Document of The World Bank
FOR OFFICIAL USE ONLY
Public Disclosure Authorized Report No: 66222-GA
PROJECT APPRAISAL DOCUMENT
ON A
PROPOSED LOAN
IN THE AMOUNT OF US$58 MILLION
Public Disclosure Authorized TO THE
GABONESE REPUBLIC
FOR THE
GABON PROJECT
UNDER
THE FOURTH PHASE OF THE CENTRAL AFRICAN Public Disclosure Authorized BACKBONE PROGRAM (APL4)
March 8, 2012
ICT Sector Unit Africa Region
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 Public Disclosure Authorized Bank authorization.
CURRENCY EQUIVALENTS
(Exchange Rate Effective January 2012)
Currency Unit = Central African CFA (XAF) XAF 500 = US$1 US$ 0.002 = XAF 1
FISCAL YEAR January 1 – December 31
ABBREVIATIONS AND ACRONYMS
$ United States dollar, all dollars are US dollars unless otherwise indicated ACE Africa Coast to Europe AfDB African Development Bank AF Additional Financing AFD Agence Française de Développement French Development Agency ANGT Agence Nationale des Grands Travaux National Agency for Major Works ANINF Agence Nationale des Infrastructures Numériques et des Fréquences National Agency for Digital Infrastructure and Frequencies APL Adaptable Program Loan ARAP Abbreviated Resettlement Action Plan ARCEP Agence de Régulation des Communications Electroniques et des Postes Posts and Electronic Communications Regulatory Agency AU African Union BOT Build Operate and Transfer BP Bank Procedures CAB Central African Backbone CAB2 STP Central African Backbone Program APL 2 – São Tomé and Príncipe Project CAB3 CG Central African Backbone Program APL 3 – Congo Project CAB4 GA Central African Backbone Program APL 4 – Gabon Project CAGR Compound Annual Growth Rate CAPEX Capital Expenditure CAR Central African Republic CAS Country Assistance Strategy CCSPFOG Commission chargée du suivi des projets de fibre optique au Gabon Fiber Optic Commission
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CEMAC Communauté Economique et Monétaire des Etats de l’Afrique Centrale Economic and Monetary Community of Central Africa C&MA Construction and Maintenance Agreement CN-TIPPEE National Commission – Labor Intensive Small-Scale Public Infrastructure Works Commission Nationale des Travaux d'Intérêt Public pour la Promotion de l'Entreprenariat et de l'Emploi the entity established under Ministerial Decision No. 000007/PRIMPPD, dated January 4, 2006, which will be responsible for the procurement and financial management aspects of CAB4 GA (Project Implementation Unit) CPS Country Partnership Strategy CQS Consultant Qualification Selection DA Designated Account DFIs Development Financial Institutions DRC Democratic Republic of Congo EIA Environmental Impact Assessment EMP Environmental Management Plan ESIA Environmental and Social Impact Assessment ESMF Environmental and Social Management Framework ESMP Environmental and Social Management Plan FBS Fixed Budget Selection FM Financial Management FMM Financial Management Manual FMR Financial Management Report FMS Financial Management Specialist FY Financial Year GDP Gross Domestic Product GoG Government of Gabon GNI Gross National Income IBRD International Bank for Reconstruction and Development ICB International Competitive Bidding ICPC International Cable Protection Committee ICT Information and Communication Technology ICS Individual Consultant Selection IDA International Development Association IFC International Finance Corporation IFR Interim Financial Report IPDP Indigenous People Development Plan IPP Indigenous Peoples Plan IPPF Indigenous Peoples Planning Framework IRR Internal Rate of Return IRU Indefeasible Right of Use ISO International Organization for Standards ISP Internet Service Provider ISR Implementation Status Report ITU International Telecommunication Union IXP Internet Exchange Point
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Kbps Kilobit per second KPI Key Performance Indicators KVA Kilo Volt Amps Mbps Megabit per second MARPOL International Convention for the Prevention of Pollution from Ships MCPEN Ministère de la Communication, de la Poste et de l’Economie Numérique Ministry of Communication, Post and Digital Economy MECIT Ministère de l’Economie, du Commerce, de l’Industrie et du Tourisme Minister of Economy, Trade, Industry and Tourism MHUEDD Ministère de l’Habitat, de l’Urbanisme, de l’Écologie et du Développement Durable Minister of Housing, Urbanism, Ecology and Sustainable Development MIGA Multilateral Investment Guarantee Agency MMPH Ministère des Mines, du Pétrole et des Hydrocarbures Minister of Mining, Petrol and Oil M&E Monitoring and Evaluation NCB National Competitive Bidding NPV Net Present Value OP Operational Manual OPEX Operating Expenses ORAF Operational Risk Assessment Framework PAD Project Appraisal Document PAP Project Affected People PDIL Projet de Développement des Infrastructures Locales Local Infrastructure Development Project PDO Project Development Objective PFES Point Focal Environnement et Social Environmental and social focal point PFM Public Financial Management PIM Project Implementation Manual PIU Project Implementation Unit PIH Provision pour Investissement en Hydrocarbures Oil Investment fund PPA Project Preparation Advance PPP Public-Private Partnership PS Secrétaire Permanent Permanent Secretary PSGE Plan Stratégique Gabon Emergent Emerging Gabon Strategic Plan QCBS Quality and Cost Based Selection RAP Resettlement Action Plan RFS Ready For Service RPF Resettlement Policy Framework RTA Reimbursable Technical Service Agreement SETRAG Gabonese railway company Société d'Exploitation du Transgabonais
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SME Small and Medium Enterprises SNEEG Stratégie Nationale d’Égalité et d’Équité de Genre National strategy for Gender Equity SPV Special Purpose Vehicle STP São Tomé and Príncipe UNCLOS United Nations Convention on the Law of the Sea UNDP United Nations Development Program UNFPA United Nations Population Fund USD United States Dollar WACS West African Cable System WARCIP West Africa Regional Communications Infrastructure Program WBG World Bank Group XAF Franc CFA CFA franc
Vice President: Obiageli Katryn Ezekwesili Country Director for CAB4 Gabon: Gregor Binkert Regional Integration Director: Yusupha B. Crookes Sector Director: Jose Luis Irigoyen Acting Sector Manager Randeep Sudan Task Team Leader for the Program: Jérôme Bezzina Task Team Leader for CAB4 Gabon: Michel Rogy
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GABONESE REPUBLIC
GABON PROJECT
FOURTH PHASE OF THE CENTRAL AFRICAN BACKBONE PROGRAM (APL4)
Table of Contents I. Strategic Context ...... 1 A. Country Context ...... 1 B. Sectoral and Institutional Context ...... 2 C. Higher Level Objectives to which the Project Contributes ...... 7 II. Project Development Objectives...... 10 A. PDO ...... 10 B. Beneficiaries ...... 10 C. PDO Level Results Indicators ...... 10 III. Project Description...... 12 A. Project components ...... 12 B. Project Financing...... 13 C. Lessons Learned and Reflected in the Project Design ...... 16 IV. Key Risks ...... 17 V. Implementation ...... 19 A. Institutional and Implementation Arrangements ...... 20 B. Results Monitoring and Evaluation ...... 22 C. Sustainability ...... 22 VI. Appraisal Summary ...... 23 A. Economic and Financial Analysis ...... 23 B. Technical ...... 24 C. Financial Management ...... 29 D. Procurement ...... 31 E. Social and Environment ...... 31 F. Grant conditions and covenants ...... 33 Annex 1: Results Framework and Monitoring...... 38 Annex 2: Detailed Project Description ...... 42 Annex 3: Implementation Arrangements ...... 48 Annex 4 Operational Risk Assessment Framework (ORAF) ...... 80
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Annex 5: Implementation Support Plan ...... 86 Annex 6: Team Composition ...... 90 Annex 7: Economic and Financial Analysis ...... 91 Annex 8: CAB Program Background and Vision ...... 106 Annex 9: Map section ...... 109
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PAD DATA SHEET
AFRICA GABONESE REPUBLIC
GABON PROJECT CENTRAL AFRICAN BACKBONE – APL4 PROJECT APPRAISAL DOCUMENT
AFRICA
ICT Sector Unit
Date: March 5, 2012 Sectors: Telecommunications (60%); General Country Director: Gregor Binkert information and communications sector (20%); Regional Integration Director: Yusupha General industry and trade sector (20%) B.Crookes Themes: Infrastructure services for private Sector Director: Jose Luis Irigoyen sector development (40%); Regional Sector Manager: Philippe Dongier integration (50%); Regulation and competition Team Leader: Michel Rogy policy (10%) Project ID: P122776 Environment Assessment Category: B – Partial Lending Instrument: Adaptable Program Loan Assessment
Project Financing Data: Proposed terms: [X] Loan [ ] Credit [ ] Grant [ ] Guarantee [ ] Other: Loan term: The Fixed Spread Loan (IBRD Flexible) has a disbursement-linked repayment with 6 years of grace period and 18 years of maturity. Source Total Amount (US$M) Total Project Cost: 109 Parallel financing: Borrower 51 Total Bank Financing: IBRD 58 Borrower: Gabonese Republic
Responsible Agency: Fiber Optic Commission (Commission chargée du suivi des projets de fibre optique au Gabon) B.P. 2280 Libreville - Gabon Contact Person: Radwan CHARAFEDDINE Telephone No.: + 241 06 31 80 80 Email: [email protected]
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Estimated Disbursements (Bank FY/US$ m) FY 2012 2013 2014 2015 2016 2017 Annual 10 10 26 9 2 1 Cumulative 10 20 46 55 57 58
Project Implementation Period: Start: March 29, 2012 End: June 30, 2016 Expected effectiveness date: April 29, 2012 Expected closing date: December 31, 2016
Does the project depart from the CAS in content or other significant respects? ○ Yes No If yes, please explain: Does the project require any exceptions from Bank policies? ○ Yes No Have these been approved/endorsed (as appropriate by Bank management? ○ Yes ○ No Is approval for any policy exception sought from the Board? ○ Yes No If yes, please explain: Does the project meet the Regional criteria for readiness for implementation? Yes ○ No
If no, please explain:
Project Development Objective: The development objectives of the proposed project are consistent with the PDO for the CAB Program: to contribute to increase geographical reach and usage of regional broadband network services and reduce their prices in the territory of the Gabonese Republic.
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Project Description: The main project components will consist of (1) Enabling environment – Technical Assistance (i) to promote and implement Open Access Regime & PPP for international and for national connectivity, (ii) for the review, improvement and development of the telecoms and information laws, (iii) to strengthen capacity of key stakeholders and provide policy and regulatory capacity building, (iv) to support the increase of broadband access including rural access as well as further liberalization in Gabon including the regulatory regime for ISPs and reaping the broadband benefits of digital switchover, (v) to support the establishment of an Internet Exchange Point (IXP) and to implement a management policy for Internet domain names and (vi) to assist in defining an e-government strategy and action plan leveraging new connectivity; (2) Connectivity – on the basis of an open access and PPP structure so as to leverage private sector investment (i) financing of a share of GoG’s $15 million contribution (consortium fee) for participating in the ACE submarine cable, (ii) financing of a terrestrial fiber optic link Libreville - Franceville - Bakumba – Lekoko / Border with Congo to interconnect with the Congolese link Dolisie – Mbinda (already financed under CAB3 CG) and additional links within the first phase of roll out of a national backbone and (iii) the setup of an Internet Exchange Point (IXP) and of an interconnection point to access the national backbone capacity; (3) Project management (including environmental and social safeguards). Safeguard policies triggered?
Environmental Assessment (OP/BP 4.01) Yes ○ No Natural Habitats (OP/BP 4.04) Yes ○ No Forests (OP/BP 4.36) ○ Yes No Pest Management (OP 4.09) ○ Yes No Physical Cultural Resources (OP/BP 4.11) Yes ○ No Indigenous Peoples (OP/BP 4.10) Yes ○ No Involuntary Resettlement (OP/BP 4.12) Yes ○ No Safety of Dams (OP/BP 4.37) ○ Yes No Projects on International Waters (OP/BP 7.50) ○ Yes No Projects in Disputed Areas (OP/BP 7.60) ○ Yes No
Conditions and Legal Covenants: Loan Description of Condition/Covenant Date Due Agreement Reference Section 5.01 The Fiber Optic Commission has been established and has been made Effectiveness (a) operational, in form and substance satisfactory to the Bank. Section 5.01 The Gabonese Republic shall have adopted the Project Implementation Effectiveness (b) Manual in form and substance satisfactory to the Bank.
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Legal The Gabonese Republic shall maintain throughout Project covenant implementation the Fiber Optic Commission under terms of reference Schedule 2, satisfactory to the Bank vested with responsibility for overall technical Section I.A.1 and operative guidance, direction and coordination during project (a) implementation as well as fiduciary and governance oversight. Legal The Gabonese Republic shall ensure that the CN-TIPPEE, entity covenant established under Decree No. 000007/PRIMPPD, dated January 4, Schedule 2, 2006, and which is the CAB4 GA Project Implementation Unit, will Section I.A.2 keep its key management, technical and financial positions staffed for (a) the entire duration of the Project to carry out its responsibilities under the Project and for this purpose deposit through the MECIT into the CN-TIPPEE account in a manner satisfactory to the Bank: (A) not later than June 30, 2012, an amount of not less than XAF 235,694,379; (B) not later than May 31, 2013, an amount of not less than XAF 302, 392,773; (C) not later than May 31, 2014, an amount of not less than XAF 302,392,773; and (D) not later than May 31, 2015, an amount of not less than XAF 168,353,128. Legal To facilitate the carrying out of component 2.1 of the Project, the covenant Gabonese Republic shall take all action required: (i) to ensure the Schedule 2, proceeds of the Loan allocated from time to time to finance the Section I.B Consortium Fee are transferred to the ACE Subsidiary in an efficient and timely manner; and (ii) to have in place a suitable legal framework to ensure the Loan is used for the intended purposes. To that end, the Gabonese Republic shall conclude the ACE Agreement with the ACE Subsidiary whereby the Gabonese Republic shall transfer the said proceeds of the Loan to the ACE Subsidiary, on a non-reimbursable basis, in consideration of the undertaking by the ACE Subsidiary that such amount shall be transferred by the ACE Subsidiary to the ACE Consortium for the purposes of payment of the membership and participation of the ACE Subsidiary on behalf of the Gabonese Republic in the ACE Consortium. Legal The Gabonese Republic shall, not later than December 31, 2012, cause covenant the ACE Subsidiary to execute a wholesale agreement (―ACE Schedule 2, Wholesale Contract‖), in form satisfactory to the Bank and in Section I.C accordance with the PPP Guidelines, with a suitable operator and which shall include subrogation rights for the Gabonese Republic against the operator party to the ACE Wholesale Contract upon the failure of the operator to perform any of its obligations under the ACE Wholesale Contract. Legal To facilitate the carrying out of components 2.2 and 2.3 of the Project, covenant the Gabonese Republic shall take all action required: (i) to ensure the Schedule 2, proceeds of the Loan allocated from time to time to finance said Section I.D components of the Project are transferred to the SPV in an efficient and timely manner; and (ii) to have in place a suitable legal framework to ensure the Loan is used for the intended purposes. To that end, the Gabonese Republic shall conclude a contractual arrangement (―Backbone Agreement‖) with the SPV whereby the Gabonese Republic shall transfer the said proceeds of the Loan to the SPV, on a non-reimbursable basis, for the purposes of carrying out components 2.2 and 2.3 of the Project. xi
Legal The Gabonese Republic shall cause the ACE Subsidiary to take all covenant action necessary on its behalf: Schedule 2, (a) to carry out the ARAP with due diligence and efficiency and at Section I.F.1 all times provide the funds necessary there for; (ii) to adequately monitor and evaluate the carrying out of the activities provided in the ARAP in the carrying out of the infrastructure partially financed through the Consortium Fee; and (iii) to maintain the Gabonese Republic and the Bank suitably informed of the progress in the implementation of the ARAP; and (b) to carry out the ACE ESIA and the ACE ESMP with due diligence and efficiency; (ii) to ensure that the relevant mitigation and monitoring provisions of the ACE ESIA and the ACE ESMP are appropriately included in the works, goods and services contracts to be concluded for the infrastructure partially financed through the Consortium Fee and that they are implemented in the carrying out of said infrastructure; and (iii) to maintain the Gabonese Republic and the Bank suitably informed of the progress in the implementation of the ACE ESIA and the ACE ESMP. Legal The Gabonese Republic shall cause the SPV to take all action necessary covenant on its behalf: Schedule 2, (a) to comply with the ESMF and to carry out the ESIA and the Section I.F.2 ESMP, as the case may be, with due diligence and efficiency; (ii) to ensure that the relevant mitigation and monitoring provisions of the ESIA and the ESMP, as the case may be, are appropriately included in the works, goods and services contracts to be concluded under components 2.2 and 2.3 of the Project and that they are implemented in the carrying out of said components 2.2 and 2.3; and (iii) to maintain the Gabonese Republic and the Bank suitably informed of the progress in the implementation of the ESIA and the ESMP, as the case may be; and (b) to comply with the RPF and the IPPF and to carry out the RAP and the IPP, as the case may be, with due diligence and efficiency and at all times provide the funds necessary therefore; (ii) to adequately monitor and evaluate the carrying out of the activities provided in the RAP and in the IPP, as the case may be, in the carrying out of components 2.2 and 2.3 of the Project; and (iii) to maintain the Gabonese Republic and the Bank suitably informed of the progress in the implementation of the RAP and the IPP, as the case may be.
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Legal The Gabonese Republic shall: covenant Schedule 2, (a) maintain policies and procedures adequate to enable it to Ongoing Section II. B. monitor and evaluate on an ongoing basis, in accordance with the Monitoring and Evaluation Indicators, the carrying out of the Project and the achievement of the objectives thereof;
(b) prepare, under terms of reference satisfactory to the Bank, and August 31, furnish to the Bank, on or about August 31, 2014, a mid-term 2014 review report integrating the results of the monitoring and evaluation activities and setting out the measures recommended to ensure the efficient carrying out of the Project and achievement of the objectives thereof during the period following such date; and
(c) review with the Bank, on or about October 31, 2014, or such October 31, later date as the Bank shall request, the report prepared for the 2014 mid-term review and, thereafter, take all measures required to ensure the efficient completion of the Project and the achievement of the objectives thereof, based on the conclusions and recommendations of the said report and the Bank’s views on the matter. Disbursement No withdrawal shall be made from the Loan Account (other than to condition - repay the Preparation Advance) until the Bank has received payment in Schedule 2, full of the Front-end Fee Section IV. B.(a) Disbursement No withdrawal shall be made for payments made prior to the date of condition - this Agreement, except that withdrawals up to an aggregate amount not Schedule 2, to exceed $4,400,000 may be made for payments made prior to this date Section IV. but on or after August 30, 2011, for Eligible Expenditures under B.(b) Component 2.1
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Disbursement No withdrawal under Component 2.1 (international connectivity) of the condition - project to finance a share of the GoG’s $15 million contribution Schedule 2, (consortium fee) for participating in the ACE submarine cable, until Section IV. and unless: B.(c) (a) (A) the ACE Subsidiary has been duly created pursuant to PPP Guidelines, registered and made operational in the Borrower’s territory, including through the appointment of its managers and the adoption of the shareholders’ agreement and by-laws, all in form and substance satisfactory to the Bank; and (B) there shall be furnished to the Bank an opinion satisfactory to the Bank of counsel acceptable to the Bank showing that the ACE Subsidiary has been duly created, registered and made operational in the Borrower’s territory and is legally authorized to operate in accordance with the Borrower’s laws; (b) (A) the ACE Agreement, in form and substance satisfactory to the Bank, has been entered into between the Borrower and the ACE Subsidiary; and (B) there shall be furnished to the Bank an opinion satisfactory to the Bank of counsel acceptable to the Bank showing that the ACE Agreement has been duly authorized or ratified on behalf of the Borrower and the ACE Subsidiary, and executed and delivered on their behalf, and is legally binding upon the Borrower the ACE Subsidiary in accordance with its terms; and (c) upon its concurrence, the ACE Consortium has transferred to the ACE Subsidiary all the rights and obligations of the Borrower in the Construction and Maintenance Agreement and has fully substituted the Borrower with the ACE Subsidiary as the member of the ACE Consortium.
