Document of The World Bank
FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No. 12444
PROJECT COMPLETIONREPORT
TANZANIA Public Disclosure Authorized
SECONDTnELCOMMUNICATIONS PROJECT (CREDIT 1810-TA)
NOVEMBER2, 1993 Public Disclosure Authorized MICROGRAPHICS
Report No: 12444 Type: PCR
Public and Private Enterprise Division Country Department II Africa Regional Office Public Disclosure Authorized
This document has a restdcted ds oibutimand may be used by redplena only in the pertfonanae of their ,fficd duties Its contents my nt oterwise be diosed w_t Wodd Bank suthulaton. CURRENCYAND EOUIVALENTS
Currency Unit = TanzanianShilling (Tsh) Tsh 1 = US$ 83.72 (1987) = US$ 125.00 (1988) = US$ 192.30 (1989) = US$ 196.60 (1990) = US$ 233.90 (1991) = US$ 325.00 (1992)
ABBREVIATIONSAND ACRONYMS
DEL Direct ExchangeLine EAC East African Community ERP Economic Recovery Program - 1986 ESAP Economicand Social Action - 1989-1992 GOT Governmentof the United Republicof Tanzania IDA InternationalDevelopment Association MTC Ministryof Transport and Communications PPF Project PreparationFacility SAP StructuralAdjustment Program - 1982 TDP Total Demand Potential TPTC Tanzania Posts and TelecommunicationsCorporation TRP TelecomsRecovery Program
FISCAL YEAR
January 1 to December31 FOROFFICIAL USE ONLY
THEVORLD BANK WasIlngton,D.C. 20433 U.SA
Office of Director-General Operations Evaluation November2, 1993
MEMORANDUMTO THE EXECUTIVEDIRECTORS AND TUE PRESIDENT
SUBJECT: Project Completion Report on Tanzania Second TelecommunicationsProiect (Credit 1810-TA)
Attached is the "Project CompletionReport on Tanzania - Second TelecommunicationsProject (Credit 1810-TA)prepared by the Africa Regional Office,with Part II preparedby the Borrower.
The project'sphysical components were completedwithout major cost overrunbut suffereddelays due to procurementproblems and turnoverin project management.Modernization of billingand accountingwas onlypartially completed due to designproblems (incompatibility of computer hardware and software).Most significantly,the projectfailed to keepTPTC (Tanzania'sPTT agency)on a sound financialfooting. By 1988, TPTC had gone technicallybankrupt. The Bank wvs slow to respond,did not invokeremedies and, indeed,waited until 1989 to halt processinga third project. Subsequentto the completionof the SecondProject, the Governmentdid agree on a Plan of Action to restructureTPTC's finances, under the Third TelecommunicationCredit (No.2486-TA), approved in April 1993.
On balance,the project'soverall outcome is ratedas unsatisfactory, given TPTC's dismal financialsituation throughout project implementation (an unusualoccurrence in telecommunicationsprojects). The institutionalimpact is rated as partial,and sustainabilityuncertain as it dependson the eventual c4nsolidationof TPTC's financialrehabilitation. The PCR could have been more thorough in its coverage of, intoe alia, the evolutionof key operational performanceindicators, most recentfinancial results, and the evaluationof the Bank's supervisionperformance. No audit is planned.
Attachment
I This docwmsnthas a nestricted distribution and may be used by recipients only in the performance of| their official duties. Its contents may not otherwise be disclosed without World Bankauthorization.| FOROmCI4L USEONLY
EM12mmtnLfro=
Prefac Trablegf C"ontents.S
Preface ...... *...... 14.
EvaluationSummary ...... ii
Part I ...... 1
1. ProjectIdentity ...... 1 2. Backgrund ...... 1 3. ProjectObjectives and Description...... 2 SectorDevelopment Objecdves ...... 2 ProjectObjectives ...... 2 ProjectDescription ...... 2 Part A. - Rehabilitation ...... 2 PartB.- TechnicalAssistance and Training...... 3
4. ProjectDesign and Organization...... 4 5. ProjectImplementation ...... 4 CreditEffectiveness and ProjectStart-up ...... 4 ImplementationSchedule .... , S...... Disbursements...... S CreditAllocation .S...... S 6. ProjectResults ...... , . , , 6 PhysicalResults ...... 6 FinancialResults ...... 6 HumanResource Development...... 9 7. ProjectSusinabiity ...... 9 8. Bank'sPerformance ...... 9 9. Bornower'sPerformance ...... 10 10. ProjectRelaonships ...... 10 11. ConsultingSerices ...... 10
12. ProjectDoumetat ndDaD...... 10
Thisdocument has a restricteddistribution and may be used by recipientsonly in the performance of their oMcialduties. Its contentsmay not otherwisebe disclosedwithout World Bank authorization. TABLEOF CONTENTS(Cont.d)
13. Rate of Retun ...... 11
14. Lesson Learned From Experience ...... I1.... I
Part ...... !. 12
ParttI ...... 36 1. RelatedBank Loans and/or Credits ..
2. Project Tinetable. 37
3. Credit Disbursements.38
4. Project Implementation...... 39
5. Project Costs (US$miilion). 4
5A. Credit Allocation ...... 4l
6. Project Results ...... 42
7. Status of Covenans ...... 43
8. Missions ...... 44
AnneL.
1. FinancialStatements 4. Second TelecommunicadonsProlect Credit 1810 TA Projlet Comtion Report
1. This report covers the SecondTelecomnmunications Project in Tanzania, supportedby Credit 1810-TA. The Credit for SDR 17.9 million to the United Republicof Tanzania on- lent to Tanzania Posts and TeleconmmunicationsCorporation (TPTC) was signedon June 16, 1987, became effective on August 12, 1987 and was closed on December31, 1992.
2. Parts I and HI were prepared by Bank staff based on informationavailable in the project files and informationsupplied by TPTC.
3. Part II has been prepared by the Borrower to give its perspectiveof the design, iplementation and the developmentimpact of the project. - ii -
Ta-nznaa
Second Telecom,muncaionsProject
Proiect CompleffonRewrt
EvqluW9_nSummslr
Backrou_nd
1. Public telecommunicationsservices in Tanzania are provided by the Tanzania Posts and TelecommunicationsCorporation (TPTC). TPTC is a monopolisticg3vernment owned institutionresponsible for operating, plannming,managing and developingof domestican, internationalpublic teleconmnunicationsand postal services. Tanzaniahas no telecommunicationsmanufacturing industry. The Corporationis administeredby an eight- member Board of Directors, whose Chairmanand Director General are appointadby the President of Tanzania. The other six members are appointedby the Minister of Communications.
World Bank Involvement
2. The World Bank Group has been associatedwith the telecommunicationssector in Tanania since 1966, first throughthe East African Community(EAC) and then directly with Tanzania. The Bank approved 3 loans to EAC TelecommunicationsCorporation; a US$13 million loan in 1967 (Ln 483-EA), a US$10.4million loan in 1970 (Ln 675-EA) and a third loan of US$32.5 million in 1973 (Ln 914-EA). These were completedsatisfactorily. The first credit to Tanzania, following the breakup of EAC in 1977, was approved *n July 1982 (Credit 1173-TA)for SDR 22.1 million (US$27million equivalent). The credit supportedan essentWialpart of TPTC's 1980-86investment program, focussingon service expansionto rural areas and expansionof the networkto unserved or underservedareas at the time, both urban and nual. It also had a broad institutionalobjective of developingTPTC, mainly through expandin training facilities. The second project (Credit 1810-TA)for SDR 17.9 million was approved in June 1987. The Third project has been approved by the Board on April 27, 1993. project Obiectivesand Descrinton
3. The project was designed to (a) addres the key institutionalconstraints of the sector by strengtheningTPTC's management,organization, financial and engineeringsystems to maintain and operate the existingnetwork, to undertakefurither rehabilitation and to plan for expansion; and (b) rehabilitatekey parts of the network, removingbottlenecks and imbalances to maximizecapacity utilizationof existinginstallations.
4. The project was designed in line with the TPTC's 1986-90Investment Program within the frameworkof the country's EconomicRecovery Program. The project's goals were to - iii -
overcome the key constraints of the sector namely, (i) lack of managementskills, systems, and trained manpower; and (ii) lack of foreign exchangefor essentialmaintenance and spares and to provide for rehabilitationand expansion.
Proect Implementation
5. The project start-up was smoothand on scheduie. TPTC, by undertakingadvance procurementaction, avoided all initialdelays. Both conditionsof effectivenessnamely, (i) appointmentof a project coordinatorand (ii) signingof the SubsidiaryAgreemnent; were fulfilled on time and the Credit was made effectiveon August 12. 1987. Progress during the flrst two years of implementationwas reasonable,with about 90% of the IDA credit being committedby the end of 1988. Since 1989, the project implementationactivities started to lag behind schedule and continuedto do so throughoutthe span of the project. The main problem with the implementationhas been the inabilityof TPTC to rneet commitmentsin respect of tariff increases and capital restructuring. This eventuallyled to deteriorationin relations between IDA and TPTC. In addition, delays due to renegotiationand re-biddingof contractspreviously approved led to the postponementof the project completionby one and a half years. The closing date was first extendedto June 30, 1992 and subsequentlyto December 31, 1992.
Project Results
6. Physical results: The implementationof the physical componentsof the project even though delayed was as per expectations. Due to small modificationsin the project in 1990, there was a reallocationof fumds(Annex SA) from some rehabilitationcomponents (outside plant) to spares and technical assistanceand training. Computerizationof billing and of the financial departnent was not completeddue to selectionof unsuitablehardware and incompatiblesoftware.
7. Financialresults: Between 1987-1989even though TPTC was operationallysound, as a result of losses due to currency devaluation,the financial performanceof the organization has been poor in terms of profitabilityand liquidity. Since 1988, the organizationwas virtually bankrupt, as highlightedby its negativeequity position. The primary reasons for the dismal performanceof the entity were (i) unusuallyhigh non-operatingexpenses like provisionsand reserves in 1988; (ii) lack of appropriatetariff increases which led to decline in revenues in real terms while operatingcosts continuedto rise with inflation;(iii) high level of outstandingbills receivablearising from inadequatecollections and delays in issuingbills; and (iv) devaluationof the TanzanianShilling. TPITChad to bear the foreign losses on its loans which were mostly foreign currency denominated. In an effort to rectify the situation the Govermnenttook over US$34 million equivalentof TPTC's loans in 1990-91.
