also difficult to forecast traffic as there have been no observations for some years and access to service is recent in many areas, still changing rapidly and subject to considerable further growth as congestion is overcome. Very intense use is noted in the business centers of Algiers and Oran where high congestion is observed at busy hours (para 1.11).

1.15 DGT's present development projections under their current program for the period 1983 to 1988, forecast an annual growth rate in DELs increasing from the current 16% average since 1979 to about 22% in 1988, which would be on the high side among the growth rates obtained in developing countries. This is expected to increase the proportion of registered demand met, from the current 64% to about 80% at the end of 1988. However, despite such a major effort, the forecast growth of demand would result in some 170,000 still outstanding applications by the end of the ongoing program, i.e., about the same number as at its start in 1979.

F. Sector Objectives

1.16 The government is aware of the need to develop telecommunications services. The national charter of 1976 states that adequate - 6 - telecommunications are a requisite to the economic expansion and activities of Algeria. To this end, and following the directives of the government for the preparation of the third national five year plan (TFYP)(1980-84), P&T was committed to a program which will significantly improve the present availability and quality of telephone service. This will be done using the latest available techniques, so that over the next 10 to 15 years the expansion will result in reasonably good quality, widely available telephone service. During the first three years of the plan, DGT made major decisions in this respect, in particular concerning the rapid introduction, from 1984 on, of electronic digital techniques in the switching and transmission systems (para 3.13). In line with these decisions, the government authorized P&T to plan and engage its development and to expand its program over an extended three-year period after the current TFYP, i.e., until early 1988. P&T intends to move toward those sector objectives under the proposed project by: (a) significantly expanding the local networks at rates of 20% to 25% per annum, with proportionately more resources being directed outside the main urban areas, thus moving from the present level of 2 DELs per 100 inhabitants to 4 DELs per 100 inhabitants over the project period; (b) changing the present manual system in the rural areas to automatic equipment and providing new exchanges at all government administrative centers; (c) providing telephone service for the first time at over 900 isolated locations; (d) improving the quality of local and long distance service through the installation of additional equipment and better system planning and maintenance procedures; (e) upgrading, restructuring and expanding the long distance network to handle the forecast increase in traffic, with the particular goal of incorporating the new on the High Plateau; (f) improving DGT's management, planning and accounting procedures, and overall productivity; (g) completing the investment program from the second plan; and (h) increasing tariffs so as to free resources for use in sectoral development, or elsewhere in the economy. Changes in selected parameters over the program period and forecasts of installed exchange capacity, connected lines, telephone demand and telex subscribers from 1979 to 1988 ar set out in Annex 8.

G. Sector Constraints

1.17 Until 1973-74, P&T's investment program was highly restricted due mainly to a shortage of qualified manpower. The slow rate of network growth resulted in a rapidly growing waiting list. Attempts to improve the situation between 1975-80 included a large investment program. However, despite P&T's efforts, network expansion has been slower than at the planned rate. Investments under the second plan (1975-78) and its additions were completed in 1982. At the same time, a relatively weak financial performance has kept net internal cash generation at below average levels despite a tariff increase in 1975 (para 5.04). The recent tariff measures, which are applied since February 1983, should significantly increase the proportion of investments financed from net internal cash generation, thus reducing the borrowing requirements (para 5.11). 1.18 The major constraint remains the rate at which P&T can improve its planning and management capabilities and, in particular, its ability to construct local networks and buildings. It is vital that substantial progress be made in these areas in order that bottlenecks, which hold up utilization of other investments, can be overcome. Improvements are also needed in productivity in general, and in the quality of the service offered. In early 1983, the government reorganized P&T's structure and functions to this effect (para 4.02). Such improvement and progress, however, require timely and adequate technical assistance and staff training, as included in the proposed project, to complement and reinforce P&T's organization and management, and DGT's development planning and implementation capability (para 4.21).

1.19 These constraints, together with the long lead time before the effect of the improvements in planning and management procedures are felt, mean that the proposed first project should be viewed as a first step in a long-term process of catching up so that, ultimately, the basis for a good quality, widely available network can be provided. To ensure this, and considering the size of DGT's current and future development programs, a subsequent second project might help consolidate long-term sectoral development.

H. The Bank's Role

1.20 A contribution by the Bank to Algeria's telecommunications development has been discussed for several years with P&T. Two previous attempts to develop a Bank-financed project (1974 and 1978) failed, principally because of inadequate project preparation. In April 1979, a preinvestment study financed under a UNDP project for which the Bank was executing agency, was undertaken to analyze the present situation and to outline a program of service expansion and institution building over the period 1980-86. The report was submitted in December 1979 (see project file). It forms the basis for the Bank's project as updated within the context of DGT's expanded development program (para 1.16).

1.21 The improvement and the expansion of services are both of great importance for the telecommunications sector and, in order to achieve its ambitious objectives in this regard (para 1.16), P&T would have to successfully implement the managerial and organizational measures which were recently taken by government (paras 4.01 and 4.19), and increase its productivity in general. The project would enable the Bank, in focussing on institution building by providing funding for experts in the technical, managerial, accounting, financial and economic fields, to assist the public telecommunications sector of Algeria at a critical stage of its development, when DGT is confronted with the responsibility of operating and developing services which will change from the present level of 410,000 lines in service to levels of approxmately 1 million lines in 1988 at the end of the project period, and 1.5 million lines by 1990. - 8 -

II. THE PROGRAM AND THE PROJECT

A. The Plan and the Program

2.01 In 1979 P&T had drawn up a comprehensive telecommunications investment program of works which were initially included under the Third Five-Year Plan (TFYP, 1980-84). This program had been designed to meet important sector objectives (para 1.16). It covered the addition of about 570,000 lines in telephone exchanges, including 200,000 lines of ongoing installation works from the previous plans. In 1982, P&T decided to rapidly introduce the modern electronic digital techniques in networks on account of the cost advantages of using such techniques and of the limited capacity of the local suppliers of switching equipment and cables which was experienced during the first three years of the plan. Based on this, the government authorized P&T to plan and commit its development for implementation until 1988 and expand its program accordingly.

2.02 The revised program includes the addition of about 800,000 lines from 1980 to 1988, of which about 150,000 were installed since 1980 and 650,000 are planned to be installed from 1983 to 1988. DGT implements all works under its program, which is made up of the following components: (a) ongoing works from previous plans to be completed between 1980 and 1984 at a total cost of about DA 1,232 million (US$268 million) with a foreign exchange component of DA 644 million (US$140 million); (b) expanded works under the Third Plan for construction until 1988, at an estimated total cost of DA 9.2 billion (US$2.0 billion), including a foreign exchange component of DA 4.4 billion (US$958 million) (see detail in para 2.04). The proposed Bank project is an essential part of these works for construction of specific items from 1983 to 1987 (paras 2.05 to 2.09); (c) other works to be executed during the plan period for the government's special development program for the southern at a total cost of about DA 632 million (US$137.5 million) including foreign costs of DA 403 million (USD$87.7 million); and (d) preinvestment for future development works to be undertaken in 1988, estimated at DA 130 million (US$28.2 million) with foreign costs of DA 50 million (US$10.9 million).

2.03 The estimated total cost of DGT's 1980-88 investment plan, excluding future program, is DA 11.1 billion (US$2.4 billion) with foreign costs of DA 5.4 billion (US$1.2 billion). The local and foreign costs of the different components and the planned investments for each year are given in Annex 9. A more detailed description of the exchange capacities to be installed and of their planned implementation schedule are given in Annex 10. Details of all works in DGT's development plan are available in the project file.

B. Program of Works Under the Expanded Third Plan Program

2.04 This program, as expanded in 1982, is the most important element in DGT's plan. It includes about 650,000 telephone exchange lines and corresponding expansion, modernization and improvement of all components of - 9 -

the network, as well as essential improvements of DGT's organizational, operational and development capabilities to be implemented between 1980 and 1988. Since 1980, during a first three-year segment of its program which had been authorized in P&T's 1980 budget, DGT initiated a large part of the works for the local and national transmission systems throughout the country and installed about 70,000 lines of locally produced exchange equipment together with 80,000 of imported equipment ordered from previous plans. In 1982, it was decided that the remaining 650,000 lines of the program for construction until 1988, would consist of about 400,000 lines locally manufactured for small and medium size exchanges and 250,000 lines of imported digital equipment. Local and long distance networks would be planned and expanded accordingly. The corresponding works were authorized under P&T's 1983 budget and the proposed project is a part of the remaining works under DGT's program. Details of the revised program, as now proposed, and of its implementation schedule are in the project file. Past and future growth of local exchange lines installed and in service (DELs) and the evolution of the waiting list since 1970 and as forecast during the program period are charted in Annex 11. The local and foreign costs of the expanded program's main components, and the estimated annual expenditures from 1983 to 1989 are given in Annex 12.

C. The Project

2.05 The project covers a time slice of DGT's current development program and consists of high priority works to be realized during the 1983-87 period. It includes principally the construction and extension of local and regional networks in rural and urban areas of 22 important wilayas, as well as the extension of local cable networks in the remaining 9 wilayas. The works correspond to a demand that must and can be satisfied rapidly. This represents construction of urban and rural distribution networks for about 350,000 of the new subscriber connections to be added during the project period, or about 60% of the total new connections planned by DGT during this four-year period. The project also includes priority trunk links from the 22 above mentioned wilayas to the national network and between themselves, and first connection for 600 isolated communities in 18 wilayas. Its components were chosen in order to help DGT in its efforts to expand local and regional systems and their access to the trunk network in pace with the installation of exchange equipment where demand is high. The project includes works in most of those wilayas which are in charge of monitoring development and operations on a pilot basis at the regional level of DGT's organization. Staff in charge of network construction in other wilayas would be trained under the project and benefit from it.

2.06 Simultaneously, the technical assistance included in the project will enable P&T to implement the managerial and organizational changes which were initiated by the government in early 1983 and are urgently required in order to cope with the problems and responsibilities of operating and developing a large telecommunications network. The Bank's association with P&T in this management and organizational change effort would be an essential objective of the project (para 1.21). - 10 -

2.07 The project is expected to achieve the following:

(a) construction of about 550 km of new coaxial cable links, and expansion to 2,000 channel capacity of an existing 600 km coaxial cable, all cables linking transit exchanges in ten important wilayas, also linking them with the main east-west and north-south long distance routes; this would represent addition and redistribution of about 4,000 trunk circuits;

(b) construction of about 1,000 km of medium capacity regional cable and transmission systems in 22 wilayas, enabling automatization of about 400 small-capacity exchanges in rural areas and connecting them to the national automatic network, and installation of about 400 line concentrators servicing about 42,000 distant subscribers;

(c) construction and rehabilitation of local cable networks in about 450 medium and large towns, where about 310,000 new subscribers are planned to be connected under the project;

(d) establishment of about 600 public telephone call offices in isolated rural areas and communities of 18 wilayas now without access to telecommunications services;

(e) provision of transport and handling equipment, power equipment and tools for network construction at large regional centers; and

(f) technical assistance and staff training in: management and organization of telecommunications development and operations, development planning and engineering, financial management, accounting and tariffs. About 170 manmonths of consultants/experts and 100 manmonths of staff training will be provided (para 4.20).

A more detailed description of the project is included in Annex 13.

D. Project Costs

2.08 The total project cost is estimated at DA 1,437.0 million (US$312.4 million), including a foreign exchange component of DA 588.8 million (US$128 million). Project cost details are shown in Annex 14. The schedule below summarizes the estimated cost of the major components of the project. - il -

Schedule of Costs of Major Project Components

For- For- eign Local Total eign Local Total (DA million) (lJS$million)

1. Coaxial cables for trunk network (cables, line and multiplex carrier equipment) 56.5 49.8 106.3 12.3 10.8 23.1

2. Automatization of regional net- works and of main rural areas (cable and transmission equip- ment, PCM and overhead line carrier systems, concentrators) 166.1 132.0 298.1 36.1 28.7 64.8

3. Local and urban networks (cable networks and external plant, including civil works and other facilities) 242.9 432.9 675.8 52.8 94.1 146.9

4. Telephone PCOs in isolated com- munities (overhead lines, single carrier and VHF/HF radio equipment) 35.5 40.0 75.5 7.7 8.7 16.4

5. Miscellaneous (transport, cable laying and handling equipment, tools) 6.9 2.3 9.2 1.5 0.5 2.0

6. Technical assistance and training 9.2 2.3 11.5 2.0 0.5 2.5

Estimated base cost 517.1 659.3 1,176.4 112.4 143.3 255.7

7. Contingencies: Physical 19.2 27.8 47.0 4.2 6.1 10.3 Price 51.1 161.1 212.2 11.1 35.0 46.1

Subtotal contingencies 70.3 188.9 259.2 15.3 41.1 56.4

8. Capitalized "front-end" fee 1.4 1.4 0.3 0.3

Total estimated project cost a/ 588.8 848.2 1,437.0 128.0 184.4 312.4

a/ Including the Bank "front-end" fee, of about US$0.3 million.

The Bank would finance 100% of the foreign cost of imported goods and services totaling US$127.7 million equivalent. The proposed Bank loan of US$128 million would also finance the capitalized "front-end" fee of US$0.3 million. The local currency costs of DA 848.2 million (US$184.4 million) - 12 - would be financed from net internal cash generation and from treasury borrowings. DGT's total investments under the expanded third plan period, excluding ongoing, special and future works, over the 1983-88 project period would amount to about DA 7.6 billion (US$1.65 billion) with a foreign exchange component of DA 3.5 billion (US$750 million). The proposed Bank project represents about 19% of this total investment and the Bank loan about 17% of its foreign exchange component.

2.09 Project costs reflect the estimated 1983 prices based on DGT's experience with recent contracts and correspond to international prices under similar conditions and allowing for some economies of scale on DGT's base costs for large grouped purchases, as DGT plans and it will be possible to order under the project. The local costs include customs duties on imported goods and production taxes which P&T is required to pay (para 3.09), and which represent about 20% of the estimated project costs. Technical assistance costs are estimated at manmonth costs of up to US$12,000 for high-level short- and medium-term consultants and of up to US$9,500 for longer-term experts, resulting in an average manmonth cost of US$10,500 for consultants/experts and US$3,000 for trainees. This includes the manmonth rates as applicable, reimbursable items such as travel, and subsistence and other allowances in country of service or stay.

E. Contingencies

2.10 An allowance averaging 4% for physical contingencies has been added to the estimated base cost to cover possible increases in plant requirements which might be found necessary on completion of detailed designs in later years. Price contingencies are based on annual escalations of 7.7% in 1984 and 7.0% in 1985 and 1986 for foreign costs, and of 10% in 1984 and 9% in 1985-87 for local costs. The price escalation has been calculated on a compounded basis up to the dates at which orders would be placed. Import duties and local taxes, which are included in the local costs, have been escalated at the same rates as the costs to which they relate. Overall price escalations represent about 18% of project base cost. This is made up of about 11% on foreign and 25% on local base costs.

F. Procurement

2.11 All materials or equipment to be financed from the Bank loan would be procured through international competitive bidding in accordance with Bank guidelines. To meet some specific or urgent needs, such as for special transport and handling facilities, cable laying, and sundry testing and measuring equipment or tools required under the project, all being expected to be imported equipment, DGT would be permitted to purchase items under government purchase procedures, as normally followed by P&T, which require obtaining quotations from at least three manufacturers or suppliers and are acceptable to the Bank, with the provision that the foreign cost of each item should not exceed US$75,000 equivalent and that all contracts so awarded would not exceed US$900,000 equivalent. If either cables, switching or transmission equipment is procured under ICB from the local factories, preference for local manufacturing would apply in accordance with Bank guidelines. - 13 -

2.12 For contracts expected to amount to US$250,000 or more, procurement documentation will be submitted to the Bank for prior review resulting in a coverage of about 90% of the estimated value of the contracts for goods and services. For contracts under US$250,000, the borrower's procurement decisions and ICB procedure would be submitted to the Bank for post-review and approval, before initiating withdrawal application. Consultants will be engaged in accordance with Bank guidelines.

G. Project Implementation

2.13 The project will be implemented by DGT. Its proposed implementation schedule is set out in Annex 15 and is realistic. DGT's management has enough general experience to manage the works under the project. Improved planning and construction methodologies and more effective control of the implementation would be introduced with the assistance of consultants and specialists in local networks and transmission systems as provided under the project. DGT's engineers have prepared or are preparing engineering designs and technical specifications for all equipment. DGT's staff will install most of the equipment except for coaxial cable line and carrier systems which would be installed by the suppliers. SONATITE would lay and commission most of the cables and install part of the cable ducts. DGT would supervise most of the civil works done by local contractors. Acceptance and commissioning tests would be carried out by DGT. Bidding documents are being prepared by DGT for its program and for the proposed Bank project. Calling for tenders concerning complex transmission systems was made in 1982/83 and is expected to be completed by mid 1985 for most items. Tender documents for important items are presently being reviewed by the Bank. Most of the contracts would be awarded by end 1985. The project is expected to be completed by June 30, 1988 including the time required for supervision of (and training in) operation and maintenance of complex transmission systems during the initial operation and guarantee periods of the systems.