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Disbursement No withdrawal under Components 2.2 and 2.3 of the project to condition - finance the National Backbone, until and unless: Schedule 2, (a) (A) the SPV has been duly created pursuant to PPP Guidelines, Section IV. registered and made operational in the Borrower’s territory, B.(d) including through the appointment of its managers and the adoption of the shareholders’ agreement and by-laws, all in form and substance satisfactory to the Bank; and (B) there shall be furnished to the Bank an opinion satisfactory to the Bank of counsel acceptable to the Bank showing that the SPV has been duly created, registered and made operational in the Borrower’s territory and is legally authorized to operate in accordance with the Borrower’s laws; (b) (A) the Backbone Agreement, in form and substance satisfactory to the Bank, have been entered into between the Borrower and the SPV; and (B) there shall be furnished to the Bank an opinion satisfactory to the Bank of counsel acceptable to the Bank showing that the Backbone Agreement has been duly authorized or ratified on behalf of the Borrower and the SPV, and executed and delivered on its behalf, and is legally binding upon the Borrower and the SPV in accordance with its terms; (c) the SPV Wholesale Agreement, in form satisfactory to the Bank and pursuant to the PPP Guidelines, has been entered into between the SPV and an operator acceptable to the Bank and which shall include subrogation rights for the Borrower against the operator party to the SPV Wholesale Contract upon the failure of the operator to perform any of its obligations under the SPV Wholesale Contract; and (d) the Borrower: (i) shall have adopted the ESIA, ESMP, RAP and/or the IPP, as the case may be, and the same documents have been consulted upon and disclosed as approved by the Bank; and (ii) shall have verified, through its own staff, outside experts, or existing environmental/social institutions, that the activities under components 2.2 and 2.3 of the Project meet the environmental and social requirements of appropriate national and local authorities and that they are consistent with the Bank’s applicable environmental and social assessment and safeguard policies and comply with the environmental and social review procedures set forth in the ESMF, RPF and IPPF, as the case may be, and the Project Implementation Manual.
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GABONESE REPUBLIC
GABON PROJECT FOURTH PHASE OF THE CENTRAL AFRICAN BACKBONE PROGRAM (APL4)
I. Strategic Context
A. Country Context
1. Gabon is a resource-rich country, well endowed with arable land, forest, and mineral resources. It has extraordinary biodiversity as well as rich deposits of magnesium and iron ore. It is the fifth largest oil producer in Sub-Saharan Africa and the second exporter of manganese. With a GNI per capita estimated at US$7760 in 2010, it is one of Africa’s few middle-income countries. 80 percent of its population lives in urban areas predominantly in the capital, Libreville, in Port-Gentil, the economic capital and in Franceville, the mining region. The Gabonese population is young, with 50 percent under 19 years of age.
2. Gabon’s human development outcomes compare favorably with Sub-Saharan Africa but fall short of countries with similar levels of per capita income. Gabon is ranked 93 out of 169 countries in the 2010 UNDP Human Development Index. Gabon is unlikely to meet a number of Millennium Development Goals (MDGs) by 2015. The third national MDG progress report, published in 2010, concluded that MDG targets relating to poverty reduction, infant and maternal mortality and the prevalence of HIV-AIDS are unlikely to be achieved. Gabon's constitution recognizes gender equality and the Government has ratified the Convention on the Elimination of All Forms of Discrimination against Women (CEDAW). However, according to the United Nations Population Fund several discrepancies in the implementation of the convention are observed. Several discriminatory provisions exist in the civil and penal codes that pertain to the minimum age of marriage, divorce, custody of children, equal inheritance rights of widows and recognition of polygamy. Gabon also lacks specific legislation to eliminate violence against women, particularly domestic violence. In 2009, the Government launched its national strategy for Gender Equity (SNEEG), following extensive consultations and research that was supported by UNDP and UNFPA.
3. Gabon’s macroeconomic performance has improved over recent years thanks to higher oil prices, a lower than expected decline in oil production and the expansionary fiscal policy implemented by the new Government. Real GDP growth increased at a yearly average rate of 3 percent from 2005 to 2011. The non-oil GDP growth rate grew particularly fast from 2.3 percent in 2004 to 6.1 percent in 2007, reflecting the increased investment in rubber production, forestry and mining sectors as well as the expansion in agri-business and telecommunications sectors. In 2008-2009, economic activity was severely impacted by the global economic crisis and GDP growth was negative; however, in 2010 the economy recovered rapidly and GDP growth reached 5.7 percent. According to the latest Debt Sustainable Analysis carried by the IMF in 2010, Gabon’s external debt remains below the critical range of 40 percent of GDP. The debt-to-GDP ratio was radically reduced in 2010 to 15.7 percent (from 82 percent in 2002) following the authorities’ decision to direct additional revenues from the rise in petroleum prices to reduce external debt levels. Gabon plays a leading economic role in Central 1
Africa. Gabon’s membership in CEMAC (the Central African Economic and Monetary Union), has strengthened economic management by creating a regional framework for macroeconomic surveillance and an institutional forum for policy dialogue.
4. While medium-term economic prospects are broadly favorable, efforts to diversify the economy have not yet succeeded in reducing Gabon’s dependence on oil. Although the agricultural sector has grown significantly in recent years, a large proportion of the country’s food is imported. Manufacturing is limited, reflecting the small economy, high labor costs and weak entrepreneurial tradition. The poorly diversified economy, the skills mismatch and weakness of policies that promote job creation are important factors contributing to Gabon’s high unemployment rate. Strong economic growth recorded over the last decade has not been able to absorb the estimated 10,000-15,000 people that enter the labor market each year and unemployment is rising. The National Office of Employment (ONE) estimates that the unemployment rate of young people (less than 30 years) is 30 percent and the overall unemployment rate 16 percent.
5. Poor governance and weak institutional capacity continue to present considerable challenges for Gabon’s development. Gabon has embarked upon a series of major reforms and initiatives including adopting a new organic budget law, purging ghost workers in the civil service, public procurement reform is underway, with new laws drafted and in the process of being finalized, and a recently instituted audit of the oil companies by an independent auditor is underway to ensure compliance and to assess how beneficial their contributions are to the country. Additionally, the Gabonese Government has recently paid the World Bank Group for Advice and Technical Assistance (a Reimbursable Technical Service Agreement, RTA) related to public financial management, and debt management, areas that encounter significant governance issues. Nevertheless, despite the fact that the Government has been active in promoting transparency in the public sector, particularly in the oil sector, indices relating to perception of corruption remain high. While improved from 2010, (110 out of 178 countries) the country is still ranked 100th out of 182 in the Transparency International 2011 Global Corruption Report. Furthermore the Mo Ibrahim Governance Index shows that in 2011, while ranking highest in the Central Africa region, Gabon ranked 27th out of the 53 African countries included in the classification, with no change in its 2010 ranking in relation to its corruption and accountability indicators.
B. Sectoral and Institutional Context
6. Gabon has shown so far a strong commitment to opening the telecommunications market to competition and the telecommunications market at the local level is dynamic and competitive. The telecom sector in Gabon has been liberalized and the incumbent operator Gabon Telecom was privatized in February 2007 (with Maroc Telecom taking a 51 percent majority stake), and the company’s monopoly on the provision of international long-distance, domestic long-distance and local fixed telephony is ending in February 2012. As in the sub- region, the fixed network shows a very low level of development, with merely 30,000 fixed subscribers as of December 2010 but the cellular sector is dynamic and competitive, including four mobile operators: Airtel Gabon, Libertis, Moov Gabon and USAN Gabon (Azur). As of
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December 2010, the mobile penetration rate is 145%1. On-net calls are priced at 120 FCFA/min VAT included (24 US cent/min).
7. By contrast, access to international connectivity is at a high price, impeding a rapid development of Gabon’s Broadband Internet market, and is beyond the reach of the majority of the population. Since 2002, the country has access to international bandwidth via the Libreville SAT3-WASC submarine cable landing station, but through its monopoly Gabon Telecom is rationing access to the bandwidth on this international fiber optic and keeping bandwidth prices close to satellite prices – the next alternative for service providers. Some attempts at regulatory intervention have been unsuccessful2. As a consequence, the fixed broadband market is underdeveloped with a penetration rate of fixed broadband customers of merely 0.5% as of December 2010, and very high prices even at low speeds3. Prior to the roll out of mobile broadband services using 3G technology, mobile operators have 209,993 subscribers as of December 2010 on EDGE-GPRS (penetration of 13.5%), which indicates a real need for Internet despite existing constraints on international connectivity.
8. In this background, the country has developed a three-year plan called “Digital Gabon” (Gabon Numérique)4. The Long-Term objective of ―Digital Gabon‖ is to connect all 9 provincial capitals, all regional capitals as well as the borders of the country, thereby increasing geographical reach and usage of regional broadband network services and reducing their prices in the Gabonese Republic and paving the way for successful deployment of flagships e- Government applications. The short term connectivity investment objectives are as follows: a) New international capacity available in Libreville via the ACE (Africa Coast to Europe)5 submarine cable (estimated ready for service date: August/September 2012); b) New national capacity via a submarine cable from Libreville to Port Gentil (estimated ready for service date: February 2012); c) New national and regional capacity via terrestrial fiber from Libreville to Franceville and from Franceville to Lekoko to interconnect with the link Dolisie – Mbinda on the other side of the border in Congo (financed under CAB3 CG); d) New national capacity via terrestrial fiber from Lekoni to Koulamoutou via Franceville.
1 The source of all figures unless otherwise specified is ARCEP. At this date there were 2,239,785 mobile subscribers (in 2010 the population is estimated 1,545,255 with annual growth rate of 2% according to the CIA World Factbook). This figure does not provide the ―true‖ penetration as many subscribers own SIM cards with several operators. There is insufficient data on multi-SIM ratio in Gabon; a survey undertaken in 2008 by ARCEP (then ARTEL) on a sample of 1,500 people in Libreville has shown that 25% of them had two SIM cards in a market with 3 mobile operators. This ratio is probably closer to 35% in 2010. 2 Despite the regulator’s attempts in November and in December 2010 to regulate wholesale prices for capacity on SAT - 3 / WASC charged by Gabon Telecom, it is nearly impossible for the private sector to openly access Gabon Telecom international capacity. 3 The majority of customers use 128 Kbits/s accesses at approx. 175 US$ VAT included per month. 4 Under the umbrella of the Presidential ―Emerging Gabon‖ program, President Ali Bongo Ondimba has given a key note speech on the distinctive role of ICT in its Emerging Gabon plan at the ITU Telecom World held in Geneva in October 2011, emphasizing that he will ensure that the Mbits will become an intangible right of the Gabonese people. 5 The ACE submarine cable is expected to connect Europe with 12 countries along the West African coast (Mauritania, Senegal, Gambia, Guinea, Sierra Leone, Liberia, Côte d'Ivoire, Ghana, Nigeria, Equatorial Guinea, Gabon, São Tomé). 3
Figure 1: Short term connectivity objectives of “Digital Gabon”6
Source : ANINF
9. Additional submarine international connectivity will need to be complemented by regional and national terrestrial links. New international connectivity via ACE will provide the potential for massively improved access to broadband communications in Gabon, but the full benefits cannot be achieved without additional investments in regional and national backbone infrastructure to connect provincial capitals and the borders with other countries within the CEMAC. Connecting Libreville, Port Gentil and Franceville will address most national current pending demand for better and cheaper international connectivity. Connecting with Congo will enable for Congo improved access to international connectivity in terms of prices, available bandwidth and redundancy as well as better cross-border connection and mutual redundancy between Gabon and Congo. Building terrestrial fiber from Lekoni to Koulamoutou via Franceville will enable to connect two main secondary cities (Lekoni, Koulamoutou) and start the building of a south loop that will back up the Libreville-Franceville link.
10. The CAB4 GA project will address the key issues of limited and non competitive access to existing submarine cable leading to high Broadband prices and constrained demand in Gabon, through (i) focused investments in new submarine capacity via ACE combined with the roll out of a crucial terrestrial national fiber backbone link to Franceville and the border with Congo (to interconnect with CAB3 CG) in accordance with PPP and Open Access principles as well as (ii) technical assistance to strengthen the legal, regulatory and institutional framework and promote a pro-competitive environment to foster investments from
6 See Figure 5 for detailed sources of funds for short term connectivity objectives. 4 operators and Internet Service Providers. Previous experience with fiber cables in East and South Africa shows that supporting the development of infrastructure whilst improving the policies and regulatory framework has a secondary impact on the market through a rapid increase in demand when price of bandwidth decrease. Access to new submarine capacity on an open access basis via ACE and to the newly rolled-out terrestrial national fiber backbone is expected to directly feed into lower retail prices and higher bandwidth available in Gabon. Significant increase in penetration shall be set in motion both for fixed broadband, with already active private ISPs (such as Internet Gabon and Solsi) well positioned to boost Internet usage in the business market, and for mobile broadband, with 3G licenses7 to be awarded end of 2011/Begin 2012 to address the residential market. Detailed demand study confirms robust pending demand8.
11. GoG has expressed strong interest in joining the Central African Backbone Program (CAB) to finance some of the short term objectives of “Digital Gabon” and is committed to the CAB program key founding principles. The CAB Program is a regional instrument aimed at catalyzing private sector investment to improve connectivity in Central Africa9, and is designed to provide broadband connectivity in Central Africa to all capital cities, main secondary cities and establish redundancy. The CAB program is structured as both a horizontal and vertical Adaptable Program Loan (APL)10. By the end of the CAB Program, all capitals and major cities in Central Africa should be linked to the global Information and Communications network through competitively priced high-bandwidth connectivity11. So far CAB projects have been approved in Central African Republic (CAR), Cameroon and Chad (APL1), São Tomé and Príncipe (STP) (APL2), and Republic of Congo (APL3). The GoG expressed interest in joining the CAB Program in November 2010 for financing a share of its ACE consortium fee, and committed to the CAB program key founding principles of leveraging private sector investment, promoting open access and developing wholesale markets12. A Project Preparation Advance (PPA) agreement of $3million was signed in May 9, 2011. In October 20, 2011 GoG has requested that its participation in the program be extended to also cover the crucial terrestrial links to connect the ACE landing station to key regional and national points restating its clear commitment to PPP and Open Access principles also in these additional links. Hence, Gabon is fully eligible to participate in the CAB Program and the Gabon project will constitute the fourth horizontal APL under CAB (CAB4 GA).
12. Telecommunications falls under the mandate of the Ministry of Communication, Post and Digital Economy (MCPEN), and National Agency for Digital Infrastructure and Frequencies (ANINF) is leading the connectivity agenda of “Digital Gabon”. The line
7 ARCEP has announced early October 2011 that a first 3G mobile license will be awarded to Airtel Gabon (formerly Zain). Other operators in Gabon are also keen to deploy third-generation services ahead of the January-February 2012 African Nations football tournament co-hosted by Gabon. 8 See Annex 7 : Economic and Financial Analysis 9 Eligible countries are Cameroon, CAR, Chad, DRC, Congo, Gabon, Niger, Sudan, Equatorial Guinea, STP. 10 Following APLs have already been discussed and approved by the Board: APL1-A (vertical) on September 24, 2009, APL1-B (vertical) on June 30, 2011, APL2 (horizontal) on January 12, 2011 and APL3 (horizontal) on May 25, 2011. 11 Similar programs are being developed for other regions: the Regional Communications Infrastructure Program (RCIP) in Eastern and Southern Africa (which is now in Phase 4), and the West Africa Regional Communications Infrastructure Program (which is now in Phase 2). 12 In this context ―Open access‖ means permitting access to capacity by new entrants on transparent and non-discriminatory terms (price and non-price) and ―PPPs‖ means the contractual, governance and financing arrangements between a government agency and one or more private sector entities participating in the Special Purpose Vehicle Company to be created for the project. 5
Ministry of Communication, Post and Digital Economy (MCPEN) acts as policy maker in the sector, with overall responsibility for telecoms licensing as well as regulating the broadcasting sector. Acknowledging fiber optic electronic communications terrestrial and submarine cable as a ―national asset‖ within basic telecommunications infrastructure, the Ministerial Decision No.0212/PR of 27 January 2011 has established an auxiliary state body attached to the Presidency called National Agency for Digital Infrastructure and Frequencies (ANINF)13 to inter alia (i) build shared national infrastructure, (ii) acquire existing infrastructure and integrate them in the shared national infrastructure and (iii) set up the carrier's carriers in charge of the shared national infrastructure. There is also a telecoms regulator, Posts and Electronic Communications Regulatory Agency (ARCEP), which was created under Law No. 005/2001 with the general aims of promoting healthy and fair competition, and ensuring public access to communications services. It has responsibility for governing tariffs, enforcing legislative decisions, issuing tenders and licenses and formulating policy to develop and modernize the industry. GoG decided to use some of the resources of the Oil Investment Fund PIH (Provision pour Investissement en Hydrocarbures), financed by the TOTAL Group, to fund a share of the ACE consortium fee as well as new national capacity via a submarine cable from Libreville to Port Gentil14.
13. Given the relatively small population in Gabon (1.5 million inhabitants), GoG is willing to absorb the investment risk associated with significant investments in broadband connectivity to create effective competition for international connectivity, reduce the digital gap and link the country to its borders whilst entrusting an independent experienced private operator with the operation and maintenance of these investments that could ultimately evolve towards shared ownership. GoG’s objective is to provide as soon as possible a new growth opportunity to its dynamic and competitive ICT sector in line with its focus on growth and diversification15. The main rationale for the Bank’s involvement is to provide financing in the early stages of the Gabonese connectivity project, so as to safeguard open access and PPP principles in this infrastructure and support GoG’s commitment to facility based- competition for international connectivity and accelerating broadband development: i.e. to safeguard that the new submarine cable capacity as well as the national backbone that will distribute it throughout the country and to its borders will be provided according to open access principles and will leverage interest expressed so far by the private sector (operators and Internet Service Providers) to participate in the project. This CAB4 GA project will in addition contribute to achieving the higher level objectives listed below.