Proiect Sustainability
8. A reliable telecommunicationssector is crucial to the sustainedeconomic recovery of Tanzania. The main linkagesbetween telecommunicationsand economicrecovery are (i) informationrequirements of business and government;(ii) the cost to the economyof an unreliable telecommunicationsnetwork including net external trade; (iii) the fiscal implications of an efficient telecommunicationsoperation; and (iv) the sector's inportance as a foreign - iv -
exchangeearner. Investmentin the telecommunicationssector therefore has to be a continuousprocess though not necessarilythrough a public sector monopolywith demonstratedinefficiency. The need for further improvementand expansionis evident and IDA jointly with ADB, EEC, Denmark,Japan and Sweden, has undertakento finance a third telecommunicationsproject in 1993. The Governmentand TPIC have taken the first steps towards restructuringTPTC and the sector. A managementperformance contract has been signed between TPTC and Governmnent,tariffs have been increasedas per IDA's recommendations,a Fixed Assets revaluationexercise has been effectivelycompleted in 1992, a Statement of Affairs has been prepared and the Govermnenthas agreed to invest a portion of IDA's credit as equity to TPTC.
Bank's Perforanc
9. Overall Bank performancehas been broadly satisfactoryunder adverse circumstances. The Bank has mnadea positive impact on the physical and institutionaldevelopment of the organization. In the design of the project, the Ba. k could not foresee the institutional difficulties that would arise in implementingtariff increases, billing ard collectionand other essental programs like capital restructuring. P' taking a firm stand in 1991 regarding the preparation of the third project the Bank succeededin convincingTPTC and Governmentto initiate tariff adjustments,necessary policy and institutionalimprovements to overhaul the telecommunicationssector. Bank's support for this has also attractedcofinancing to support TPTC.
Borrower's Performnce
10. During the implementationstage there were several major lapses on the part of TPTC in achievingperformance indicators presented in the StaufAppraisal Report. The most critical lapse has been in financial managementrather than operationalperformance primarily in the areas of billing and collectionsand delays in increasingta in line with inflation and late submissionof unauditedand audited fnancial statements. Since the Governmenthad the authority to increasetariffs, that tariffs were not increasedas required, was not entirely TPTC's fault, however, even when TPTC was empoweredto raise tariffs they did not do so effectively. Other problems includedinability to complete on time action plans and implementationof capital restructuringand manpowerplanning. During the project period, TPITC'snet profits went from Tsh 435 million to a negative TSh 10.3 million.
Proiect Relationships
11. Bank relationshipwith the Govermmentand TPTC were initiallygood but had deteriorated in the light of TPTC's poor performance. The relationshiphas now been restored as it has become clear that IDA's concernswere essentiallyin the company's best interests.
Project Documentationand Data
12. The credit and project agreements1810-TA were adequateand appropriatefor achievingproject objectivesin the key organizationaland financial areas. The Appraisal Report of the project provided a useful frameworkfor the Bank and TPTC to review implementation. TP1TCprovided regular progress reports on implementationduring 1987- 1990 after which time they were delayedand infrequent.
Lesson Learned From Experience
13. The most importantlesson that has been learned from this project is that unless Public Enterptisesare held to strict operationaland financialtarget. 4.y will have little incentiveto take the often painful managerialmeasures to achieve efficieiu;yand profitability. In this project most of the componentsof the project were committedwithin the first two years, and the borrower had almost no incentivesubsequently to fulfill conditionalities. In fact, it was only because IDA took a firm stand to suspendprocessing the third project that many of the critical elementslike capital restructuringand tariff increaseshave been achieved. In addition, for improved efficiencythere is a need for increasedfinancial and managerial autonomy for the operatingentity. Ta~nznia
SecondTel-conuunicatons Prolc
Credit 1810 TA fpiect Comnlilon Renort
1. ProjectIdenti_y
1.01 Title SecondTelecommunications Project CreditNo 1810- TA RVPUnit AFR Country Tanzania Sector AF2PE Subsector Telecommunications
2.* Bka Mk 2.01 Publictelecommunications services in Tanzaniaare providedby the TanzaniaPosts and TelecomnumicationsCorporation (TPTC). TPTCwas establishedby the Tanzan Posts and Teleomunications CorporationAct of December2, 1977,following the break-upof the EastAfrican Community. TPC is a monopolistcgovernment owned insutution responsible for operating,plaming, managingand developingdomestic and inttional public telecommunicationsand postalserices. In additionto the publictelecommunications services,dedicated networks exist to meetthe specializedrequiements of the police,military, rai'ways,and civilaviation. Otherprivate users also operateradio call servicesin areas inadequatelyserved by publicnetworks. Tanzaniahas no telecommunicatonsmanufacuring industry. The Corporationis administeredby an eight-memberBoard of Directors,whose Chairmanand DirectorGeneral are appointedby the Presidentof Tanania. Theother six membersare appointedby the Ministerof Communications.The currentorganizational structureis attachedas Annex1. 2.02 The WorldBank Group has beenassociated with the telecommunicationssector in Tanzaniasince 1966,first throughthe EastAfrican Community (EAC) and thendirectly with Tanzania. The Bankapproved 3 loansto EAC TelecomnmnicationsCorporation; a US$13 millionloan in 1967(Ln 483-EA),a US$10.4million loan in 1970(Ln 675-EA)and a third loanof US$32.5milion in 1973(Ln 914-EA). Thesewere crompletedsatisfactorily. The first creditto Tanzania,following the breakupof EAC in 1977,was approvedin July 1982 (Credit1173-TA) for SDR22.1 million(US$27 million equivalent). The credit supported an essentalpart of TPITC's1980-86 invesment program, focussing on serviceexpansion to rural areasand expansionof the networkto unservedor undereved areas at the time,both urban and rral. It also had a broadinstitutional objective of developingTPTC, mainly through 2- expandingtraining facilities. This project was closed on June 1987. 18 months behind schedule (PCR dated May 17, 1990 Report No. 8662). The second project (Credit 1810-TA) for SDR 17.9 million was approved in June 1987. The Third project has been approvedby the Board on April 27, 1993.
3. Project Objectivesand Description
3.01 Sector DevelopmentObJectives: Having realized the crucial importanceof the teleconununicationssector to the Governmentof Tanzania's (GOT) overall Economic Recovery Program, and in particular, to achieve the targeted growth in exports and increased efficienciesin all sectors, the main telecommunicationssector goais were to:
(a) increaseoperational efficiency and quality of service through network rehabilitation,introduction of an effective maintenanceprogram and improved managementsystems, and staff development.
(b) ensure that revenues cover operatingcosts and contribute significantlyto investments;
(c) generate revenues for the Government;and
(d) extend service to the rural areas.
3.02 Proiect Objecives
The project was designedto address the constraintsof the sector by:
(a) Sw,ngtheningTPTC's mnangement,organization, financial and engineering systemsto maintain and operate the existingnetwork, to underake further rehabilitationand to plan for expansion; and
(b) rehabilitatingkey parts of the network, removing bottlenecksand imbalanceto maximizecapacity utilizationof existinginstallations.
3.03 oect esariimiDn
The project comprised of the followingcomponents:
Part A. - Rehabilitation:
(a) Provisionof equipmentfor rehabilitationof local cable networkmand subscriberfacilities;
(b) replacementof worn out or obsolete switchingand transmissionequipment, includingmarginal expansionwhere justified by subsntial excess demand;
(c) installationof new transit exchangesfor local and interational traffic and a satellite earth station for internationalservices; -3-
(d) upgradingof maintenancefacilities by providingtool and test equipment. spare parts and specializedvehicles, training equipment.upgrading the stores and the repair facilitiesin workshops;and
(e) upgradingthe computerfacilities for: (i) introductionof management informationsystems; and (ii) automationof local cable and subscriber data to ensure optimumutilization of existing resources.
Part B. - TechnicalAssistance and Training:
(a) strengtheningTPTC's organizationalstructure and managementsystems;
(b) strengtheningTPTC's training programs; and
(c) overseas trainingfor about 40 staff;
3.04 The project had been conceivedto (a) rehabilitatethe country-widelong distance networks (46% of the total Project costs); (b) rehabilitatelocal networks (35%); (c) improve internationalfacilities (12%); and (d) enhance TPTC's managementcapabilities (7%).
3.05 The total cost of the program was estimatedat Tsh 3,575 million (US$65 million) with a foreign exchangecomponent of Tsh 2,860 million (US$ 52 million). The sources of financingare summarizedin Table 3.1 below. The project's foreign exchangecosts of US$49.0 million wouldbe financedby ADF, Italian Aid, Japan and SwedishGovermnent Aid and the IDA credit. Local currency financing, estimatedat US$11.0 million equivalentwould be financedby TPTC through internallygenerated funds. -4-
Table 3.1 - Project Financing (USSmillions)
Local Foreign Total % of Total
IDA - 23 23 39 ADF - 5 5 8 Italy - t0 10 17 Sweden - 11 11 18 TPTC 11 - - 18
Total 11 49 60 100
4. ProjiectDesign and Organization
4.01 The project was designed in line with TPTC's 1986-90Investment Program within the frameworkof the EconomicRecovery Program and consistent with the sector goals. The project rehabilitationand implementationof works were a continuationof the First Telecomnications Project. The project was designed to address and overcomethe key constraintsof the sector namely:
(i) Lack of Magemem skills. svstemsand trained manpowerthroughout the organization. Particular weaknesseswere identifiedin manpowerplanning, budgeting and cost control, maintenance,customer services and data processingcapabilites. Under a PPF of US$581,000approved in November 1986, consultantswere employed to do a comprehensivereview of the organizationand managementin the administrative,technical and financial disciplinesand remmend correctve measures. Based on the consultantsrecommendations technical assistance amounting to 140 man- monthswas provided under the project for implemention accordingto the action plan agreed during negotiations. It was agreed that TPTC with the assistanceof the consultants,prepare an action plan by December 1987 and commenceimplementation of the recommendedmeasures through (a) resmtrcring of its organizaton structure and managementprocedures: (b) establishingprofit centers; and (c) contractingout those activitieswhich can be handled more efficientlyby other external agencies.