H. Disbursements

2.14 Disbursement would be made on 100% of foreign expenditures or 100% of ex-factory cost of local expenditures for goods and services under the project, and 100% of foreign expenditures for consultants and overseas fellowships. P&T intends to start implementing the technical assistance program as early as possible. Field work of three senior consultants in organization, planning and financial management and of the experts in basic technical guidelines and operation of the networks would begin early in 1984. So far, P&T has awarded, under ICB procedures in accordance with Bank guidelines and under Bank supervision, six contracts for goods under the proposed project, essentially with regard to coaxial cable and rural systems. Total value of these contracts is about US$12.0 million equivalent. Based on a tentative schedule of loan processing and on the assumptions of loan signature in January 1984, there would be a need for retroactive financing from June 1, 1983 of about US$4.0 million, - 14 - representing the initial payment under the contracts. The estimated schedule of disbursements is set out in Annex 16. The loan is expected to be fully disbursed by June 30, 1989, which would be the closing date of the proposed loan.

I. Performance Indicators

2.15 A set of indicators which will help monitor DGT's performance on project implementation and its operational and financial performance during the project period are set out in Annex 17. These indicators have been discussed during negotiations and will be included in DGT's project progress reporting requirements.

III. ECONOMIC ANALYSIS

3.01 The economic analysis relates primarily to the Algerian P&T's telecommunications investment program, of which the proposed Bank project is an integral part. The part of P&T's program on which the analysis was made covers the period 1983-88.

A. Telecommunications and Development

3.02 In Algeria there is a large and rapidly growing demand for telephone service, and call traffic congestion of parts of the network is severe during peak hours (paras 1.07 and 1.11). The proposed program will contribute to better meet forecast demand by the end of 1988 (para 1.15).

3.03 The National Third Five-year Plan, of which P&T's program is a part, was designed to redress the imbalances which rapid industrialization has generated in the economy during the 1970s. Emphasis is put on social sectors such as housing, education and health, on equitable regional development, and on productivity in agriculture and industry. The recent move towards conserving oil reserves may be seen as part of a general trend towards consolidation and the improved use of all resources. An integral part of this process over the next few years will be the decentralization of planning and management, and the better integration of all regions into national economic development. There is also a growing orientation towards self-sufficiency in the productive industrial and service sectors.

3.04 The current level of telecommunications access and usage is low compared to the level and complexity of economic activity in such a large country (para 1.05). The need for an efficient means of communication will grow rapidly as economic consolidation and integration proceed. Specific benefits from the expansion of telecommunications services under the third program will include: (a) fuller use of existing telecommunications installations by better planning and management; (b) improved quality of service and alleviation of congestion, and reducing subscribers' wasted time at peak hours, thereby considerably reducing for both subscribers and P&T the average cost per completed call; (c) provision of service to a - 15 - large number of new subscribers currently waiting for telephone service; (d) increased ability of the Algerian P&T to finance its own expansion, thus freeing resources otherwise provided by the government for use elsewhere in the national economy; (e) enlarged market areas for goods and services; (f) savings in transport and energy arising from the partial substitution of low-cost telecommunications, an important factor in such a large country; and (g) facilitating participation of remote or isolated communities in regional and national economic and social activities.

3.05 A sample analysis made at the time of project appraisal showed that currently the overall penetration of telephone service related strongly to urbanization, literacy and emphasis on industrial employment. Such relationships are being examined by P&T in the light of the ongoing development in the high plateau region.

B. Distribution of Benefits

3.06 There are both economic efficiency and social equity aspects to the distribution of benefits from the proposed telecommunications investment program. Algeria has a centrally planned economy, and the exact level at which a service should be priced for maximum economic efficiency relates to the mix of prices charged for the myriad other goods and services. However, it may be reasonably assumed that in general in urban areas, those who obtain the greatest benefits from telephone service are willing to pay the highest price. Thus, increases in revenues obtained from restructuring and/or increasing the tariffs should help to ensure that, in areas where service is available, telephone access and use will be better allocated.

3.07 It has been estimated that the proportion of business telephones to the total number of telephones is about 57% (para 1.08), and that the proportion of waiting business subscribers is about 49%. However, the proportion of business telephone stations out of the total number of stations added over the project period will probably be greater than either of these figures, because: (a) the preference is for expansion in the semi-urban and rural areas where nonresidential business demand predominates; (b) the drive for management efficiency in the economy will require better communications, resulting in increased business demand; (c) residential demand is typically more price elastic than business demand, and the tariff increase may cause a shift towards proportionately higher business use; and (d) refusal rates when offered service are typically higher among residential subscribers. Furthermore, experience in other developing countries suggests that residential telephones are utilized to a significant extent for work-related communication and other forms of participation in the economy.

3.08 There are also strong social equity aspects to the program. In Algeria it is felt that there are particular social aspects to public utilities such as telecommunications, and policies pertaining to the distribution of benefits have to take such aspects into account. To examine the distributional aspects, an index of the level of development of - 16 - each of the 31 wilayas in Algeria was developed (see project file). The index measures the relation of the use of telecommunications services in the urban centers to use in the rest of the wilaya, and reveals that the proposed rate of growth in telecommunications access is significantly higher for the less developed wilayas. This shows an emphasis on a more equitable distribution of development, thus tending to avoid reinforcement of higher urban use. The telephone expansion in rural and provincial areas aims primarily at providing service for all administrative entities at those levels. In addition, publicly available telephone call offices will be introduced for the first time into approximately 800 small communities. This increased access into rural and provincial areas, together with suitable tariff measures, should ensure a more even distribution of the telephone service in the long run, and thus better opportunity for the rural and provincial areas to participate in the economy.

3.09 Finally, DGT's development program will have a favorable fiscal impact. P&T pays a uniform global production tax, equivalent to 11% (25% in some cases) of the net value of all equipment it purchases. This includes imports and local goods and works. Customs duties on imported goods range from 10% to 70%, the latter for items that compete with locally manufactured goods, and average about 24% for DGT's imports. In addition, there is a 6.4% tax on installation charges locally contracted and a 10% tax on installation by foreign suppliers. Estimited taxes and duties on the foreign exchange component of the 1983-88 tejecommunications investment program would be about DA 600 million, and taxes on the local cost component would be about DA 700 million; thus, DGT would generate about DA 1,300 million in funds for the treasury during the third plan. In addition, revenues brought about by increased tariffs and improved utilization of existing and future investments over the period 1983-1988 will produce net internal cash generation of about DA 5.1 billion (US$1,109 million); DGT's needs for Treasury advances will be this much less and corresponding amounts could be used for development projects in other sectors. The proportion of total investments financed by net internal cash generation will be about 59% during the project period, rising to about 62% by the end of the project. This is up from 33% over the 1979-82 period.

C. Tariff Policies

3.10 A summary of tariffs as of February 1, 1983 is set out in Annex 18. Telecommunications tariffs were increased in 1965, 1975 and 1983; the most recent increase averaged about 55%, effective February 1, 1983. Past tariff increases have not had a noticeable impact on telephone traffic and new subscriber demand. As a result of the recent tariff increase, P&T increased the base call charge by 50% from DA 0.40 to DA 0.60 and restructured national tariffs by generally increasing the cost of long distance calls and virtually doubling the connection charge from DA 490 (average) to DA 900 (US$196). Algeria's telephone tariffs are in the middle range compared to those of other countries, as shown in Annex 19 where an indicative comparison is made of the yearly cost to subscribers of sample telephone usage in Algeria with that of other countries. Beginning - 17 - in 1984, a six-minute limit to the duration of local calls will be progressively introduced in large cities where digital exchanges will be installed under DGT's program. The rate for automatic long distance calls is reduced by 40% between 8 p.m. and 8 a.m. These lower off-peak rates reflect the lower marginal cost of carrying traffic outside the peak periods.

3.11 The tariff structure leans towards providing somewhat less costly telephone service for subscribers outside the main urban areas, the size of the monthly rentals being set according to the size of the subscribers' network, with charges ranging from DA 19.20 (US$4.17) for a network of less than 2,000 lines, up to DA 42 (US$9.10) for a network larger than 50,000 lines. This is common practice in other countries and has some justification in terms of value-of-use rationale. However, since in telecommunications the production costs decrease with scale and density, this means that there are probably some non cost-based tariff elements in provincial and rural areas in comparison with the urban areas, in particular Algiers and Oran. A similar arrangement applies to the call charges for which a duration limit will be introduced in large cities.

3.12 During the project period the tariff structure should be examined in order to establish the extent to which tariffs diverge from the incremental costs of providing the services, and thus assess the implications on economic efficiency in the use of existing plant and new investment. In order that this examination may relate the tariff policies to the country's economie and social goals, it should also address the identification of the user groups charged at more, or less, favorable rates, and analyze the use which they are making of the telephone. The analysis would compare tariffs with the cost of services, in the context of government development and social objectives and in consideration of DGT's goals of efficient operations and development. P&T will carry out such a tariff study as part of the project, following the introduction of a cost accounting system (para 4.12) by December 31, 1986, and in accordance with terms of reference agreed to by the Bank (para 4.21). The conclusions from this study would be taken into account in future tariff action as required for DGT's operations and development.

D. Least Cost Solution

3.13 The configuration of the existing network and the development targets proposed under P&T's program do not give much scope for viable alternative technical solutions. The Bank-financed project is based on standard engineering and economic techniques, with appropriate provisioning periods for various plants, and studies designed to determine the least-cost solution for each project component. Since 1980, under SFYP, P&T has been studying the most adequate switching equipment to use at transit and international and at local exchange levels in its network. In 1982, P&T decided, with government's agreement, that: (a) the digital technology should and will be rapidly introduced for the transit and large exchanges, as well as in the long-distance network, where justified; and (b) switching equipment of electromechanical crossbar type manufactured for - 18 -

P&T by ENTC in its Tlemcen factory will continue to be used for small and medium-size exchanges under the program. Digital equipment is, at present, cheaper than mechanical equipment for transit and large exchanges and it better fulfills operational requirements of such exchanges for now and in future. P&T's decision is appropriate. It is in line with those being made worldwide, and will result in a decreased average cost per line under its program. Tlemcen production, including private branch exchanges, would be maintained at about 60,000 equivalent lines per year. It will also enable to complete to full capacity existing crossbar exchanges and to rapidly install smaller exchanges where required under the program. P&T buys ENTC's production at costs commensurating with prices of imported equipment of the same type. In general, the technologies adopted in the project and program are effective in promoting low installation and maintenance costs. The technical assistance included in the project (para 4.20) will enable P&T to have suitable detailed definitions of the equipment and works, efficient use and operation of the facilities, as well as proper development planning and execution.

E. Return on Investment

3.14 The internal financial rate of return, defined as the discount rate which equalizes the present value of the cost and revenue streams (in 1983 prices) attributable to the program, is about 15%. Details of the calculation of the rate of return are given in Annex 20.

3.15 It is difficult to estimate the real benefits of the program for the following reasons: (a) the tariff structure probably produces some imbalances in that prices charged for specific services may not always accurately reflect costs; (b) the response of subscribers to this distorted tariff structure is expressed in terms of preference for other goods and services, which are centrally priced, and thus willingness to pay may not be a good indication of relative benefit; and (c) demand exceeds supply by over 60%.

3.16 Nevertheless, the available evidence suggests that the internal financial rate of return underestimates the real benefits to be derived from the investment program. For example, the 33% tariff increase in May 1975 produced no noticeable decline in traffic or demand for service in either the short or the long run, indicating that at that time the users and applicants believed that the benefits they received from service outweighed the additional cost. Considering that unsatisfied demand throughout Algeria is very high, and that previous tariff increases produced no measurable change in consumer behavior, it appears likely that a substantial consumer surplus exists even after the most recent tariff increase.

3.17 Adjusting for taxes and duties, and estimating a portion of the consumer surplus by tabulating prices in real terms (1983 level) over the program period, an estimate of the quantifiable economic rate of return would be 38%. In estimating this potential consumer surplus, it is assumed that existing and new subscribers over the project period will be prepared - 19 - to pay the prices in real terms that existing subscribers and applicants have shown to be willing to pay (Annex 20). This is considered to be a reasonable assumption.

F. Risk

3.18 The program and the project offer limited risk. The principal risk is the possibility of delayed physical implementation and the resulting slowing down of investment expenditures and disbursements. In telecommunications projects, which comprise a large number of relatively independent activities, delay in the completion of some works does not generally prevent the use of other assets. A sensitivity analysis on the economic rate of return indicates that a 10% increase in capital expenditures would result in an economic rate of return of about 35%, while a 10% decrease in operating revenues would result in a rate of return of about 34%. A combination of these factors plus a 10% increase in operating expenses would result in an economic rate of return of about 31%. A further sensitivity analysis for the program shows that one and two year delays of all benefits (but not of costs) would result in minimum economic rates of return of 29% and 24% respectively, which is satisfactory.

G. Environmental and Health Aspects

3.19 The program is not expected to adversely affect the environment or public health in any way. On the contrary, it is likely to lead to more efficient utilization of vehicles and fuel, and facilitate delivery of health services as well as emergency interventions. As the project will provide better telephone and telex services, a reduction in vehicle use for personal travel could be achieved, thus improving the present level of efficiency of business communications, particularly in Algiers and Oran. This will result in some energy conservation and reduction of environmental pollution.

IV. THE IMPLEMENTING AGENCY

A. Organization and Management

4.01 The Ministry of Posts and Telecommunications (P&T) will be the beneficiary and implementing agency of the proposed project. P&T was constituted by, and functions in accordance with, Presidential Ordinance 75-89 of December 30, 1975, which confirms and codifies the powers and responsibilities vested in the Ministry to administer and operate the state monopolies for postal and telecommunications services. The Ordinance also defines the financial services entrusted to P&T, such as postal checking accounts, savings accounts, money orders, etc. The Ordinance provides that P&T will have a separate budget annexed to the government budget. For each branch of service, the budget details operating and investment expenditures under separate sections. The investment section needs to be approved by the Ministry of Planning. P&T is required to cover all operating expenses, - 20 - including depreciation and debt service, from operating revenues. Tariffs are proposed by P&T and set by the Ministry of Finance. Under the authority of the Minister, P&T is basically organized into a central administration in Algiers and directorates in the wilayas. These directorates have basic responsibility for the service to the public in the wilayas () and to the "Walis" (Prefects) who represent the government at the regional level.

4.02 Effective January 1, 1983, three Presidential Decrees were promulgated to redefine the functions and responsibilities and the organization of P&T at the Ministry's Central Administration level. Under the Minister's authority, P&T's organization provides for a secretary general and five directorates general (DG) for the Telecommunications Branch (DGT), for the Postal/Financial Branch (DGP), for common services (buildings, transport, and procurement), for general administration, human and financial resources and training, and for programming, planning, organization and information systems. The new organization aims at improving P&T's efficiency and programming/planning capability and at streamlining the Ministry's various branches of activities. The accounting department (Agence Comptable) reports directly to the Minister. There is also a general inspectorate for the Ministry. P&T's current organization chart is shown in Annex 21.

B. Telecommunications Branch

4.03 DGT administers the telecommunications monopoly, provides services to the public and defines general policy in regard to telecommunications. Important internal support services, such as personnel, accounting, budget, buildings and transport are provided to DGT by the two other directorates general in charge of these common services. DGT comprises four directorates: for programming/planning and industrial relations, for switching, for transmission (covering development, technical operation and maintenance in each field), and for operations, commercial action and tariffs. In addition, DGT has some operational units or "centers" providing common services to P&T, such as for procurement of telecommunications equipment, central stores, research, testing and inspection, etc. At regional level, since 1979, there are seven operational directorates for telecommunications (DOT) charged with the technical function in about four wilayas each. The DOTs coordinate and monitor telecommunications development and operations within the wilayas. Also, two divisions reporting to the DGs for planning and information systems and for financial resources are providing services for the telecommunications branch, viz., the data processing division and the accounting division respectively (paras 4.05 and 4.09). Annex 21 shows DGT's basic internal organization; its organization, functioning, responsibilities and staffing are outlined in detail in the Decree of January 1983 on the organization of P&T's Central Administration and in the UNDP/World Bank Study Volume B, Chapter 2 (see project file). - 21 -

C. Postal/Financial Branch

4.04 P&T's postal/financial branch is operated by DGP. In addition to providing postal services, DGP operates a nationwide checking account system and collects funds on behalf of the National Savings Bank. Postal/financial services in Algeria are generally reliable, accurate and timely.