13 http://aninf.ga/aninf/test/spip.php?article1. 14 The projects to be financed under the PIH are jointly decided by GoG and the TOTAL Group (with GoG owning 25% of the Gabonese subsidiary of the TOTAL Group). According to the GoG’s new economic vision called -―Emerging Gabon‖ (Gabon Emergent), the PIH shall finance major infrastructure projects. Other such projects are e.g. the sanitation program and the upgrade of the airport in Port Gentil. 15 In 2008, the World Bank conducted an econometric analysis across 120 countries to investigate the impact of higher penetration of broadband and other ICTs on economic growth (the average growth rate of per capita GDP) between 1980 and 2006. For developing countries, every 10 percentage point increase in the penetration of broadband services was associated with an increase in per capita GDP of 1.38 percentage points; Internet and mobile phone penetration were associated with a 1.12 and 0.81 percentage point increase, respectively. Although causality in the relationship between broadband and growth is hard to prove with the data available, analysis suggests high likelihood of causality. See: Annex 7: Economic and Financial Analysis. 6
C. Higher Level Objectives to which the Project Contributes
14. CAB4 GA is fully consistent with GoG’s new economic vision called -“Emerging Gabon” (Gabon Emergent) and the Millennium Development Goals. ―Emerging Gabon‖ aims at modernizing the country and turning it into an emerging economy by 2025 and consists of four pillars including improving the business environment and private sector development (pillar 2) and strengthening infrastructure development and regional planning (pillar 4) by ensuring that basic infrastructure, notably energy, telecommunications and transportation are adequate for all. More specifically, CAB4 GA is fully consistent with the three-year plan ―Digital Gabon‖16 mentioned above that will increase geographical reach and usage of regional broadband network services and reduce their prices in the Gabonese Republic, paving the way for successful deployment of flagships e-Government applications. The project will also contribute towards realization of the Millennium Development Goals (Targets 1 and 2) by supporting economic growth; and Target 18, by making available the benefits of new technologies, especially information and communications17.
15. CAB4 GA is also fully aligned with the World Bank Country Partnership Strategy (CPS) under preparation, the Progress Report on the Regional Integration Assistance Strategy (RIAS) “Partnering for Africa’s Regional Integration” (March 2011) as well as the Africa Region Strategy “Africa’s Future and the World Bank’s Support to It” (March 2011). The ICT strategic theme will be fully reflected within the new Gabon Country Partnership Strategy (CPS) FY12-15 under preparation, with CPS outcome 3 aiming at increased geographical reach and usage of regional broadband network services and reduction of their prices. CAB4 GA largely represents the Bank’s support to Gabon’s regional integration agenda within the CPS. The RIAS update supports ―completing the connection of countries to submarine cables and extending terrestrial fiber optic backbone networks into landlocked countries, on a strong PPP basis – all key components of CAB4. The Bank’s Regional Strategy which rests on two pillars (I) competitiveness and employment and (II) vulnerability and resilience, and a foundation of governance and public sector capacity. ICT has been identified as a major driver for growth in competitiveness and employment (pillar I) and has an immense potential to provide innovative ways to enable citizen-centered governance (pillar II). As per the Bank’s Regional Strategy, the ICT component of the CPS intends to set in motion a process of transformative change by: Leveraging partnerships. As in any intervention in the context of a PIH funding, the TOTAL Group provided expertise and support in project management for the ACE component to the Fiber Optic Commission established by GoG. The French Donor AFD is discussing an operation to finance additional national backbone links - under subsequent phases of roll out of a national backbone - that will ―branch out‖ from the link financed under CAB4 GA, in particular new national capacity via terrestrial fiber to the
16 ―Digital Gabon‖ is structured around 6 strategic objectives as follows: (i) establish an coherent and stable institutional framework; (ii) set up the legal framework for the information society; (iii) build and operate digital infrastructure with the objective to foster infrastructure sharing; (iv) standardize and digitalize major State unified registries; (v) implement e- government; and (vi) support industrial and social sectors in their migration towards information society and knowledge economy. 17 Target 1. Halve, between 1990 and 2015, the proportion of people whose income is less than $1 a day. Target 2. Halve, between 1990 and 2015, the proportion of people who suffer from hunger Target 18. In cooperation with the private sector, make available the benefits of new technologies, especially information and communications technologies. 7
border with Cameroun, and is in agreement with the Bank to promote PPPs and open and competitive access principles18. Knowledge. The CPS foresees analytical work post investment with AAA ICT Policy Notes as well as an ICT Component in a Reimbursable Technical Agreement. Financing connectivity under CAB4 GA and e-Government flagship applications as envisaged in the proposed CPS.
16. Significant regional spillover benefits are expected under CAB4 GA and the wider CAB program.
a) CAB4 GA supports the objective of CEMAC and ECCAS (Economic Community of Central African States) of creating an integrated and competitive economic space in Central Africa. In particular it contributes to the implementation of the third pillar of the 2010-2015 CEMAC Regional Economic Program related to physical interconnectivity of its member countries by enhancing regional connectivity through (i) access to international connectivity with the ACE submarine cable infrastructure, (ii) increased cross-border communications traffic flows, particularly with the Republic of Congo (link Dolisie – Mbinda financed under CAB3 CG which will be dedicated to the transportation of international traffic) and (iii) connection of some main secondary cities (Franceville, Koulamoutou, Lekoni) in Gabon to the regional infrastructure. CAB4 GA will also allow for the further deployment of the national backbone within Gabon and to Gabon’s other borders: the French Donor AFD is discussing with GoG a possible operation branching out from the link financed by the Bank and heading North towards Cameroon via main secondary city Oyem. This enhanced regional connectivity will contribute to unleashing Gabon’s economic potential. b) The policies infrastructure implemented under CAB4 and earlier phases of the CAB program will strongly benefit neighboring Congo, landlocked countries Chad and CAR as well as DRC which is not yet served by a submarine cable. The construction of a backbone connection to Congo will create loops (redundancy) in the regional communications network (see figure 2 below), allowing for alternative access routes to submarine cables for both Gabon and Congo should there be any interruption of their direct access to the ACE cable and increasing the overall integrity of the regional communications network. The connection of Gabon to Congo (APL4), connections from Congo to CAR and DRC (APL3) and further connection from CAR to Chad (APL1) will offer alternative access routes for Chad, CAR and DRC. The combination of redundant physical connections and open access policies should increase competition for transit traffic, thereby lowering prices for all countries in the regional network. c) The regional nature of the Gabon project will also enhance the harmonization of sector regulation that governs the ICT sector across the countries of the region, particularly under the umbrella of the CEMAC. Technical Assistance under Component 1 of the project will assist GoG in the review, improvement and development of (i) the telecoms and (ii) the information laws (cyber-security, privacy, etc) including implementation of the CEMAC regional telecoms directives. This will lead to lower
18 To mitigate the risks involved in infrastructure development and management, the Bank has engaged with Development Partners to foster Open and Competitive Access to communications infrastructure, actively engaging private sector through PPPs, and strengthening policy and regulatory frameworks / institutional capacity to facilitate enabling environment. 8
prices for telephone services and better access to the broadband Internet, which will significantly improve foreign and local private investment environment in the region, decrease the cost of doing business, increase the prospects for job creation and wealth generation and enable countries to reap the benefits of ICT as a platform to deliver services to their citizens. d) By providing a variation of PPP/Open access principles which balances strong government preference to keep infrastructure in public hands (at least in the initial phase), and Bank requirements for open access to boost sector development and strong private sector involvement to ensure effective operation and maintenance of the assets, CAB4 GA can also provide a learning experience and possible consolidation of existing PPP operations in Chad, RCA, STP and Congo under the CAB Program (see Annex 2 for detailed information). It may also provide incentives for other countries which are showing reluctance to implement such a PPP structure to join subsequent APLs of CAB.
Figure 2: Reinforcing the integrity of the regional communications networks
Source : Y. ROUHAUD19
19 Based on the report and financial model developed by Mr. Yves Rouhaud, Technical and Economical consultant advising GoG (see : Projet CAB4-CITGB, Plan d’entreprise du PPP pour l’accès au câble sous-marin ACE, Rapport N° 2 : Phase I du Backbone National, Date : 24 décembre 2011). 9
II. Project Development Objectives
A. PDO
17. The development objectives of the proposed project are the same as the PDO for the Central African Backbone (CAB) Program: to contribute to increase geographical reach and usage of regional broadband network services and reduce their prices in the territory of the Gabonese Republic.
B. Beneficiaries
18. Direct beneficiaries of the project include people who are connected to the communications network in the Gabonese Republic (including telecommunication services and internet users, schools, hospitals, banks, corporations, government and public administrations), to be measured as the total population because the total teledensity is much higher than 100% (see Figure 3 below). Indirect beneficiaries potentially include all of the country’s population, since increased communications capabilities at affordable rates for some of the population may eventually have externalities for all.
C. PDO Level Results Indicators
19. Achievement of the development objectives of CAB4 GA will be assessed through the key monitoring and evaluation indicators summarized in the Figure below. These indicators were retained in all APLs of regional connectivity projects such as CAB or WARCIP because they enable to assess either the level of communications services within targeted countries or the competitiveness of countries with regards to cost of capacity regionally.
20. Market trends observed recently in East and Southern Africa, where new competitive submarine cables have now been in place for over a year and where data has recently been made public, confirm that these key monitoring and evaluation indicators are appropriate to capture major consequences of the combination of component 1 - Enabling environment and of component 2 – Connectivity of the CAB4 GA project, without large risks that exogenous factors will intervene to derail them. When investments in fiber infrastructure to access international connectivity are made in accordance with PPP and open access principles, bandwidth prices fall substantially and consumption/demand increases dramatically in the targeted country; this will adequately address the key issues of ―limited competition‖ and ―high prices‖ in the Gabonese Broadband market identified in the Sectoral and Institutional Context section above.
10
Figure 3: Key monitoring and evaluation indicators for CAB4 GA Project Development Core Outcome Indicators for CAB4 GA Base line By the closing date Objective (PDO) Sector [2010] [YR 5 (2016)] Indicators* Contribute to increase Volume of international traffic geographical reach and usage of regional 4,620 14,712 broadband network . International internet bandwidth services and reduce prices (Bits per second per person) in the territory of the Volume of national traffic using 2 Gabonese Republic proxies: Y . Access to internet services 14 28 (number of subscribers per 100 people) Y . Access to telephone services 14720 12521 (fixed mainlines plus cellular phones per 100 people)
Average price of international
communications using the proxy: . Average monthly price of 10,500 US$ 500 US$ wholesale international E1 capacity link from capital city to Europe (US$/ month/2Mbps)
Project beneficiaries:
22 1,740,208 Y . Number of project direct 1,545,255 (51%) beneficiaries (51%) (percentage of female)
* Results Platform, CT: Telecommunications, Core Sector Indicators and Definitions, May 25, 2010
21. Intermediate Results Indicators will assist in measuring more specifically the results of component 1 - Enabling environment, monitoring sector competitiveness and efficiency of regulation, and of component 2 - Connectivity (see Annex 1), monitoring competitiveness / fair access to infrastructure, increase in potential intra-regional communications23 and level of access to services countrywide24.
20 The percentage of multiple SIM holders is at least 25% (estimate 2008, with 3 operators in the market) and is probably closer to 35% in 2010, which corresponds to a real penetration of 109%: the market for telephone services in Gabon is reaching saturation. 21 Gabonese operators have started to ―clean up‖ their database to exclude non-active customers. Furthermore, it is scheduled that all SIM card owners will be registered by the Gabonese mobile operators before End 2012. Both operations (clean up of non- active customers, identification of SIM card holders) are generally associated with a sharp decrease in the number of mobile cellular subscriptions. 22 Assuming total population of approx. 1,545,255 and an annual growth rate of 2% (source: CIA World Factbook). The real penetration number being higher than 100%, it can be assumed that the whole Gabonese population will benefit from the project. 23 The indicator ―Length of fiber optic network built‖ will be used as a proxy for the volume of cross-border communications traffic flows: this indicator measures the cumulative number of kilometers of fiber-optic network built under the project to reach the borders of the country. Under Capacity Building activities for the Regulatory Authority ARCEP under Component 1, assistance in improving the Market Observatory will address this issue of lacking data on traffic flows on a country by country basis. A specific indicator to capture intra-regional traffic flows is expected to be introduced after mid-term review. 24 Intermediate Results Indicators have been identified taking into account lessons learned from CAB2 STP (where the connectivity component focuses on financing participation in the ACE submarine cable) and from CAB3 CG (where the connectivity component focuses on terrestrial backbone links to the borders of the country). 11
III. Project Description
A. Project components
22. The project will be executed over a five-year period with a total IBRD financing of US$58 million and will include a set of activities grouped under three broad components25.
a) Component 1 - Enabling environment (Estimated Cost US$6.05 million) – This component will include the following activities, that have been identified taking due account of the strategic objectives of ―Digital Gabon‖ (Gabon Numérique): (i) Technical Assistance to promote and implement Open Access Regime & PPP for international and for national connectivity (e.g. rules of incorporation, reference wholesale / interconnect offer) through hiring legal and business experts to advise GoG on negotiations with private sector operators, by financing technical and financial audits of the structures to be setup and through workshops on Promoting PPP investment in the telecommunications sector as well as supporting tender design and audit of national backbone, of IXP and of a Carrier Hotel to access the international and national connectivity; (ii) Technical Assistance for the review, improvement and development of the telecoms and the information laws (cyber-security, privacy, etc) ; (iii) Technical Assistance to strengthen capacity of key stakeholders (i.e. Line Ministry MCPEN, ANINF and the Regulatory Authority ARCEP) and provide policy and regulatory capacity building (e.g. regulatory tools, cost models, M&E capacity) ; (iv) TA to design a strategy and action plan to support the increase of broadband access including rural access as well as further liberalization in Gabon including the regulatory regime for ISPs and reaping the broadband benefits of digital switchover; (v) TA to support the establishment of an Internet Exchange Point (IXP) and to implement a management policy for Internet domain names; and (vi) TA to assist in scaling up the e-government strategy and action plan to leverage new connectivity, encompassing a status of actions undertaken so far in implementing e-government applications, an analysis of progress and delays, and detailed recommendations to update / revise the Gabonese e-government strategy with an action plan showing clear priorities, associated timelines and suggestions for indicators tracking impact on country development and progress towards a knowledge based economy. b) Component 2 – Connectivity (Estimated Cost US$48.50 million) – This component will include the following activities, on the basis of an open access and PPP structure so as to leverage private sector investment: (i) finance a share of GoG’s $15 million contribution (consortium fee) for participating in the ACE submarine cable; (ii) finance a terrestrial fiber optic link Libreville - Franceville - Bakumba – Lekoko / Border with Congo (approx. 800 km) to interconnect with the Congolese link Dolisie – Mbinda (already financed under CAB3) and additional links such as Lekoni - Franceville – Koulamoutou (approx. 340 km) within the first phase of roll out of a national backbone
25 To maximize flexibility, client-responsiveness and the specific national situation of each country (in terms of existing infrastructure or policy environment), the CAB Program includes a customizable set of activities which have been grouped under four broad components: ―enabling environment‖, ―connectivity‖, ―eGovernment and flagship ICT applications‖ and ―project management‖. 12
and (iii) finance the setup of an Internet Exchange Point (IXP) and of a Carrier Hotel26 to access the international and national backbone capacity. c) Component 3 – Project Management (Estimated Cost US$3.45 million) – This activity will (i) finance the social and environmental studies required by the ESMF, the RPF and the IPPF and monitoring and capacity building, (ii) provide support needed to strengthen the capacity of GoG to implement CAB4 GA, including upgrading an existing Project Implementation Unit (PIU) (see below), hiring dedicated staff to work on the project to complement existing project staff (such as technical advisor), covering office equipment and some operating costs, trainings on Bank’s project cycle and procurement and FM guidelines of Bank funded projects and (iii) finance audits, monitoring and evaluation (M&E) including appropriate actions to support efficient data collection, and communication. 23. Annex 2 provides a detailed breakdown of main proposed project components. While the CAB Program includes the possibility of eGovernment related components, the Bank and GoG have decided that this project will focus on connectivity elements, whose effective availability is a key prerequisite for successful roll-out of eGovernment applications, and finance a study on scaling up the e-government strategy and action plan to leverage such new connectivity. Additional financing to this CAB4 GA project may be considered in the future to support rollout of selected eGovernment and flagship ICT applications should GoG confirm its interest to engage in such an ICT transformational agenda with the Bank as envisaged in the proposed CPS.
B. Project Financing
Lending Instrument
24. The instrument is an investment Adaptable Program Loan. CAB4 GA is part of the fourth phase of the Horizontal APL for the Central African Backbone (CAB) Program, discussed and approved by the Board on September 24, 2009, with whose objectives it is fully consistent.
25. Activities under the proposed project meet the regionality criteria and therefore are eligible for a US$58 million IBRD funding under the CAB program27.
Project Financing Table
26. Total project financing requirements split between IBRD and GoG counterpart funding (on a parallel basis) are estimated as follows:
26 A carrier hotel, also called a collocation center is a secure physical site or building where data communications media converge and are interconnected. It is common for numerous telecommunications operators and service providers to share the facilities of a single carrier hotel. Co-location allows multiple customers to locate network, server, and storage gear—and connect them to a variety of telecommunications and network service providers (ensuring neutrality towards any operator or service provider) — with a minimum of cost and complexity. A carrier hotel provides collocation, offering various services to customers ranging from modest-sized racks to dedicated rooms or groups of rooms (offering herewith the appropriate environment to set up data centers). In developed countries, carrier hotel can be of sizeable magnitude (often containing more than 5000 square meters (approximately 54,000 square feet). In our case, the carrier hotel will be much smaller. 27 The CMU confirms the availability in FY12 of $58 million IBRD funding. 13
Figure 4: Total Costs and financing sources for the CAB4 GA project
US$ million IBRD GoG Counterpart TOTAL funding (parallel financing) Component 1 - 6.05 0.3028 6.35 Enabling environment Component 2 – 48.50 48.3629 96.86 Connectivity Component 3 – 3.45 2,2230 5.67 Project management (including environmental and social safeguards) TOTAL 58.00 50.88 108.88
27. Detailed information on costs and financing sources for the short term connectivity objectives of ―Digital Gabon‖ is provided in Figure below.
28 Financing the route survey for the Phase I of the National backbone. 29 See para below. 30 See Annex 3: Implementation Arrangements (US$ 2.02 million parallel financing of PIU operating costs and US$ 0.20 million parallel financing of safeguards implementation). 14
Figure 5: Costs and financing sources for the short term connectivity objectives of “Digital Gabon”
–
) ) )
)
) Total Total
Description of connectivity component GoG
million
million million million
Gabon Gabon
million
Parallel Parallel Parallel
financing financing
objectives
CAB4 CAB4 GA
with IBRD IBRD with
Short term term Short
funds (US$ funds
paid to ACE ACE to paid
Connectivity
through PIH through
Paid by by Paid GoG by Paid be to Amount
(US$
(US$ (US$ (US$
Paid by Total Total by Paid
Total Amount Total Amount
Including Including
Component 2 Component with own funds funds own with (a) New international capacity available in 30.00* 7.64 15.00 7.36 25.00 Libreville via the ACE (b) New national capacity via a submarine 26.00** 26.00 cable from Libreville to Port Gentil (c) New national and regional capacity via 40.86 40.86 and terrestrial fiber (approx. 800 km) from (d) Libreville to Franceville and from Franceville to Lekoko to interconnect with the link Dolisie – Mbinda on the other side of the border in Congo (financed under CAB3) including setup of a Carrier Hotel to access the international and national backbone capacity and setup of an Internet Exchange Point (IXP) and New national capacity via terrestrial fiber (approx. 340 km) from Lekoni to Koulamoutou via Franceville TOTAL 96.86 48.50 41.00 7.36 25.00 Notes: * In addition to the US$25.00 million consortium fee to ACE, there are associated investments to set up the landing station and its operating environment. ** CAB4 GA is not dependent on the implementation or functioning of the new national capacity via a submarine cable from Libreville to Port Gentil, even though the Bank project will benefit from this national link. See: Annex 7: Economic and Financial Analysis. *** CAB4 GA is partly dependant on the functioning of CAB3 CG (link Dolisie – Mbinda) and adequate coordination between technical teams on both sides of the border to provide effective cross border interconnectivity between Gabon and Congo. See: Annex 7: Economic and Financial Analysis.