(ii) Lack of forejan exchan,e: TPTC's limitedaccess to foreign exchangehad resulted in severe shortages of essentWaspare parts and routine operationalrequiements. As a result, the qualityof service had continuedto decline in most areas. The project was designed.to provide foreign exchangeto meet the urgent reqments of services, equipmentand matials for rehabilitationand maintenanceand to establish sufficient stock levels for project implementationand to achievea minium inventory level of six months by the project completiontargeted to be December31, 1990.
5. Project Inplementation
5.01 Credit Effectivenessand Proiect Start-up: To minimizepossible delays, advance procurementactivity had been unetaken by TPTC, includingIDA's review of all - 5 - procurementpackages it would finance. By April 30. 1987. TPTC had finalizedand submittedto IDA for review and clearance. bid documentsfor 50% (by value) pf IDA financeditems. The two conditionsof effectivenessfor the project were: (a) TPTC and the Governmentto sign a subsidiaryloan agreementacceptable to IDA, whereby US$23million equivalentof the proceeds of tic IDA credit would be onlent to TPTC at 7.92% for 20 years with TPTC bearing the foreign exchangerisks and including4 years of grace; and (b) a project coordinatorto be appointedunder the terms of reference and conditionsof service to be agreed between TPTC and IDA. Given (i) the early progress made with procurement arrangementand (ii) the experience gained in the sector under the First project, the project was expected to be completedby December31, 1990.
5.02 The Project Coordinatorwas appointedin May 1987 and the SubsidiaryAgreement between GOT and TPTC was signed in August 1987. Both conditionsbeing fulfilledwithout delays, the credit was made effective on August 12, 1987 as per schedule.
5.03 ImplementationSchedule: Progressduring the first year of implementationwas very good. 60% of the IDA credit was conmmittedby June 1988 with tenders being anmouncedfor another 30%. Since 1989, the project implementationactivities started to lag behind schedule and continuedto do so throughoutthe span of the project. Delays due to renegotiationand re-bidding of contractspreviously approved led to the postponementof the project compledon by one and a half years. Accordingto Para 2.03 of the DevelopmentCredit Agreementthe Project Closing date was determinedto be June 30, 1991. On April 10, 1991 the closing date was extendedto June 30, 1992 upon the request of the Government of Tanzania. On June 26, 1992, in order to facilitate the executionof committedcontracts, the closing date was further extendedto December31, 1992. The main reasons for the lag in project implementation were: (i) The Project Coordinator left TPTC 18 months after the project commenced;(ii) even though about 90% of the physicalcomponents were committedand cleared by IDA, TPTC's Board of Directors, decidedto renegotiatea number of such contractsand in some cases re-bid; and (iii) the Board did not approveany tariff increases between March 1990 and October 1991. Issues (ii) and (iii) finally led to the deteriorationof relationsbetween TPTC and IDA in 1991. One problem that TPTC and the Bank supervisionmission faced through the implementationperiod of the project was that the Minister of Communicationswas replaced five times and therefore a stable relationshipwith him could not be built up.
5.04 12isbureme: Disbursementhad been as per schedule during the first two years of the Project. Progress on procurement,disbursement and tariff increasesduring this period allowed a rating of 1. Since 1990, disbursementshave been constantlylagging and because of delays in processingprocuremen documentation,the project completiondate had to be extended twice. The project rating was droppedto 3 during 1990-92. Althoughthe appraisal report stated that disburement would be made through FY95 based on standarddisbursement schedules for Tanzania, during negotiationsit was agreed that the project would be completed by June 1991, by which time disburement would be conpleted.
5.05 Credit All : The original and revised allocationand the actual disbursementby categories for Credit 1810-TAare shownin Part m. The original allocationwas revised on November 10, 1988 to reflect the changesin increasedfinancing for equipmentand spares and consultantsand training. -6-
6. Proiect Results
6.01 PhysicalResults: Even thoughphysical implementationof the project has been accordingto expectation.the executionbecame slow and in some cases unproductive. For exampJe. the Wang computerinstallud for improvingthe financialdata processingwas ineffectivebecause of the obsolescenceof its tectmologyby the time it was installed. In addition, the software that was installedwas not totally compatible. As a result, the computer is being discardedand a new system is being reconumendedunder the IDA-111project. The following progress had been made under the project:
(i, Cables and accessoriesfor rehabilitationof the outside plant for which US$4 million had been allocated initiallyand subsequentlychanged to US$2.1 million has been disbursed and implemented;spares were procured for switches, microwave systems.,power and air-conditioningequipment;
(ii) 1,000 line digital exchangeswere installed in Mtwara and Singida in 1992-93;
(iii) New digital exchangeshave been installed in Tanga and Moshi and additional trunk lines installed in other regions.
(iv) Terminal equipmentconsisting of 19,000 sets, 420 telex terminals, 140 payphonesand 315 switchboardswere installedin 1990-92;
(v) Call loggingequipment (the "tiger" system)were installed in the international exchanges;
6.02 FinancialResults: During the period between FY85-91the financialperformance of TPTC was poor both in terms of cash flows and net profitability. TPTC's dramatic deteriorationin performanceis highlightedby the change in earnings during this period. From a net profit of Tsh 435 million in 1985, profitabilitydeclined to a net loss of Tsh 10,295 million in 1989. The financial statementsof TPTC are attached as Annex 2. During the period 1987-89the operationalperformance was up to expectationsbut due to foreign exchangelosses and interest on loans, the net profitabilitydeclined. Some financial indicators are presented in the following table: - 7 -
Income Statements (Tshs Million)
198S 1986 1987 1988 1989 1990 1991
Telephone 1,148 1.343 2.420 3,536 4.909 8.098 9.457 Telex 170 276 560 1.019 1.934 2.680 2,445 Telegraph 27 87 53 77 78 78 99 Other Revenue 8 301 101 224 227 250 403 TelecomsOpera Revenue 1,353 2,007 3,134 4.855 7,148 11.106 12.404
TdecomsOperating Expesem 631 1,624 2,453 3.701 5,173 8,630 14,600
Net TelecomsOperadng Income 7r2 383 681 1.155 1,975 2,476 (2.196)
Net Postal OperatingIncome (Loss) 26 (34) 7 10 (37) (254) (412)
Less: Intereston Loans 14 56 309 255 3,615 1.456 795
ForeignExchange Gain (Loss) (48) (2,328) (3,705) (2,650) (5.269) (494) (358)
Net Profit (Loss) 435 (2,146) (4,666) (6,272)(10.295) (228) (3,761)
6.03 The main reasons for the dismalperformance of TPTC were:
(a) The lack of appropriatetariff adjustmentmeasures from 1990 onwards to overcomethe high rate of inflation and the devaluationof the Tanzanian Shilling. Whereas inflationover the 6 year period 1985-91was around 1,000% and whereas the TanzanianShilling devalued from an exchangerate of Tsh 16,50 = US$1 in 1985 to Tsh 225 = US$1 in 1991, tariff increases amountedto only 300% over the same period. As a result of the imbalancebetween increases in costs and revenues, operaton and maintenanceexpenses increasedfrom 14% of gross operatingrevenues (GOR) in 1985 to around 76% in 1991.
(b) High level of bills receivablescontinue to be a major bottleneckto the liquidityposition of the organization. In 1987, bills receivablesamounted to the equivalent of 569 days of revenues, resultingin a negativeinternal cash generationof Tsh 3,064 million. The shortage of liquidityand short term financingled to negative working capital during the period 1988-91, which has in turn impededmaintenance and routine operations. The shortfall in worldng capital is reflected by the decliing curren ratio from 2.3 in 1985 to 0.6 in 1991. The high level of receivables is the result of (i) poor collectionspolicy and (ii) delays in billing. A major objective of the IDA II project was to institutean effective billing and collectionssystem. IDA supervisionmissions had during 1987-89made regular 80/20 analyses to implementa incentivebased collectionsprocedure for the higher-revenueyielding 20% of the customers. Consultantshad made various recommendatons,however the recommendationswere never effectivelyincorporated over any reasonableperiod. In 1990, a collectionspolicy was in effect and efforts were made to visit customers (includingvisits by supervisionmissions) with substanial oustandingsand a disconnecton policy was approved but never stricdy enforced. By early 1991 since the measures were not consistentlyimplemented the collectionspolicy did not achieve expected results. During 1990-92the billing system deterioratedfurther to the extent that the amount of outstandingdebts to TPTC could not be ascertainedwith any level of accuracy. The issue was highlightedin the AuditorsReport of 199f. Under the IDA III project, a study is underwayto determine accuratelythe level of outstanding bills receivables.
(c) In additionto poor collectionsand delays in billing, there is a high level of non-billingpresent in the sector. It appears that at least 30% of the traffic goes unbilled. This problem had been highlightedin IDA supervisionreports and recommendationsto improve the situationwere made in 1990. Under the IDA II project, fundingwas made availableto finance the "Tiger" systern, which had been effectivelyused in many countries to overcomethe problem. Even though the system was installed in 1991, its impact was not up to expectations. It is apparent that non-billingcontinues to be a major hinderanceto the profitabilityof the organization. As one of the objectivesof the proposed IDA III project, technical assistance will be providedto institute stringentcontrols on the billing and collections process.
(d) The continualdevaluation of the Tanzanian Shillinghas probablybeen the most binding externalconstraint to the financial deteriorationof the entity. Sectors such as telecommunications,where the foreign currency componentof capital expenditureis almost 80% of the investmentprogram, have been most seriously impacted. In TPTC, foreign exchangelosses as a result of currency devaluation increasedfrom Tsh 48 million in 1985to a staggeringTsh 5,269 million in 1989. The problem had been exacerbatedby the refusal of the Treasury to accept TPTC's request to make debt service paymentsto the Treasury in local currency. If accepted this would have produceda completelydifferent performancescenaro for the entity. The issue of carrency had been addressedin the IDA U project from the appraisal stage. TPTC was required to present to IDA a proposal for restructuringby December31, 1988. However, no proposals were prepared until 1990when the Bank took a position to discontinueprocessing the IDA m credit unless a restructuring proposalwas presented. Only the organization's debt has been restrctred. As part of the restructuringprocess the Govermnentassumed US$34 million equivalentof TPTC's debt. This considerablyimproved the financialsituation, reducing foreign losses from Tsh 5,269 million in 1989to Tsh 494 million in 1990 and Tsh 358 in 1991. TPTC will be completelyrestructred under the IDA m project to maintain a Debt Equity ratio of 1.5 from the dtird year of effectiveness.