D. Data Processing

4.05 P&T's data processing division, under the DG for planning and information systems, has five medium-power computers and eight mini-computers which are being used primarily for checking and savings accounts transactions, payroll processing, and billing of the 425,000 telephone subscribers in Algeria. The growth of demand on computer capacity for existing and future applications has prompted P&T to reconsider the scope and contents of its data processing requirements. A well-designed data processing plan was drawn up and has been partially implemented. New applications of P&T's computer capacity in areas such as accounting, inventory management, directory assistance, preparation of the telephone directory, management of the telephone network, personnel management, management information and accounting, are under consideration.

E. Management Information System

4.06 P&T's management is currently presented with large quantities of statistics and administrative data; however, presentation is unstructured and does not facilitate decision making. A management information system based on the expanded data processing capacity of P&T would be established through the management improvement program (para 4.19). The system would define the responsibilities for data gathering and decision making at different levels in the organization, and the contents and frequency of management reports. For each branch of activity, the system should meet the managerial and operational requirements at the different levels of decision making. In particular, it should incorporate the revised accounting system (para 4.12). Two consultants would be recruited, financed from the proceeds of the proposed loan (para 4.20), to assist in preparing and implementing the management information system.

F. Staff

4.07 As of December 31, 1982, P&T's total staff was 27,870, of which 15,803 was for telecommunications. Salaries have been adjusted roughly pari passu with the increase in the consumer price index over the 1974-82 period. Personnel costs now represent 62% of the operating expenditures of the telecommunications branch, and any further improvement in its financial performance (para 5.12) will depend to a large extent on the success of measures to reduce the ratio of the number of staff per 1,000 DELs. This ratio has already slightly reduced since 1980, and P&T plans to further decrease it from 39 per 1,000 DELs (1982) to 23 per 1,000 DELs by the end of 1988. This measure is crucial to the productivity and future financial - 22 - performance of the telecommunications branch. A decreasing staff ratio would be one of the principal performance indicators of DGT (para 2.15).

G. Training

4.08 P&T ensures the specialized training of its staff at all levels for both posts and telecommunications. Its training organization handles the following facilities:

(a) the central P&T school in Algiers. The present capacity is for 600 students at one time. It trains middle and upper levels of non-engineering staff as well as junior technicians and other maintenance staff;

(b) regional schools at Constantine and Ouargla and under construction at Saida. Total capacity is 250 students to be extended to 750 students, from 1986 when the three schools will be operational at full capacity. Middle level operational and installation staff would be trained;

(c) the telecommunications institute at Oran (ITO). The present capacity of 1,000 students at one time will be increased to 1,300 in 1986. ITO receives assistance from UNDP/ITU and has also a significant number of teachers, paid for mainly with bilateral assistance. It trains higher level telecommunications staff, including specialized technicians and engineers in the various branches of telecommunications. Some post-graduate studies are performed abroad, mainly in France. About 7% of the ITO students come from other African countries; and

(d) seven holiday centers with space for 500 to 600 students which, during off-season, are used for short-term training.

During the period 1983-87 P&T plans to train a total number of 14,000 of its own staff plus approximately 500 foreign students at the above establishments. The biggest problem in this effort is the shortage of teachers, but P&T's training branch plans to resolve it with a teacher training program of 220 candidates; assistance is being obtained from ITU for the implementation of the program. The programs for training of staff and of teachers cannot be successful without the full use of available resources. The programs adequately cover the needs of the organization up to the end of 1986 (see also para 4.19). Details of the staff training program and of the proposed expansion of the training capacity are given in Annex 22.

H. Accounting

4.09 The responsibility for preparation of accounting data is divided between (a) the accounting division of the financial resources department - 23 -

and (b) the accountingdepartment (Agence Comptable);the latter reports directly to the Minister. The accountingdivision is in charge of verify- ing the accounts of the individualpost offices and the operation of the accounting system. The Agence Comptableprepares monthly summaries of receipts and expendituresand issues the year-end financialstatements.

4.10 The number of staff in the accountingdivision and the Agence Comptable is adequate consideringthat computers will gradually take over the routine tasks (para 4.05). To improve the quality of its accounting staff, P&T should provide more in-house courses or let staff participatein courses given by institutionssuch as the Chamber of Commerce,the Ecole Superieurede Commerce,and the Societe Nationalede Comptabilite. Promotionand salary policies should be linked to successfulparticipation in accountingcourses. Under the proposed project, consultingservices would be provided to examine the training requirementsof the accounting staff and to design and implement a training program (para 4.20).

4.11 P&T's accounts, although reasonablywell kept, do not provide all the informationrequired for good financial managementand control. Separ- ation of accounts between the principal branches exists only for certain items, notably on the revenue side. P&T has a cash accountingsystem; accounts payable and receivableare not recorded in the balance sheets. No distinctionis made between fixed assets and work in progress (other than buildings). The last review of the fixed assets register took place in 1968. Depreciationis calculatedover fixed assets on the books as of the beginning of the fiscal year only. There is a lack of proper inventory management, control and valuation.

4.12 Reorganizationof P&T's accountingsystem is necessary and is being planned. P&T plans to introduce,within the frameworkof the national accountingsystem, accrual accountingand separationof accounts between telecommunicationsand postal/financialservices. In addition, P&T wishes to undertake a review of its fixed assets register and related procedures. Although these various tasks will be carried out to some extent by P&T's staff, outside assistancein design and implementationis necessary and has been requested. The proposed project would provide consulting services through the management improvementprogram (para 4.20). During negotiations,assurances were obtained from the government that P&T will introduce,by January 1, 1986, accrual and cost accounting systems providing for separationof the accounts of the telecommunications and postal/financialbranches.

I. Billing and Collection

4.13 Billing is on a bimonthly basis and is--since 1982--fully computerized(para 4.05). Bills are delivered on the 15th day of the month following the billing period. Service is suspendedif payment has not been received by the end of that month. The accounts receivablesituation is satisfactory(para 5.07). - 24 -

J. External Auditing Arrangements

4.14 Government has informed the Bank that the Inspection Generale des Finances (IGF) of the Ministry of Finance will carry out the external audits of P&T's accounts in future, and that its reports will be submitted to the Bank. The IGF has been accepted as independent auditor in previous Bank projects in Algeria. During negotiations, assurances were obtained from Government that: (a) audits will be carried out in accordance with generally accepted auditing principles; and (b) P&T's audited financial statements would be submitted within six months after the end of the fiscal year starting with 1984.

K. Budget Preparation and Control

4.15 P&T's budget consists of two parts: the operating budget and the investment budget. The operating budget is prepared at the wilaya level, reviewed by the budget division of the general administration department, and must show an overall surplus (para 5.02). The investment budget is prepared by the central departments of P&T, within the framework of the national investment plan. Both budgets are submitted to the National Assembly for approval in October/November of each year, where they are incorporated in the finance law which details expenditures and authorizes commitments and borrowings.

4.16 The budget division exercises strict control over expenditures by checking them monthly against budget chapter allocations. Although officially the Comptroller of the Treasury has to approve major expenditures prior to their being incurred, in practice only actual suppliers' invoices are submitted for ex post facto approval. The budget division summarizes year-end results by budget chapter, leading to requests for, or cancellation of, credits to be included in the closure law. Although marginal improvements could be made in budget preparation and control procedures, the existing situation is satisfactory.

4.17 All P&T funds are public funds which P&T is expected to transfer to the Treasury when received. On postal checking account deposits with the Treasury relating to nongovernment customers, it receives between 2.25% (parapublic sector) and 2.50% annual interest (private sector), which is about equal to the rate at which it borrows funds from the Treasury (para 5.02). P&T is entitled to keep a working capital balance equivalent to up to three months' of operating expenditures. This arrangement is satisfactory.

L. Insurance

4.18 So far, the high cost of commercial assets and liability insurance has favored self-insurance by the government, which is in line with the policy adopted in many other countries. Procedures for - 25 -

replacement of lost or damaged assets, via supplementary budget allocations, are sufficiently flexible to make this arrangement acceptable.

M. Management Improvement Program

4.19 P&T is aware of the vital managerial and organizational improvements needed in virtually all major areas of its administration and operations. The UNDP/WB study made a thorough evaluation of the present situation in this respect and recommended a suitable course of action; it also defined the outside assistance required to implement the proposed measures. Following the study, the Minister formed in 1981 a working group at the highest level within P&T to prepare a comprehensive action program in this field, hereafter referred to as the management improvement program (MIP). The recommendations of the working groups were formulated in 1982 and resulted in the reorganization of P&T's central administration as promulgated by Presidential Decrees in January 1983. This was followed by the decrees on tariff increases which had been set as a condition of presentation of this project to the Board of Directors. The measures taken were along the lines discussed during appraisal and earlier negotiations of the proposed project. Other measures included in the MIP remain to be implemented. These measures concern all branches of P&T's activities and would provide for strengthening, assisting and improving P&T's general administration, financial management and accounting system, its operational, planning and developmental capabilities, staff training and expansion of training facilities, together with the creation of new services such as a specialized center for applied research and technical control. The proposed Bank project would finance part of this program through its technical assistance component, which covers the essential requirements of the telecommunications branch.

4.20 Under further implementation of the MIP, the Bank would finance 100% of the foreign exchange cost (US$2 million) of about 170 manmonths of consultants and 100 manmonths of staff training. Technical assistance under the project would provide the following services and expertise over a period of approximately two years:

(a) management and organization of telecommunications development, planning and implementation, operations and personnel (2 consultants for a total of about 20 manmonths and 15 manmonths of staff training);

(b) technical guidelines and fundamental plans for local and long distance network construction and operation; traffic and service quality analyses; and development of new services (3 consultants for a total of about 24 manmonths and 15 manmonths of staff training);

(c) development planning and management, detailed planning and construction methodology and supervision of program/ project execution in switching, transmission and local network techniques (5 consultants for a total of about 45 manmonths and 30 manmonths of staff training); - 26 -

(d) design of an integrated management information system, including computer programing, and assistance in implementing it (2 consultants for a total of about 24 manmonths and 10 manmonths of staff training);

(e) introduction of an accrual accounting system, separation of the accounts of the telecommunications and postal/ financial services, updating of the fixed assets register, introduction of proper inventory control and valuation procedures, and design and implementation of an accounting staff training program (4 consultants for a total of about 44 manmonths and 20 manmonths of staff training);

(f) review of the telecommunications tariffs (para 3.12) (2 consultants for a total of about 8 manmonths and 6 manmonths of staff training); and

(g) unallocated to eventually complement the above services, about 10 manmonths of consultants and 4 manmonths of staff training.

4.21 During negotiations, assurances were obtained from the Government that the project's management improvement and training program would be carried out starting no later than March 1, 1984, and ending March 31, 1986, and in accordance with the agreed terms of reference of the consultants and timetable. The proposed timetable is given in Annex 23.

V. FINANCIAL ASPECTS

A. Background

5.01 Postal/Financial Operations - In addition to telecommunications services, P&T also provides postal/financial services (para 4.04). Pro forma separation of the financial statements of the two branches for the period 1974-78 was prepared by consultants financed under the UNDP/WB preinvestment study and for the period 1979-82 by P&T staff. These statements indicate that the financial performance of the postal/financial branch was satisfactory during the period 1974-82, with strong operating surpluses in each year. Postal tariffs were increased effective February 1, 1983, by an average of 50% on both domestic and international services.

B. Past Financial Policy

5.02 Existing legislation demands that P&T's tariffs be established so as to enable it to cover at least its own operating expenses, including depreciation and debt service. During the period 1974-82, P&T also financed 26% of its consolidated construction requirements from net internal cash generation. The remainder has been financed almost entirely - 27 - by Treasury advances with a 20-year final maturity, including a grace period of 4 years and an interest rate of 2.5%. The same terms apply for Treasury lending to other sectors of the Algerian economy.

5.03 The remainder of Chapter V deals exclusively with the telecommunications branch.

C. Past Performance

5.04 The financial statements of the telecommunications branch are presented in Annexes 24 to 26. A summary of the key indicators of its past financial performance follows:

Key Financial Indicators, Telecommunications Branch, 1979-82

Est. Fiscal year ending December 31: 1979 1980 1981 1982

Operating revenues (DA million) 636 776 915 1,003 Operating expenses (DA million) 536 716 748 847 Operating ratio (%) 84 92 82 84 Current ratio (times) 3.0 3.8 4.1 4.6 Debt/equity ratio 84/16 86/14 84/16 83/17 Net internal cash generation (%)a/ 33 21 38 43 Debt service coverage (times) 4.7 1.9 2.4 2.5

a/ As a percentage of construction requirements.

5.05 Measured by traditional yardsticks the past financial performance has been weak, due to the financial policy followed thus far (para 5.02); however, the trend since 1980 shows a gradual improvement in the financial performance of DGT. Gross assets in service quadrupled from DA 1.4 billion in 1974 to an estimated DA 6.0 billion (US$1.3 billion equivalent) by the end of 1982. The rate of return on average net fixed assets in operation reflects this rapid expansion and averaged 3.2% during the period 1979-82. Operating ratios averaged 86%, while net internal cash generation contributed 33% of construction requirements. Prior to the 1983 tariff increase (para 3.10) tariffs were increased last in May 1975. Despite considerable annual increases in domestic prices since then, the telecommunications branch has been able to maintain a fairly level financial performance due to a 200% increase in telephone subscribers during the period 1975-82.

D. Present Financial Position

5.06 A summary of the estimated financial position as of December 31, 1982 is given below: - 28 -

Balance Sheet

As of December 31, 1982 DA Million

Assets Gross fixed assets 6,030 Less: Depreciation 1,539 Net fixed assets 4,491 Work in progress 481 Other investments 89 Current assets 719 Total Assets 5,780

Liabilities Equity 947 Long-term debt: - Treasury advances 4,547 - Other borrowings 131 Current liabilities 155 Total Liabilities 5,780

Current ratio 4.6 Debt/equity ratio 83/17

Gross fixed assets in service (DA 6.0 billion) are shown at book value. Following DGT's decision to switch from crossbar to electronic digital equipment under its expanded program for large capacity exchanges (paras 2.01 and 3.13) book value now fairly represents replacement value. The current ratio is satisfactory at 4.6. Under an accrual accounting system this ratio would have been different, because accounts receivable and accounts payable would be included under current assets and liabilities. The debt/equity ratio of 83/17 reflects P&T's heavy reliance on Treasury borrowings for financing construction requirements, consistent with past financial policy (para 5.02).

E. Accounts Receivable

5.07 Although P&T does not have an accrual accounting system (para 4.11), the accounts receivable situation is being monitored very closely. The information provided indicates that, as of the end of 1982, arrears were DA 121 million or 1.5 months of billing. This favorable situation is due to strict enforcement of suspension and disconnection policies for private subscribers. By decree of April 1978, government agencies can be forced to pay through direct deduction from their Treasury accounts, even when budget allocations for telecommunications usage are exhausted. - 29 -

5.08 The principal--and virtually only--collection problem relates to the Radio Television Algerienne (RTA). Agreement on a tariff schedule for RTA's use of circuit facilities of P&T's domestic satellite system was reached in 1980. P&T has billed RTA for a total amount of DA 52 million through 1982. Government recently informed the Bank that a repayment schedule has been agreed upon for RTA's arrears and that it would ensure prompt settlement of bills for current usage.

F. Future Financial Policy

5.09 The Government has recently agreed to proposals made by P&T aimed at increasing the level of net internal cash generation of the telecommunications branch to about 50% or more of construction requirements. A similar approach is taken in many other countries where telecommunications entities fund a relatively large portion of their construction requirements from internal sources. Implementation of this policy would enable the government to spend less Treasury funds on telecommunications and correspondingly more on the development of other sectors of the economy.

5.10 Achievement of a contribution to construction requirements of at least 50%, with possibly higher levels during and after the project implementation period, is an acceptable and realistic target for DGT. As from February 1983, P&T introduced a 50% increase in the base call charge which is expected to produce a revenue increase of the same magnitude (para 3.10). Combined with the proposed staff efficiency improvements (para 4.07) and the potential to better utilize present and new installations (para 3.04) DGT should be able to achieve this target.