28. The Project Preparatory Advance (PPA) of US$3 million approved in March 2011 and effective since May 12, 2011 provides financing to cover initial membership fee payments to participate to ACE submarine project as well as other project preparation activities consisting of technical assistance to design and structure from a technical, commercial, financial and regulatory perspective the PPP and Open Access principles, environmental and social studies as well as establishment of the necessary enabling environment for the project implementation through strengthening of the Project Implementation Unit (PIU). As of February 29, 2012, US$2.3 million out of the US$ 3 million have been disbursed (76.6% disbursement rate), including US$2 million consortium fee payment to ACE disbursed in July 2011.
29. Involvement of IFC and MIGA in the operation has been considered. Some private operators or ISPs in Gabon have approached or may approach IFC and/or MIGA for financing
15 and/or for the provision of political risk insurance. Leveraging the new fiber optic infrastructure, the SETRAG may also approach IFC for financing IT equipments enabling the deployment of a technology similar to ERTMS31 to improve monitoring and supervision of trains.
C. Lessons Learned and Reflected in the Project Design
30. The project incorporates lessons learned and builds upon experiences of World Bank-financed Telecom/ICT projects and programs in the region.
31. Government commitment and ownership of the project. The team recognizes the importance of client ownership for an efficient implementation of project activities. GoG has confirmed its strong interest in participating in the CAB program and specifically requested support from the Bank first for the ACE component and then for Phase I of the National backbone32. The project design reflects the intent, interest and priorities of the various beneficiaries and stakeholders, in particular the different institutions in charge of defining and/or implementing sector policies and regulations (MCPEN, ANINF, ARCEP).
32. PPP and Open Access Principles. Emerging international best practice (e.g. Kenya, Tanzania, Rwanda and Uganda) indicates the best management structures for high capacity broadband backbone networks are on an "open" basis and under PPPs. Integrating the private sector brings access to private capital, reduced public sector operational risk, faster project deliveries, project management skills, entrepreneurship and innovation. To keep some flexibility in the CAB Program33, the detailed arrangements in terms of ownership and management will be defined at the country-level given the difference of eligible countries in terms of sector structure, level of development and access, operational and financial situation of the respective telecom State Owned Enterprises (SOE). Lessons learned from similar operations under regional connectivity projects such as CAB, WARCIP or RCIP indicate that PPP and Open Access discussions often run into obstacles when it comes to the practical details of how to implement PPP and Open Access principles: CAB4 GA project is financing extensive legal and regulatory technical assistance under the PPA to discuss and to improve the GoG’s preliminary proposal in close interaction with the private sector; it has been confirmed that implementing this variation for PPP/Open access principles would creating a good balance between strong GoG’s preference to keep ―national‖ assets in public hands and Bank requirements for open access to boost sector development and for strong private sector involvement to ensure effective operation and maintenance of the assets (see Section IV for detailed information).
31 The European Rail Traffic Management System (ERTMS) is an initiative backed by the European Union to enhance cross- border interoperability and signalling procurement by creating a single Europe-wide standard for train control and command systems. 32 On November 23, 2010 (ref. 2635/MECIT/CAB/JPNB) GoG expressed interest in joining the CAB Program for its international connectivity and submitted a Project Preparation Advance (PPA) request of US$ 3 million, clearly committing to PPP and Open Access principles. The PPA agreement has been signed on May 9, 2011 after initial delays. On October 20, 2011 (ref. 2231/MECIT/CAB) GoG expressed interest in joining the CAB Program also for a crucial link of its national backbone from the ACE landing station to the border with Congo via Franceville. 33 Within the context of the CAB Program, a Public Private Partnership (PPP) can be defined as an agreement between government and private entities for the purpose of delivering a project or service (building, operating and commercializing international/regional/national connectivity) by sharing the risks and rewards of the venture. The PPP model helps in bridging gaps in quality, speed, and efficiency in the provision of services by the public sector. The extent of participation from the private sector may range from small scale sharing of risk to near complete ownership and management of the project. 16
33. Technical assistance needed to support implementation of project activities. Experience in several countries has shown that significant capacity is needed for negotiations with the private sector to establish PPP arrangements. Given the low capacity of the institutions involved in project implementation, the project provides financing for extensive technical assistance to allow for detailed design of the PPP agreements and other technical activities under the project, with significant involvement financed by the PPA. The technical assistance will also provide support, where needed, for the formulation of the bidding documentation and technical specifications in relevant project components.
34. Build on available expertise for project implementation arrangements. Given the limited availability and short supply of qualified staff for project management, procurement and financial management, the team is proposing to use an existing Project Implementation Unit (PIU) already familiar with Bank procedures (―CN-TIPPEE‖) for fiduciary management, including procurement, financial management, M&E, communications and environmental support. A technical advisor will be hired and will be responsible for technical inputs, which CN- TIPPEE does not master, and a Fiber Optic Commission (Commission chargée du suivi des projets de fibre optique au Gabon) with participation from MCPEN, MECIT, ANINF and ARCEP will ensure coordination and overall policy and strategic direction, general project oversight and overall operative guidance and coordination during implementation.
IV. Key Risks
A. Risk Ratings Summary Table
Stakeholder Risk Substantial Implementing Agency Risk - Capacity Moderate - Governance Moderate Project Risk - Design Substantial - Social and Environmental Moderate - Program and Donor Moderate - Delivery Monitoring and Sustainability Moderate - Other Moderate Overall Implementation Risk Substantial
B. Overall Risk Rating Explanation
35. The Overall Implementation Risk is rated Substantial due to the risks linked to weak implementation capacity despite mitigation measures implemented during project preparation. The Bank will therefore fund targeted Technical Assistance and capacity building activities throughout project implementation to all key stakeholders (MCPEN, ARCEP, ANINF) as well as to the PIU CN-TIPPEE. The strategy for implementation support (see Annex 5) has also been developed to provide mitigation measures to implementation capacity risk. In addition, telecommunications. In addition, technical Assistance has been planned within the new Reimbursable Technical Service Agreement (RTA).
17
36. The main risks of the proposed operation lay in defining the practical details of how to implement PPP and Open Access principles and have been addressed during project preparation. Guidelines were agreed with Government of Gabon (GoG) during appraisal to ensure smooth implementation of this Open Access and PPP structure (see Section VI. B Appraisal Summary – Technical) and reflected in the Loan Agreement (as disbursement conditions). The table below summarizes Stakeholder as well as Project Design substantial risks identified during project preparation and the associated mitigation measures (see Annex 4 Operational Risk Assessment Framework (ORAF)).
18
Figure 6: Main CAB4 GA project-related preparation risks
Risk Description Proposed Mitigation Measures Stakeholder risks Despite very strong interest to join ACE and national backbone In order to obtain effective financial commitment by the projects, the buoyant private sector remains insufficiently private sector, consultants have been hired in October 2011 informed about GoG’s proposed approach to implementing PPP under the PPA to assist in showing that GoG’s proposed and open access principles to make a financial commitment. approach complies with open access principles and PPP as Furthermore there is a concern that GoG may not effectively well as improving via workshops the interaction with handling over operation and maintenance to the private sector private sector. In particular business cases enabling to despite commitments formalized in its request for financing. compute fully cost oriented prices have been presented to ensure private sector committing to purchasing capacity and secure payback (see Annex 7). Guidelines on how to implement open access and PPP principles have been discussed and agreed with GoG during appraisal and will be included in a supplemental letter to the loan agreement. Disbursement conditions have been set to ensure that the HoldCo and its ACE subsidiary are duly created, registered and made operational and to ensure that the independent private wholesale operator is selected in form and substance satisfactory to the Bank. Finally performance of private wholesale operator against appropriate KPIs in monitored as part of project supervision.
Despite having representatives of both MCPEN and ANINF on A Fiber Optic Commission with high level representatives the ACE project steering committee set up by GoG, there is of MECIT, MCPEN, ANINF and ARCEP will be set up insufficient coordination between MCPEN and newly created and be in charge of overall operative guidance, direction ANINF. The sector regulator ARCEP has not been adequately and coordination during project implementation. The team involved in the ACE project will monitor during preparation and implementation how coordination is performed and advise should the need for improvements or streamlining arise.
The sector regulator ARCEP lacks the expertise to guarantee the TA will provide ARCEP with a study and specific training implementation of open access principles and sound on key tools for broadband regulation. competition in the developing broadband market. Design risks PPP structuring negotiations are in general difficult. PPA will provide extensive support for PPP negotiations, including capacity building for Gabonese shareholders. PPP negotiations will be well advanced before Board because guidelines on how to structure the PPP have been agreed with GoG (see Annex 2) and because the ACE cable will have been laid down and required operations and maintenance arrangements have therefore to be put in place pursuant to the ACE Construction & Maintenance Agreement. This support includes a detailed economic study to confirm robust pending demand and identify any need for appropriate demand stimulating approaches. It also includes discussion appropriate rules to ensure that the private sector is involved in defining the next phases of national backbone roll-out. .
37. Lessons learned from this experience will eventually benefit other Bank funded projects where interconnection between different connectivity projects located on different sides of borders has to be established because it involves the set up of a backbone interconnection between Gabon and Congo. The French Donor AFD is discussing with the GoG a possible operation to finance links of the national backbone branching out towards the northern borders
19 from the link Libreville – Franceville financed by the Bank : CAB4 GA is not dependent on the implementation or functioning of the AFD projects, even though the Bank project will benefit from the AFD projects.
V. Implementation
A. Institutional and Implementation Arrangements
38. The line Ministry MCPEN and the MECIT will set up a Fiber Optic Commission that will lead the implementation of CAB4 GA.
39. The implementation arrangement agreed with GoG involves therefore two organizational levels: a Fiber Optic Commission and a Project Implementation Unit. This arrangement builds upon the existing arrangement established by GoG and TOTAL Group as any PIH funded project; it has been successfully working during the PPA and it is now proposed with some membership adjustments for the whole CAB4 GA project. Beside savings on project management costs, this approach will also enable a faster implementation of CAB4 GA as there will be no need to set up a new PIU.
The Fiber Optic Commission (Commission chargée du suivi des projets de fibre optique au Gabon) will be in charge of providing overall technical and operative guidance, direction and coordination during project implementation will have fiduciary and governance oversight and will bear overall responsibility for the compliance of safeguard activities to national and Bank policies. A draft Ministerial Decision of GoG formally establishing the Fiber Optic Commission is under preparation and will be issued prior to effectiveness of the Loan Agreement. o The Steering Committee will include the Minister of MECIT, the Minister of MCPEN, the Director General of ANINF and the President of ARCEP34. The Steering Committee will meet at least once every quarter (or exceptionally if so required) and will be supported, in all its functions, by a Project Coordination Team. o The Project Coordination Team will comprise of representatives from MECIT, MCPEN, ANINF and ARCEP complemented by representatives of the Director General of Environment (DGE) in charge of social and environmental safeguards within the MHUEDD and from the railway company SETRAG. It will designate one of its members as the CAB4 GA focal point to ensure smooth coordination with the Bank and with the PIU. The CAB4 GA focal point will be the secretary of the Steering Committee. The PIU for CAB4 GA will be an already established and experienced PIU called CN- TIPPEE (Commission Nationale – Travaux d’Intérêt Public pour la Promotion de l’Entreprenariat et de l’Emploi / National Commission – Labor Intensive Small-Scale Public Infrastructure Works), which was set up in 2006 by GoG and which is already familiar with
34 The GoG may consider appropriate to complement the Fiber Optic Commission with representative of other interested institutions or authorities of the Gabonese Republic, such as the National Agency for Major Works ANGT. 20
Bank procedures35. The CN-TIPPEE, directed by a Permanent Secretary, includes four units respectively responsible for technical implementation, administration and finance, monitoring and evaluation as well as information and communication. Reporting to the Fiber Optic Commission for overall guidance, direction and coordination as well as for fiduciary and governance oversight, the CN-TIPPEE will be responsible for project implementation, including all fiduciary tasks such as Procurement, Financial Management, M&E, Communications and Environmental Support.
o The Government of Gabon will ensure that the CN-TIPPEE will keep its key management, technical and financial positions staffed for the entire duration of the project to carry out its responsibilities under the project36. The estimation is a total of 1,008,833,053 XAF (US$2,017,666) for the 5 year period of the CAB4 GA project, which includes the staffing costs for the key positions in the PIU37. The MECIT will be responsible for collecting contributions from relevant institutions and will channel the subventions to the CN TIPPEE according to the following scheduling in order to mitigate risks of untimely availability of counterpart funding:
no later than no later than no later than no later than 30 June 2012 31 May 2013 31 May 2014 31 May 2015 TOTAL XAF XAF XAF XAF XAF 235,694,379 302,392,773 302,392,773 168,353,128 1,008,833,053
o The Permanent Secretary of CN-TIPPEE can be invited as an observer to the Steering Committee. o A representative of the Permanent Secretary of CN-TIPPEE can be included in the Project Coordination Team. While all procurement and fiduciary activities will be centralized and carried out by CN- TIPPEE, the beneficiary institutions MCPEN, ANINF and ARCEP will participate actively by contributing their expertise and knowledge in preparing TORs, evaluations, participation in selection committees, etc. A technical advisor will also be hired that will work closely with the CAB4 GA focal point within the Project Coordination Team as well as with MCPEN and ANINF to handle the additional technical workload generated by CAB4 GA. The technical advisor will be the secretary of the Project Coordination Team. Terms of Reference for the technical advisor have been drafted and the Gabonese Republic through the PIU CN-TIPPEE is in the process
35 According to its establishing Ministerial Decision, CN-TIPPEE’s objective is to make projects which are in the public interest on behalf of all stakeholders (GoG, Regional and local administrations, NGOs or Donors) with a view to implement best practices and sound governance. The size of the CN-TIPPEE can vary to adjust to the project workload, with a minimum of 6 key staff working on multiple projects.CN-TIPPEE was the PIU of the local infrastructure development project (PDIL project – P082812) which closed December 2011. As of January 2012, CN-TIPPEE is in charge of a project financed by GoG (Projet de création de « plateformes de services » (PFS) pour l’insertion à des activités économiques génératrices d’emplois et de revenus dans la filière « BOIS ») as well as of the PPA of the CAB4 GA project. Counterpart funding estimates for CAB4 GA have been made and submitted to GoG in the context of the 2012 budget discussion. To address any possible risks of attrition of staff prior to GoG’s counterpart funding availability under its 2012 budget (which is introduced as a legal covenant), support can be financed under the PPA, in particular for Financial Management and Procurement activities. 36 Similar implementation arrangements as for the infrastructure development project (PDIL project – P082812). 37 Permanent Secretary (coordinator), Financial & Admin. Specialist, Procurement Specialist, M&E and Safeguards Specialist. 21
of hiring the technical advisor.
B. Results Monitoring and Evaluation
40. ARCEP will be responsible for collecting the relevant data throughout the project implementation, because proposed results framework and monitoring indicators (see Annex 1) are usually collected by the Regulatory Authority in the context of its market oversight duties. ARCEP will get its information directly from the operators and ISPs and from ANINF and will conduct surveys as appropriate; in order to ensure a smooth and regular collection of information, ARCEP must identify within each source of data (operators, ISPs, ANINF) a focal point that will serve as ARCEP’s counterpart for M&E so that the person can anticipate data collection and the necessary resources and provide data to ARCEP. Indicators will be collected yearly as a minimum, but ARCEP will endeavor to collect them every 6 months.
41. The PIU CN-TIPPEE will have overall responsibility for reporting to the Fiber Optic Commission. ARCEP will provide the PIU CN-TIPPEE with collected monitoring and evaluation indicators. CN-TIPPEE will put and prepare M&E reports on a biannual basis that will include the updated Results Framework and the Action Table as well as the strategic environmental and social safeguards indicators, listing the corrective actions to be implemented with deadlines and persons responsible clearly identified. The report will be sent to the Bank for information (see Annex 3 for detailed information).
C. Sustainability
42. Sustainability of the proposed project is determined by GoG’s commitment and private sector participation. GoG is highly committed to the project, as it fully aligned with the broader three-year plan called ―Digital Gabon‖ (Gabon Numérique), this plan being itself under the umbrella of the Presidential ―Emerging Gabon‖ program), increasing the sustainability of the project outcome. GoG is also committed to implementing PPP and Open Access principles in a homogeneous way for international, regional and national connectivity establishing low cost connectivity in the country. Setting up a PPP via two SPVs for owning and operating the connectivity shall ensure effective operation and maintenance of the infrastructure. In Africa private companies have demonstrated, almost without exceptions, that they are more capable of operating telecoms networks and deliver services that public-owned entities. Private sector commitment to prepurchased capacity will be established through appropriate binding legal agreements to ensure sustainability.
43. Improved access and lower prices will be sustained. Improved service coverage and quality at more competitive prices for international, regional and national connectivity and for data services will be sustained as it will create opportunities for advanced applications, using more bandwidth and creating more traffic.
44. Local capacity will be strengthened through training and technical assistance. The project will make significant investments in capacity-building efforts through training and technical assistance to build technical expertise, social capital and knowledge. With the focus on building sustainable capacity in key institutions such as MCPEN, ANINF and ARTEL, the benefits of the project are expected to last far beyond program completion. As such, capacity will
22 support the creation of ICT policy and regulatory know-how to guide sector growth and transformational applications in the future.
VI. Appraisal Summary
A. Economic and Financial Analysis
45. Connecting to ACE is most cost-effective long term option for improved access to international connectivity in Gabon. Financial analysis was performed for Gabon38. The analysis considered a variety of radio wave, satellite and fiber options and concluded that for a coastal country like Gabon a submarine fiber link is the best overall option in terms of long-term cost effectiveness and bandwidth availability when international connectivity required is multiples of Gbps as it is the case for broadband services as well as in terms of quality of service.
46. Connecting Gabon to ACE is a project that will result in a very suitable economic return to Gabon. Detailed demand study has been conducted to assess and confirm robust pending demand for international connectivity in Gabon (see Annex 7). All scenarios show positive IRR after 15 years, even in adverse conditions caused by project costs higher than budgeted or demand for connectivity not materializing as expected. In the base case scenario, assuming a discount rate of 15%, the project is estimated to have a NPV of US$8 million over 15 years and an IRR of about 26%, breakeven payback occurring in 2014.
47. Impact of improved international access through ACE will provide significant potential to decrease retail prices for broadband services in Gabon either via fixed broadband (DSL, WiMax) or mobile (3G) broadband access networks for residential and very small businesses, which will in turn increase annual GDP per capita in Gabon. Compared to current average US$30 per month per Mbps via satellite, the ACE submarine cable will allow an almost 6 fold decrease towards around US$5 per month per Mbps. Membership in the ACE submarine cable, if accompanied with robust regulation to ensure competitive pricing releases demand, has potential to provide low cost international access to a broad range of the population and very small businesses because broadband demand is very sensitive to changes in price, and even small reduction in price can generate substantial demand and penetration in the country. Recent evidence suggests that increasing overall service coverage and promoting access to telecommunications services provide a substantial economic benefit to low and middle income countries. World Bank research on the economic multiplier effect of increased broadband penetration rates, presented in the chart below, indicates that each 10% increase in broadband penetration increases overall GDP growth in developing countries by 1.38%39. Although causality in the relationship between broadband and growth is hard to prove with the data available, analysis suggests high likelihood of causality. Based on the economic multiplier and estimated penetration rate in Gabon with or without ACE capacity, the analysis indicates that the project will increase annual GDP per capita in Gabon by an annual average of approximately 0.91% over the first 10 years of operation of the ACE submarine cable.