6.04 It is worth noting that althoughoperating expenses increased, expenseson salaries and wages actally declined from 19% of GOR In 1985to 13.3% in 1989. The failure to increase staff compensationin the face of hyperinfiationled to a demoralizedwork-force and therefore substantal inefficienciescrept into the organizationwhich further affectedthe organiztion's performance. Under the IDA II project, TPTC was required to institutean incentive scheme to improve performance. The scheme was introduced in 1990on an experimentalbasis in certain regions for a short period. The scheme did not prove successfulbecuse of the inabilityto meas=ueperformance for the operational/engineeringstaff and therefore was abandoned shortly thereafter. In 1992an incetive scheme has been introducedwhich appears -9- to be successful. Approximately30% of the staff have received bonusesduring the first 2 monthsof the program.
6.05 The financialsituation of TPTC reached its lowest ebb in 1989, when it was technicallybankrupt. The Organizationhad a net negative equity of Tsh 19.456 million comprisedprimarily of accumulatedlosses amountingto Tsh 22,734 million.
6.06 Throughoutmost of the project period it was never possibleto take any corrective action based on the rate of return and self financing indicatorsas all financial and accounting data or informationwas alwaystoo late. This constraint, highlightedduring the completion report of the First IDA project, was addressedduring the first year of inplementationof the IDA II project through employrnentof consultants. The Rate of Return on Fixed Assets (of at east 12%) as defincd by IDA, covenantedin the Project Agreementwas complied with. It must be mentionedthat this rate of return as calculatedumder IDA's prescriptiondoes not take into account interest on loans and more importantly,foreign exchangelosses. Since 1990, financial statementshave been consistentlydelayed and inaccurate(as reported by the external Auditors).
6.07 Human Resource Developmen: The project by supportingthe telecommunications training institutionsin Tanzania and through various fellowshipsand traminingprograms overseascontributed to considerablestrengthening of the human resource support of TPTC. Under the IDA II project about 28 officialshave been provided overseas training and about 120 staff-monthsof consultantshave been funded to provide training in Tanzania. Also, about 17 fellowshipswere offered courses in managementof training functionsand about 4 fellowshipsin post graduate studies in telecoms technologyand management. Hardwareand software for PC trainng system have been installed. Training equipmentfor satellite comnmnicationswas procured but has not yet been installed.
7. Project Sustainabilitv
7.01 A reliable telecommunicationssector is crucial to the sustainedeconomic recovery of Tanzania, The main linkages betweentelecommunications and economicrecovery are (i) informationrequirements of business and government;(ii) the cost to the economyof an unreliabletelecommunications network; (iii) the fiscal implicationsof an efficient telecommunicationsopertion; and (iv) the sector's importanceas a foreign exchangeearner. Investmentin the telecommunicationssector therefore has to be continuousprocess.
8. Bank's Perfonnance
8.01 Despite the Bank's best efforts the Borrower's financial performancedeteriorated and it went into bankruptcy over the projectperiod. The Bank has made a positive impacton the physical and instiutonal developmentof organizaion. In the design of the project, the Bank could not have foreseen the insttutional difficultiesthat arose in implementingtariff increases and other essentialprogram like capital restucring, however, by taking a firm stand in 1991 to suspendprocessing the third project wi61the backing of major donors, it was able to institute the necessarypolicies and agreementthrough conditionalitiesrequisite for the preparationof the third project. Bank's support for this has also attracted cofinancig to support the IDA II and HI projects. - 10-
9. Borrower's Performance
9.01 There have been several major lapses on the part of TPTC in achievingperformance indicatorspresented in the Staff Appraisai Report. During the project period, TPTC's net profits went from Tsh 435 millionto a negative TSh 10.3 million. Annex 3 contains the review of TPTC's performance in comparisonto the performanceindicators mentioned in Annex 12 of the SAR. The most critical lapse has been in financialmanagement rather than operationalperformance primarily in the area of billing and collections and delays in increasingtariffs in line with inflationand late submissionof unauditedand audited financial statements. Since only the Governmenthad the authorityto increasetariffs, it was not entirely TPTC's fault that tariffs were not increasedas required, however, even when TPTC was empoweredto raise tariffs they did not do so effectively. Oth'erproblems included inabilityto completeon time, action plans and implementationof capital restructuringand manpower planning.
10. Proiect Relationships
Bank relationshipwith the Governmentand TPTC were initiallygood but had deterioratedin the light of TPITC'spoor perfonnance. The relationshiphas now been restored as it has become clear that IDA's concerns were essentiallyin the company's best interests.
11. ConsultingServic
11.01 Consultancyservices and technicalassistance comprised about 13% of the IDA credit. Consultantswere initially employedunder the PPF to undertakea comprehensivereview of the organizationand managementin the adnministrative,technical and financialdisciplines, identifyingweaknesses, and have recommendedcorrective measures. The assignmentwas completedin 1987 and formed the basis for an institutionalrestructuring, manpowerand training program for the project. During the implementationof the Project, consultantswere employedto provide assistance for engineeringactivities, namely project planning, Materials Managementand data processingcapabilities. The assignmentcovered transfer of managerial expertise to TPTC. The consultants' performancein the implementationof billing and financialsystems had been less than acceptable. This was because of the lack of coordination between the consultantsand TPTC. As a result, the financialand billing systemswere not effectivelyestablished and has been earmarkedfor re-implementationunder the THird Credit. Consultantswere effectivelyemployed in performiingFixed Assets revaluation which was completedin 1992.
12. Proiect Documentationand Data
12.01 The credit and project agreements 1810-TAwere appropriatefor achievingproject objectivesin the key organizationaland financialareas. The Appraisal Report of the project provided a useful framework for the Bank and TPTC to review implementation. TPTC provided regular progress reports on implementationduring 1987-1990after which time they were delayed and infrequent. 13. Rate of Return
13.01 The rate of return for the project is as follows:
1987 1988 1989 l92Q
Rate of Return on RevaluedFixed Assets 11% 11% 12% 16%
The calculationsare based on expected revaluedcost of assets at US$1,500per connected Direct ExchangeLine. The rate of return is in compliancewith IDA's expected rate of return of 12%.
14. Lesson LearnedFrom Experience
14.01 The most importantlesson that has been learned from this project is that unless Public Enterprises are held to meetingstrict operationaland financialtargets, they will have little incentive to take the often painful managerialmeasures to achieve efficiency and profitability. In this project since most of the componentsof the project were committedwithin the first two years, the borrower had almost no incentiveto fulfill conditionalities. In fact, it was only because IDA took a firm stand to suspend processingthe third project that many of the critical elements like capital restructuringand tariff increases have been achieved. This project also provides evidence of problems that may arise in fast disbursingprojects. Another important lesson that is learnedfrom the project is the importanceof regular tariff adjustmentsin line with inflationfor the sustainedfinancial viabilityof the telecommunicationssector. - 12 -
TANZANIA SECONDTELECOMMUNICATIONS PROJECT (Credit 1810-TA) PROJECT COMPLETIONREPORT PART II: PROJECT REVIEW FROM BORROWER'SPERSPECTIVE
1. PREFAC PART 1
- This Project-Completion -Report.(PCR) presents a review of Credit 1810 - TA of SDR 17.9 Million (USS 23.0 million equivalent) for the Second Telecommunications Project of the Tanzania Posts and Telecommunications Corporation (TPTC) for telecommunication development. Credit 1810 - TA was approved and was declared effective in August 1987 and was closed in December 1992, 12 months behind schedule. The PCR is based. interalia, on the Staff Appraisal Report; the Credit, Guarantee, and Project Agreements. supervision reports; correspondence between the Bank and the Borrower 2. EVALUAT&IQpSMABX 2.1 OB ECTIVUS The current deteriorated state of the Tanzanian telecommunications network and consequent poor quality of all telecommunications services are severe constraints on Tanzanian economic development, particularly of the agricultural and other productive sectors which play a key role in the Tanzanian economy. The project aimed at reducing these constraints through rehabilitation, building up the supply of spares, and limited expansion of physical facilities to improve overall performance and to ensure that the now and rehabilitated assets were maint;ined. A further objective is the institutional development of TPTC, with special emphasis on utilisation of financial and technical tools to improve management performance and efficiency. 2.2 JIumemntatlon Exoerience Substantial delays in loan effectiveness were caused initially by loan disbursement process/procedure to Tanzania. This was however later streamlined, by greation of special A-c'bynt in Deutsche Bank, New York, Branch. The project: was
.. -~--'--j b* in December, 1992 about a year behind the original appraisal schedule. Delays in civil worht and lack of cables for Moshi and Tanga delayed the completion of outside plant works. In this case, the local cable ne,tworks a substantial part of cables and accessories under the project were utilised for rehabilitation, operation and maintenance due to lack of foreign exchange for this purpose. - 13 -
Despite these factors, TPTC's efforts in successfully processing procurement and in the executing the project componentsresulted in timely implementationof the project. 2.3 Besult The projects physical targetswere achieved as planned. The financialperform4nce of TPTC over the projectperiod (1987 - 92) was satisfactory. The tariff raise and TPTC's subsequent action incorporatinga triggermechanism linking international tariffs, to currencydevaluation has helped TPTC's financial performance. - 14 -
THE PJROET_ 1. BBGON TPTC was established by the Tanzani3 Posts and TelecommunicationsCorporation Act of December 2. 1977,- followingthe break-upof the East AfricanCommunity. TPTC is an autonomous government - owned public corporation responsiblefor all domestic and international postal and telecommunicationsservices in Tanzania. It commenced operations on February 3, 1978. In addition to the public telecommunicationsnetwork operated by TPTC, dedicated networks exist to meet the specialized requirementsof the police, military, railway and civil aviation services. Private users are licensesto operate radio link services in areas inadeqgatelyserved by the public network. Tanzaniahas no telecommunicationsmanufacturing industry. TPTC is responsible for the establishmentexpansion' operation and maintenance of all local, national and international telecommunicationservices. The national developmentplans give priority to rural development and dispersal of the developmentefforts. In accordancewith national objectives, TPTC directs its yearly investment programes towards improvingthe poor qualityof existingservices and addressing the heavy demand for new telephone connections to provide access to the Telecommunicationsnetwork.