G. Financing Plan

5.11 The forecast funds flow statements for the period 1983-90 are shown in Annex 25. A summary of the sources and applications of funds during the project implementation period (1983-88) follows: - 30 -

Financing Plan, 1983-88

DA M US$ M %

SOURCES Internal cash generation 7,512 1,633 83 Less: Debt service 2,395 521 26 Net internal cash generation 5,117 1,112 57 Borrowings: - Credit Industriel et Commercial 105 24 1 - Proposed IBRD loan 589 128 7 - Future external loans 1,000 217 il - Future Treasury loans 1,579 343 17 Total 3,273 712 36 Contributions (Gov't. & SONATRACH) 620 135 7

TOTAL SOURCES 9,010 1,959 100

APPLICATIONS Proposed project 1,437 312 16 Other capital expenditures 7,233 1,573 80 Increase in working capital 340 74 4

TOTAL APPLICATIONS 9,010 1,959 100

It has been assumed that the proposed IBRD loan and future external borrowings would be at an 11% interest rate with a final maturity of 15 years, including 3 years of grace, and that residual borrowing requirements will be financed through Treasury loans at the currently prevailing terms (para 5.02). An existing commercial credit with Credit Industriel et Commercial is at 7.75% interest and a seven year maturity without grace period. DGT would finance during the project implementation period 57% of total applications from net internal cash generation (59% of construction requirements), which is satisfactory.

H. Future Finances

5.12 Forecast income and funds flow statements, and balance sheets for the 1983-90 period are in Annexes 24 to 26. Assumptions on the financial projections are in Annex 27. The key financial indicators of the telecommunications branch for the project period are given below. Net earnings are expected to show satisfactory progress as the combined effect of tariff increase and efficiency improvements takes hold. Net internal cash generation is expected to increase significantly compared to the period 1979-82 (para 5.04), indicating a satisfactory financial performance of the telecommunications branch. - 31 -

Key Financial Indicators, 1983-88

Fiscal year ending December 31 1983 1984 1985 1986 1987 1988

Operating ratio (%) 67 67 68 69 70 66 Current ratio (times) 2.3 2.3 2.3 2.3 2.3 2.4 Debt/equity ratio 75/25 69/31 63/37 58/42 56/44 54/46 Net internal cash generation (%) 69 58 58 55 55 62 Rate of return (%) 10.9 11.5 11.4 11.3 11.3 14.0 Debt service coverage (times) 3.7 3.5 3.3 3.0 2.7 3.2

5.13 Net internal cash generation as a percentage of construction requirements is expected to average 59% during the project period. In the years following project completion, net internal cash generation is forecast to further increase (Annex 25). At this stage of its development, the Algerian telecommunications branch needs to focus on generating funds to finance its large investment program and on reducing its reliance on Treasury loans correspondingly. During negotiations, assurances were obtained from the Government that it will take all the necessary measures to enable the telecommunications branch to achieve an appropriate ratio of net internal cash generation to construction requirements. In this context, the Government has assigned a ratio of about 50% from 1983 through 1988, and higher ratios in the years thereafter, as an objective for the telecommunications sector. The corresponding rate of return on average net fixed assets in service would increase from about 4% in 1982 to about 11% in 1983 and thereafter (Annex 24). Also during negotiations, assurances were obtained from the government that P&T will prepare and review, before September 30 of each year, financial statements for the current and next fiscal year indicating the estimated net internal cash generation ratios, and present these statements to the Bank.

5.14 The forecast financial statements indicate that annual debt service coverage will be satisfactory at an average of 3.1 during the project period. During negotiations assurances were obtained from the Government that it will charge the amortization, interest and other charges on the loan against DGT's budget at the prevailing standard Bank terms.

5.15 The data available in the project file and the related documents are listed in Annex 28.

VI. AGREEMENTS REACHED AND RECOMMENDATION

A. Agrements Reached

6.01 During negotiations, assurances were obtained from the government that: - 32 -

(a) P&T will introduce, effective January 1, 1986, an accrual and a cost accounting system providing for separation of the accounts of the telecommunications and postal/financial branches (para 4.12);

(b) P&T will: (i) submit its accounts and financial statements to an annual external audit; and (ii) submit audited financial statements within six months after the end of each fiscal year to the Bank (para 4.14);

(c) P&T will carry out the management improvement and training program during the period starting March 1, 1984 and ending March 31, 1986 (paras 4.20 and 4.21);

(d) the telecommunications branch will achieve an appropriate net internal cash generation ratio averaging at least 50% of construction requirements during the project implementation period (para 5.13);

(e) P&T will prepare and review, before September 30 of each year, financial statements for the current and the next fiscal year indicating the net internal cash generation ratios, and submit these statements to the Bank (para 5.13); and

(f) P&T will charge amortization and all interest and other charges on the loan against P&T's budget for the telecommunications branch at the prevailing standard Bank terms (para 5.14).

B. Recommendation

6.02 With the above agreements, the project is suitable for a Bank loan of US$128 million including the capitalized front-end fee, at a variable rate of interest and related fees, to be repaid over a period of 15 years, including a 3-year grace period.

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Ct 3.OC0$C3305$HOsH-Cr0Ot.0>9eCz * * O CCOHCHHC< ]' H c''C ' o- - 34 - ANNEX 2 Page 1 of 3

ALGERIA

MINISTRY OF POSTS AND TELECOMMUNICATIONS (P&T)

GENERAL DIRECTORATE OF TELECOMMUNICATIONS (DGT)

FIRST TELECOMMUNICATIONS PROJECT

Telephone Exchange Installations and Waiting List (by wilaya as of December 31, 1982)

Wilaya's Name Installed DELs Wilaya's Chief Population Capacity a/ in Pending Other Cities (Total) ('000) (Exch. Lines) Service Applications b/

01 Wilaya of Adrar Adrar 10.0 1,300 957 1,185 Other cities 147.0 1,000 704 1,418

02 Wilaya of El Asnam El Asnam 105.2 6,000 1,409 2,942 Other cities 925.8 6,800 5,432 4,871

03 Wilaya of Laghouat Laghouat 54.6 6,000 4,346 2,842 Other cities 308.4 7,500 5,473 5,428

04 Wilaya of Oum El Bouaghi Oum El Bouaghi 21.4 1,500 900 360 Other cities 428.6 6,500 4,103 4,941

05 Wilaya of Batna Batna 142.8 7,000 4,443 4,296 Other cities 541.2 4,000 3,478 3,362

06 Wilaya of Bejaia Bejaia 96.2 7,500 2,443 2,507 Other cities 544.8 6,700 2,305 3,818

07 Wilaya of Biskra Biskra 102.6 6,000 4,124 2,918 Other cities 570.4 6,500 5,646 8,498

08 Wilaya of Bechar Bechar 76.4 6,600 2,999 3,753 Other cities 94.6 2,000 1,019 1,114

09 Wilaya of Blida Blida 187.3 10,000 7,566 5,179 Other cities 936.7 14,000 9,319 10,932 - 35 - ANNEX 2 Page 2 of 3

Wilaya's Name Installed DELs Wilaya's Chief Town Population Capacity a/ in Pending Other Cities (Total) ('000) (Exch. Linès) Service Applications b/

10 Wilaya of Bouira Bouira 28.8 3,500 2,299 251 Other cities 418.2 7,500 4,188 1,693

11 Wilaya of Tamanrasset Tamanrasset 15.3 1,500 921 555 Other cities 34.7 1,000 442 600

12 Wilaya of Tebessa Tebessa 79.7 6,000 3,216 1,203 Other cities 337.3 2,500 1,681 2,191

13 Wilaya of Tlemcen Tlemcen 114.2 11,000 7,484 4,720 Other cities 554.8 5,000 4,317 7,758

14 Wilaya of Tiaret Tiaret 62.6 6,000 4,065 1,352 Other cities 646.4 6,100 4,927 3,238

15 Wilaya of Tizi-Ouzou Tizi-Ouzou 52.4 8,000 3,704 1,525 Other cities 972.6 7,600 4,840 6,262

16 Wilaya of Algiers Algiers 2,030.0 171,000 114,282 40,104 Other cities 672.0 14,000 10,208 7,386

17 Wilaya of Djelfa Djelfa 67.3 5,000 2,791 770 Other cities 307.7 3,000 1,760 977

18 Wilaya of Jijel Jijel 44.8 5,000 4,043 454 Other cities 527.2 3,000 2,025 2,211

19 Wilaya of Setif Setif 182.5 10,000 8,116 3,596 Other cities 976.5 10,000 8,686 7,479

20 Wilaya of Saida Saida 76.2 6,000 3,281 1,625 Other cities 359.8 7,000 3,979 3,665

21 Wilaya of Skikda Skikda 121.7 12,000 7,084 2,877 Other cities 456.3 5,000 2,959 1,806 - 36 - ANNEX 2 Page 3 of 3

Wilaya's Name Installed DELs Wilaya's Chief Town Population Capacity a/ in Pending Other Cities (Total) ('000) (Exch. Lines) Service Applications b/

22 Wilaya of Sidi Bel Abbes Sidi Bel Abbes 148.7 10,000 6,223 3,595 Other cities 444.3 6,500 4,611 5,802

23 Wilaya of Annaba Annaba 301.9 22,000 13,920 7,762 Other cities 325.9 15,500 2,999 3,225

24 Wilaya of Guelma Guelma 72.9 5,000 3,885 1,479 Other cities 534.1 6,400 5,270 3,705

25 Wilaya of Constantine Constantine 447.8 38,000 21,290 6,575 Other cities 353.2 5,000 1,896 3,887

26 Wilaya of Medea Medea 76.5 6,000 3,276 1,114 Other cities 477.5 5,500 3,492 2,393

27 Wilaya of Mostaganem Mostaganem 108.0 12,000 5,656 3,386 Other cities 763.0 8,600 4,607 5,739

28 Wilaya of M'sila M'sila 38.8 3,000 1,949 1,083 Other cities 467.2 3,000 1,932 1,874

29 Wilaya of Mascara Mascara 63.0 6,000 4,219 981 Other cities 435.0 6,850 4,237 4,833

30 Wilaya of Ouargla Ouargla 63.8 7,000 4,464 1,673 Other cities 172.2 5,700 4,815 3,634

31 Wilaya of Oran Oran 646.3 49,000 29,339 23,787 Other cities 227.7 5,900 3,167 6,179

Total 20,600.0 650,550 410,210 263,759

a/ Including about 49,000 lines in manual exchanges. b/ Number of pending registered applications for telephone connection.

IND April 1983 -37- ANNEX 3

ALGERIA

MINISTRY OF POSTS AND TELECOMKUNICATIONS (P&T)

GENERAL DIRECTORATE OF TELECOMMUNICATIONS(DGT)

FIRST TELECOMMUNICATIONS PROJECT

Distribution of Access to Telephone Service by Size of Urban Centers, Per Wilaya (as at end 1982)

Cities With Cities With Cities With Cities With 2,500 to 5,000 5,000 to 7,500 7,500 to 10,000 more than 10,000 Population Population Population Population Total Not Connected Total Not Connected Total Not Connected Total Not Connected

Adrar 1 1 3 - 1 - - - El Asnam 10 1 5 - - - 6 - Laghouat 4 2 1 - - - 7 - Oum El Bouagli 4 - - - 2 - 5 - Batna 6 - 3 - 4 - 3 - Bejaia 8 1 4 - 1 - 3 - Biskra 20 2 4 - 3 - 6 - Bechar 2 - 2 - 1 - 1 - Blida 35 4 3 - 1 - 12 - Bouira 5 - - - - - 4 - Tamanrasset - - 1 - 1 - - - Tebessa 7 - 1 - 1 - 3 - Tlemcen 12 - 2 - 2 - 7 - Tiaret 10 1 2 - 1 - 7 - Tizi Ouzou 29 1 8 - 2 - 4 - Alger il - 5 - 4 - 24 - Djelfa 3 - 3 - - - 4 - Jijel 2 - 1 - 2 - 2 - Setif 12 1 2 - 3 - 4 - Saida 7 - 1 - - - 4 - Skikda 10 1 3 - 1 - 4 - Sidi Bel Abbes 19 - 4 - 4 - 4 - Annaba 9 1 5 - - - 4 - Guelma il - 1 - 1 - 4 - Constantine 5 1 - - 3 - 5 - Medea 2 - 1 - - - 3 - Mostaganem il 1 7 - - - 3 - M'sila 7 1 2 - 1 - 3 - Mascara 10 1 1 - - - 4 - Ouargla 5 2 2 - - - 3 - Oran 13 1 2 - 1 - 4 -

Total 290 23 81 - 40 - 147 -

IND April 1983 - 38 - ANNEX 4

ALGERIA

MINISTRY OF POSTS AND TELECOMMUNICATIONS (P&T)

GENERAL DIRECTORATE OF TELECOMMUNICATIONS (DGT)

FIRST TELECOMMUNICATIONS PROJECT

Basic Data on and Description of Existing Telecommunications Facilities (as at December 31, 1979 and 1982)

Basic Data 1979 1982

Local Telephone Capacity of telephone exchanges Total 482,000 650,550 Automatic 450,000 601,740 Manual 32,000 48,816 Number of telephone exchanges Total 1,101 1,072 Automatic 144 218 Manual 957 854 Number of telephones (all stations) 414,093 598,045 Number of connected DELs a/ 260,000 410,209 Automatic 228,563 382,865 Manual 31,457 27,344 Annual growth in connected DELs (%) a/ 25.6 16.5 Automatic exchange fill (Z) b/ 50.8 63.6 Registered unsatisfied demand for subscriber connections Total 118,000 263,759 As a percentage of satisfied demand (%) c/ 45.0 64.3 As a percentage of total demand d/ 31.0 39.1

Long Distance Telephone Total number/length in km-circuits 5,658/1,622,250 9,507/2,968,197 - Microwave channels 5,586/1,057,879 9,412/2,169,595 - Cable and open-wire carrier channels 54/ 11,093 55/ 8,395 - Physical circuits 16/ 2,170 19/ 2,178 - HF radio circuits 2/ 3,709 16/ 16,166

Telegraph and Telex Number of telegraph offices (gentex) 334 288 Number of telex exchanges 22 29 Telex subscribers 2,387 4,716 Registered unsatisfied demand for telex connections 962 1,332

International Facilities Telephone circuits 1,139 1,820 Telex and telegraph circuits 402 536

Staff Total staff (P&T Ministry) 22,650 27,870 Total telecommunications staff 12,250 14,993 Number of staff per 1,000 DELs a/ 47 37

a/ Direct Exchange Lines (DELs) in service, growth is expressed in percent of the DELs at the beginning of the year. b/ Connected DELs as proportion of exchange capacity, X. c/ Satisfied demand is the number of connected DELs T/ Total demand equale satisfied demand (i.e., connected DELs) plus registered unsatisfied demand (waiters).

IND May 1983 ALGERIA

MINISTRY OF POSTS AND TELECOMMUNICATIONS (P&T)

GENERAL DIRECTORATE OF TELECOMMUNICATIONS (DGT)

FIRST TELECOMMUNICATIONS PROJECT

Past Growth of Local Telephone Network (as at December 31, each year from 1970 to 1982)

Exchange Yearly Growth Exchange Lines Installed Capacity Direct Exchange Lines in Service % Fill a/ in DELs b/ Year Automatic Manual Total Automatic Manual Total Automatic % %

1970 111,210 47,115 158,325 70,896 28,245 99,141 71.5 63.7 - 1971 112,210 49,772 161,982 77,293 31,840 109,133 70.8 68.9 10.1 1972 113,210 50,300 163,510 81,933 33,004 114,937 71.3 72.4 5.3 1973 115,310 53,732 169,042 82,773 35,167 117,940 70.2 71.8 2.6 1974 115,590 54,837 170,427 85,627 36,328 121,955 70.2 74.1 3.4 1975 133,260 46,222 179,482 97,690 37,061 134,751 72.5 73.3 10.5 1976 190,600 48,626 239,226 106,174 42,728 148,902 71.3 55.7 10.5 1977 262,610 57,044 319,654 133,728 38,766 172,494 77.5 50.9 15.8 1978 312,060 56,800 368,860 167,791 39,727 207,518 80.9 53.8 20.3 1979 522,210 31,800 544,010 234,700 22,300 257,000 91.0 47.2 23.8 1980 529,960 46,656 576,616 285,659 27,005 312,664 91.3 54.2 21.6 1981 580,060 29,850 609,910 339,118 23,782 362,900 93.2 59.5 16.3 1982 601,740 48,810 650,550 383,041 29,045 410,980 93.2 63.3 13.3

IND I April 1983 ALGERIA

MINISTRY OF POSTS AND TELECOMMUNICATIONS (P&T)

GENERAL DIRECTORATE OF TELECOMMUNICATIONS (DGT)

FIRST TELECOMMUNICATIONS PROJECT

Past Evolution of Registered Demand for Telephone Connections (1970-82)

Proportion of Waiting List DELsa/ in Registered Total Demand Net Growth Growth of No. of DELsa/ Equivalentd/ Year Service Waiting List Demandb/ SatisfiedC/ of Demand Demand, % Added in Year (Months) (1) (2) (3) (4) (5) (6) (7) (8) (9) 6.8 1970 99,141 5,474 104,615 94.8 - - 9,600 1971 109,133 8,646 117,779 92.7 13,164 13.6 9,992 10.4 1972 114,937 15,042 129,979 88.4 12,200 10.4 5,804 31.1 1973 117,940 20,412 138,352 85.2 8,373 6.4 3,003 81.6 ° 1974 121,955 25,192 147,147 82.9 8,795 6.4 4,015 75.3 1975 134,757 33,433 168,184 80.1 21,037 14.3 12,796 31.4 1976 148,902 43,349 192,251 77.5 24,067 14.3 14,151 36.8 1977 172,494 61,333 233,827 73.8 41,576 21.6 23,592 31.2 1978 207,518 89,278 296,796 69.9 62,969 26.9 35,024 30.6 1979 257,000 123,400 380,400 67.6 83,604 28.4 49,482 30.0 1980 312,644 160,278 472,942 66.1 92,542 24.3 55,644 34.6 1981 362,900 210,994 573,894 63.2 101,263 21.4 50,256 50.3 1982 410,210 263,759 673,969 60.8 100,075 17.4 48,080 66.0 a/ Direct exchange lines. h/ Total demand: columns (2)+(3). c/ Column (2) over (4); in %. d/ Months needed to clear current waiting list, assuming future additions of net new DELs to service at current year's rate. Figures in column (9) equals column (3) divided by column (8)x12 times.