38 Based on the report and financial model developed by Mr. Yves Rouhaud, Technical and Economical consultant advising GoG (see : Projet CAB4-CITGB, Plan d’entreprise du PPP pour l’accès au câble sous-marin ACE, Date : 12 décembre 2011). 39 Source: "Information and Communications for Development 2009: Extending Reach and Increasing Impact, World Bank. Chapter: Economic Impacts of Broadband, page 45. Authors: Christine Zhen-Wei Qiang and Carlo M. Rossotto with Kaoru Kimura. 23
48. Building a terrestrial fiber optic link is also most cost-effective long term option for improved access to international connectivity on the Libreville – Franceville link as well as for cross-border traffic with Congo. Detailed demand study has been conducted to assess and confirm robust pending demand for international and national connectivity for Phase I of the national backbone, using a combination of ―empiric‖ data from interviews and questionnaires with GoG, operators, ISPs as well as large businesses and of ―theoretical‖ data from a broadband demand forecasting tool (see Annex 7).
49. The national backbone Phase 1 will result in a suitable economic return to Gabon. All scenarios show positive IRR after 15 years, even in adverse conditions caused by project costs higher than budgeted. In the base case scenario 4, assuming a discount rate of 15%, the project is estimated to have a NPV of US$0.3 million over 15 years and an IRR of 15%, breakeven payback occurring in 2019
B. Technical
50. International connectivity: the ACE consortium is deemed to be technically qualified and structured according to best practices in the industry. The team’s assessment is that the ACE consortium is being structured in a manner consistent with international good practices in the industry, and is led by major industry players. Given the experience of key consortium members in designing, commissioning and operating submarine cables, the implementation risk is minimal. As with all cables, there is, however, a risk of breaks in operational system. The cost of membership for Gabon will be US$25 million based on the latest basic system configuration. A as member of the consortium, Gabon will obtain a fixed ownership percentage and an allocated capacity (based on kilometers and branch capacity) at a fixed price. It is agreed that for a single landing station membership, Gabon will obtain approximately 3.6 percent of the capacity at a cost of approximately US$25 million. The percentage and dollar amounts are based on a membership cost model developed by the ACE consortium management. The model enables members to specifically determine the payment required for membership and the bandwidth capacity that will be allocated. While the model and the resulting payment amounts were finalized when the consortium C&MA was signed by all members on June 5, 2010, there may be slight variations around the US$25 million estimate, depending on final configuration of the system and the final list of ACE members.
51. Phase 1 of the national backbone: due diligence has been made on the investments associated with Phase I of the national backbone, confirming a total Capital Expenditure (CAPEX) of US$39 million40. Building the fiber link alongside railway tracks and setting up technical sites and transmission equipments in all railway stations41 allows fully addressing the internal connectivity needs of the railway company SETRAG (which is currently using VSAT
40 The Component 2 – Connectivity of the project foresees a total of 28.5 + 12 = 40.5 US$ million (i.e. 4% contingencies) to finance the terrestrial fiber optic link Libreville - Franceville - Bakumba – Lekoko / Border with Congo (approx. 800 km) to interconnect with the Congolese link Dolisie – Mbinda (already financed under CAB3 CG) and the additional link Lekoni - Franceville – Koulamoutou (approx. 340 km) within the first phase of roll out of a national backbone. 41 Building and sites as well as transmission equipments which are to be used only by the railway company (24 locations) are included in the project, with an estimated CAPEX of US$ 2 million. 24 connections) offsetting the relative cost disadvantage of civil works alongside existing railways vs. existing roads. Technical assistance including transaction/legal, regulatory and economic/financial support will be provided under Component 1 of the project to define with the SETRAG the terms and conditions under which the fiber will be laid down and operated by the SPVs. A route survey will be undertaken by GoG to determine jointly with SETRAG the best technical solution for laying down the fiber (fully manual, use of machines alongside the tracks when sufficient space is available, use of machines positioned on specially equipped wagons, etc.). The estimated average total CAPEX per km for the project is US$34,962 per km, to be compared with an Average Cost Per Km To Deploy Fiber Optic Networks (Excluding Highest and Lowest) in Africa of US$27,846 per km (according to sample data available to the Bank’s ICT unit). Technical assistance under the PPA will also support GoG in defining the appropriate strategy for the competitive and open tender in the specific context of Gabon to ensure best value for money.
52. The main risks of the proposed operation lay in defining the practical details of how to implement PPP and Open Access principles and have been addressed during project preparation.
Given the mandate of the ANINF, the GoG's preliminary proposal for the new international, regional and national capacity was to have a state-owned and controlled company (HoldCo holding) the assets built according to the Short term Connectivity objectives of Digital Gabon42, with a PPP operating the assets (OpCo) and providing the connectivity on a wholesale basis to its shareholders operators and ISPs according to open access principles43. This proposed governance structure differs from the ACE projects financed by the Bank with IDA funds (STP, Liberia, The Gambia, Sierra Leone, and Guinea) which have been predicated on private sector ownership and operation of the facilities that are being funded. In most cases the ownership of the assets starts out in state hands, but then much of the project is aimed at transferring the assets to the private sector or to a PPP (with some residual state interest) if and when there is sufficient private sector appetite, financing and capacity to take up a majority of the Government's share. It bears however resemblance with the option envisaged for CAB3 Congo (financed with IDA funds) for regional terrestrial fiber optic links where the Congolese Government wants to keep the ownership of the infrastructure for security and sovereignty reasons: a Concession Contract will be established with a Private Operator on a Build Operate and Transfer (BOT) model to develop and market fiber (full network). According to the GoG’s preliminary proposal, operators and ISPs in the OpCo would: o acquire the connectivity from the HoldCo on a 15 years44 IRU45 basis at a price oriented towards the cost of initial capacity on the ACE submarine cable (dividing the
42 New international capacity available in Libreville via the ACE (Africa Coast to Europe) submarine cable (estimated ready for service date: August/September 2012); New national capacity via a submarine cable from Libreville to Port Gentil (estimated ready for service date: February 2012); New national and regional capacity via terrestrial fiber from Libreville to Franceville and from Franceville to Lekoko to interconnect with the link Dolisie – Mbinda on the other side of the border in Congo (financed under CAB3); New national capacity via terrestrial fiber from Lekoni to Koulamoutou via Franceville. 43 For the avoidance of doubts, Total Group will neither be a shareholder of the HoldCo nor of the OpCo. 44 15 years is the duration of the ACE C&MA. However the life of a submarine cable is typically 20 to 25 years. It is therefore very likely that the ACE C&MA will be expanded to coincide with the life of the submarine cable. 25
initial investment costs of US$30 million by an minimum expected demand for the initial capacity46); o buy a share of the OpCo (US$500,000) and split between them the operating and maintenance costs of the international/regional/national connectivity based on effectively used connectivity; o with a resulting total price (ownership + operation) – if expected demand by operators and ISPs materializes – of US$172/E147 per month for international capacity towards Europe and US$164/E1 per month for the submarine cable Libreville Port Gentil. Such level of proposed price for connectivity is consistent with the recently observed trends in East and Southern Africa where new competitive submarine cables have now been in place for over a year and where data has recently been made public. Due to the competitive pressure there, bandwidth prices have fallen substantially and consumption/demand has increased dramatically. Bandwidth pricing in the region is now moving toward $100- $200/month/E1 at a wholesale level (for long-term - i.e., 15 year, IRU type pricing), producing much higher levels of demand. This has already necessitated the commissioning of upgrades to submarine cable capacity, much earlier than initially planned. With such level of proposed price for connectivity proposed on an IRU basis and with involvement in the operation so as to keep costs to a minimum, there is interest from the private sector (operators and ISPs) to participate in this much needed international, regional and national connectivity project. Furthermore this level is below the PDO (Average monthly price of wholesale international E1 capacity link from capital city to Europe) target values of similar bank financed projects (e.g. US$4,500 for STP; less than US$2,000 for Guinea, Liberia, and Sierra Leone; less than US$1,000 for the Gambia) showing a clear objective of GoG to have the benefits of the connectivity investments immediately and fully transferred to the sector and ultimately to the Gabonese residential and business customers as well as the bigger market potential for broadband in Gabon. A public workshop held November 30, 2011 with the consultants retained under the PPA, GoG and the private sector identified 3 main improvements to implement: o The HoldCo is open in principle to private sector shareholders, GoG warehousing for now the capacity built according to the Short term Connectivity objectives of Digital Gabon. The PPP will therefore be structured around 2 Special Purpose Vehicles (SPVs), the HoldCo and the OpCo, involving various equity stakeholders with different rights and interest as is common practice in Public Private Partnerships. o The prices are to be oriented not only on the initial capacity installed (higher cost per Mbit/s) but also on a reasonable estimate of future capacity upgrades (lower cost per Mbit/s) having the private sector to commit to sufficient prepurchased capacity to
45 An Indefeasible Rights of Use (IRU) is a legal interest created by contractual agreement that confers an indefeasible and exclusive right of access to some or all of the capacity in a telecommunications cable system on another party. 'Indefeasible' is a term meaning not liable to be annulled or forfeited. An IRU is specified in terms of available bandwidth (e.g. STM-1, which is a 155 Mbit/s transmission capacity) and is a fairly standard option to acquire connectivity in telecoms. 46 In GoG’s initial proposal the expected demand corresponds to 75% of the initial capacity of the ACE submarine cable and to 33% of the initial capacity of the Libreville Port Gentil submarine cable. 47 An E1 is a 2Mbit/s transmission capacity. 26
derive fully cost oriented prices48. Such fully cost oriented prices shall not change unless according to a pricing formula defined ex ante. The consequence of such a pricing approach would be to have an economic signal to the private sector equivalent to the situation where there would be one SPV only owning and operating the capacity. o The possibility of paying the IRUs over 2 or 3 years is also under review, so that the annual financial burden on smaller operators and ISPs would be equivalent to the current out payments for satellite capacity (between 0.5 and 1 million US$ per annum). Such flexibility in paying the IRUs could support higher financial commitment of the private sector in the early phases of the project, which will in turn lead to a better usage rate of the available capacity on the submarine cable and hence lower fully oriented cost oriented prices for all operator and ISPs. Ultimately this would translate into lower retail prices for Gabonese residential and business customers contributing to higher broadband penetration in the country. Business cases for all components of the Short term Connectivity objectives of Digital Gabon49 have been prepared by the consultants in the PPA and discussed with GoG and the private sector, to ensure prices are fully cost oriented. Regulatory due diligence has concluded that ―open access‖ (fair and transparent pricing and access) to the bandwidth capacity provided by the ACE cable at the domestic level can be implemented under the existing regulatory framework (taking into account applicable regional directives)50. During appraisal further changes to the GoG’s preliminary proposal were requested. GoG has indicated its strong preference to initially rely on an independent experienced private wholesale operator selected via an international call for tender to ensure effective operation and maintenance of the assets.
53. Guidelines were agreed with GoG during appraisal to ensure smooth implementation of this Open Access and PPP structure as follows:
1. A corporation will be set by GoG (SPV HoldCo) to own the new international, regional and national capacity that will be made available according to open access principles, with a ACE subsidiary that will own the assets covered by the ACE CM&A agreement. The HoldCo and its ACE subsidiary are open in principle to private sector shareholders, GoG warehousing for now the capacity built, but the Gabonese operators and ISPs not effectively being involved in the initial phase of the PPP. 2. As private sector interest is the strongest for international connectivity, statutory documents of the ACE subsidiary will be drafted with a sufficient level of details to enable swift transfer of shares to the private sector when the decision is taken by GoG (e.g. rules for setting the value of the shares, golden share of the HoldCo …). 3. With the assistance of consultants hired under component 1 – Enabling environment of
48 A higher value will be retained for the PDO to cater for (1) sensitivity analysis on the forecasted demand and (2) the average value between prices paid by shareholders of the OpCo and prices paid by other operators or ISPs in the country that will buy on a wholesale basis from the shareholders. 49 See Annex 7: Economic and Financial Analysis. 50 See: Report by Mrs. Claire Audin, Regulatory consultant advising GoG (Rapport d’Etat des Lieux, Date : 30 novembre 2011). 27
the project51, the HoldCo and its subsidiary ACE will award through an international open and transparent tender an Operating, Maintenance and Commercialization contract to an experienced independent private wholesale operator52. The contract will be awarded for an initial duration of 3 years and will contain detailed provisions on (i) the reference offer (scope of services, level of quality of services, collocation…) and on (ii) the obligation to report publicly against a set of Key Performance Indicators (KPI) chosen to reflect in particular price levels, quality of service and profitability. 4. The IRU prices will be cost oriented not only on the initial capacity installed (higher cost per Mbit/s) but also on a reasonable estimate of future capacity upgrades (lower cost per Mbit/s) having the private sector to commit to sufficient prepurchased capacity to derive fully cost oriented prices. 5. During supervision missions, GoG and Bank team will review performance of independent private wholesale operator against appropriate KPIs and make appropriate recommendations should performance not meet expectations.
54. GoG has an incentive to select swiftly a private wholesale operator because international connectivity partially financed under the project will be ready for service by end 2012 (whilst the national backbone is yet to be built). The main risks associated with practical details of how to implement PPP and Open Access principles are addressed as follows:
i. New international, regional and national capacity is made available according to open access principles and warehoused by GoG until decision to share ownership with private sector is taken. This shall be ensured through the combination of (a) a disbursement condition (payments for the ACE consortium fee will be made once the HoldCo and its ACE subsidiary have been satisfactorily established) and (b) the ongoing technical assistance of GoG by the legal, regulatory and techno-economic consultant whose ToRs already encompasses these duties (financed under the PPA).
ii. Independent private wholesale operator is selected in form and substance satisfactory to the Bank. This shall be ensured through the combination of (a) a disbursement condition (payments for the construction of the national backbone will be made once the private wholesale operator has been satisfactorily selected) and (b) the non objection on the ToRs of the transaction advisor that will assist GoG in selecting the private wholesale operator (under advanced procurement). iii. Performance of private wholesale operator against appropriate KPIs is monitored as part of project supervision. This shall be ensured through an obligation in the Operating, Maintenance and Commercialization contract for the private wholesale operator to publicly report against a set of KPIs chosen to reflect in particular price levels, quality of service and profitability. During supervision mission, GoG and Bank team will review performance against KPIs and make appropriate recommendations should performance not meet expectations.
51 Under advanced procurement. 52 GoG intends to apply such an approach to all infrastructure projects within the presidential programme ―Emerging Gabon‖. 28
Figure 7: Open Access Regime & PPP for international and national connectivity under CAB4 GA
C. Financial Management
55. FM assessment. In accordance with the new Financial Assessment Principles and AFTFM ORAF guideline, the Financial Management arrangements of the Central African Backbone APL4 Gabon Project (CAB4 GA) have been reviewed to determine whether it is acceptable to the Bank. The CAB 4 GB project will be implemented by the Permanent Secretary (PS) of the National TIPPEE Program. The PS will have overall responsibility over the fiduciary aspects, all procurement aspects, and the preparation and consolidation of financial reports. The financial capacity of the PS is found acceptable to the Bank because the entity will integrate the staff and resources of the former Local Infrastructure Development Project (PDIL – Projet de Développement des Infrastructures Locales), which has an appropriate accounting, internal control and relevant financial reporting already in place.
56. FM rating. The PIU will be reinforced by the mitigation measures below mentioned aimed to be implemented during the PPF. The FM performance of this PIU for the Bank- financed project, PDIL is rated satisfactory following the recent supervision carried out in September 2011. The PIU has no overdue audit report. The conclusion of the Financial Management Assessment is that, the overall project arrangements satisfy the Bank’s requirements under OP/BP10.02 to provide, with reasonable assurance, accurate and timely information on the status of the execution of the project.
57. The overall FM risk is considered Moderate since the implementing agency is an existing and adequately-performing PIU endowed with all fiduciary requirements. The proposed financial management arrangements for this project are considered adequate to meet the Bank’s minimum fiduciary requirements under OP/BP10.02. The assessment recommended among other measures (i) the Adoption of the Project Implementation Manual and (ii) the amendment of contract of the current external auditor. Details of the financial management arrangements are described in the Annex 3.
58. GoG has received a technical and financial proposal from the existing PDIL-auditor to extend its use to the CAB4 GA Project and submitted a draft contract to the Bank during
29 appraisal. A signed amendment to the contract with the existing PDIL auditor has been provided by GoG.
59. GoG has hired a consultant to prepare the Project Implementation Manual (covering Procurement and FM, as well as environmental and social safeguards). A draft Project Implementation Manuel (PIM) was submitted to the Bank for review on January 16, 2012. Comments from the Bank and from GoG have been forwarded on January 28, 2012. Adoption of the finalized PIM is a condition of effectiveness of the Loan Agreement.
60. Retroactive financing. GoG is requesting refinancing for two payments for a total of US$4.4 million. In accordance with OP 6.00 – Bank Financing, Retroactive financing is permitted under the following conditions which are satisfied in this specific case: (a) the activities financed are included in the project description; (b) such payments do not exceed 20 percent of the loan amount; and (c) the payments were made by the borrower not more than 12 months before the expected date of Loan Agreement signing53.
o The first payment amounts to US$2.0 million. The conditions of OP 6.00 are fulfilled because: (a) the activities financed are a share of ACE Consortium fee under Component 2-(i) of the project; (b) the payment amounts to 1% of the Loan amount; and (c) the payment was made on 1 December 2011, i.e. less than 5 months before the expected date of Loan Agreement signing (which is 22 April 2012). o The second payment amounts US$2.4 million and is approved by FY12 Finance Law. The conditions of OP 6.00 are fulfilled because: (a) the activities financed are a share of ACE Consortium fee under Component 2-(i) of the project; (b) the payment amounts to 1% of the Loan amount; and (c) the payment is expected to be made before 22 April 2012, i.e. the expected date of Loan Agreement signing.
61. Refinancing date of the PPA. The refinancing date of the PPA was March 1, 2012. An extension to June 30, 2012 has been approved on February 28, 2012.
62. IBRD Flexible Loan choice. GoG confirmed its preferences for the IBRD Flexible Loan given the Government’s debt policy and the nature of the investment (fiber optic cable). These preferences are as follows:
Spread over LIBOR Fixed Spread Repayment terms Payment dates: May 1st and November 1st Grace period: 6 years Total repayment period (including Grace period) : 18 years Repayment schedule linked to disbursement Amortization profile: level repayment Front-end fee Paid upfront from own resources Options Currency conversion ; Interest rate conversion
53 The condition requiring that the payments are for items procured in accordance with applicable Bank procurement procedures are not applicable in this case as the Procurement Guidelines do not apply to the Consortium Fees --- which is not a procurable item --- in line with the waiver obtained for the previous operations supporting the connection to the ACE Cable. 30
D. Procurement
Procurement assessment. A procurement assessment has been carried out during the pre- appraisal mission of November 2011 and has concluded that the PIU CN-TIPPEE has adequate experience and capacity to carry out procurement activities related to the proposed project. The PIU CN-TIPPEE is familiar with Bank procurement procedures through its experience with implementing of the Local Infrastructure Development Project financed by the Bank. As a result, procurement risk is assessed as Moderate. Risk mitigation measures have been discussed with the PIU CN-TIPPEE and agreed. A brief summary of the procurement capacity assessment and project procurement arrangements are provided in Annex 3.