2. PIIQJT OJETIVESf AND DESCRI 2.1 Proiect obiectives The current deteriorated state of the Tanzanian telecommunicationsnetw7rk and consequentpoor qualityof all telecommunications services are severe constraints on Tanzanian economic development, particularly of the agriculturaland productivesectors which play a key role in the Tanzanian economy. The project aims at reducing these constraintsthrough rehabilitation, building up the supply of spares, and limited expansion of physical facilities to improve overall performanceand to ensure that the new And rehabilitatedassets are maintained. A furtherobjective is the institutionaldevelopment of TPTC, with special emphasis on utilisation of financial and technical tools to improve managementperfomance and efficiency. - 15 -
2.3 Prolect Description
The prolect comorises: a) Rehabilitation of cables and subscriber distribution networks and provision of equipment to relieve traffic congestion to improve quality of service; b) Upgrading of maintenance by: i) strengthening maintenance units; ii) upgrading stores, garage and workshops; iii) providing tools, instruments, spare parts and specialised vehicles. iv) partial financing of recurrent maintenance costs; c) Provision of ancillary equipment, power and airconditioning; computer hardware and software, civil works materials and training equipment. d) Provision of fellowships and staff training.
e) Provision of consultant services to enhance TPTC's capabilities in project planning, monitoring and control; equipment installation, operational and maintenance; finance and accounting; stores and material management. - 16 -
3. S?AFP A31? AND PEMSC= FINANCIN
The World Bank Staff Appraisal Report No.6728 - TA of 5th May, 1987 is the blueprint of the project. The size of the project and the cost by category is a shown below:-
. ~ MILLION USi ITEN LOCAL FOREIGN TOTAL COST COST 1. Local cable Network 2.0 6.3 8.3 2. Switching equipment cost 0.4 13.7 14.1 components and spares 3. Radio and Transmission 0.4 5.5 5.9 Equipment, Components and spares
4. Tolephones, Teleprinters 0.6 3.2 3.8 and switchboards
S. Earth Station 0.4 9.2 9.6 6. Vehicles, Power Plants. Airconditioning, Repair 3.S 3.2 6.7 Centre, Workshop equipment, training equipment, Civil works, Materials and . _ . spares. 7. Technical Assistance and 0.3 3.4 3.7 TraininS
8. Physical Continsencies 0.4 2.2 2.6 9. Price Contingencies 0.3 2.3 5.3 TOTAL PROJECTS COST. 11.0 49.0 40.0
In conceiving the Second Telecommunications Project, the Worid Bank Staff Appraisal Report looked at the total network requtrement first. Projects which could attract bilateral aid/loan were identified and IDA undertook to finance the remaining projects which although could not a-.ract bilateral aid/loan are ndcessary projects for efficient performance of the total network. - 17 -
The project financing is distributed as follows:-
MILLION USS SOURCE ______LOCAL FOREIGN TOTAL % TOTAL IDA _ 23.0 23.0 39 AfDB _ 5.0 5.0 8
ITALY - 10.0 10.0 17
SWEDEN - 11.0 11.0 18
TPTC 11.0 - 11.0 18 TOTAL 11.0 49.0 60.0 100
The project foreigncosts of USS 49.0 million equivalentwould be financedby AfDB, ItalianAid, Swedish GovernmentAid and the IDA Credit. Local currency financing,estimated at USS 11.0 million equivalent,would be provided by TPTC through internallygenerated funds. The IDA Credit of USS 23.0 millionequivalent would be on lent to TPTC at 7.92% interes for 20 years including a 4 years grace period. The grants from SIDA and Italy will be on lent to TPTC under the same concessionary terms as to the- Government. The loan from AfDB will be on lent to TPTC on the same terms as the IDA Credit. TPTC would bear the foreignexchange risks. The executionof the subsidiaryloan agreement between the Governmentand TPTC, acceptableto rDA is a conditionof credit effectiveness.The IDA financed segment of the program comprises high priority crediticalelements, particularly for spare parts,maintenance and institutionaldevelopment and can stand on its own, cross effectiveness conditions are thorefore not required. M reover, the parallel financingAfDB, SIDA and the Italian -aSwernmentis largelyconfirmed. - 18 -
4. STATUS OF FIJNANCXXQOF VARIOUS PQIECTS BY OTHER DONOR FIfNCIER IX THE SECOND TELECONUN ICATION PROJQC. 4.1 AIML LOAN:i
USS 4,550,000 have been made available by AfDB for the procurement of two 4,000 lines each digital exchanges for Kigoma and Bukoba and for the purchase of microwave radio equipment to link Tanzania with other countries in KBO region. These are lines across the borders to Rwanda, Burundi as Uganda. KB0 was the executing agency for the Project. Fujitsu represented by Marubeni and Siemens have been the contractors for the supply of switching equipment and radio equipment respectively. The exchanges and .;adiosystems have been commissioned. 4.2 ITALIAN FINANCING: Bilateral Aid
Italy made available 11,270 million Liras for the supply and installation of a Standard A Earth Station, including power plant. Factory Training to six TPTC staff has been provided. The Standard A Earth Station has been commissioned. TPTC financed and constructed civil works. Also, made available funds, USS 3,766,870 for the supply and installation of Nwanza - Musoma 34mb/s digital microwave system. The equipment has been installed and it will be commissioned shortly. Also, factory training to TPTC staff has been provided. 4.3 SIDA ASSISTANCE TO TPTC
During this period SIDA's assistance comprises of the following elements:- a) Consultancy contract including reimbursables related to the services as specified in the Specific Agreement. b) Pellowships/training for TPTC staff which had a direct relation to the programme. c) Import support Funds for 0,e Implementation of the SIDA/TPTC projects. - 19 -
Funds gbtained:
The SIDA/TPTC Specific Agreement in cooperation amounted to MSEK 45 for training and comprised item(a) 41MSEK for Import support and item(b) 4 MSEK for consultancy. The portion of SIDA Import Support Funds to TPTC was annually agreed upon between the Treasury and SIDA. thus the amount could increase/decrease over the (four years) period of paramount impor.tancewas of course TPTC's request to Treasury for such funds. The Import Support Funds was used by TPTC a follows:- a) Rehabilitation of part of Dar es Salaam Network and commissioning of Operation and Maintenance Centre (OMCI. b) Rehabilitation of Singida. Dodoma and Zanzibar networks.
c) Updating of tne TPTC Development Programme - i.e. Master Plan for Telecommunications Development -Tanzania and TRP - TelecommuAications Recovery Programme. d) Importation of various telecommunication spares and upgrading the Staff College. 4.4 JAPAN: Japan has provided USS 10,0 million for the following:- i) Rehabilitation of the Dar es Salaam cable network in Oysterbay, Upanga, Government offices and President's office areas. (Phase 1) ii) Provision and installation of:- a) Container type (3000L) digital telephone exchange with standby engine at Oysterbay and a junction cable between Oysterbay and Dar es Salaam Central. b) Container type digital telephone exchanges with standby engine (7000L) at Pugu Road, (3000L) at Wageni, (1000L) at Tabata. 4.5 BDI&IDh Belgium has prov.ided(USS 6.4 million +,for the following:-
i) Provision and installation of 2000 trunks Intetnational Telephone Exchange (ITE)
ii) Provision and installation of 1000 line digital exchange and 34 Mbit radio link to Kigambon'i. - 20 -
4.66 M: CANADA through CIDA has provided Canadian $9.7 million for providing the following:- Automatic Number Identification (ANI) equipment (exchanges to allow for International Subscriber Dialling (ISD).
a) Dar-es-Salaam - 2000L b) Pugu Road - 5001 -- c) Wageni - SOOL d) Kurasini - 2000L e) Songea - IOOOL f) Iringa - IOOOL a) Dodoma - IOOOL h) Tabora - IOOOL i) Mwanza - IOOOL J) Musoma - IOOOL K) -Lindii - IOOOL 1) Kijitonyama - 1000L m) Ubungo - IOOOL n) Msasani - 1000L a) Arusha - 1000L
4.7 FRANCE: France has provided a soft loan of 12,450,000 FF for the supply and installation of a 2000 Trunks Dodoma digital telex exchange. Training to TPTC staff has been provided and commissioning of the system is in due course.
4.8 ITU: Through ITU assistance programme, TPTC has received 29 telefax machines, and 42 PBXs. 4.9 TPTC/BANK OF TANZANIA:
JYen 149,906,000 was made available for provision of a 140/Mbit radio link between Dar es salaam ( Central- Pugu Road - Wageni).