IND April 1983 - 41 - ANNEX 7

ALGERIA

MINISTRY OF POSTS AND TELECOMMUNICATIONS (P&T)

GENERAL DIRECTORATE OF TELECOMMUNICATIONS (DGT)

FIRST TELECOMMUNICATIONS PROJECT

Distribution of Population and Registered Demand for Telephone Connections, by Wilaya (as at December 31, 1982)

Population Registered Wilaya (in thousands) Demand a/ Density b/

Adrar 157 4,264 2.7 El Asnam 1,031 14,654 1.4 Laghouat 363 18,089 5.0 Oum El Bouaghi 450 Batna 684 15,579 2.3 Bejaia 641 12,073 1.9 Biskra 673 21,186 3.1 Bechar 171 8,885 5.2 Blida 1,124 32,996 2.9 Bouira 447 8,431 1.9 Tamanrasset 50 2,518 5.0 Tebessa 417 8,291 2.0 Tlemcen 669 24,279 3.6 Tiaret 709 13,582 1.9 Tizi Ouzou 1,025 16,331 1.6 Alger 2,702 171,980 6.5 Djelfa 375 6,298 1.7 Jijel 572 8,733 1.5 Setif 1,159 27,877 2.4 Saida 436 7,644 1.8 Skikda 578 14,726 2.5 Sidi Bel Abbes 593 16,636 2.8 Annaba 627 27,906 4.5 Guelma 607 14,339 2.4 Constantine 801 33,638 4.2 Medea 554 10,275 1.9 Mostaganem 871 19,388 2.2 M'sila 506 6,838 1.4 Mascara 498 14,270 2.9 Ouargla 236 14,586 6.2 Oran 874 62,472 7.1 Total exel. Algiers 17,989 501,889 2.8 Grand Total 20,600 673,969 3.3 a/ DELs in service plus registered waiters b/ Registered demand per 100 population.

IND April 1983 - 42 - ANNEX 8 Page 1 of 2

ALGERIA

MINISTRY OF POSTS AND TELECOMMUNICATIONS(P&T)

GENERAL DIRECTORATE OF TELECOMMUNICATIONS (DGT)

FIRST TELECOMMUNICATIONS PROJECT

I. Changes in Selected Parameters Over DGT's Program Period (1979-88) (as at December 31, each year)

---- Actual ---- Forecast 1979 1982 1988

DELs per 100 Population Algeria 1.4 2.0 4.1

Algiers 4.6 5.6 11.0 Other wilaya with large urban centers (Oran, Constantine,Annaba) 3.3 4.6 8.0 Rest of the country 0.9 1.4 3.0

Availabilitya/ (%) Algeria 67.6 61.0 80.0

Algiers 71.5 74.0 82.0 Other wilaya with large urban centers (Oran, Constantine,Annaba) 62.4 63.0 76.0 Rest of the country 60.7 55.4 68.0

Actual and Forecast Unsatisfied Registered ConnectionsDemand Algeria 123,000 263,760 180,000

Algiers 35,160 40,120 34,000 Other wilaya with large urban centers (Oran, Constantine,Annaba) 24,640 38,140 32,000 Rest of the country 63,200 185,500 114,000

a/ Availabilityis defined as the number of connectedDELs divided by the total registereddemand for telephoneconnections (connected DELs plus waiting list) expressedas a percentage. Il. Forecast Installed Exchange Capacity, Connected Direct Exchange Lines, Registered Telephone Connection demand and Telex Subscribers Over the Program Period (1979-88) (as at December 31, each year)

------Actual ------Forecast ------1979 1980 1981 1982 1983 1984 1985 1986 1987 1988

Population (1,000 pop.) 18,100 18,900 19,700 20,600 21,200 21,800 22,500 23,300 24,000 24,800

Connected telephone DELs a/ ('000) 257 313 363 410 475 550 645 745 870 1,020

Telephone density b/ 1.4 1.6 1.8 2.0 2.2 2.5 2.8 3.2 3.6 4.1

Automatic telephones (Z) 91 91 93 93 94 94 95 95 96 97

Exchange capacity installed c/ ('000) 544 577 610 651 744 850 1,004 1,140 1,300 1,460d/

Fill e/ (%) 47 54 59 63 64 64 65 66 67 70

Total registered demand for telephone connections ('000) 380 473 574 674 740 810 890 980 1,090 1,200

Unsatisfied registered demand ('000) 123 160 211 264 265 260 245 235 220 180

Telex subscribers 2,400 3,193 3,962 4,716 5,550 6,500 7,750 9,200 10,800 12,000 a/ DELs: direct exchange lines. b/ Connected DELs per 100 population. c/ Including about 50,000 lines in manual exchanges. Ct dl Including 150,000 exchange lines under future program from 1988 onward. 0e e/ Connected DELs as % of exchange capacity.

IND June 1983 ALGERIA

MINISTRY OF POSTS AND TELECOMMUNICATIONS (P&T)

GENERAL DIRECTORATE OF TELECOMMUNICATIONS (DGT)

FIRST TELECOMMUNICATIONS PROJECT

Summary Costs of DGT's Development Plan (1980-89) 1988 onward) (Estimated Construction Expenditures from 1980 to 1989, including part of future programs from

Estimated Yearly Expenditure (DA million) Total Costs -- Actual -- Est. ------…------Forecast ------1986 1987 1988 1989 Item US$ m DA m 1980 1981 1982 1983 1984 1985

60.0 1. Ongoing Works From Previous Programs F 140.1 644.6 204.6 90.0 110.0 180.0 L 127.7 587.4 315.4 95.0 87.0 70.0 20.0 T 267.8 1,232.0 520.0 185.0 197.0 250.0 80.0

2. Works Under the Third Plan Program 184.0 69.4 13.4 Bank project F 128.0 588.8 - - - - 138.0 184.0 Proposed 1.8 L 184.4 848.2 - - - 170.8 222.0 286.0 166.0 1.6 15.2 T 312.4 1,437.0 - - - 170.8 360.0 470.0 350.0 71.0

960.8 469.0 F 830.3 3,819.5 50.0 177.1 244.0 213.6 260.0 350.0 420.0 675.0 Other works 131.0 L 867.6 3,991.1 124.0 282.4 180.1 175.6 340.0 300.0 580.0 884.0 994.0 600.0 T 1,697.9 7,810.6 174.0 459.5 424.1 389.2 600.0 650.0 1,000.0 1,559.0 1,954.8 604.0 744.4 974.2 469.0 Program F 958.3 4,408.3 50.0 177.1 244.0 213.6 398.0 534.0 Total Third Plan 131.0 L 1,052.0 4,839.3 124.0 282.4 180.1 346.4 562.0 586.0 746.0 885.6 995.8 600.0 T 2,010.3 9,247.6 17. 459.5 424.1 560.0 960.0 1,120.0 1,350.0 1,630.0 1,970.0

95.0 140.0 100.0 - - - 3. Special Works (for governument special F 87.7 403.5 - 3.6 4.9 60.0 75.0 60.0 70.0 - - - project, including contingencies) L 49.8 228.9 - 1.9 2.0 20.0 T 137.5 632.4 - 5 69 8. T75 2 170.0 -_- -

_ _ _ - - 50.0 750.0 4. Preinvestment for Works Under Future F 173.9 800.0 - _ _ - - 80.0 1,050.0 Program (from 1988 onward) L 245.7 1,130.0 _ - _ ------130.0 1,800.0 T 419.6 1,930.0 - _ _ - - 1,219.0 F 1,360.0 6,256.4 254.6 270.7 358.9 453.6 553.0 674.0 704.0 744.4 1,024.2 5. Total Cost 1,075.8 1,181.0 L 1,475.2 6,785.6 439.4 379.3 269.1 436.4 657.0 646.0 816.0 885.6 2,400.0 T 2,835.2 13,042.0 694.0 650.0 628.0 890.0 1,210.0 1,320.0 1,520.0 1,630.0 2,100.0

Note - F: Foreign L: Local T: Total

IND June 1983 - 45 - ANNEX 10

ALGERIA

MINISTRY OF POSTS AND TELECOMMUNICATIONS(P&T)

GENERAL DIRECTORATE OF TELECOMMUNICATIONS(DGT)

FIRST TELECOMMUNICATIONSPROJECT

Forecast of Automatic Exchange Capacity to be InstalledUnder DGT's Current Program (1980-87) (Existing installed capacity end 1979 and 1982, and proposed exchange capacity to be installed from 1983-87)

Additional Capacity to be Installed from 1983-87 Installed Capacity (651,460 exchange lines in total) Proposed Situation End una suDototal at End of Current Wilaya 1979 1982 1983 1984 1985 1986 1987 1983-87 DGT's Program

Adrar 1,600 2,300 3,400 500 800 4,700 7,000 El Asnam 10,500 10,200 7,500 12,000 6,000 1,300 26,800 37,000 Laghouat 11,000 12,500 4,000 3,000 1,000 5,000 6,000 19,000 31,500 Oum El Bouaghi 6,000 6,000 4,000 2,000 6,000 12,000 18,000 Batna 7,500 8,500 13,000 4,500 5,000 22,500 31,000 Bejaia 2,500 13,000 5,500 3,500 1,000 10,000 23,000 Biskra 8,500 10,200 3,100 5,000 6,900 5,000 1,000 21,000 31,200 Bechar 6,200 7,100 400 3,900 500 4,500 9,300 16,400 Blida 16,500 22,000 8,000 4,000 20,000 500 32,500 54,500 Bouira 5,000 9,000 1,000 5,000 2,000 8,000 17,000 Tamanrasset 1,000 1,500 4,500 4,500 6,000 Tebessa 6,000 7,500 6,000 1,000 7,000 14,500 Tlemcen 12,500 14,000 1,000 9,500 5,000 2,000 17,500 31,500 Tiaret 7,100 10,100 1,500 2,500 7,400 4,000 15,400 25,500 Tizi Ouzou 10,700 14,500 7,000 6,000 7,500 20,500 35,000 Algiers 162,000 182,000 1,500 33,400 50,500 60,000 78,000 223,400 405,400 Djelfa 4,500 7,000 4,500 1,500 2,500 8,500 15,500 Jijel 6,000 7,000 9,000 2,000 1,500 12,500 19,500 Setif 11,000 18,000 10,500 5,500 1,500 1,000 18,500 36,500 Saida 8,000 10,500 1,000 1,500 5,000 7,500 18,000 Skikda 11,500 16,000 500 1,500 2,500 4,500 20,500 Sidi Bel Abbes 13,500 14,000 600 1,000 7,400 1,000 4,000 14,000 28,000 Annaba 16,000 36,500 1,000 1,000 3,500 5,500 42,000 Guelma 8,000 10,100 4,000 5,500 5,500 15,000 25,100 Constantine 21,000 42,000 2,000 2,000 11,000 10,000 25,000 67,000 Medea 6,000 10,500 3,300 800 4,000 8,100 18,600 Mostaganem 10,000 19,600 500 2,600 2,000 5,100 24,700 M'sila 4,000 5,000 6,100 1,500 1,500 9,100 14,100 Mascara 9,180 11,840 2,000 5,200 9,360 16,560 28,400 Ouargla 9,000 10,200 800 6,200 5,000 2,000 14,000 24,200 Oran 36,480 53,100 1,000 3,000 3,000 16,500 10,000 33,500 86,600

Total excl. Algiers 286,760 419,740 91,300 72,800 103,800 95,500 63,660 428,060 847,800

Grand Total 448,7608/ 601,7408/ 93,800 106,200 154,300 155,500 141,660 651,460 1,253,200a/

a/ In addition, about 49,000 lines in manual exchanges are installed and will mostly remain in service or to be re-used.

IND June 1983 ALGERIA

MINISTRY OF POSTS AND TELECOMMUNICATIONS (P&T)

GENERAL DIRECTORATE OF TELECOMMUNICATIONS (DGT) FIRST TELECOMMUNICATIONS PROJECT Growth of Local Telephone Network Number of unes Actuals --- Projections

2,000,000.-- f

1,000,0001 : - --

- .,, -- #--..- i _ r-- - !

500,000 A Exchange capacity installed . 9'-DLconected

-lRegistereddemand ///l

200,000 __ U -< , / ` / ! ~~~~~~~~~registered

100,000

1970 75 79 80 81 82 83 84 85 86 87 88 IND (Year, Dec. 31) June 1983 ALGERIA

MINISTRY OF POSTS AND TELECOMMUNICATIONS (P&T)

GENERAL DIRECTORATEOF TELECOMMUNICATIONS(DGT)

FIRST TELECOMMUNICATIONSPROJECT

Construction Costs of DGT's Expanded Program Under the Third Plan (1980-89)

_------DA million ------US$ mil. Actual Estimated SiubtEla Subtotal Total 1980-82 1983 1984 1985 1986 1987 1988 1989 1983-89 1980-89

Switching equipuent F 316.60 92.74 150.20 192.30 236.70 200.00 350.00 171.66 1,393.60 1,710.20 371.78 L 93.80 39.66 60.00 78.00 76.20 95.40 145.40 18.04 512.70 606.50 131.85 T 410.40 132.40 210.20 270.30 312.90 295.40 495.40 89.70 1,906.30 2,316.70 503.63

Transmission equipsent F 15.50 58.65 80.20 155.00 141.00 190.20 190.30 80.00 895.35 910.85 198.01 L 23.30 31.35 29.70 65.00 42.00 130.00 131.00 20.00 449.05 472.35 102.68 T 38.80 90.00 109.90 220.00 183.00 320.20 321.30 100.00 1,344.40 1,383.20 300.69

Local networks F 92.70 33.85 99.80 100.00 100.00 185.20 246.40 175.00 940.25 1,032.95 224.56 L 316.60 136.95 205.20 174.70 249.90 338.20 398.70 45.00 1,548.65 1,865.25 405.49 t T 409.30 170.80 305.00 274.70 349.90 523.40 645.10 220.00 2,488.90 2,898.20 630.04 >

Miscellaneous services and F 10.20 6.00 13.10 21.40 15.00 15.20 17.80 1.50 90.00 100.20 21.78 equipuent (maritime, L 25.40 6.00 16.80 13.60 10.00 20.50 20.40 0.70 88.00 113.40 24.65 construction support and T 35.60 12.00 29.90 35.00 25.00 35.70 38.20 2.20 178.00 213.60 46.43 testing)

Buildings, transport and F 36.00 9.20 17.00 10.60 30.00 40.00 - - 106.80 142.80 31.04 power equipment L 127.50 110.20 178.00 139.40 210.00 111.70 100.00 13.30 862.60 990.10 215.24 T 163.50 119.40 195.00 150.00 240.00 151.70 100.00 13.30 969.40 1,132.90 246.28

Total estimated base costs F 471.00 200.44 360.30 479.30 522.70 630.60 804.50 428.16 3,426.00 3,897.00 847.17 L 586.60 324.16 489.70 470.70 588.10 695.80 795.50 97.04 3,461.00 4,047.60 879.91 T 1,057.60 524.60 850.00 950.00 1,110.80 1,326.40 1,600.00 525.20 6,887.00 7,944.60 1,727.08