Procurement plan. A simplified procurement plan for the project for 18 months has been received by the Bank and found to be acceptable. It will be updated at least once annually (or as required) afterwards to reflect project implementation needs (see Annex 3).
63. All procuring entities, as well as bidders, suppliers, and contractors shall observe the highest standard of ethics during the procurement process and execution of contracts financed under the project in accordance with paragraph 1.16 of the Procurement Guidelines and paragraph 1.23 of the Consultant Guidelines dated May 2010 and revised January 2011. Procurement under this project will also be carried out in accordance with the ―Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants‖ dated October 15, 2006 and revised in January 2011. The Bank's Procurement Guidelines will not apply to the financing of the Consortium Fee under Component 2 – (i), (in line with the waiver obtained for the previous operations under the ACE Cable) as the Bank’s funding of the Consortium Fees (paid in different installments) is made against a set of rights including use of a certain amount of capacity at preferred rates and a share of ownership of an indivisible cable infrastructure asset, which is not a procurable item under the Procurement Guidelines.
E. Social and Environment
64. Safeguard considerations for the international connectivity via the ACE submarine cable landing in Libreville.
Final versions of the safeguards documents (ESIA, ESMP, ARAP) were reviewed and cleared by the World Bank on December 29, 2011. Submission for public disclosure in the Bank InfoShop has been made on January 4, 2012 and documents were disclosed publicly in local language in the country on January 31, 2012. The ESIA indicates overall moderate to low negative environmental and social impacts; the ARAP indicates that number of Project- Affected People (PAPs) is 13, as the project has negative impacts on the living environment, mobility and livelihoods of some people located along the road between the shore and the landing station.
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An environmental audit was conducted and ascertains that there are no outstanding issues with works under the ACE component. The safeguards documents have been disclosed by GoG to the Bank when works had started and were at an advanced stage and the Bank requested GoG to stop works until final versions of ESIA, ESMP and ARAP (taking into comments by the Bank’s environmental and social safeguards team) were cleared by the Bank. An Environmental Audit was conducted in Gabon from January 13 to 18, 2012 and concluded as follows: ―The mission has visited the ACE site and contacted and discussed with all entities that are involved in this ACE project. All entities were unanimous that this investment is key in the context of the development of a country such as Gabon. We noted that all structures in charge to implement and to follow up environmental and social mitigation measures are in place with mandates supported by legal texts. Nevertheless, flow of information and coordination between the aforementioned entities are weak. The mission noted that all works done consisting of the laying and connection of the submarine cable to the landing station is completed as well as the filling of holes along the cable route. They were performed according to the technical specifications in contract execution. So far, no adverse environmental impacts and complaints have been recorded. However, the cleaning of campsite located at the first section cable landing and the rehabilitation of pathways and road sections crossed by the cable need to be undertaken. To this end, public and road users have to be informed sufficiently in advance before and during works. In addition, putting in place long term protection and follow up measures of the use of the two back street sections respectively located at la Sablière and Angonje is strongly recommended. As the ESMP has already been approved by the Bank, disclosed at the InfoShop and disclosed in country, the Steering Committee and the PIU are required to take action in completing the remaining works in compliance with the environment safeguards underlined in the contract execution and developed in the ESMP‖.
65. Safeguard considerations for the national backbone connectivity (Phase I).
All three safeguard documents for national backbone connectivity were submitted in draft version to the Bank on December 27, 2011 and comments have been provided by the Bank’s environmental and social safeguards team on January 4, 2012. Final versions have been cleared by the Bank on January 23, 2012 for ESMF and RPF on January 25, 2012 for IPPF. All documents have been subsequently disclosed publicly in the country on January 31, 2012 as well as in the Bank InfoShop.
The terrestrial fiber optic link is expected to follow major railway tracks or roads already in place, and the project connection at the border with Congo will not lead to social conflicts because the borders between the two countries have been clearly delineated and materialized. Negative environmental and social impacts of the project come mainly from the laying of the fiber (excavation and crossing human settlements, fields, forests, rivers, etc.). The negative environmental impacts of the project resulting from the work will mainly concern: soil erosion (due to the unstable nature of soils), the risks of water pollution and degradation, loss of vegetation due to deforestation to clear the right-of-way, risks of pollution and degradation of rivers, etc. The significant negative social impacts will mainly concern the acquisition of land for the construction of infrastructure, the disruption of life setting, the occupation of private lands, the possible destruction of crops, the deforestation of woodlands, the risk of
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encroachment on areas of indigenous peoples and the sacred forests, the risk of disruption of cultural areas during the excavation, the risks of accidents during the work, the risks of disruption of networks of dealers (water, telephone, electricity), etc. The accurate estimate of the number of people who will be affected is not feasible at this stage of the study. However a rough estimate could be made according to the planned route. For the whole railway route, the number of people likely to be affected by the implementation of fiber optic cable is estimated at 250, while along the terrestrial road the number is 200. Land requirements are estimated at 100 ha for the railway line and 80 ha for the terrestrial road. Interviews with different categories of Indigenous Peoples players (leaders, women, and youth) show that the project has a lot of support; however, Indigenous Peoples have expressed broader concerns about being marginalized on development activities in the country.
Once the final path for the terrestrial fiber foreseen alongside existing railway tracks and roads and the final location of the associated technical sites are chosen and the specific civil works identified, the Borrower will prepare and consult upon an Environmental and Social Management Plan (ESMP) as well as a Resettlement Action Plan (RAP) or an Abbreviated RAP ---whichever will be appropriate--- and an Indigenous Peoples Plan (IPP) which will be then publicly disclosed in local language in the country as well as in the Bank InfoShop.
66. Arrangements for environmental and social safeguards supervision have been defined and agreed. The funding requirement for the environmental and social safeguards is estimated in total at US$1,672,800, with US$340,000 for the International connectivity via the ACE submarine cable landing in Libreville and US$1,332,800 for National backbone connectivity (Phase I) via a terrestrial fiber optic link. The Bank will finance US$1,468,800 and GoG US$204,000 (see Annex 3). Relevant provisions of the safeguard documents (ESIA, ESMP, ARAP for international connectivity; ESIA, ESMP, ARAP for national backbone connectivity (Phase I)) have been included in the Project Implementation Manual. Inputs from Bank’s environment and social specialists will be provided throughout project implementation, to support the Environmental and Social Safeguards Focal Point (Point Focal Environnement et Social (PFES)) within the PIU as well as the Line Ministry in charge of Ecology and Sustainable Development) in monitoring the effective implementation of safeguards.
F. Loan conditions and covenants
Effectiveness conditions:
67. The Fiber Optic Commission has been established and has been made operational, in form and substance satisfactory to the Bank.
68. The Gabonese Republic shall have adopted the Project Implementation Manual in form and substance satisfactory to the Bank.
Disbursement conditions:
69. No withdrawal under Component 2.1 (international connectivity) of the project to finance a share of the GoG’s $15 million contribution (consortium fee) for participating in the ACE submarine cable, until and unless:
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(a) (A) the ACE Subsidiary has been duly created pursuant to PPP Guidelines, registered and made operational in the Borrower’s territory, including through the appointment of its managers and the adoption of the shareholders’ agreement and by-laws, all in form and substance satisfactory to the Bank; and (B) there shall be furnished to the Bank an opinion satisfactory to the Bank of counsel acceptable to the Bank showing that the ACE Subsidiary has been duly created, registered and made operational in the Borrower’s territory and is legally authorized to operate in accordance with the Borrower’s laws; (b) (A) the ACE Agreement, in form and substance satisfactory to the Bank, has been entered into between the Borrower and the ACE Subsidiary; and (B) there shall be furnished to the Bank an opinion satisfactory to the Bank of counsel acceptable to the Bank showing that the ACE Agreement has been duly authorized or ratified on behalf of the Borrower and the ACE Subsidiary, and executed and delivered on their behalf, and is legally binding upon the Borrower the ACE Subsidiary in accordance with its terms; and (c) upon its concurrence, the ACE Consortium has transferred to the ACE Subsidiary all the rights and obligations of the Borrower in the Construction and Maintenance Agreement and has fully substituted the Borrower with the ACE Subsidiary as the member of the ACE Consortium.
70. No withdrawal under Components 2.2 and 2.3 of the project to finance the National Backbone, until and unless:
(a) (A) the SPV has been duly created pursuant to PPP Guidelines, registered and made operational in the Borrower’s territory, including through the appointment of its managers and the adoption of the shareholders’ agreement and by-laws, all in form and substance satisfactory to the Bank; and (B) there shall be furnished to the Bank an opinion satisfactory to the Bank of counsel acceptable to the Bank showing that the SPV has been duly created, registered and made operational in the Borrower’s territory and is legally authorized to operate in accordance with the Borrower’s laws; (b) (A) the Backbone Agreement, in form and substance satisfactory to the Bank, have been entered into between the Borrower and the SPV; and (B) there shall be furnished to the Bank an opinion satisfactory to the Bank of counsel acceptable to the Bank showing that the Backbone Agreement has been duly authorized or ratified on behalf of the Borrower and the SPV, and executed and delivered on its behalf, and is legally binding upon the Borrower and the SPV in accordance with its terms; (c) the SPV Wholesale Agreement, in form satisfactory to the Bank and pursuant to the PPP Guidelines, has been entered into between the SPV and an operator acceptable to the Bank and which shall include subrogation rights for the Borrower against the operator party to the SPV Wholesale Contract upon the failure of the operator to perform any of its obligations under the SPV Wholesale Contract; and (d) the Borrower: (i) shall have adopted the ESIA, ESMP, RAP and/or the IPP, as the case may be, and the same documents have been consulted upon and disclosed as approved by the Bank; and (ii) shall have verified, through its own staff, outside experts, or existing environmental/social institutions, that the activities under components 2.2 and 2.3 of the
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Project meet the environmental and social requirements of appropriate national and local authorities and that they are consistent with the Bank’s applicable environmental and social assessment and safeguard policies and comply with the environmental and social review procedures set forth in the ESMF, RPF and IPPF, as the case may be, and the Project Implementation Manual.
Legal covenants:
71. The Gabonese Republic shall cause the ACE Subsidiary to take all action necessary on its behalf:
(a) to carry out the ARAP with due diligence and efficiency and at all times provide the funds necessary there for; (ii) to adequately monitor and evaluate the carrying out of the activities provided in the ARAP in the carrying out of the infrastructure partially financed through the Consortium Fee; and (iii) to maintain the Gabonese Republic and the Bank suitably informed of the progress in the implementation of the ARAP; and
(b) to carry out the ACE ESIA and the ACE ESMP with due diligence and efficiency; (ii) to ensure that the relevant mitigation and monitoring provisions of the ACE ESIA and the ACE ESMP are appropriately included in the works, goods and services contracts to be concluded for the infrastructure partially financed through the Consortium Fee and that they are implemented in the carrying out of said infrastructure; and (iii) to maintain the Gabonese Republic and the Bank suitably informed of the progress in the implementation of the ACE ESIA and the ACE ESMP.
72. The Gabonese Republic shall cause the SPV to take all action necessary on its behalf:
(a) to comply with the ESMF and to carry out the ESIA and the ESMP, as the case may be, with due diligence and efficiency; (ii) to ensure that the relevant mitigation and monitoring provisions of the ESIA and the ESMP, as the case may be, are appropriately included in the works, goods and services contracts to be concluded under components 2.2 and 2.3 of the Project and that they are implemented in the carrying out of said components 2.2 and 2.3; and (iii) to maintain the Gabonese Republic and the Bank suitably informed of the progress in the implementation of the ESIA and the ESMP, as the case may be; and
(b) to comply with the RPF and the IPPF and to carry out the RAP and the IPP, as the case may be, with due diligence and efficiency and at all times provide the funds necessary there for; (ii) to adequately monitor and evaluate the carrying out of the activities provided in the RAP and in the IPP, as the case may be, in the carrying out of components 2.2 and 2.3 of the Project; and (iii) to maintain the Gabonese Republic and the Bank suitably informed of the progress in the implementation of the RAP and the IPP, as the case may be.
73. To facilitate the carrying out of component 2.1 of the Project, the Gabonese Republic shall take all action required: (i) to ensure the proceeds of the Loan allocated from time to time to
35 finance the Consortium Fee are transferred to the ACE Subsidiary in an efficient and timely manner; and (ii) to have in place a suitable legal framework to ensure the Loan is used for the intended purposes. To that end, the Gabonese Republic shall conclude the ACE Agreement with the ACE Subsidiary whereby the Gabonese Republic shall transfer the said proceeds of the Loan to the ACE Subsidiary, on a non-reimbursable basis, in consideration of the undertaking by the ACE Subsidiary that such amount shall be transferred by the ACE Subsidiary to the ACE Consortium for the purposes of payment of the membership and participation of the ACE Subsidiary on behalf of the Gabonese Republic in the ACE Consortium.
74. The Gabonese Republic shall, not later than December 31, 2012, cause the ACE Subsidiary to execute a wholesale agreement (―ACE Wholesale Contract‖), in form satisfactory to the Bank and in accordance with the PPP Guidelines, with a suitable operator and which shall include subrogation rights for the Gabonese Republic against the operator party to the ACE Wholesale Contract upon the failure of the operator to perform any of its obligations under the ACE Wholesale Contract.
75. To facilitate the carrying out of components 2.2 and 2.3 of the Project, the Gabonese Republic shall take all action required: (i) to ensure the proceeds of the Loan allocated from time to time to finance said components of the Project are transferred to the SPV in an efficient and timely manner; and (ii) to have in place a suitable legal framework to ensure the Loan is used for the intended purposes. To that end, the Gabonese Republic shall conclude a contractual arrangement (―Backbone Agreement‖) with the SPV whereby the Gabonese Republic shall transfer the said proceeds of the Loan to the SPV, on a non-reimbursable basis, for the purposes of carrying out components 2.2 and 2.3 of the Project.
76. The Gabonese Republic shall maintain throughout Project implementation the Fiber Optic Commission under terms of reference satisfactory to the Bank vested with responsibility for overall technical and operative guidance, direction and coordination during project implementation as well as fiduciary and governance oversight.
77. The Gabonese Republic shall ensure that the CN-TIPPEE, entity established under Decree No. 000007/PRIMPPD, dated January 4, 2006, and which is the CAB4 GA Project Implementation Unit, will keep its key management, technical and financial positions staffed for the entire duration of the Project to carry out its responsibilities under the Project and for this purpose deposit through the MECIT into the CN-TIPPEE account in a manner satisfactory to the Bank: (A) not later than June 30, 2012, an amount of not less than XAF 235,694,379; (B) not later than May 31, 2013, an amount of not less than XAF 302, 392,773; (C) not later than May 31, 2014, an amount of not less than XAF 302,392,773; and (D) not later than May 31, 2015, an amount of not less than XAF 168,353,128.
78. The Gabonese Republic shall:
(a) maintain policies and procedures adequate to enable it to monitor and evaluate on an ongoing basis, in accordance with the Monitoring and Evaluation Indicators, the carrying out of the Project and the achievement of the objectives thereof;
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(b) prepare, under terms of reference satisfactory to the Bank, and furnish to the Bank, on or about August 31, 2014, a mid-term review report integrating the results of the monitoring and evaluation activities and setting out the measures recommended to ensure the efficient carrying out of the Project and achievement of the objectives thereof during the period following such date; and
(c) review with the Bank, on or about October 31, 2014, or such later date as the Bank shall request, the report prepared for the mid-term review and, thereafter, take all measures required to ensure the efficient completion of the Project and the achievement of the objectives thereof, based on the conclusions and recommendations of the said report and the Bank’s views on the matter.
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Annex 1: Results Framework and Monitoring
AFRICA: Central African Backbone - APL4 - Gabon Project (CAB4 GA)
Results Framework
Regional APL (CAB) Objective: Contribute to increase geographical reach and usage of regional broadband network services and reduce prices in Central Africa Project Development Objective (PDO): Contribute to increase geographical reach and usage of regional broadband network services and reduce prices in the territory of the Gabonese
Republic
* Cumulative Target Values Responsibility Description
PDO Level Results Unit of 55 Data Source/ Sector Sector Baseline Frequency for Data (indicator Indicators54 Measure YR 1 YR 2 YR3 YR 4 YR5 Methodology
Collection definition etc.) indicators Core (2012) (2013) (2014) (2015) (2016) This indicator measures Bits per 4,620 ARCEP from the volume of . International second PIU from [2010] 7,804 10,027 12,086 13,778 14,712 Yearly operators international traffic per ARCEP generated by people internet bandwidth /ITU person who pay for access to the Internet. This indicator is a proxy . Access to internet for the volume of 14 ARCEP from services (number of PIU from national traffic. It Y Ratio [2010] 19 21 24 26 28 Yearly operators measures the number of ARCEP subscribers per 100 /ITU people who pay for people) access to the Internet per 100 people. This indicator is a proxy . Access to telephone for the volume of national traffic. It services (fixed ARCEP from 14756 PIU from measures the total mainlines plus Y Ratio 12057 121 122 123 12558 Yearly operators number of fixed [2010] ARCEP /ITU telephone lines and cellular phones per mobile cellular 100 people) subscriptions per 100 people.
54 All the other countries that are covered by previous APL phases or will be covered by the following APL phases use the same PDO. 55 Indicators will be collected yearly as a minimum, but ARCEP will endeavor to collect them every 6 months. 56 Assuming total population of approx. 1,545,255 and an annual growth rate of 2% (source: CIA World Factbook). The percentage of multiple SIM holders is at least 25% (estimate 2008, with 3 operators in the market) and is probably closer to 35% in 2010, which corresponds to a real penetration of 109%: the market for telephone services in Gabon is reaching saturation. 57 Gabonese operators have started to ―clean up‖ their database to exclude non-active customers. Furthermore, it is scheduled that all SIM card owners will be registered by the Gabonese mobile operators before End 2012. Both operations (clean up of non-active customers, identification of SIM card holders) are generally associated with a sharp decrease in the number of mobile cellular subscriptions. 58 As the market for telephone services in Gabon is reaching saturation, only moderate growth is expected when clean up of non-active customers and identification of SIM card holders will have taken place. 38
This indicator is a proxy . Average monthly for the average price of price of wholesale international communications. It international E1 US$/ ARCEP from 10,500 PIU from measures the wholesale capacity link from month/ 5,000 2,000 1,000 800 500 Yearly operators price of an E1 or 2 [2010] ARCEP 2Mbps /ITU Mbit/s capacity capital city to acquired by operators Europe and ISPs in the country to carry traffic from/to Europe. Direct beneficiaries of the project include people who are connected to the communications network in the Gabonese Republic (including # telecommunication . Number of project benefici services and internet users, schools, direct beneficiaries aries 1,545,25559 ARCEP from 1,607,683 1,639,837 1,672,634 1,706,086 1,740,208 PIU from hospitals, banks, (percentage of Y (% (51%) Yearly operators corporations, (51%) (51%) (51%) (51%) (51%) ARCEP female [2010] /ITU government and public female) administrations), to be benefici measured as the number aries) of active fixed and mobile subscribers (Internet subscribers not accounted to avoid double counting). (Assume % female on a pro-rata basis using the current figure for total population: 51% )
59 Assuming total population of approx. 1,545,255 in 2010 and an annual growth rate of 2% (source: CIA World Factbook). The real penetration number being higher than 100%, it can be assumed that the whole Gabonese population will benefit from the project. 39
INTERMEDIATE RESULTS
Intermediate Result (Component One): Enabling Environment - Sound environment conducive to investment and competition
This indicator is a proxy for the enhancement of the harmonization of sector regulation that governs the ICT sector in the region. It (composi is a qualitative composite . Impact on telecom sector te score: Mid term indicator. It rates (i) making 1-low of World Bank technical 0 (zero) review and PIU from the regulatory framework Y impact 0 1 2 3 4 ARCEP/WB more effective at delivering assistance to 5 – [2010] Project ARCEP sector performance, (ii) high completion improving the capacity of impact) the regulatory institution to deliver their mandate and (iii) increasing the level of competition in the ICT sector as a result of the project technical assistance . Average cost of mobile This indicator measures the call (three minutes, local, US$/3 0.71 ARCEP from PIU from cost of a three minute peak 0.7 0.6 0.4 0.3 0.2 Yearly peak) min [2010] operators /ITU ARCEP time local call in the same mobile network.