4.10 IDA - CREDIT: The second IDA Credit amounting to US 23,000,000 equivalent to SDR 17,900,000 was obtained in August, 1987. Two agreement associated with the credit. namely Development Credit Agreement (DCA) and Project Agreement (PA) were signed on 16th June, 1987 and became effective on 17th August. 1987.The credit was reallocated and used as follows:- - 21 -
SECOND TELECOMMUNICATIONS PROJECT STATUS OF CIEDIT ALLOCATION AS AT 31/12/1990
COST IN U.S.* DETAILED CATEGORY ORIOINAL AMOUNT UTILISED S5NO. DESCRIPTION ALLQ=ION RE-ALLOCATION AS AT31/12/1992 1. Cables and Accessories 4000000 2f897P00 3851311.06 a) Wooden poles 803539.00 b) Drop-wire 375534.71 c) Open wire and joining sleeves 319497.14 d) Cables & Accessories 948952.15 e) Tools and-other cable accessories 4000000 2897000 1413288.Q§ 3,8SI? 11. 06 2. Tanga and moshi Digital Exchanges. Additional exchange Trunks, Local Call Timing 5p0001 000 500;000 3724598.97 and ANII
3. Teleprinter New terminals and spares. 15000 81p00O 763028.31 4. Telephones and coins Boxes: =* -ordinary Telephone sets 960.000 600,000 573783.41 -secretarial Telephone sets 7S4000 500900 417124.98 -Coins Boxes 1S9000 17;000 16475l.89
S. soL3cbboards s50QOOo 340O000 1,477165.21 6. R'MOSflitation of MSNarw and Singida Crossbar Exchanges 3SF00 309000. 104 288.69 (New Rich) 7. Nicroware and UHF ,009000 10000 Equipment - 22 -
COST IN U.S55
DETAILED CATEGORY ORIGINAL AMOUNT UTILISED ALM. DRSCRIPTgm AkCION RE-ALLOCAION AS ATSI12121992 8. Rural line carrier Equipment 500000 5,000 9. Multiplex,VHF and HF including Radio Call Equp. 1000000 1,800/000 469496.70 10. Rehabilitation of international 300000 270p00 271,586.50 Telex Exchange -
11. Spares for Telecomm Equipment 2500000 390§ooo 4,216,482.45 a)Teleprinters 94750.84 b)Switchboards 1476815.02 c)Switching Equipment 633290.99 d)AirconditioninS Equipment 371732.61 e)Power Plant 818156.40 f)Automanual Boards S)Multiplexa and Radio 90885.Q1 h)Earth stations 158051.81 i)Computer Terminals 41815.00 j)External line plant klOther equipment 2500000 24900P)00 S3983.00 12. Motor vehicle and 900000 800000 84 P01.90 motor ajiles 13. Computer Terminals - 600000 508286.69 and software. 14. Power Equipment and Air condition 500000 800.oo0 1,104033.57 Equipment. 15. Consultancy services and Training: -Technical Assistance 1900000 2600,000 2p90.166.68 -Fellowships - 750000 844,644.62
16. Refund of project Advance - 580000-4, 581178.00 17. Unallocated (contingency) 190000 303000 . 61240.82 TOTAL 23000000 23000000 , 23944270.45 ====e======s======z2===s====z=2=z$=S-s====- =S= - 23 -
S . 0 ,PIJ:.I T o 5.1 Performance f nsultantJ: Three Consultancy missions have been undertaken in Tanzania following 2nd Telecommunication. Project IDA Credit 1810 - TA. namely:
- Project Preparation Facility (PPp) - - Implementation of the plan for corrective action of Institutional Development of Tanzania Posts and Telecommunications Corporation this included the following scope of services:- - Strategic planning - Planning, Monitoring and Control of Outside Plant Works in the regions - Operational and maintenance practice - FinancialManagement planning - Data processing capabilities
- Telecommunication tariff review - Telecommunications fixed assets revaluation. The consultacy work was perfomed by M/S M.G. Associates of U.K. The overall performance was La4w.Aa .4- 'erio 5.2 Suonliers Performance: Generally the performance of most of the suppliers has been fair and reasonable. There has been no serious defaults to the extent of the determination of the contract. S.3 PERFORMANCEOQ MAIN PROJECT COMSPNENTS 4) Tanaa and poihi Erchanes The NEAX 61 Digital Telephone exchanges of 6000 lines each have been performing well *and the contractor cooperated to solve a few problems which have arisen. ii4*11twara and Sinaida Exchantes: The FETEX 150 Digital Telephone exchanges of 1000 lines i*ch have been installed and cut-over of the exchanges is expected shortly. - 24 -
Most of the teleprinters purchased under the 2nd IDA Credit were OKITEX 500 manufactured by OKI of Japan and supplied by Mitsubishi Corporation of Japan. The machines are performing well. 1
iv) Te le0."Os The telephones purchased under IDA - 2 were automatic and magneto. Also secretarial sets. The telephones arec performing well.
v) FtDhongs: The payphones purchased were supplied by M/S ON of Denmark. These are still performing well. vi) Veshicles. The Suzuki vehicles are generally performing well. Spares are readly available for replacement the parts which go faulty. The I8uzu Trooper and Mitsubish maintenance vans are generally performing well and spares are also readly available. The Lancer staff cars have deteriorated very fast. There is an indication that these vehicles are incapable of sustaining the rough conditions of the roads in the country. Spares are also difficult to get. vii) Comptuer: The computer software packages purchased and installed are functionins well.
5.4 TBAZNIN.: A total of 25 courses were sponsored ditectly by IDA under the Second Telecommun% tions Project2S staff attended these courses at a totaMbf USS489,917. A part from the courses which wereodirectly sponsored by IDA, a total of .4AL...... courses were sponsored under the contracts with equipment manufacturers/suppliers jid consultancy services.
I~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~' -25-
S people attended a course in NEAX 61 exchange by NEC / MitsubishilOpeople attended a course in OKITEX500 teleprinter by mttsubish, 8 people attended a course in FETEX 500 exchangesby marubeni corporationin all,a total of 48 members of TPTC staff were trained under the second IDA - credit. 5.5 OPERATING PERFORMANCE
5.5. 1 TELEPHONE GRJnwF: -
i) - Lines: - Year Capacity Connected lines 1987 77347 58919 1988 81214 66058 1989 82298 73011 1990 104658 73369 1991 109054 81307 1992
(Also see annex ...... for additional data on operationalperformance
ii) Existing Facilities: Telephones: End 198? End 1992 CaPAcity of Telephone Exchanges 77,347 109054 Automatic lines 60,900 67509 Manual lines 16,447 13798 No.of Telephone Exchange Automatic 31 34 Manual 136 163 Number of subscriber connections(DEL) 58,919 81307 Number of telephones
(total) 122,600 150678 -' Number of waitig list 74,460-4. 134336 Number of Radio-Call Service subscriber 258 P Number of Radio Call Control Centres 3 ; 3 -26 -
Telegram and telex Number of telegramoffices 100 Number of telex offices 3 Number of telex connections 1425 1816 Number of telex waiters 2089 3926 Financial: Average Revenue per subscriber: - Telephone 24500 - Telex 224000 Rate of return on revaluedsets 21% OperatingRatio (%) 32% Debt service.coverage(tiiiis)- 12- Accounts receivabledays 4S 6.0 PROJECT ACEIEVENENTS
6.1 Project Preparation Facility - PPF: MG Associates Ltd was a consultant under PPF. The consultancydiagnosed weaknesses in TPTC's fuctionsand proposedremedial measures. This technicalassistance was well perfomed. and is the basis of the out going restructuringactivities. 6.2 Consultantservicesand Training: 6.2.1 ConsultantServices: MO Associateswas contractedto provided assistancefor engineering and finance activities, namely projects planning, monitoring and control, operations- and maintenancefor financemanagement and planning,materials management and data processing capabilities.Tbe assignmentalso coveredtransfer of managementknowledge to TPTC. This assistance was Snot well performed to TPTC's satisfaction. 6.2.2 Fellowships: Overseas training programmewas well implementedas 25 TPTC staff benefittedfrom the fellowshipprogramme. -27 -
6.36. 3~~~~~~~~ PKOCCRBNEVT A number of tenderswere floated,evaluated and awarded. All equipmentordered had been delivered and installed. Procurementdetail for each category are contained in Appendix 2.
6.4 TELECOMMS UNICATIONSOPERATIONS: 6.4.1 - Performance indicators - Time to answer (secs) The world Bank target for automanual boards and manual boards of spares to seconds has been achieved,due to fitting of spares to operatorpositions. - Call Completion Rate:..... Call CompletionRate (X) for long distance:.....
6.4.2 Operator to Operator Direct Circuits: All regions with exception of lindi have been provided with direct rinS down circuitsto Dar es salaam and other destinationswith high traffic streams. Direct Dialing circuits between the regions and Dar es salaam have also been provided to ease the problem of congestion.
6.4.3 Monltoringof operators: Fenographmachine have been bought and fitted to major telephonegroup centres to monitor operator performance (malpractice)These are Mwanza, Arusha, Dar es salaam, Tanga, Dodoma, Mbeya, Zanzibarand Tabora. 1992 PSRFORNANCI TARGETS REALISATION