Contingencies - Physical F 8.16 14.40 19.14 20.90-- 25.40 32.30 16.70 137.00 137.00 29.78 L 13.24 19.80 18.86 23.20 27.40 31.70 4.20 138.40 138.40 30.09 T 21.40 34.20 38.00 44.10 52.80 64.00 20.90 275.40 275.40 59.87

- Price F 5.00 23.10 35.76 60.40 88.60 137.30 24.14 374.30 374.30 81.37 L 9.00 52.70 96.24 134.70 162.20 168.70 29.76 653.30 653.30 142.02 T 14.00 75.80 132.00 195.10 250.80 306.00 53.90 1,027.60 1,027.60 223.39

- Total F 13.16 37.50 54.90 81.30 114.00 169.60 40.84 511.30 511.30 111.15 contingencies L 22.24 72.50 115.10 157.90 189.60 200.40 33.96 791.70 791.70 172.11 T 35.40 110.00 170.00 239.20 303.60 370.00 74.80 1,303.00 1,303.00 283.26

Total estimated costs F 471.00 213.60 397.80 534.20 604.00 744.60 974.10 469.00 3,937.30 4,408.30 958.32 (expanded third plan L 586.60 346.40 562.20 585.80 746.00 885.40 995.90 131.00 4,252.70 4,839.30 1,052.02 prograi) T 1,507.60 560.00 960.00 1,120.00 1,350.00 1,630.00 1,970.00 600.00 8,190.00 9,247.60 2,010.34 t

IND June 1983 - 48 - ANNEX 13 Page 1 of 4

ALGERIA

MINISTRY OF POSTS AND TELECOMMUNICATIONS(P&T)

GENERAL DIRECTORATEOF TELECOMMUNICATIONS(DGT)

FIRST TELECOMMUNICATIONSPROJECT

Project Description

General

1. The project consists of part of DGT's investmentprogram to be started in 1983 and for execution until end 1987. It includes high priority items representingabout 22% of the total investmentduring this period, to expand and modernize national regional and local networks in order to satisfy urgent demand for network expansion and for automatization of telephone service in 22 importantwilayas where new subscriberscan be connected rapidly, and in isolated communitiesnow without such services. When selecting the project components, DGT considered that the project could be of particularlygreat help to its current efforts to construct local subscriberand regional networks in pace with the installationof automatic switching equipment. The proposed works represent local and regional network facilities for the connection of about 350,000 new subscribers,about 66% of the total number of new subscribersto be added during the project time slice of DGT's program. The project also includes technical assistance and training for sectorialmanagement and organization,for program/projectengineering and execution,and to improve future operations and financialmanagement. This assistance is essential to enable P&T and the DGT to implement the managerial and organizational changes required in order to cope with DGT's operations and constructional responsibilitieswhich were initiated in 1983. The 22 wilayas mostly concerned by the project are those of Annaba, Guelma, Constantine,Tebessa, Setif, Bejaia, Blida, El Asnam, Tizi-Ouzou, Sidi-bel-Abbes,Oran, Medea, Laghouat, Batna, Biskra, Skikda,Mostaganem, Mascara, Tlemcen, Tiaret, Jijel and Oum-El-Bouaghi. The various components of the project are detailed below.

Coaxial Cables and Carrier Systems for Interurban Network

2. This includes constructionand equipment of five coaxial cable links between national and regional transit exchanges in ten important regional districts (wilaya level), also linking the concernedwilayas with the main east-west and north-southnational trunk routes. The total length of new coaxial cable to be laid underground is about 600 km and an existing 600 km coaxial cable of the main north-southroute, now partially equipped on one pair of tubes, will be expanded to 1900 channel capacity using digital technique on the second pair. All five links will include line and multiplex transmissionequipment as follows: - 49 - ANNEX 13 Page 2 of 4

Lines Multiplex Dates Distance (MHz- (60-Channel Coaxial Cable Link Start-Delivery (km) Channels) Supergroups)

1. Constantine-Batna- Biskra 09/83-04/85 240 12-2700 20

2. El Asnam-Tenes 12/83-04/85 55 4-960 6

3. Constantine-Tebessa 06/84-06/86 235 12-2700 12

4. Oran-SidiBel Abbes 06/84-12/85 82 12-2700 20

5. Ouargla-Constantine 04/84-06/86 600 12-1920 36

The cable to be used is of small diameter (1.2/4.4mm) coaxial type with four coaxial pairs and peripheral quads of 0.9 mm diameter conductors in number varying from 14 to 84 depending the location. Cables will be imported for the links No. 1 to 5, and laid and spliced jointly by SONELEC and SONATITE. The Ouargla-Constantinecable is an existing cable with 4 standard (1.2/4.4mm) coaxial pair, 2 of which are now used with 300 channel capacity only. The two other pairs will be equipped with 140 megabits digital line systems and multiplex equipment for up to 1900 channels. Under the project, equipment of this cable will be redustributed and expanded for channel capacitiesas required for the main north-south national trunk link it will constitute,and for the regional and interregionalnetworks along its 600 km route. For all the links, line equipment including repeatersand remote control, maintenance and signaling equipment, and multiplex equipment would be supplied, installedand delivered ready for operation by foreign manufactures.

Automatizationof Regional and Rural Networks

3. This item includes the constructionof about 1000 km of medium capacity intraregionalcable and multiplex transmissionsystems in the 22 wilayas of the project and the installationof about 400 line-concentrators servicing about 42,000 distant subscribers. The new cable links would principallyconsist of overhead self-supportingpair cables of small or medium capacity (from 4 to 50 pairs, 0.9 mm diameter), and of similar one small coaxial pair (1.2/4.4mm) cables to install on existing pole lines now saturated. In addition to the line concentrators,this will enable automatizationof the telephone service, and access to the national automatic network, of about 400 small capacity exchanges in rural areas. DGT's staff will install all equipment,after initial training and supervision from the suppliers,where necessary. Detail of the equipment to be procured is as follows: - 50 - ANNEX 13 Page 3 of 4

Number Total Length of of Links Circuits/km Systems (km) (in thousands)

PCM (30 channels) 165 2,200 8,500.0

Open wire line (12 channels) 260 5,600 10,000.0

Self-supportingcoaxial cable (120 and 480 channels) 33 620 85.0

Self-supportingpair cable (0.9 mm) 22 165 9.2

Microwave links (120 channels) 12 500 200.0

Line concentrators 400 having a total capacity of about 43,000 distant subscribers

Local and Urban Networks

4. This item includes the constructionand the rebahilitation/ expansion of local cable and overhead line subscriber networks and outside plants in about 450 medium and large cities in all wilayas representing about 500,000 distributed pairs of local network available for immediate and future connection of subscribers. Switching equipment is, or will be, available in these localities from ongoing works or from works under the third plan. The works comprise constructionof ducts and cable of the primary and secondary levels of the local distributionnetworks. In some cases, overhead subscriber lines will prolong the undergroundcable systems. DGT's planning unit designs the duct system capacity for about 20 years of expansion,and the cable distributionsystems for about 2.0 to 2.5 times the known or short-term planned demand, depending the forecast pace of growth of the networks, which is standard practice. Used cables and equipment are of proven and largely used types. The Bank financed imported equipment under the project, for which detailed lists of types, characteristicsand quantitiesare available in the project file, include (a) local cables and accessories; (b) PVC ducts; and (c) copper wires, poles and overhead lines accessories. These imports are complementaryto the local production by SONELEC of some categories of equipment (small and medium capacity undergroundcables essentially),in order to enable the constructionof the local networks as planned by DGT. The total cost in foreign exchange of this equipment amounting to about DA 243 million (US$52.8million equivalent),represents approximately50% of total DGT's requirementsfor the above three subgroups of materials during the project period. An estimated total number of about 310,000 new subscriber connectionswill be made in the local networks to be constructedor expanded under the project, from 1984 to 1987. - 51 - ANNEX 13 Page 4 of 4

PCO in Isolated Communities

5. This item includes 600 PCOs in isolated localitiesnow without telephone service in 18 wilayas where populationand developmentcenters are largely dispersed and where the road and transportationsystems are lacking or insufficient. These wilayas include 9 wilayas among the 22 selected under the project and 9 other southern wilayas with higher priority and need for such PCO service. Of the proposed 600 PCOs, about 400 will be connected using overhead pole lines, 160 using single channel VHF radio and 40 HF radio links of standard types. Overhead lines equipment includes about 180,000wooden poles and 1,200 tons of copper or bimetalliewires, for constructionof about 6,000 km of open wire pair line. Terminal telephone stations are also included.

MiscellaneousEquipment

6. The project also provides for equipment of large regional centers and stores with transport and handling equipment for cables and open wire line materials, as well as tools and machinery for network construction. It also includes some power supply equipment and the equipment to carry out the acceptance tests of the systems and of the external plant to be constructedunder the project.

Technical Assistanceand Training

7. Technical assistanceconsists of 170 manmonths of consultantand expert services,and of 100 manmonths of training services for senior management and professionalstaff of P&T and DGT to attend overseas courses, fellowshipsand seminars. Annex 23 gives a proposed timetable including specialitiesof the consultantsand fields of study for P&T's staff. The proposed terms of reference and schedule for these activities were agreed during negotiations. More details are in the project file. (UNDP/WB Study, Document B, Chapter 7.6 and Annex 7), and a timetable is given in Annex 23.

IND June 1983 - 52 - ANNEX 14

ALGERIA

MINISTRY OF POSTS AND TELECOMMUNICATIONS (P&T)

GENERAL DIRECTORATE OF TELECOMMUNICATIONS (DGT)

FIRST TELECOMMUNICATIONS PROJECT

Estimated Project Cost

------Estimated Cost ------Foreign Local Total Foreign Local Total (DA million) (US$ million)

Coaxial Cables and Carrier Systems Constantine - Batna - Biskra 18.75 14.20 32.95 4.08 3.08 7.16 El Asnam - Tenes 2.86 2.92 5.78 0.62 0.64 1.26 Constantine - Tebessa 14.80 15.08 29.88 3.22 3.28 6.50 Oran - Sidi bel Abbes 5.25 4.75 10.00 1.14 1.03 2.17 Ouargla - Constantine 14.83 12.82 27.65 3.22 2.79 6.01

Subtotal 56.49 49.77 106.26 12.28 10.82 23.10

Automatization of Regional and Rural Networks PCM systems (30 channels) 24.22 20.32 44.54 5.26 4.42 9.68 Microwave links (24/120 channels) 3.10 1.76 4.86 0.67 0.38 1.05 Overhead line systems (12 channels) 39.14 14.53 53.67 8.51 3.16 11.67 Coaxial cables (selfsupporting) 38.13 16.74 54.87 8.29 3.64 11.93 Pair cables (selfsupporting) 20.32 57.32 77.64 4.42 12.46 16.88 Line concentrators 41.15 21.35 62.50 8.95 4.64 13.59

Subtotal 166.06 132.02 298.08 36.10 28.70 64.80

Local Urban Networks Local cables and accessories 168.18 68.31 236.49 36.56 14.85 51.41 PVC ducts and accessories 7.36 58.97 66.33 1.60 12.82 14.42 Poles, copper wires and accessories 67.34 28.98 96.32 14.64 6.30 20.94 Civil works 176.64 176.64 - 38.40 38.40 Cable laying and jointing 100.05 100.05 - 21.75 21.75

Subtotal 242.88 432.95 675.83 52.80 94.12 146.92

PCOs in Isolated Localities Overhead lines equipment 26.96 35.51 62.47 5.86 7.72 13.58 Single channel VHF radio 5.79 3.22 9.01 1.26 0.70 1.96 HF radio 2.48 1.15 3.63 0.54 0.25 0.79 Telephone station and accessories 0.28 0.09 0.37 0.06 0.02 0.08

Subtotal 35.51 39.97 75.48 7.72 8.69 16.41

Miscellaneous Transport, stores, tools, power and test equipment 6.90 2.30 9.20 1.50 0.50 2.00

Technical Assistance 9.20 2.30 11.50 2.00 0.50 2.50

Total estimated base costs 517.04 659.31 1,176.35 112.40 143.33 255.73

Contingencies Physical 19.23 27.78 47.01 4.18 6.04 10.22 Price 51.06 161.14 212.20 11.10 35.03 46.13

Subtotal contingencies 70.29 188.92 259.21 15.28 41.07 56.35

Capitalized front-end fee 1.47 - 1.47 0.32 - 0.32

Total Estimated Project Costs 588.80 848.23 1,437.03 128.00 184.40 312.40

IND June 1983 ALGERIA

MINISTRY OF POSTS AND TELECOMMUNICATIONS (P&T)

GENERAL DIRECTORATE OF TELECOMMUNICATIONS (DGT)

FIRST TELECOMMUNICATIONS PROJECT

Project Implementation Schedule

Year 1983 1984 1985 1986 1987 Item Quarter 1 2 3 4 1 2 3 4 1 23 3 1 2 3 4 12 3 4

Trunk network Procurement - _ _ - . (coaxial cables) Delivery _ - _ . Installation _ = -= = = -= - Supervision a/, _ = _ _ _ - - -

Automatization Procurement - _ - of regional and Delivery - - - - - rural networks Installation _ _ …- _ Supervision a/

Local networks Procurement - Delivery r = = =

Installation = == -

PCOs in isolated Procurement - - - _ _

areas Delivery - - Installation_=====

Miscellaneous Procurement _ _ _ equipment Delivery , _ - -

Technical Consultants assistance and and experts training Training - - _ _ , !

__~~~~~~~~~~~~ _____ . _.-... a/ Supervision of and training in operation and maintenance of the system$, by the suppliers. IND November 1983 - 54 - ANNEX 16

ALGERIA

MINISTRY OF POSTS AND TELECOMMUNICATIONS (P&T)

GENERAL DIRECTORATE OF TELECOMMUNICATIONS (DGT)

FIRST TELECOMMUNICATIONS PROJECT

Schedule of Disbursements a/

Cumulative Disbursements Bank Fiscal Year During Semester at End of Semester and Semester (US$ thousand) (US$ thousand)

FY84 June 30, 1984 10,000 10,000

FY85 December 31, 1984 18,000 28,000 June 30, 1985 18,000 46,000

FY86 December 31, 1985 20,000 66,000 June 30, 1986 20,000 86,000

FY87 December 31, 1986 20,000 106,000 June 30, 1987 12,000 118,000

FY88 December 31, 1987 4,000 122,000 June 30, 1988 4,000 126,000

FY89 December 31, 1988 1,000 127,000 June 30, 1989 1,000 126,000 a/ Based on Bank approval of the loan in December 1983.

IND November 1983 - 55 - ANNEX 17

ALGERIA

MINISTRY OF POSTS AND TELECOMMUNICATIONS (P&T)

GENERAL DIRECTORATE OF TELECOMMUNICATIONS (DGT)

FIRST TELECOMMUNICATIONS PROJECT

Performance Indicators - Telecommunications

A set of indicators which would assist in monitoring DGT's performance during the 1983-88 period is given below. DGT is expected to indicate in its periodical progress report to the Bank the actual performance relating to the projected figures.

Actual -… Forecast FY Ending Dec. 31 1982 1983 1984 1985 1986 1987 1988

Telephone direct exchange lines in service (1000 DELs) 410 475 550 645 745 8,700 1,020

Exchange capacity ('000 lines) 650 744 850 1,004 1,140 1,300 1,460

Exchange fill a/ (%) 63 64 64 65 66 67 70

Number of telex subscribers 4,716 5,550 6,500 7,750 9,200 10,800 12,000

Number of employees 15,800 17,100 18,150 19,200 20,115 21,750 23,460

Employees/1,000 DELs 39 36 33 30 27 25 23

Operating ratio (%) b/ 84 67 67 68 69 70 66

Net internal cash generation (%) c/ 43 69 58 58 55 55 62

Debt service coverage (times) 2.5 3.7 3.5 3.3 3.0 2.7 3.2

Current ratio (times) d/ 4.6 2.3 2.3 2.3 2.3 2.3 2.4

a/ DELs in service as proportion of exchange capacity. b/ Operating expenses divided by operating revenues. c/ As a percent of construction requirements. d/ Current assets divided by current liabilities.

IND June 1983 - 56 - ANNEX 18 Page 1 of 3

ALGERIA

MINISTRY OF POSTS AND TELECOMMUNICATIONS (P&T)

GENERAL DIRECTORATE OF TELECOMMUNICATIONS (DGT)

FIRST TELECOMMUNICATIONS PROJECT

Summary of Telecommunications Tariffss (as of February 1983)

Items Rates in DA

1. Telephone Service

Installation fee: Domestic and business 900

Monthly subscription fee (direct exchange line): Central with 2,000 or less main subscribers 19.20 Central with 2,001 to 10,000 main subscribers 26.40 Central with 10,001 to 20,000 main subscribers 30.00 Central with 20,001 to 50,000 main subscribers 33.60 Central with more than 50,000 main subscribers 42.00

Domestic telephone calls: Local calls, per call (no time limit in manual service) 0.60 Automatic calls charged by meter, one base pulse per call (360 seconds time limit will be progressively introduced beginning in 1984) 0.60

Calls to adjacent areas: Between districts less than 50 km away 0.60 every 120 sec. Others 0.60 every 60 sec.