This indicator measures the . Retail price of Internet price for access to the Internet at an equivalent rate services (per Mbit/s per 218 ARCEP from PIU from of 1 Mbit/s per month paid Y US$ 200 150 120 100 80 Yearly Month) [2010] operators /ITU ARCEP by end users in the country. It will be based on the price of a 256 kbit/s connection multiplied by 4.
Intermediate Result (Component Two): Connectivity - Increased access to ICT services
This indicator is a proxy for open access. It measures the . Number of operators and progress of unfettered and ISPs buying capacity from non-discriminatory access at 0 ARCEP from PIU from reasonable prices for all the regional infrastructure 2 3 4 5 6 Yearly Number [2010] operators /ITU ARCEP operators to regional deployed infrastructure (ACE RFS 3rd Quarter 2012 ; Libreville- Franceville-Congo link RFS 2014) . International Communications This indicator measures the 1.2 ARCEP from PIU from (Internet, Telecoms and Gbit/s 4.9 4.9 4.9 4.9 4.9 volume of available [2010] operators ARCEP international capacity (ACE Data) bandwidth RFS 3rd Quarter 2012)
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This indicator is a proxy for the volume of cross-border communications traffic . Length of fiber optic ARCEP from 0 PIU from flows. It measures the network built Y km 0 0 800 1140 1140 Yearly operators and cumulative number of [2010] ARCEP from ANINF kilometers of fiber-optic network built under the project to reach the borders 60 of the country. This indicator is a proxy for . Increased access to ICT increased geographical reach Mid term and usage of regional services: Number of 61 3 review and ARCEP via PIU from broadband network services localities with broadband Number 3 3 662 1063 10 Internet access (256Kbps) [2010] Project survey ARCEP (Libreville-Franceville – completion Lekoko (Border Congo) RFS 2014 ; Lékoni - Koulamoutou RFS 2015) * Results Platform, CT: Telecommunications, Core Sector Indicators and Definitions, May 25, 2010
60 Under Capacity Building activities for ARCEP under Component 1, assistance in improving the Market Observatory will address this issue of lacking data on traffic flows on a country by country basis. A specific indicator to capture intra-regional traffic flows is expected to be introduced after mid-term review. 61 Libreville – Port Gentil - Franceville. 62 In addition: Moanda - Bakoumba - Lekoko. 63 In addition: Lekoni - Bongoville - Mounana - Lastourville. 41
Annex 2: Detailed Project Description
AFRICA: Central African Backbone - APL4 - Gabon Project (CAB4 GA)
1. The development objectives of the proposed project are consistent with the PDO for the CAB Program: to contribute to increase geographical reach and usage of regional broadband network services and reduce their prices in the territory of the Gabonese Republic.
2. The project has three components, Component 1 – Enabling environment, Component 2 – Connectivity and Component 3 – Project Management, each of which is described in terms of detailed activities below64. While the CAB Program includes the possibility of eGovernment related components, the Bank and GoG have decided that this project will focus on connectivity elements, whose effective availability is a key prerequisite for successful roll-out of eGovernment applications, and finance a study on scaling up the e-government strategy and action plan to leverage such new connectivity. Additional financing to this CAB4 GA project may be considered in the future to support rollout of selected eGovernment and flagship ICT applications should GoG confirm its interest to engage in such an ICT transformational agenda with the Bank as envisaged in the proposed CPS.
3. The project activities will contribute to the development objective of the proposed project by implementing an effective broadband connectivity and increased competition (addressing herewith critical connectivity gaps), which will improve access and reduce prices, as well by setting up a regulatory oversight in line with international and regional best practices with respect to broadband regulation. This will be achieved through (a) providing Technical Assistance (TA) strengthening regulatory framework and capacity of key stakeholders (MCPEN, ANINF and ARCEP) to promote further sector liberalization, resolve market efficiency gaps and pursue an ambitious broadband and digital policy agenda and (b) leveraging private investment on the basis of Public Private Partnerships (PPP) arrangements in a homogeneous way for new and much needed international, regional and national connectivity via the ACE submarine cable and via a crucial link of the national backbone linking the landing station of ACE, Libreville, Franceville and the border with Congo to interconnect with the Congolese backbone network.
4. Component 1 - Enabling environment (Estimated Cost US$6.05 million). This component will include the following activities:
(i) Technical Assistance to promote and implement Open Access Regime & PPP for international and for national connectivity (e.g. rules of incorporation, reference wholesale / interconnect offer) through hiring legal/transaction, regulatory and business advisors to advise GoG on negotiations with private sector operators, by financing technical and financial audits of the structures to be setup and through workshops on Promoting PPP investment in the telecommunications sector as well as supporting tender
64 To maximize flexibility, client-responsiveness and the specific national situation of each country (in terms of existing infrastructure or policy environment), the CAB Program includes a customizable set of activities which have been grouped under four broad components: ―enabling environment‖, ―connectivity‖, ―eGovernment and flagship ICT applications‖ and ―project management‖. 42
design and audit of national backbone, of IXP and of a Carrier Hotel65 to access the international and national connectivity (Estimated Cost US$1.60 million). (ii) Technical Assistance for the review, improvement and development of the telecoms and the information laws (cyber-security, privacy, etc). There is a need to review outdated telecoms law and to ensure their coherence with the regional directives66 (Estimated Cost US$0.90 million). (iii) Technical Assistance on key regulatory tools for broadband market and action plan and development of cost models for interconnection (fixed and mobile) and for broadband wholesale offers including facility sharing (Estimated Cost US$1.00 million). (iv) Technical Assistance to strengthen capacity of key stakeholders (i.e. Line Ministry MCPEN, ANINF and the Regulatory Authority ARCEP) to provide policy and regulatory capacity building (e.g. regulatory tools, cost models, M&E capacity). This assistance will support a range of activities, focused studies and training designed to assist MCPEN, ANINF and ARCEP improving the overall policy, competitive and regulatory environment for the ICT sector (Estimated Cost US$0.75 million). (v) Technical Assistance to support the increase of broadband access including rural access as well as further liberalization in Gabon including the regulatory regime for ISPs and reaping the broadband benefits of digital switchover. Having a comprehensive policy to promote broadband use in Gabon will facilitate uptake of demand and applications that will be available following the improved access to connectivity, in particular though ISPs and local content providers, as well as increased geographical reach of broadband in the country by a revised universal access strategy. Also the switchover from analog to digital television is likely to free valuable frequency resources that could facilitate roll out of mobile broadband (Estimated Cost US$0.70 million). (vi) Technical Assistance to support the establishment of an Internet Exchange Point (IXP) and to implement a management policy for Internet domain names subject to existing international agreements and arrangements. Generally IXPs are managed by an association of ISPs and telecommunications operators or similar structure. The technical assistance will enable Gabonese stakeholders to determine the most appropriate technical and institutional management structure for future growth and long-term sustainability to establish an IXP in Gabon as a key prerequisite for successful local content and services development. The technical assistance will also conduct a diagnosis summary of the current status of the use of ―.ga‖ and provide recommendations to develop a national management policy for the ―.ga‖ domain as well as a communication plan around the ―.ga‖ domain at the national and international level, with the objectives of increasing the
65 A carrier hotel, also called a collocation center is a secure physical site or building where data communications media converge and are interconnected. It is common for numerous telecommunications operators and service providers to share the facilities of a single carrier hotel. Co-location allows multiple customers to locate network, server, and storage gear—and connect them to a variety of telecommunications and network service providers (ensuring neutrality towards any operator or service provider) — with a minimum of cost and complexity. A carrier hotel provides collocation, offering various services to customers ranging from modest-sized racks to dedicated rooms or groups of rooms (offering herewith the appropriate environment to set up data centers). In developed countries, carrier hotel can be of sizeable magnitude (often containing more than 5000 square meters (approximately 54,000 square feet). In our case, the carrier hotel will be much smaller. 66 See: Report by Mrs. Claire Audin, Regulatory consultant advising GoG (Rapport d’Etat des Lieux, Date : 30 novembre 2011). 43
names registered in ―.ga‖, creating direct qualified jobs and attracting foreign investors in the ICT sector (Estimated Cost US$0.60 million). (vii) Technical Assistance to assist in scaling up the e-government strategy and action plan to leverage new connectivity (Estimated Cost US$0.50 million), encompassing a status of actions undertaken so far in implementing e-government applications, an analysis of progress and delays, and detailed recommendations to update / revise the Gabonese e- government strategy with an action plan showing clear priorities, associated timelines and suggestions for indicators tracking impact on country development and progress towards a knowledge based economy. 5. Component 2– Connectivity (Estimated Cost US$48.50 million). This component will include the following activities:
(i) finance a share of GoG’s $15 million contribution (consortium fee) for participating in the ACE submarine cable on the basis of an open access and PPP structure (Estimated Cost $7.64 million).
o Providing new and much needed international connectivity to Gabon via ACE will substantially reduce the cost of international connectivity, increase capacity and provide more effective redundancy. o The ACE submarine cable is expected to connect Europe with 12 countries along the West African coast (Mauritania, Senegal, Gambia, Guinea, Sierra Leone, Liberia, Côte d'Ivoire, Ghana, Nigeria, Equatorial Guinea, Gabon, Sao Tomé), of which 5 have already mobilized World Bank financing to join ACE (Liberia and Sierra Leone under WARCIP 1-A discussed and approved by the Board on January 20, 2011), STP under APL2 on January 12th, 2011, The Gambia and Guinea under WARCIP 1-B discussed and approved by the Board on June 21, 2011). The ACE consortium agreed also to install a Branching Unit off the coast of Tenerife, Benin and Cameroon. The submarine cable has been laid in international and territorial waters between June and December 2011, starting with the segment France/Senegal, followed by Senegal/Ivory Coast and finally Ivory Coast/STP (serving Gabon). In each country, a landing station will be built close to the shore to connect the submarine cable with terrestrial networks. It is expected that the ACE submarine cable will be ready for service in August / September 2012. As a party to the Construction & Maintenance Agreement (C&MA) to ACE, the Republic if Gabon will obtain a fixed ownership percentage and an allocated capacity (based on kilometers and branch capacity) at a fixed price. At this point in time, it is estimated that for a single landing station, each country will obtain approximately 2.8% of the capacity at a cost of approximately US$25 million67.
67 A model enables parties to the C&MA to specifically determine the payment required for consortium members and the bandwidth capacity that will be received. While the model and the resulting payment amounts have been finalized when the C&MA was signed by all members on June 5, 2010, there may be slight variations around the US$25 million estimate depending on final configuration of the system and final list of ACE members. 44
Figure 8: Overview of the ACE submarine cable
NB: Discussions are currently underway to assess interest for deployment of Segment 4 (from STP to South Africa) at a later stage. Source : ACE
o According to the ACE Construction & Maintenance Agreement (C&MA), consortium fees of US$25 million are to be paid in 8 installments between July 2010 and June 2012. Some of these installments have been paid by Government with own funds, some with funds from the PIH and some using IBRD funding. So far 80% has been paid, US$2 million of which using IBRD financing, and the Government is expecting to cover US$4 million through retroactive financing68 (details below).
68 In accordance with OP 6.00 – Bank Financing, Retroactive financing is permitted under the following conditions which are satisfied in this specific case: (a) the activities financed are included in the project description; (b) the payments are for items procured in accordance with applicable Bank procurement procedures; (c) such payments do not exceed 20 percent of the loan amount; and (d) the payments were made by the borrower not more than 12 45
Figure 9: ACE installment schedule Parallel financing
Installment Due date Total Paid by Paid by Paid by IBRD direct IBRD IBRD # Amount to Total GoG with GoG with payment to retroactive reimbursement be paid to Gabon own funds IBRD funds ACE financing to GoG under ACE through (US$) (US$) (reimbursement normal (US$ )a PIH (US$) to GoG on past financing (US$) expenses) (US$)c (US$)b
1 July 23, 3,750,000 3,750,000 2010
2 September 2,500,000 1,607,821 23, 2010 3 December 1,250,000 1,250,000 23, 2010 4 March 23, 4,000,000 4,892,179 2011 5 July 31, 4,000,000 2,000,000 2,000,000 2,000,000 2011 6 December 4,500,000 1,857,821 642,179 2,000,000 2,000,000 22, 2011 7 February 23, 3,750,000 1,357,821 2,392,179 2,392,179 2012 Subtotal 23,750,000 10,000,000 7,357,821 6,342,179 2,000,000 4,392,179 8 June 23, 1,250,000 1,250,000 1,250,000 2012
TOTAL 25,000,000 10,000,000 7,357,821 7,642,179 2,000,000 4,392,179 1,250,000
a. WB funding would flow through a direct payment to the ACE consortium on behalf of GoG. b. Indicative value (depends on exchange rate US$/XAF) c. If payment is made after signing but before effectiveness, GoG will be reimbursed from loan proceeds after effectiveness.
(ii) finance a terrestrial fiber optic link Libreville - Franceville - Bakumba – Lekoko / Border with Congo (approx. 800 km) to interconnect with the Congolese link Dolisie – Mbinda (already financed under CAB3 CG) and additional links such as Lekoni - Franceville – Koulamoutou (approx. 340 km) within the first phase of roll out of a national backbone (Estimated Cost US$40.50 million).
o While new international connectivity via ACE will provide the potential for massively improved access to broadband communications in Gabon, the full benefits
months before the expected date of Loan Agreement signing. The date after which payments may be made is agreed at appraisal, confirmed during negotiations, and recorded in the Loan Agreement. 46
cannot be achieved without additional investments in national backbone infrastructure. o The terrestrial fiber optic link Libreville - Franceville - Bakumba – Lekoko is a crucial link of the Gabonese backbone (―dorsale nationale‖): loops to provincial capitals and links to the borders are branching out of this Libreville – Franceville link. o The terrestrial fiber optic link Franceville - Bakumba – Lekoko will ensure interconnection with neighboring country with Congo to interconnect with the Congolese link Dolisie – Mbinda financed by the Bank under CAB3 CG on the basis of the same open access network (open to all operators) and PPP (leveraging private sector investment) key principles. o The terrestrial fiber optic link from Lekoni to Koulamoutou via Franceville will enable to connect two main secondary cities (Lekoni, Koulamoutou) and start the building of a south loop that will back up the Libreville-Franceville link, herewith contributing to increase geographical reach and usage of broadband network services.
(iii) finance the setup of an Internet Exchange Point (IXP) and of a Carrier Hotel to access the international and national backbone capacity (Estimated Cost $0.36 million).
o An Internet exchange point (IXP) is a physical infrastructure through which Internet Service Providers (ISPs) and telecommunications operators exchange Internet traffic between their networks. The primary purpose of an IXP is to allow networks to interconnect directly, via the exchange, rather than through one or more third-party networks. The advantages of the direct interconnection are numerous, but the primary reasons to finance the set up of an IXP in Gabon are cost, latency, and bandwidth. IXP typically hosts shared time servers, local DNS servers and caching servers. o A carrier hotel, also called a collocation center, is a secure physical site or building where data communications media converge and are interconnected. It is common for numerous telecommunications operators and service providers to share the facilities of a single carrier hotel. Co-location allows multiple customers to locate network, server, and storage gear—and connect them to a variety of telecommunications and network service providers (ensuring neutrality towards any operator or service provider) — with a minimum of cost and complexity.
6. Component 3 - Project Management (Estimated Cost US$3.45 million). This activity will (i) finance the carrying out of the social and environmental studies required by the ESMF, the RPF and the IPPF monitoring and capacity building (Estimated Cost US$1.5 million), (ii) provide support needed to strengthen the capacity of GoG to implement CAB4 GA, including upgrading an existing Project Implementation Unit (PIU) (see Annex 3), hiring dedicated staff to work on the project to complement existing project staff (such as technical advisor), covering office equipment and some operating costs, trainings on Bank’s project cycle and procurement and FM guidelines of Bank funded projects and (iii) finance audits, monitoring and evaluation (M&E) including appropriate actions to support efficient data collection, and communication.
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Annex 3: Implementation Arrangements
AFRICA: Central African Backbone - APL4 - Gabon Project (CAB4 GA)
1. Project institutional and implementation arrangements
1.1 Project administration mechanisms
1. The line Ministry MCPEN and the MECIT will set up a Fiber Optic Commission that will lead the implementation of CAB4 GA. The implementation arrangement agreed with GoG involves therefore two organizational levels: a Fiber Optic Commission and a Project Implementation Unit. This arrangement builds upon the existing arrangement established by GoG and TOTAL Group as any PIH funded project; it has been successfully working during the PPA and it is now proposed for the whole CAB4 GA project. Beside savings on project management costs, this approach will also enable a faster implementation of CAB4 GA as there will be no need to set up a new PIU.
2. The Fiber Optic Commission (Commission chargée du suivi des projets de fibre optique au Gabon) will be in charge of providing overall technical and operative guidance, direction and coordination during project implementation will have fiduciary and governance oversight and will bear overall responsibility for the compliance of safeguard activities to National and Bank policies. A draft Ministerial Decision of GoG formally establishing the Fiber Optic Commission is under preparation and will be issued by GoG as a condition of effectiveness of the Loan Agreement.