X N jtMA PANT CAPCITY - ;1 LI J_.- PaiuCA i I .1 i)ar es Salaam 5801ti 68320 65288 12.5 96 1. ;; i:'thers 88010 9406Q 91927 4.5 98 j I .3 'Ivota.l 146026 162370 157215 7.7 97 ^.. ~. .__ ._ _ .,_ ._. _ ...... S:CARC(EAVA I LABI - I :: . | ew. . 11ITY OF l Hh~~~~~~~~~~~~~~~~~~~~MTEltIALS ,; . xchange Capacity |i)ar ' es1 Salaami * 37190 47800 42430 14.1 89 .; . I . 8 ')t.lers 67468 80600 72340 7.2 90 -1 . Ei'fotal 1104668 28400 114770 9. 689 3* C.rnnelted DRIss (Year l(nd) |2.:~J.. i r es Salaam 32486 36930 34036 4. tl 92 II;.. .2, others 43883 50070 47270 7.7 94 (: :2 .3 'ITotal . 76369 87000 81306 6.b 94 I. -. .-- , _.______.. -~ l .3 lxExchange Fill (X) L,ACKO'F EXCII. i IrXVANa.7;IIN DUE TO :.:I. . tIs ar es; S;alaam 87 77 80 8. .: 96 (NAVA1ILABILITY j 3. ; :UL ther. 65 62 65 0.5 W5 OF MATERIALS l; 33.3 Tot.al 73 68 71 2.9 96 i.. ..~~~~~__ . ______.. a ...... ___...... _._ .__... 199* PERFOR9AKCS TARGETS RIALISATIOt No. SET TARGETS JAN. 1992 TARGET ACTUAL X WLR9 Z. TARLET fR E M A R K S 1992 END OF DEC IPERF. REALISAT. _ _ _ .______.__ [1Z . 4 Working DELs ^.4.1 Dar es Salaam 32221 26950 33676 4.5 1251 ... 4.2 Others 43591 37052 47021 7.9 127 SLIGHT FALL IN 2 . 4 . i Total 75812 64002 90697 6.4 126 PERFORMIANCE BLUT --- 1. .. ._.STILL VERY 11UCH _.:.5 ' Lines Working ABOVE TARGET ,.Z).i Dar es Salaam 99.2 73 98.9 136 2.5.. . Uthers 99.3 74 99.5 134 '0 Total 99.3 74 99. 135 2.6 Average Number of Fau1ts/DEL/ ear .. 6 2.7 2.5 2.7 2.6 91.5 2. . Dareses' ailaam 3 2 3.9 29.9 51.8 MANY VEHICLES 2.7 Z of Faults Cleared OFF THE ROAD DUE (National) TO OLD AOE RESULTING IN .7i .; Within 24 hours 41 60 33 55 LESS FAULTS ., _ Wl Within 48 hours 54 70 52 74 CLEARED Within 30 Days 86 85 89 104 1992 PERFORMANCE TARGETS REALISATION I' No. bET TARGETS JAN. 1992 TARGET ACTUAL X WORK % TARGET B E M A R K S 1992 END OF DEC PERF. REALISAT. j ".bt No. of STD Circuits *4.. o S Cir(Nauonal) 1347 _._ .__.._..___..6430 1542 14.5 24 .9 1n lernational Kxobange Capacily 2000 2000 2000 0 100 V:tial V Tosne X within. 8IJ ;Second:s |ii .Tn % uiNainal 74 80 74 ( ) 92. T 1 U. . IJav es Salaam 75 85 80. 6.7 94.1 i l)l~~~~~~~~~~~~~~~~~~~~IJETo BSAD 1----._._.. -- NETWORK I .opletion Rate Intltrnational Outg6ing 59 65 64 8.5 !8. 5 :. 11 .:;;I nternational Incoming 21 25 21 0 84 3 I * 11- 1 H4atiunal (ST1) 25 40 25 I5 1-:.11.4 Jlational (Maanual) 68 75 77 13.2 1I2.7 I :i. 1I . 1 National4) (Local) 71 75 71 U) 94.7 1;-.J.6 i.ocal - DSM 60 65 61 1.7 93.8 I .!. . .. _ . ______. ______1992 PERFORMANCE TARGETS REALISATION ; ..ET TARGET' JAN. 1992 TARGET ACTUAL % WORK % TARGET R E N A R K 8 1992 END OF DEC PERF. REALISAT. I .i2. Av. Op. Answer Time i within 10 Second$ !;:.12 .1 1t-rnational B0 85 87 8.8 1U2.4 :; . 1}.2 Iniand , 54 55 56 3.7 101.8 i * ' Js:.l)4Ing.@Aau 2350 4350 4350 85.1 100 3. 3 .1 :;ubscriber Lines 1809 3760 1816 0.4 48.3 DUE TO HIGHER I ::i.2Z2 kxd ange Fill X 77 86 42 -45.8 48.3 TARIFF MANY TLXs CEASED THOUGHA FEW MORE CONNECTED 1992 PERFORMANCE TARGETS REALISATION 1h. SEI' TARGETS JAN. i992 TARGET ACTUAL X Wlkh V; TARlGET h E M A R K S 1992 END OF DEC OR1F. 1RIEALl:AT. _..4 ;Working DELs . :;* Il)ar es salaam 32221 26950 33676 *I.!. 1:;!b | * '4 -;- ; (0liers 43591 37052 47021 '/. j 1!7 3L1UGHl'FALL IN ;; 4.:. j TT l.a1 15~~~~~5812 64002D 80697 6.{ X 1;X6 VEFlDF';){ANC8 BUT I... - Working -- -___ _ _._ . _ -~. _-' 'TILL VERY MUCH to " LsinesX Working . AB3UVE...... TARGET 1r,.t es Salaatm 9. 73 98.u -1).;"" 13.4 :8.:. | tU t.-hrs 99.3 74 99.5 0.14 I14 Tv t.a1 (J9.3 74 99.3 - .'; 135 Averaae Number of jau I tas/DsI./Year *i Net ionaj I .. 2.7 - fj Y1. ;. . *-.K. . es Salaam 3 2 3.9 29. 5 1 . # MANY VEHIICLES .:' If Faults Cleared (lJii; TIIE OAD DUE (Ns l.ioni) . TO OLLD AGE RE.;U[LTI Nl IN WI 0.1in 24 hours 41 60 33 -19. '. Sb FAULTS WI t.,hj1n 48 hours 54 70 52 - 4. 1 74 CLEAHRED) ! ; ; Witin 30 Days 86 85 89 104 i_.,it___ . _ .. . _ .______- . ._ _ _ ...... -33 - 6.5 performance of radio and transmission Systems: 6.5.1 The performance indicators in the Radio and Transmission plants is based on the systems availability and quality. The system availability is calculated from the total number of time the system has been downaguinst the total available time. The system quality is determined by telling measurements of the noise performance. The following transmission system exist: i) HF Systems ii) VHF single channel systems iii) UHF Systems iv) Microwave systems v) Earth Satellite Stations vi) Overhead openwire line systems 6.5.2 S HP system was ordered and installed- The system has three control stations in Dat es Salaam, Arusha and ?wanza. The Dar es Salaam control station is functioning well, while the Mwanza and Arusha control stations have a problem of which is being sorted out with the contractor, M/S Codan of Australia. 6.5.3 Single Channel VHF Systems: The systems are performing satisfactorily after receiving spares from M/S Motorola, Israel. 6.5.4 UHF Systems: The UHF Radio systems have been operating with a good system reliability and quality. There has been occasional degredation of system availability caused by power failures and equipment failures caused by lightning strikes especially in Lake and Southern Highlands Zones. 6.S.S Microwave Systems: These systems have been operating with a good system reliability and qualitv. 6.S.6 E^sHieEae_f The two stations. Std k-and Std B have been operating with a good system reliability and quality despite power shades Dar es Salaam $6using the standby engines to operate fully. -34 - 6.5.7 Overhead open wire line systems: -The open wire line systems have been operating satisfactorily. Major overhauls have made to most of the trunk routes. 6.5.8 Exchange: - International Exchange The 2000 trunk digital telephone exchange commissionedin 1991 has been operating well. The exchange has enabled subscriber to have internationalaccess after the introductionof GX- 5000 exchange and NEAX 61 exchanges. 6.5.9 Other Exchanges: Most of the automaticdigital, crossbar and step by step exchanges have been operating satisfactorily after rehabilitation.Also, manual exchanges are operating satisfactorilyafter rehabilitation.Using IDA funds, Mtwara, Singida, Tanga, and Moshi exchanges have been installed.Zanzibar exchanre has been extended by 1000 lines. 6.5.10 External line plant: The external line plant has been rehabilitatedand new pairs ( ...... ) havebeen provided. .6.5.11 Power plant: .86 diesel engine generators for various stations have been rehabilitated.Also rectifiersfor-various stations plant at Mbeya, Zanzibar and Mwanza have been rehabilitated. . New generator sets have been installed at Morogoro, Tabora, Nkoani,Wete, Tanga,Moshi, Kigoma, Kijitonyama, Bukoba and Dar es salaam G.OP, Solar power Generators have been installedat 10 stations. 6.5.12 Subscrib terdinals: i) Telephane and secretarialSets: 26847 telephoneconnections have beenmade for the period,;987- 92. 1408 secretarialsets have been provide. 90 payphones were installed and are functibning. - 35 - ii) Telex: S8S telex installationshave been achieved for the -. period 1987/92. 6.5.13 Spares for telecommunicationequipment, cables and cable accessories Some of the cables and accessories were used for rehabilitation and expansion of the local telecommunication network and installation of new exchange. Due to availabilityof materials and spares purchased under 2nd IDA and other Donor funds there has been significant improvement in the performance of the telecommunicationsnetwork. From 1987 - 1992, telephone exchange connectionshave grown at an average-of about 4475 per year.Totalworking lines (DELS)bav6 ntureased from 59013 in 1987 to 81,307 in 1992. Telex connections have also increasedfrom 1425 in 1987 to...... in 1992.Other performanceindicators have shown progress durins the project period. 7.0 OTHER ACHIEVEMENTS: Other benefitsfrom the secondTelecommunications project are the additional revenue to TPTC and the non - quantifiedeconomic benefits to the country as a whole. Such benefits are reductionin fuel costs, improvementin efficiencyin transportetc. The economicbenefits by fat exceeds the direct benefits to users and TPTC. - 36 - farJlj 1. RelatedBank Loans and/or Credits Loan/Credit Title Purpose Year Status Approved 1. Loan 483-EAj/ To help finance 1967 Completedin Early 1974 local and long distance facilities 2. Loan 675-EA1/ To fiuther extend 1970 Completedin June 1975 telecommunications services 3. Loan 914-EA1/ To further extend 1973 Tanzanian portion completed in telecommunications in 19812/ serces 4. Credit 1173-TA Extensionof Services 1981 Completedin June 1987 and institutional development [1 Prior to 1977 the tel ons services in East Africa Commmity (Tanzania, Keya and Uganda)were managedby the East Africa Pots and Telcommuncations Corporation (EAPTC). These Loans were extended to EAPTC. 