Medium to long distance calls: Up to 100 km 0.60 every 60 sec. From 100 to 200 km 0.60 every 30 sec. From 200 to 300 km 0.60 every 24 sec. From 300 to 500 km 0.60 every 18 sec. From 500 to 700 km 0.60 every 15 sec. Above 700 km 0.60 every 12 sec.

There is a 40% reduction on these calls from 8 pm to 8 am and on Fridays and official holidays.

Specialized Circuits

Initial connection expenses: Fees for installation and additional accruing contributions to terminal lines - 57 - ANNEX 18 Page 2 of 3

Monthly fees for location and maintenance: Telephone or Telegraph Within the same rate zones: Up to 500 m 198 From 500 m to 10 km 324 From 10 km to 25 km 450 More than 25 km 540 Telephone Telegraph Between two different rate zones: Up to 10 km 324 324 From 10 to 25 km 756 756 From 25 to 50 km 1,260 1,250 From 50 to 75 km 1,800 1,800 From 75 to 100 km 2,400 2,400 From 100 to 200 km 4,200 3,000 From 200 to 300 km 7,200 3,600 From 300 to 500 km 10,800 4,200 From 500 to 700 km 14,400 4,800 More than 700 km 18,000 6,000

2. Telegrah Service

Ordinary domestic telegram Per word (minimum charge 10 words) 0.30 Fixed surcharge per telegram 3.60

Urgent telegram: double tariff

Press telegram: one half the charge of a private telegram

Domestic telegraphic money-order: fixed surcharge of DA 6.80 instead of DA 2.40

3. Telex Service

Installation charge - new subscription 900 - transfer of subscription 450

Basic monthly subscription: a function of the distance as the crow flies between the subscriber and the local distribution frame of the nearest telex exchange: From 5 km or more 105 From 10 to 25 km 135 From 25 to 50 km 165 From 50 to 75 km 225 From 75 to 150 km 705 From 150 to 300 km 1,305 More than 300 km 2,205 - 58 - ANNEX 18 Page 3 of 3

Rental and maintenance of equipment Monthly rental fee (teleprinterwith perforator and automatic transmitter) 600 Monthly maintenance fee (for telex station as above) 450

Fees for domestic telex communications(per unit of 3 min.): Between subscribersin the same zone 1.80 Between subscribersin two continguouszones 3.60 Between subscribersin two non-continguouszones, if the distance between them is: less than 200 km 3.60 more than 200 km 5.40

The fees are reduced by one-third from 8 pm to 8 am and on Fridays and official holidays.

IND April 1983 - 59 - ANNEX 19

ALGERIA

MINISTRY OF POSTS AND TELECOMMUNICATIONS (P&T)

GENERAL DIRECTORATE OF TELECOMMUNICATIONS (DGT)

FIRST TELECOMMUNICATIONS PROJECT

Comparison of Yearly Costs to subscribers of Telephone Service For Sample Usage in Algeria and Twelve Other Countries (rates as at mid-1982, in US$)

1/10 of 200 Long- Connection Annual 1,400 Distance Calls Country Fee Rental Local Calls (3mnsxlOOkm) Total a/

Turkey 10.20 13.8Ob/ 49.2Ob/ 81.70 154.90 Yugoslavia 6.60 52.90 44.60 79.20 183.30 Spain 15.25 43.35c/ 29.70c/ 103.40 191.70 Sweden 7.25 61.25 48.30 88.70 205.50 Tunisia 4.00 36.30 107.40 98.70 246.40 Mexico 2.50 2 6.9 0 d/ - d/ 285.00 313.40

Algeria e/ (i) 11.60 62.50 130.20 111.60 316.20 (ii) 19.60 109.60 182.40 156.70 468.30

Japan 50.00 90.00 93.40 126.60 360.00 France 6.40 92.50 125.00 148.80 372.70 Germany 8.50 13 5.00f/ 12 1 .2 0f/ 172.50 437.20 Argentina 42.30 180.00 75.80 175.00 473.10 USA (New York) 2.50 134.20g/ 62.10g/ 312.00 510.80 United Kingdom 13.40 103.50 230.70 230.50 578.10 a/ Total sample yearly usage/cost to subscriber consists, as applicable, of: 1/10 connection fee + annual rental charge + 1,500 local calls + 200x3 mns long distance (100 km) calls. Indicative sampling for illustrative purpose, differences in tariff structures, exchange rates variations and changes in tariffs policies may result in totals not being strictly comparable. b/ 500 local calls included in subscription. ci/ 600 local calls included in subscription. d/ 1,800 local calls included in subscription. e/ Two sets of figures are given: (i) as at mid-1982 using applicable tariffs and exchange rates; and (ii) as from February 1983 following tariff increase and including exchange rate adjustment. f/ 240 local calls included in subscription. g/ 500 local calls included in subscription.

IND June 1983 - 60 - ANNEX 20 Page 1 of 2

ALGERIA

MINISTRY OF POSTS AND TELECOMMUNICATIONS (P&T)

GENERAL DIRECTORATE OF TELECOMMUNICATIONS (DGT)

Rate of Return on Investments

1. The Algerian P&T's 1983-88 investment program, of which the project is an integral part, also includes ongoing and other works. The project is basically a time slice of the investment program and the close relationship between project and non-project parts makes any attempted separation arbitrary. The rates of return calculated therefore refer to the whole of P&T's telecommunications investment program.

2. The benefit period extends from 1983 to 2002, when on average the equipment provided under the program will have finished its useful life.

3. As from 1990 on operating costs and revenues related to the program are assumed to remain constant. Incremental revenues are based on expected additional telephone and telex subscribers and traffic brought about by the program. Operating costs are based on additional assets and traffic generated by the program, excluding depreciation and interest.

4. No residual values of fixed assets have been taken into account, as the discounted real value of these would be minimal in 1983 prices.

5. A summary of the cost and benefit streams is given below in DA millions. All revenues and costs have been deflated to bring them to their comparable 1983 price levels.

Capital Operating Net Year Expenditures Costs Revenues Benefits

1983 890 - - (890) 1984 1,100 60 248 (912) 1985 1,090 116 460 (746) 1986 1,142 172 670 (644) 1987 1,113 242 880 (475) 1988 1,304 332 1,253 (383) 1989 339 427 1,477 711 1990-2002 0 518 1,688 1,170

The net benefit stream above results in a financial rate of return of 14.95%. - 61 - ANNEX 20 Page 2 of 2

6. Adjusting for taxes and duties, and estimating the future consumer surplus by tabulating over the program period the prices in real terms (1983 level) which existing subscribers and applicants are demonstrating a willingness to pay, and assuming that new subscribers are prepared to pay the same real price, the economic rate of return is 38%. Labor has not been shadow priced in the above calculations as most of P&T's staff is qualified, and there is no surplus of qualified staff in Algeria. Foreign exchange has not been shadow priced because reliable estimates of the shadow price are not available.

7. A sensitivity analysis was performed on the program's economic rate of return with the following results:

10% increase in capital expenditures: 35% 10% increase in operating expenses: 37% 10% decrease in operating revenues: 34%

Combination of all the above factors 31%

8. A further sensitivity analysis was performed, assuming a delay in benefits but not of costs. A one year delay of all benefits would result in a minimum economic rate of return of 29%. A two year delay would result in a minimum economic rate of return of 24%.

IND November 1983 - 62- ANNEX 21

ALGERIA

MINISTRY OF POSTS AND TELECOMMUNICATIONS(PET)

CENERALDIRECTORATE OF TELECOMMUNICATIONS(DGT)

FIRST TELECOI4NUNICATIONSPROJECT

Orngni.atios Chart

f Mini nt.nof P6 | n Oth-rgant e-

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Tl . tI.o

(DGT) Rdsources nd Procureaent and-DCP) Intonoatlon

Studis pnd do-ll Sdrvices 5n snn j SaidîngOg and tri.1 Rel.ti... R...... l S.-uity

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Di DAioc nt- t

S/D S.b-dir.. tIen - - - Lins ef authority nf th. IG Separation lIn. batrsa centraJ Giov.rs.nt *nd "sgis.al .1-1 Of .d.ini.trntion

April 1983 - 63 - ANNEX 22 Page 1 of 3

ALGERIA

MINISTRY OF POSTS AND TELECOMMUNICATIONS(P&T)

GENERAL DIRECTORATE OF TELECOMMUNICATIONS(DGT)

FIRST TELECOMMUNICATIONSPROJECT

Summary of TelecommunicationsTraining Programs and Facilities

General Organization

1. The General Directorate for human and financialresources, through its directorate for training, controls P&T's specialized schools for training the administrativeand technical staff who are assigned to posts, telecommunicationsor administrativebranches, or move from one to the other later. Both branches rely heavily on the university, on the Ecole Nationale d'Administration,and on foreign institutions,for training the higher level managers. The students attending the various courses at P&T's schools are recruited at determined education or graduation levels and are engaged by contract to serve P&T for a number of years varying with the length of the courses. After successful completion of their training, the students are junior civil servants. Part of the students get complementarytraining for specializationor internal promotion. Training is provided at the TelecommunicationsInstitute of Oran (ITO) at engineer and senior technician levels (1,000 students), at three regional schools in Algiers, Constantineand Ouargla (600, 150 and 100 trainees separately)at junior technician and "national"levels, and at smaller centers with a total capacity of about 550 trainees in 7 other cities where shorter duration training are taking place, at operator and worker levels.

The TelecommunicationsInstitute of Oran

2. ITO is the highest training center of P&T's specialized educational system. The institute is managed and operated by P&T. Due to the high level of education, it provides in telecommunicationsand electronics at applied engineeringand university engineers (Ingénieur d'Etat) levels, it works under the supervisionof the Ministry of Higher Education and ScientificResearch. ITO's various courses are as follows:

(a) Ingénieurs d'Etat (IE courses started in October 1977, established by cooperationwith ITU): highest level in technical field; This level was reached until this year through foreign schools, or through Ecole Polytechnique of El Harach. Graduation from the institute requires a - 64 - ANNEX 22 Page 2 of 3

two-year general training at the university with full credits in exact sciences, followed by three years at the institute itself. A first group of 20 students first graduated from this course in October 1980. Since 1981, the full capacity of 40 IE students graduate each year, mostly for P&T's needs but also for the needs of some other organizationswith important private telecommunicationssystems. In future, ITO will also train engineers for the local telecommunicationsand electronicsindustry;

(b) Ingénieursd'Application (junior graduation in applied engineering): four years of study at the institute starting after baccalauréat (or equivalentexamination), presently a total of more than 400 stude.atsare enrolled in this line; and

(c) Techniciens Supérieurs (senior technicians),with two origins:

(i) from lycées (classe de première, at first level of high school certification),two years at the institute--presentlya total of about 160 students; and

(ii) from recruitment internal to P&T, opened to technicians after five years under P&T--one year at the institute (about 40 students).

The institute also provides courses occasionallyfor technicians (one year, about 50 students) in parallel with the regular schools of Algiers, Constantineand Ouargla, and with the military school for transmission.

3. The Instituteof Telecommunicationsin Oran has also about 10% of students coming from other African countries,studying mainly at the level Ingénieur d'Application. ITO is considered as one among the best telecommunicationstraining centers at this level in Africa. Its present maximum capacity is 1,000 students, which all board at ITO during their training, which covers about nine months of the year. Its laboratoriesare well equipped for the various curriculae,partly with help from UNDP and from bilateral institutionsfor equipment and pedagogy, and also with equipment provided by the main suppliers of equipment. To this effect, the DGT includes appropriate training elements in the large contracts for new types of equipment. The number of students graduating at all levels from ITO each is presently about 700. In addition, about 350 students are attending short or medium term recycling courses in the various specialties. About 105 of all students are specialistsor trainees from other governmentdepartments (such as army, railway, SONATRACH)and from other French speaking countries. Existing facilities are sufficient and - 65 - ANNEX 22 Page 3 of 3

adequate for present p&t requirements. ITO was expanded to 1,000 students in 1982 and it is proposed to further expand it to 1,300 students by 1986. This expansion will enable to meet training requirementsfor DGT's staff under the ongoing expansion program and for future operations.

Training at Junior Technician,Vocational and Workers Levels

4. At lower levels, junior technicians,testers and skilled workers for installation,maintenance and operation of the equipment, operators and specializedworkers for maintenance and constructionof overhead lines and cable networks are trained either in the three regional schools of Algiers, Constantineand Ouargla, or in the seven other smaller training centers. Ocassionally,on-the-job training is also made by sending instructorsfrom the regional schools to where there are enough attendees.

Proposed Expansion of the Training Capacity

5. As a part of its management and operations improvementprogram, P&T is planning an important expansion of its training capacity in order to cope with its needs of specializedtechnical and administrativestaff at all levels to implement its developmentprogram and for future operations. The proposed expansion is adequately planned to cope with DGT's training requirement for new and existing staff at completion of current program under the third plan. The facilities will also enable to continue training staff for the specialized telecommunicationsservices from other government agencies. The proposed expansion would be realized in two stages as per the following table.

-- Student Capacity in --- Training Center 1979 1982 1986

ITO 800 1,000 1,300

Central P&T school in Algiers 300 600 600

Regional schools in: Constantine 100 150 300 Ouargla - 100 150 Saida - - 300

Small vocational training centers in seven other regions 530 550 550 Total Capacity 1,730 2,400 3,200

IND April 1983 ALGERIA MINISTRYOF POSTSAND TELECOMMUNICATIONS(P & T) GENERALDIRECTORATE OF TELECOMMUNICATIONS(DGT) 'FIRSTTELECOMMUNICATIONS PROJECT Technlcal Assistanceand Training - Tlmetable

VE8R 1983 1984 1986 1986 MON4IH 6 7j 8J9 1i 1 12 - 3 à 516 7 8 9 101il12 2IJ 4 5 6 ' à 9 0 il 12 1 2 3

CONRLTANS PERIS ' c)__ 14 aChb) C trt-OrQatizlo r &)

a) I 14(">b* b) 14 b - b) c) Per(nnel Ma)nage dent - StaffFunctkans d) Management Information>Se il) Data System-Data Pvoceoln -Statl,llcs ____ d) ( ii)24 - q - - - I - 12e)Acxtnc ' -e

(H) 8 (~~~~~~~~~~~~~~~~~~~~~il)Codi Accountlng - Crweca

s) A I _ - _ (xi) Stdcks& StarageDepots

(Vi)-(Y) \- e) (XI) 48 (VE)-F- - - 1

16 (iv) RiC4auenentd &ln _____(4QDMlnS4thv

(sl) -(x) - (lx) 12 ~~~~~~~~~~~~~~~~~~~~(I)DR4 lnI.e Networks

(xiii) 6 Q.