2/Due to problems in the East African Communhyleading to its breakup the works to be undertakenon te Third Projec were generallydelayed. - 37 - 2. ProjectTimetable Item Dateplamed Date Revised ActualDate Preparation November1986 November1986 December1986 Appraisal March 1987 March1987 March 1987 Negotiations May 1987 May 1987 April 1987 BoardApproval June 1987 June 1987 June 1987 CreditEffectiveness October1987 October1987 August1987 ProjectCompletion June 1991 June 1992 December1992 - 38 - 3. CreditDisbursenents AccumulatedDisbursements (in USSmillions) IDA FY and Actual Appraisal Actual as a % Six month period US$ Estimates3/ of Appraisal Estimates 1988 July - Dec 1987 2.37 0.2 100 Jan-Jun 1988 2.95 0.7 100 1989 July - Dec 1988 5.56 2.1 100 Jan -Jun 1989 9.18 3.5 100 1990 July - Dec 1989 13.20 5.3 100 Jan-Jun 1990 15.00 7.4 100 1991 July - Dec 1990 19.25 9.4 100 Jan-Jun 1991 20.11 11.5 100 1922 July- Dec 1991 20.81 14.0 100 Jan - Jun 1992 22.08 15.5 100 1993 July - Dec 1992 22.66 17.0 100 Jan - Jun 1993 23.00 18.5 100 1994 July - Dec 1993 23.00 20.0 100 Jan - Jun 1994 23.00 22.0 100 1995 July - Dec 1994 23.00 22.5 100 Jan - Jun 1995 23.00 23.0 100 3/Even thoughthe Appraisalestimates were not officially revised it was expectedthat the project would be completedby June 1991 by which time the credit would be completely disbursed. In this respect, conrary to what is shown in the above table, disbrh ave been consistentlydelayed from the third year of the project (1989). - 39 - 4. Pro2ect Impleunentation CompletionDates CATEGORYDESCRIPTION CompletionDates Appraisal Actual 1. Cables & Accessories June 1990 December1992 2. Tanga and Moshi Digital June 1990 August 1991 exchanges. Additional exchangetrunks, local call timing and ANI 3. Teleprinter New Terminals March 1990 December 1992 and Spares 4. Telephonesand Coins Boxes: June 1990 June 1992 5. Switchboards June 1990 July 1991 6. Rehabilitationof Mtwara June 1990 July 1990 & Singida Crossbar Exchanges (New Exchange) 7. Microwaveand UHF Equipment June 1990 June 1990 8. InternationalTelex December 1989 July 1991 13. Computer Terninals and June 1989 Incomplete Software 14. Power Equipmentand Air March 1990 Incomplete ConditioningEquipment iS. ConsultancyServices & Training: - TechnicalAssistance December 1990 December 1990 - Fellowships December1990 December 1992 - 40 - 5. frlset Cost (USSmillion) IDA FinancedComponents ITEMS AppraisalEstimate PCR Estimates I. Cables& Accessories 4.000.000 2.897,000 2. Tanga and MoshiDigital 5.000.000 5.000,000 exchanges. Additional exchage tnmks. ocal call timingand ANI 3. TeleprinterNew Terminals 1.500.000 815,000 and Spares 4. Telephonesand Coins Boxes: - OrdinaryTelephone Sets 960,000 600,000 - Secetrial TelephoneSets 750.000 500.000 - Coin Boxes 150,000 170.000 5. Switchboards 1.500.000 1,400.000 6. Rehabilitadonof Mtwara 350.000 300.000 & SingidaCrossbar Exchanges (New Exchange) 7. Microwaveand UHF Equipment 1,000.000 10.000 8. RuralLine Carrier Equipment 500.000 5.000 9. Multiplex.VHF and HF 1.000.000 1.903.000 includingRadio Call Equipment 10. Rehabilitationof 300,000 370,000 InternationalTelex Exchange 11. Sparesfor Telecoms 2.500,000 2,900,000 Equipmt including telephones.switchboards. swiching equipment, air-conditioning,power plant automanuatboards. workshops.vehicles, computerterminals. 12. Motor Vehicles 900.000 900.000 13. ComputerTerminals and 600,000 Software 14. Power Equipmentand Air 500.000 800,000 ConditioningEquipment 15. ConsultancyServices & Training: - TechnicalAssiste 1,900,000 2.500,000 - Fellowships - 750,00= 16. Refumnof Prject - 580,000 Prepation Advance 17. Unallocated(contingency) 190,000 TOTAL 23M 23000.000 - 41 - SA. C A Catetories Oriatnl Allocation RevisedAllocation 1. Cables& Accessories 4,000.000 2.897.000 2. Tangoand MoshiDigital 5.000.000 5,000.000 exchanges. Additional exchangetrunks, local call timingand ANI 3. TeleprinterNew Terminals 1,500,000 815.000 and Spares 4. Telqhotnesand Coins Boxes: - OrdinazyTelephone Sets 960,000 600,000 - Secrerial TelephoneSets 750.000 500,000 - Coin Boxes 150,000 170,000 5. Switchboards 1.500,000 1,400,000 6. Rehabilitationof Mtwara 350.000 30,.000 & SingidaCrossbar Exchanges (New Exchange) 7. Microwaveand UHF Equipment 1,000,000 10,000 8. Rural Line Carre Equipmet 500000 5.000 9. Multiplex. VHF and HF 1,000,000 1,800,000 includingRadio Call Equipmt 10. Rehabiliaton of 300.000 270,000 interatioa Telex ExdB- ii. Spares for Telecms 2,500,000 2,900.000 Equi including telphones, swithrs. switchingequips, aircondktlong power plan automanualboards. workshop, vehicles, computertemnals. 12. Motor Vehicles 900.000 800.000 13. ComputerTerminals and 600,000 Software 14. Power Equipmentand Air 500.000 800.000 Coniioing Equipment IS. ConsultancySevices & Training: - TechnicalAssace 1,900,000 2,500,000 - Fellowships 750,000 1i. Refimdof Prjcct 580,000 Prepation Advance 17. Unallocated(contingency) 190.000 303,000 TOTAL 2000.000 23. 0 - 42 - 6. 1. Cash flows for the rate of return are based on actual operating results for the operation of TPTC for the 1987 to 1990. 2. Incrementalcosts and benefit flows in constant terms are as below: (Tsh millions) 1987 1988 1989 1990-2001 Incrmental Revenues 1,127 1,721 2,293 3,959 IncrementalCosts 635 1,333 1,424 1,994 Capital Costs 623 588 718 1,716 Net Benefits (130) (200) 151 248 in constant terms (130) (129) 67 79 nernal Rate of Retum 2S% 3. The Project has an estimated fincial rate of return of about 25% based on actala results during 1987-90and a revenue stream to 2001 based on 1990's results. The Rate of Return is in line with expectationsindicated during appraisal. - 43 - 7. St of Covenants DevelopmentCredit Agreement(DCAjor Project Agreement(PA) Section Condition Remarks DCA4.01 Submissionof TariffPolicy Complied Agmementof TariffPolicy by June '88 NotComplied DCA6.02 Signingof the SubsidiaryAgreement Complied PA 2.07 Submissionof StaffIncentive Scheme by Jan '88 and implementit by June '88 Compliedwith delays PA 2.08 Planof Actionto reduceReceivables by January'88 Complied PA 2.08 SubmitDebtors aging list every6 months NotComplied PA 3.03 Insurancefor IDAfinanced goods Complied PA 4.01 Timelyfurnishing of Financialstatements and auditedaccounts Compliedfor 1989 PA 4.02 Reflectrevalued assets and liabilitiesin financialstatements from FY 1987 Complied PA 4.03 Provideat least50% of the fundingfor investment requirementsfrom internal sources Not Complied PA 4.03 Submitbefore October 1, anmnalrequirements for the year and the next fiscalyear and whetherthe requirementwould be met Complied PA 4.04 Rateof Return(12%) Complied PA 4.04 Reviewadequacy of Tariffsand make recommendationsto the Govermnent Not Complied PA 4.05 SubmitResource Transfer Policy by June '88 and startimplementation by end '88 Not Complied PA ScheduleI Procurementand Consultants' servicesnrles Complied PA ScheduleII Appointmentof ProjectCoordinator Complied ReviewManpower plan Compliedin part PA ScheduleI Institutionalrestrucuin, establishment of cost centers Compliedin part PA ScheduleII Establishmentof ComputerizedFixed Assets Register Not fullycomplied - 44 - TANZANIA SECOND TELECOMMUNICATIONSPROJECT PROJECT COMPLETIONREPORT 8. MISSIONS STAGEOF PROJECTMONTH/ NO. OF DAYSIN SPECIALIZATION PERFORMANCETYPES OF CYCLE YEAR PERSONSFIELD REPRESENTED RATINGSTATUS PROBLEMS Ibrough Appisal 1/86 1 2 Engineering 11/86 2 10 Finance+Engineering Appraisalthrough BoardApproval 3187 3 10 Finance+Eng.+Postal BoardApproval dhroughEffectiveness - Supervision 12/87 2 8 Finance+Engineering 4/88 1 14 Finane 1 9/88 2 16 Finance+Engineering 1 5/89 1 7 Finance 1 12/89 2 7 Finan+ce.Engineering 1 a 7/90 1 6 Finance 3 No tariff inceases and finacial resncring *)3191 2 15 Finame *)11l91 3 5 Finazwe+Engizwetrng ) 6/92 2 12 Financ+EngWneug *)10192 2 10 Finamce+Enginering NOTE: j)oint minam for do secondW ropdoject (supevisiont) and d iUItd ponwiect(pznc pr4ppawu amd apais). -45- ANNEXI Page l of 2 TAMZAIA POSTS& TELE ICATIOfS CW...... Itm Stat_mts ...... (TM atllt on) TIUI9 WmSA 19 166 196 116 119 1990 199 ...... Tetuwo 1.145 10348 2.42 3.536 4.99 6.09 9.,3 tebs 1T0 276 s0 1.019 1.9, 2,4W 4.0 To1q.ea 7 a n53 77 7 a ,o4 ...... Gross Teeosm _rs:qI tevws 1,345 1, 3.034 ..6 6., 10.7 13,43 Ot9e GM S 301 101 2 w 2 la , ...... Tel, i _ aprainflo l-_ m Oas 3.134 4,M Tm %0107 13,0" ...... *...... 11stloes 25 356 476 MS 6 1.434 I.m i NfaldtoniflS@ 110 801 1.32 2,.5 2.819 3,9 4.1 Others 148 236 301 573 1.09 1.4 1'W Oa5?ole1ton 39 1s5 34 2 306 373 or ,...... Total qeottq buwas 63 1.6 2,453 3,1 5is 73 8,8 Ado to Pav fair I. (47?) NI TELEu 01MATIG WOOi 723 33 "5 1,155 1,97 3.,83 4,51 NetPaost Opeative tmm (Los 26 (34) 7 10 (37) (5) (416) LaS: Interst On Loam 14 56 309 2 3,615 1,456 1,"4 Not t-Operatif "its (Lou) (I11) (93) (4,25) (249) 33 Foreign l ew Gin S) (48) (,32.) (3,M0) (2,450) (5,20) (1.924) (1O152) ...... NIt I (LOP) 66 (2,146) (4,1) (5,909) (9.M7 ) m I.501 staff 2iontt a Yu 251 0 405 6 50 soSo 67 . 0. 0...... 0...... Nat Profit (LS") 435 (2,16) (4, U) (6.272) (10.2) (3) 1 - - ma- -mi -46- AziexI Page 2 of 2 TANANIAPOTSr TELICGMICATIOS CORP. TAN? lelaw.e shsts (Tab Will) AM$ 195 196 1Sn? 195 19 1f90 191 ...... Gre 11s Asset 93n 5,30 6.056 6.40 69,0 ?.W7 11.28 Acamalsted 0eprat1un "4 21,S59 2.9W 3.23 3.a1 4.*, 5.02X Total 11usd Assets 491 3 o. 3 3X,2 6.244 Wwk in Prrep 770 602 1,040 1,202 1,4 2.2S 0 Iwnstmns 236 567 619 m 616 93 936 Current Aseuts: -Cah am Ink 0 its 192 315 362 530 549 54 2466 Accowa It c.seMlose 1,031 2.159" 14? 2.055 3.4, 6,054 6,514 Las PM. for Doatfut Aects. (MY7) -foreign Aministration 5.US5 9.40? 1.97 2.469 -*tbw ctas1le1 154 174 714 446 101 1.3a *Ihoefte" 191 227 4u 51? 916 1.094 1.343 5 ~~~~~~.. .* ...... -...... *****... *...... Total Current Asset 1,.414 2,554, S,22 9.661 14.79 9.?" 14.10 MALAUlT 2,911 7,314 1O.SS2 14.3 20,361 16,756 21,352 mn mu _a mm - _ a m