TOTALMKAN-IXlM O CONCS*TANtS/DOE1S 170 0f Vhtich70 CaneMont M t- tIs a 100 et M-anih

1 2 ACrMuCiACCautin Cod Accaun*r: 8 - - 2 Fblrocl idiW#caom 8-- - 3 4 3 4 con SyxIwT - Date Sistem 18 Cucnw SerSe 5 5 0U8 Mahn& Mathods 10 _ 67 Op«alhorr& Qxott Sevice 12 - - 8 9 8 9 Plning & rogam ContraiServies 10 10 11 12 lamrlng & Melflodcgy - Devecpnient 4 EngeeIrin Swclrlng T rw 4 12 & LocclNetwoe 4 13 13 TebeconvautlcallareSIlstcsIas 4 14 stackxaStage 4 15 Aurt hventWc 8& Valution 4

17 VWaru Sen* 4 _.

TOTALMAN-K.%Ntt6 OF TRAiES 100

Mav 1983 "M = dMvel a &ch DPFM= D rratpw Pk1i & Mthdb WorldBank-25053 67- - ANNEX 24

ALGERIA

MINISTRY OF POSTS AND TELECOMMUNICATIONS(P&T)

GENERAL DIRECTORATE OF TELECOMMUNICATIONS(DGT)

FIRST TELECOMMUNICATIONSPROJECT

INCOME STATEMENTS (DA Million)

--- Actual------Est. ------Forecast------FY ending Dec. 31, 1978 1975 1980 1981 1982 1983 1984 1985 1986 1982 1988 198< 16

OFERATINGREVENUES

TELEPHONE -RENTAL 58 71 91 104 106 177 211 245 285 332 425 5Î0 585 -CALL CHG (NAT, 223 237 314 412 488 814 979 1146 1349 1589 2046 242e 2870 -CALL CHG INT) 40 41 54 71 70 117 141 166 195 230 295 351 415 -INSTALLATION 20 32 31 33 27 Se 68 81 95 113 149 178 198

SUBTOTAL 341 381 490 620 691 1165 1398 1639 1923 2263 2915 3455 4eG8

TELEX 28 43 49 o4 66 1oo 121 145 175 209 262 294 328

TELEGRAFH 25 28 28 30 31 46 47 48 49 50 51 j2 53 LEASEDCIRCUITS 2B 41 68 56 61 90 99 109 120 132 145 159 175 REIMBURSAhLEWORS 50 74 56 63 65 ô8 72 75 79 83 87 91 9e WORhSFOR COMF'ANY 46 e9 85 82 89 93 98 103 108 114 119 125 131

TOTAL 518 e36 776 915 1003 1562 1835 2119 2454 2850 3579 4177 4852

OPERATINGEXPENSES

F'ERSONNEL 244 319 391 461 522 634 747 871 1008 1181 1403 1661 1945 MATERIALS 13 16 50 24 32 40 51 64 81 102 128 161 203 OTHER 22 34 46 43 45 57 71 90 113 143 180 227 28e IiEPRECIATION 164 167 229 220 248 320 363 418 483 556 639 738 852

TOTAL 443 536 716 748 847 1051 1233 1443 1685 1981 2350 2787 328e

OPERATINGINCOME 75 100 60 167 156 511 602 676 769 869 1229 1390 1566 OTHERINCOME (NET) 14 19 25 41 39 10 il 12 13 15 16 10 19

NET INCOMEhEF INT 89 119 85 208 195 521 613 688 782 884 1245 1408 15SS

INT CHARGE' TO OPE 65 21 55 56 52 ô? 88 115 143 190 239 286 326

NET INCOME 24 98 30 152 143 452 525 573 639 694 1006 1122 1260

OPERATINORATIO<%) 86 84 92 82 94 67 67 68 69 70 66 67 68

RATE BASE 2555 3054 3506 3934 4310 4701 5224 5932 6776 7713 8783 10074 11555 RATE 0F RETURN 3.50 3.27 1.71 4.25 3.62 10.87 11.53 l1.40 11.34 11.27 13.99 13.80 13.56

IND APril 1983 - 68 - ANNEX 25

ALGERIA

MTNISTRY 0F POSTS AND TELECOMMUNICATIONS (P&T)

GENERAL DIRECTORATE 0F TELECOMMUICATIONS (DGT)

FIRST TELECOMMUNICATIONS PROJECI

Funds Flow Statements (DA Million)

…----Actual …---- Est. -… Forecast…------TOTAL FY einding Dec. 31 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1983-1988

SOURCES

-NET INC.BEF,INT. 89 119 85 208 195 521 613 688 782 884 1245 1408 1586 4733 -DEPRECIATION 164 161 229 220 248 320 363 418 483 556 639 738 852 2779

INTCASH GEN 253 286 314 428 443 841 976 1106 1265 1440 1884 2146 2438 7512

LESS:-IIESTSERVICE 113 61 166 177 175 226 279 340 428 536 586 635 780 2'395 -PERS.BONUS S 4 4 A O O O O O O O O 0 O

TOTAL 118 65 170 181 175 226 279 340 428 536 586 635 780 2395

NET INT CASHGEN 135 221l 144 247 268 615 697 766 837 904 1298 1511 1658 5117

BORROWINGSS -TREASURY 584 498 533 451 558 20 246 205 397 259 462 543 527 1589 -CIC O O ~ ~~~82 9 4 5 25 25 25 25 O 0 O 105 -PROPOSEDIBRD 0 O 0 0 0 0 140 200 180 50 10 9 0 580 -FUTUREBORROWINGS O O O O O O 0 0 0 500 500 500 500 1000

SUPTOTAL 584 498 615 460 562 25 411 430 602 834 972 1052 1027 3274

CONTRIRUTIONS O O 0 6 7 80 170 200 170 O O O 0 620

TOTALSOURCES 719 719 759 713 837 720 1278 1396 1609 1738 2270 2563 2685 9011

CONSTRUCTIONREG. -ONGOINSSORKS 692 621 694 644 621 250 80 0 I O 0 O O 330 -PROPOSEDPRGJECI O O O O O 120 360 470 360 80 37 10 O 1427 -1HIRI0PLAN (REM) O O O 0 O 440 600 650 990 1550 1933 590 O 6163 -FUTUREPROGRAN O O O O O O O O O O 130 1800 2500 130 -S.REG./SONATRACH O 0 0 6 7 80 170 200 170 O 0 O O 620 -L/TINVESTNENTS O 45 0 O O O O O O O O O O O

SUEiTOTAL 692 666 694 650 628 890 1210 1320 1520 1630 2100 2400 2500 8670

CHANGEIN WKCAP 27 53 65 63 209 -170 68 76 89 107 170 163 184 341

TOTALAPPLICATIONS 719 719 759 713 837 720 1278 1396 1609 1737 21270 2563 2684 9011

DEBTSER COY RATIO 2.24 4.69 1.89 2.42 2.53 3.72 3.50 3.25 2.96 2.69 3.22 3.38 3.13 3.14

NET INT.CASHGEN/ -CONSTRUCTREG Z 20 33 21 38 43 69 58 58 55 55 62 63 66 59 -TOTALAPPLICATII 19 31 19 35 32 85 55 55 52 52 57 59 62 57

IND November 1983 - 69 - ANNEX 26

ALGERIA

MINISTRY OF POSTS AND TELECOMNUNICATIONS(P&T)

GENERAL DIRECTORATE OF TELECO

FIRST TELECQ4MUNICATIONS PROJECT

BALANCE SHEETS (DA Million)

------Est. - - Forecast------FY ending Dec. 31, 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990

ASSETS

GROSS FIXED ASSETS 3597 4189 4833 5425 6030 6771 7759 8969 10347 11882 13681 15841 18233 LESSI DEPRECIATION 762 917 1094 1297 1539 1859 2222 2640 3123 3679 4318 5056 5908

NET FIXED ASSETS 2835 3272 3739 4128 4491 4912 5537 6328 7223 8203 9363 10785 12325

WORKIN PROGRESS 410 431 433 472 481 630 852 962 1104 1199 1500 1740 1848

I/T INVESTMENTS 44 89 89 89 89 89 89 89 89 89 89 89 89

CURRENTASSETS:

-CASH S BANKS 72 196 237 282 432 146 174 205 240 285 342 410 487 -ACCOUNTSREC. O O O O 0 234 275 318 368 428 537 627 728 -INVENTORIES 106 120 121 131 141 160 182 209 241 278 320 369 426 -OTHER 58 36 49 67 146 168 193 222 255 294 338 388 447

SUBTOTAL 236 352 407 480 719 708 824 954 1105 1284 1536 1794 2087

TOTAL ASSETS 3525 4144 4668 5169 5780 6339 7301 8333 9522 10775 12488 14408 16349

s. ssss...... sssas.s...ssss.. s.s..s=5ss .... S.ss= ...... a..s ==35=

LIABILITIES

EQUITY:

-CAPITAL+GRANTS 229 229 229 235 242 322 492 692 862 862 862 862 862 -RES.t RET.EAR. 303 401 431 577 705 1157 1682 2255 2894 3588 4594 5716 6976

SUBTOTAL 532 630 660 812 947 1479 2174 2947 3756 4450 5456 6578 7838

LONGTERM DEBT 2938 3396 3900 4239 4678 4546 4766 4971 5288 5775 6400 71Q3 7676

CURRENTLIABILITIE

-ACCOUNTSPAYABLE 55 118 108 118 155 314 361 415 478 549 632 726 835

TOTAL LIABILITIES 3525 4144 4668 5169 5780 6339 7301 8333 9522 10775 12488 14tU7 16349 ...... a ......

CURRENTRATIO 4.29 2.98 3.77 4.07 4.64 2.26 2.28 2.30 2.31 2.34 2.43 2.47 2.50 DEBT/DEBT+EGUITY 0.85 0.84 0.86 0.84 0.83 0.75, 0.69 0.63 0.58 0.56 0.54 0,52 0.49

IND April 1983 - 70 - ANNEX 27 Page 1 of 3

ALGERIA

MINISTRY OF POSTS AND TELECOMMUNICATIONS(P&T)

GENERAL DIRECTORATE OF TELECOMMUNICATIONS(DGT)

Notes and Assumptionsfor the Financial Projections,1983-90

Increase in domestic prices: 10% per annum

I. Income Statements

Operating Revenues

Telephone and telex: calculationsbased on data shown on page 3 of this annex. Revenues per DEL are assumed to remain virtually constant during the period 1983-87 and to increase by about 10% in 1988, which is conservative

Telegraph: + 10% per annum

Leased circuits: + 15% per annum, includingreceipts from Radiodiffusionet Television Algerienne--RTA

Reimbursableworks: annual increases correspondingto percentage increases in connected telephonelines. Works performedon a cost-plus-10%basis for subscribersand special clients (e.g., Aviation, Ministry of Interior,etc.)

Works for own company: annual increases correspondingto percentage increases in connected telephone lines

Operating Expenses

Personal costs: increasesin personnel as discussed during negotiations(see performanceindicators, Annex 17); average personnel expenses increased by annual rate of inflation

Materials: increases correspondingto rate of expansion of connected telephone lines plus annual rate of inflation

Other expenses: increases correspondingto rate of expansionof connected lines plus annual rate of inflation

Depreciation: 5% of average gross fixed assets in service

Other income (net): + 10% per annum, starting from a 1983 level of DA 10 million - 71 - ANNEX 27 Page 2 of 3

II. Balance Sheets

Assets moved into service: 80% of work in progress in previous year plus 40% of the current year's capital expenditures(see page 3). For the period 1978-82 the followingadjustment was made to P&T's books to better reflect work in progress: 100% of work in progress shown on the books (representingbuildings only) plus 50% of capital expendituresduring that year.

Cash and Banks: present cash levels are unusually high. The forecasts assume that they will be at a more normal level equivalent to 20% of cash operating expenses.

Accounts Receivable: an adjustmenthas been made in 1983 to incorporate accounts receivable,as would be the case under an accrual accounting system; a similar adjustmenthas been made under accounts payable. Accounts receivableare forecast at a level equivalent to 15% of annual operating revenues (1.8 months of billing).

Inventories: 2.5% of average gross fixed assets in service.

Other: + 15% per annum.

Current liabilities: + 15% per annum from 1984 (see also accounts receivable). ALGERIA

MINISTRY OF POSTS AND TELECOMMUNICATIONS(P&T)

GENERAL DIRECTORATE OF TELECOMMUNICATIONS(DGT)

FIRST TELECOMMUNICATIONSPROJECT

BASIC DATA FOR THE FINANCIAL PROJECTIONS

----Actual-----…------_------…Fotecast ------1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990

TELEPHONE DELS 208000 260443 312600 363200 410000 475000 550000 640000 745000 870000 1020000 1200000 1400000 -ADDED 36000 52443 52157 50600 46800 65000 75000 90000 105000 125000 150000 180000 200000 -INCREASE(Z) 21 25 20 15 13 16 16 16 16 17 17 18 17 TELEPHONES 357760 414294 519940 551688 606869 698250 808500 940800 1095150 1278900 1499400 1764000 2058000 POPULATION (000) 17653 18250 18834 19437 20059 20661 21281 21919 22577 23254 23951 24670 25410 TELEPH/100POP 2.03 2.27 2.76 2.84 3.03 3.38 3.80 4.29 4.85 5.50 6.26 7.15 8.10 INST.COST/DEL 490 490 490 490 490 863 900 900 900 900 990 990 990 RENTAL/DEL 305 330 318 308 274 400 411 411 411 411 450 450 450 GROSS REV/DEL 1395 1187 1285 1429 1443 2105 2186 2208 2230 2252 2477 2502 2527 -DOM CALLS 1183 1012 1096 1218 1261 1840 1910 1929 1948 1968 2165 2186 2208 -INT CALLS 212 175 189 211 182 265 276 279 282 284 312 316 319 EMPLOYEES 12120 13197 13810 14317 15803 17100 18150 19200 20115 21750 23460 25200 26600 PERS.COSTS/EMPL 20591 25436 29285 33118 35028 38531 42384 46622 51284 56413 62054 68260 75086 EMPL/EMP 58 51 44 39 39 36 33 30 27 25 23 21 19 TELEX LINES 1744 2400 3193 3962 4716 5550 6500 7750 9200 10800 12000 13200 14500 REV/TELEXDEL 12442 19107 15409 15669 13331 19437 20000 20300 20605 20914 23005 23350 23701

ASSETS MOVED INTO SERVICE 689 592 644 592 610 741 988 1210 1378 1536 1799 2160 2392

LND November 1983 - 73 - ANNEX 28 Page 1 of 2

ALGERIA

MINISTRY OF POSTS AND TELECOMMUNICATIONS (P&T)

GENERAL DIRECTORATE OF TELECOMMUNICATIONS (DGT)

FIRST TELECOMMUNICATIONSPROJECT

Related Documents and Data Available in the Project File

A. Legal Documents on P&T's Insitutions, Organization and Operation 1. PresidentialOrdinance No. 75-89 of December 30, 1975 bearing code of posts and telecommunicationsunder the governmentmonopolies for these services.

2. PresidentialDecree No. 76-168 on the organizationof P&T's central administration(now repealed, see A.9 below).

3. Ministerial Decision of July 15, 1971, on the organizationof P&T's services in the wilayas.

4. Ministerial Decision of September 30, 1978, establishingthe Regional Directoratesfor TelecommunicationsOperations (DOT).

5. PresidentialOrdinance No. 75-35 of April 29, 1975, establishingthe National AccountingPlan.

6. PresidentialOrdinance No. 71-19 of April 9, 1971, creating the Societe Nationale pour les Travaux d'Infrastructure des Telecommunications (SONATITE),and Decree No. 80-33 of February 16, 1980 modifying its statutes.

7. PresidentialDecree No. 82-145 of April 10, 1982 bearing procurement code for the public operators.

8. PresidentialDecree No. 83-30 of January 1, 1983 creating the National Company for TelecommunicationEquipment Manufacturingand Installation (ENTC) and ruling the transfer of concerned assets and activities from SONELEC electronicbranch to ENTC.

9. PresidentialDecree No. 83-71 of January 8, 1983 on the attributions and responsibilitiesof the Minister of Posts and Telecommunications.

10. PresidentialDecree No. 83-72 of January 8, 1983 on the organizationof P&T's central administration.

11. PresidentialDecree No. 83-73 of January 8, 1983 on the funct:ionsof P&T's technicaladvisers and staff under special assignmentsat central administrationlevel.

B. Reports and Studies on the Sector and the Project 1. UNDP PreinvestmentStudy for a TelecommunicationsProject in Algeria (Project ALG/79/005): - 74 - ANNEX 28 Page 2 of 2

(a) Document A, existing telecommunications services and development program (1980-84), technical and financial aspects;

(b) Document B, organization, functioning and procedures of the telecommunications services; and

(c) annexes.

2. Description of a project for World Bank financing (P&T document DGT/SPD dated 02/21/1980, and its complement/updating of 01/28/1981).

3. Proposed telecommunications development program under the Algerian Five-Year Plan 1980-84 (P&T Document of May 1980, three volumes, and revision/updating documents of March 1983 to expand DGT's program for construction from 1983 to 1987).

4. Law No. 80-11 of December 13, 1980 brearing Five-Year Plan 1980-84.

5. Description of works in DGT's Development Program (1980-87).

6. Description of existing telecommunications facilities, and implementation status of the Third Plan Program as at December 31, 1982.

7. Presidential Decree No. 83-62 of January 1, 1983 modifying the rate of the unit pulse (from previous DA 0.40 to DA 0.60 per unit pulse) on which telecommunications tariffs are based.

8. Presidential Decree No. 83-63 of January 1, 1983 establishing new tariffs for telecommunications services as from February 1, 1983.

9. Also Presidential Decrees No. 83-59, 60, 61, 64 and 65 establishing new tariffs for postal and financial services of P&T, as from February 1, 1983.

C. Selected Working Papers 1. Analysis of demand for telephone service within wilayas and of refusals when offered service.

2. Detailed analysis of telecommunications staff.

3. Pro forma financial statements, 1974-79, for telecommunications and postal/financial services, separate and consolidated (Annexes 12.1 to 12.3 and 13 of the UNDP Study) and working papers for 1980-82 prepared by P&T in March 1983.

4. Debt service schedule, 1983-92.

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