3. The Fiber Optic Commission will comprise of a Steering Committee (Comité de pilotage) and of a Project Coordination Team (Direction de projet)69. The Steering Committee will include the Minister of MECIT, the Minister of MCPEN, the Director General of ANINF and the President of ARCEP70. The Steering Committee will meet at least once every quarter (or exceptionally if so required) and will be supported, in all its functions, by a Project Coordination Team comprising of representatives from MECIT, MCPEN, ANINF and ARCEP as well as representatives from the Director General of Environment (DGE) in charge of social and environmental safeguards within the MHUEDD and from the railway company SETRAG. The Project Coordination Team will designate one of its members as the CAB4 GA focal point to ensure smooth coordination with the Bank and the PIU and a representative of the Permanent Secretary of CN-TIPPEE will be included in the Project Coordination Team. The CAB4 GA focal point will be the secretary of the Steering Committee. The Permanent Secretary of CN- TIPPEE can be invited as an observer to the Steering Committee. The main duties of the Fiber Optic Commission will be:
69 Such a Fiber Optic Commission is to be established for any project financed by GoG using resources of the PIH. In the case of the ACE / Libreville - Port Gentil project where funds from the PIH have been used, the Fiber Optic Commission has been set up by Ministerial Decision n.088/MCPEN from November 21, 2010, updated by Ministerial Decision n.043/MCPEN from June 20, 2011 to include newly created ANINF alongside to MECIT, MCPEN, the Line Ministry in charge of Mining, Petrol and Oil (MMPH) and TOTAL Gabon. 70 The GoG may consider appropriate to complement the Fiber Optic Commission with representative of other interested institutions or authorities of the Gabonese Republic, such as the National Agency for Major Works ANGT. 48
o Provide overall policy and strategic direction, general project oversight and overall operative guidance and coordination during implementation; o Identifying synergies and complementarities of activities, and consistency of activities with GoG’s ICT policy; o Have fiduciary and governance oversight of the main disbursement areas for CAB4 GA; o Be responsible for approving annual work plans and budgets within a time frame to be defined in the project implementation; o Deliberate on all realignment of project implementation activities and any changes in allocation of budgets between components (subject to the Bank’s approval); o Be responsible for monitoring the implementation of the M&E framework; o Bear overall responsibility for the compliance of safeguard activities to National and Bank policies.
4. The PIU for CAB4 GA will be an already established and experienced PIU called CN-TIPPEE (Commission Nationale – Travaux d’Intérêt Public pour la Promotion de l’Entreprenariat et de l’Emploi / National Commission – Labor Intensive Small-Scale Public Infrastructure Works), which was set up in 2006 by GoG and which is already familiar with Bank procedures71. The CN-TIPPEE, directed by a Permanent Secretary, includes four units respectively responsible for technical implementation, administration and finance, monitoring and evaluation as well as information and communication. Reporting to the Fiber Optic Commission for overall guidance, direction and coordination as well as for fiduciary and governance oversight, the CN-TIPPEE will be responsible for project implementation, including all fiduciary tasks such as Procurement, Financial Management, M&E, Communications and Environmental Support. The Permanent Secretary of CN-TIPPEE can be invited as an observer to the Steering Committee. The main duties of the PIU will be: o Oversee CAB4 GA implementation, management and reporting; o Prepare implementation and procurement plans together with the Project Implementation Team; o Prepare annual work plans and budgets for submission to the Fiber Optic Commission for approval; o Coordinate with the Bank on all aspects of project implementation; o Coordinate with the Fiber Optic Commission to define the work program of the technical advisor; o Work with MCPEN, ANINF and ARCEP to monitor performance agreements; o Handle for the Fiber Optic Commission all procurement and financial management for the CAB4 GA project in compliance with the World Bank procurement guidelines
71 According to its establishing Ministerial Decision, CN-TIPPEE’s objective is to make projects which are in the public interest on behalf of all stakeholders (GoG, Regional and local administrations, NGOs or Donors) with a view to implement best practices and sound governance. The size of the CN-TIPPEE can vary to adjust to the project workload, with a minimum of 6 key staff working on multiple projects.CN-TIPPEE was the PIU of the local infrastructure development project (PDIL project – P082812) which closed December 2011. As of January 2012, CN-TIPPEE is in charge of a project financed by GoG (Projet de création de « plateformes de services » (PFS) pour l’insertion à des activités économiques génératrices d’emplois et de revenus dans la filière « BOIS ») as well as of the PPA of the CAB4 GA project. Counterpart funding estimates for CAB4 GA have been made and submitted to GoG in the context of the 2012 budget discussion. To address any possible risks of attrition of staff prior to GoG’s counterpart funding availability under its 2012 budget (which is introduced as a legal covenant), support can be financed under the PPA, in particular for Financial Management and Procurement activities. 49
and in the spirit of the anti-corruption legislation, including resource monitoring, preparation of bid documents, appraisal and procurement of contracts, and contracts management; o Prepare quarterly consolidated financial and auditing reports to be submitted to the World Bank on financial management and procurement arrangements, respectively; o Prepare the disbursement plan and take responsibility for withdrawal of funds, and payment to contractors and suppliers; o Arrange and facilitate regular meetings with the Project Coordination Team to discuss progress with implementation and issues of common concern; o Prepare materials related to the project for public dissemination and coordinate stakeholder inputs and appropriate response; and o Provide guidance and support implementation of Environmental and Social Safeguards via an Environment and Social Safeguards Focal Point (Point Focal Environnemental et Social (PFES)) that will be in charge of coordinating the implementation, the monitoring (control and audit) of social and environmental aspects and be an interface between the project, local authorities and other stakeholders.
5. The Government of Gabon ensures through subventions (counterpart funding) that the CN-TIPPEE will keep its key management, technical and financial positions staffed for the entire duration of the project to carry out its responsibilities under the project.72 The estimation is a total of 1,008,833,053 XAF (US$2,017,666) for the 5 year period of the CAB4 GA project, which includes the staffing costs for the key positions in the PIU73. The MECIT will be responsible for collecting contributions from relevant institutions and will channel the subventions to the CN TIPPEE according to the following scheduling in order to mitigate risks of untimely availability of counterpart funding:
no later than no later than no later than no later than 30 June 2012 31 May 2013 31 May 2014 31 May 2015 TOTAL XAF XAF XAF XAF XAF 235,694,379 302,392,773 302,392,773 168,353,128 1,008,833,053
6. While all procurement and fiduciary activities will be centralized and carried out by CN- TIPPEE, the beneficiary institutions MCPEN, ANINF and ARCEP will participate actively by contributing their expertise and knowledge in preparing TORs, evaluations, participation in selection committees, etc.
7. A technical advisor will also be hired that will work closely with the CAB4 GA focal point within the Project Coordination Team as well as with MCPEN and ANINF to handle the additional technical workload generated by CAB4 GA. The technical advisor will be the secretary of the Project Coordination Team. Terms of Reference for the technical advisor have been drafted and the Gabonese Republic through the PIU CN-TIPPEE is in the process of hiring the technical advisor.
72 Similar implementation arrangements as for the infrastructure development project (PDIL project – P082812). 73 Permanent Secretary (coordinator), Financial & Admin. Specialist, Procurement Specialist, M&E and Safeguards Specialist. 50
Figure 10: CAB4 GA Implementation arrangements
1.2 Measures to address capacity constraints
8. Extensive technical assistance is being provided to promote and implement Open Access Regime & PPP for international and for national connectivity (e.g. rules of incorporation, reference wholesale / interconnect offer, …) through hiring legal/transaction, regulatory and business advisors to advise GoG on negotiations with private sector operators, by financing technical and financial audits of the structures to be setup and through workshops on Promoting PPP investment in the telecommunications sector as well as supporting tender design and audit of national backbone, of IXP and of a Carrier Hotel to access the international and national connectivity. An existing PIU is being used and will be strengthened with a CAB4 technical advisor placed to handle the additional technical workload generated by CAB4 GA at MCPEN and ANINF. The team will monitor the staffing situation at the PIU during preparation and implementation and advise on how to handle the additional workload generated by CAB4 GA. Trainings will also be organized throughout project implementation for the staff of the Line Ministry MCPEN, the ANINF and ARCEP on the Bank’s project cycle and procurement and FM guidelines of Bank funded projects.
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2. Financial Management, Disbursement and Procurement
2.1 Financial Management and Disbursement Arrangements
9. Overview of Project and implementing entity. The CAB4 GA project will be executed over a five-year period with a total financing of US$58 million and will include a set of activities grouped under three components described above. The line Ministry MCPEN and the MECIT will set up a Fiber Optic Commission that will lead the implementation of CAB4 GA. As described above, the implementation arrangement agreed with GoG involves two organizational levels: a Fiber Optic Commission and a Project Implementation Unit (PIU). This arrangement has been successfully working during the PPA and is now confirmed for the whole CAB4 GA project. Beside savings on project management costs, this approach will also enable a faster implementation of CAB4 GA as there will be no need to set up a new PIU.
10. Country Issues. GoG remains committed to improving Public Financial Management (PFM) and has taken measures to improve the expenditure and payment process. It has established an inter-ministerial task force composed of staff of the ministries of Budget and Economy that has recently completed a review of expenditures practices and has defined concrete measures aimed at shortening the expenditure channels and payment process. The improvement of the efficiency of the capital expenditure is crucial as the Government has decided to triple its investment budget. Despite all of the measures taken including the recent PER (June 2011), Public Financial Management remains weak and lacks capacity in budgeting, accounting, reporting, debt management, auditing and internal control systems. So far the country risk is rated high.
11. Risk assessment and mitigation. The overall residual risk rating is deemed Moderate. Risk Risk Risk Mitigating Measures Risk after Remarks rating Incorporated into Project Design mitigation measures INHERENT RISK M M Country level H Use an existing PIU experienced with H WB financed projects Weak capacity in Public Financial Management Entity level L Rely on existing PIU CN-TIPPEE L experience to support steering The implementation committee arrangements agreed with GoG involves two organizational levels: a CAB4 GA Fiber Optic Commission and a CAB4 GA Project Implementation Unit.
Project level M M Rely on other countries experience No major risk has been identified, for project components are based on similar projects in the region.
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CONTROL RISK M M Budgeting L Rely on PIU existing budgeting L arrangements. No risk has been identified in PIU existing budgeting arrangements. Accounting L L
No risk has been identified Rely on PIU existing accounting The accounting software has a multi in PIU existing accounting arrangements. project and site version. arrangements provided that the staffing level will not change after the closing of PDIL project. Internal Controls and S S Internal Audit
PIU manual of procedures Adopt an execution manual to reflect the During PPF and does not include the new new project implementing arrangements. prior to project implementing negotiations arrangements
Funds Flow M Open/use a segregated Designated M Account Funds might be diverted, used for non project eligible purposes or comingled with other activity funds carried out by PIU.
Financial Reporting L Rely on PIU existing financial reporting L Since the accounting software has a arrangements. multi project and site version, the No risk has been identified reporting process will be eased in PIU existing financial reporting arrangements. Auditing L L Rely on PIU existing external auditing Prior or at No risk has been identified arrangements but expand its scope to negotiation for in PIU existing external include the projects’ transactions. the agreement on auditing arrangements the use of current besides the need to expand external auditor. the scope of the audit to include the projects’ transactions. Overall FM risk M M
12. Strengths. The PIU has an adequate track record in implementing Bank-financed projects and is endowed with an existing fiduciary platform (accounting software, manual of procedures, qualified staff, external audit arrangements…).
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13. Weaknesses and Action Plan to reinforce the control environment.
Significant Weaknesses Action Responsible Completion or risks body
The current procedure Adoption of project CN-TIPPEE During PPF and prior implementation manual or at negotiation manual is not tailored to the project needs The scope of the current Amend the ToRs of the external CN-TIPPEE Negotiations external audit auditor to include the proposed arrangements does not project. include the proposed project
14. Staffing and Training. CN-TIPPEE is already staffed with a Finance Specialist and one accountant all well experienced in Bank-financed projects. The FM team will have the responsibility to collect and control the invoices, maintain the books, enter the data in the accounting software, manage project’s bank accounts, keep the books, monitor the budget and prepare the financial reports. The project will make significant investments in capacity-building efforts through training and technical assistance to build technical expertise, social capital and knowledge. With the focus on building sustainable capacity in key institutions such as MCPEN, ANINF and ARCEP, the benefits of the project are expected to last far beyond program completion.
15. Budgeting. The function of the administrative and financial unit of CN-TIPPEE includes: preparation and execution of the annual budget. Reliance will be placed on the PIU existing budgeting arrangements. The activities and the breakdown of cost to be financed under the project have been identified. Annual work plans to be approved by the Fiber Optic Commission will clearly detail the activities and will be translated into annual budgets. The Procurement Specialist (PS) will monitor its execution with the integrated financial software, in accordance with the budgeting procedures specified in the manual of procedures, and will report on variances along with the quarterly Interim Financial Reports (IFRs). Basically, the PS will prepare the overall budgets on an annual basis. The budgeting system needs to forecast the origin and use of funds under the project for each fiscal year. Only budgeted expenditures will be committed and incurred so as to ensure resources are used within the agreed upon allocations and for the intended purposes.
16. Accounting Policies and Procedures. The PIU will use its existing platform (accounting software multi project and multi site) to maintain the books and accounts of the project activities and ensure that the annual financial statements are produced in a timely manner in accordance with OHADA (Organisation pour l’Harmonisation du Droit des Affaires en Afrique) accounting
54 principles – which are in line with the international accounting standards. The existing software Tom-pro has been customized and upgraded to record the PPF and the project’s transactions and generate accurate financial reports on time.
17. Internal Control and Internal Auditing. Internal control will build on the existing CN- TIPPEE arrangement which comprise segregation of duties through four different units respectively responsible for technical implementation, administration and finance, monitoring and evaluation as well as information and communication and the monitoring and evaluation unit will be in charge of following up internal control recommendations made by external auditor. In addition an implementation manual specific to the project will be adopted.
18. Funds Flow and Disbursement Arrangements. One segregated Designated Account (DA) in XAF will be opened at Banque Internationale pour le Commerce et l’Industrie du Gabon (BICIG) and managed by the PS under the responsibility of the Project coordinator and the financial manager. Upon effectiveness, the DA will receive an advance up the ceiling amount of XAF 500 million, which is calculated to represent four month expenditures forecast, and will be replenished regularly through monthly Withdrawal Applications. Withdrawal transactions from the DA will be authorized respectively by PS head and Financial Manager. Direct payments will be made to the ACE Consortium74 to pay a share of the Consortium fee for the Gabonese Republic under Component 2-(i). In addition to the designated account, a Project Account will receive counterpart funds in compliance with the terms of the Loan Agreement.
IBRD Project Account (ACCD) Loan account Counterpart fund
PIU Designated Account in Commercial Bank
ACE Services providers / PIU Consortium Operating costs
Legend: Transfers of funds Flow of documents (invoices, good receipt notes, purchase order, contract) Payment to suppliers
74 The Bank's procurement guidelines will not apply to the financing of the Consortium Fee, in line with the waiver obtained for the previous operations under the ACE Cable (see Procurement Section below) 55
19. Method of Disbursement. The transaction-based disbursement method will be applied at the beginning. Once the PS demonstrates its ability to submit reliable quarterly IFRs, the project may shift to the report based method in the second year if it sustains a satisfactory FM rating. Other disbursement methods such as reimbursement, direct payments and special commitment will be available to the borrower. The minimum value for Reimbursement, Direct Payment and Special Commitment will be 20 percent of the DA ceiling. Further advances by the Bank into the Designated Account will be made against withdrawal applications supported by appropriate documents. Disbursement for ACE payments under Component 2-(i) will be done exclusively through the Direct Payment method, as was the case under the Project Preparation Advance (P4620-GB) which financed a share of the Government of Gabon’s initial contributions to the ACE consortium. Disbursements under for construction of the fiber optic cable under Component 2-(ii) will be made in installments linked to milestones reached at key stages of the development of the network. Payments will be made on the basis of customized Statement of Expenditures certified upon verification of an Independent Engineer as to the achievement of the milestones (e.g. constructed network segment) during the construction phase of the network. The remaining project components can be done using any of the four disbursement methods (Advance, Reimbursement, Direct Payment and Special Commitment).
20. Statement of Expenditures. Disbursements for all expenditures should be against full documentation except for items of expenditures under contracts valued at less than: (a) $500,000 for civil works; (b) $250,000 for goods; (c) $100,000 for consultant services contracts for firms; (d) $50,000 for consulting services awarded to individuals as well as (e) all training and operating costs, which will be claimed on the basis of Statement of Expenditures (SOEs). All supporting documentation for SOEs will be retained at the PS and will be readily accessible for review by periodic Bank supervision missions and external auditors.
21. Disbursements by category. The table below sets out the expenditure categories to be financed out of the Loan proceeds. This table takes into recognition the prevailing Country Financing Parameter for Gabon in setting out the financing levels.
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Amount of the Loan Percentage of Category Allocated Expenditures to be (expressed in USD) financed (inclusive of Taxes) (1) Goods, works, non-consulting services, consultants’ services and 8,500,000 100% Operational Costs for the Project, except works and goods under Parts 2.2 and 2.3 thereof (2) Consortium Fee:
(a) Due December 22, 2011 2,000,000 44% (b) Due February 23, 2012 2,392,179 64% (c) Due June 23, 2012 1,250,000 100% (3) Goods and works under Parts 2.2 and 2.3 of the Project 40,857,821 100% Amount payable pursuant 4) Refund of the Preparation 3,000,000 to Section 2.07 (a) of the Advance No. P4620-GB General Conditions TOTAL AMOUNT 58,000,000
22. Retroactive financing. GoG is requesting refinancing for two payments for a total of US$4.4 million. In accordance with OP 6.00 – Bank Financing, Retroactive financing is permitted under the following conditions which are satisfied in this specific case: (a) the activities financed are included in the project description; (b) such payments do not exceed 20 percent of the loan amount; and (c) the payments were made by the borrower not more than 12 months before the expected date of Loan Agreement signing.
o The first payment amounts to US$2.0 million. The conditions of OP 6.00 are fulfilled because: (a) the activities financed are a share of ACE Consortium fee under Component 2-(i) of the project; (b) the payment amounts to 1% of the loan amount; and (c) the payment was made on 1 December 2011, i.e. less than 5 months before the expected date of Loan Agreement signing (which is 22 April 2012). o The second payment amounts US$2.4 million and is approved by FY12 Finance Law. The conditions of OP 6.00 are fulfilled because: (a) the activities financed are a share of ACE Consortium fee under Component 2-(i) of the project; (b) the payment amounts to 1% of the loan amount; and (c) the payment is expected to be made before 22 April 2012, i.e. the expected date of Loan Agreement signing.
23. Refinancing date of the PPA. The refinancing date of the PPA was March 1, 2012. An extension to June 30, 2012 has been approved on February 28, 2012.
24. IBRD Flexible Loan choice. GoG confirmed its preferences for the IBRD Flexible Loan given the Government’s debt policy and the nature of the investment (fiber optic cable). These preferences are as follows:
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Spread over LIBOR Fixed Spread
Repayment terms Payment dates: May 1st and November 1st Grace period: 6 years Total repayment period (including Grace period) : 18 years Repayment schedule linked to disbursement Amortization profile: level repayment
Front-end fee Paid upfront from own resources
Options Currency conversation ; Interest rate conversion
25. Financial Reporting and Monitoring. The existing reporting arrangements (used with PDIL) will be maintained, whereby IFR will be submitted by the PIU to IBRD within one (1) month after the end of each calendar quarter. The current content and format of the IFR will continue to be used. The IFR will comprise the sources and use of funds and the detailed expenditures by component under the same format used under the PDIL project, taken into account lessons learned and improvement proposed during the different supervision missions. At the end of each fiscal year, the project will prepare annual financial statement. The financial management indicators for the project are the following: (i) part of the budget disbursed every year at the level of each component of the project; (ii) nature of the opinion from the external
58 auditor on the annual financial statements; (iii) number of internal control major weaknesses identified by the internal and the external auditors; (iv); and rating of FM overall control risk.
26. Auditing. The annual financial statements prepared by the PS as well as internal control system applied will be subject to an annual audit using the existing auditing arrangements. To this end, the scope contract of the current auditor will be amended. The auditor will provide one single opinion on the annual financial statements in compliance with IFAC Standards on Auditing. In addition to the audit reports, the external auditors will be expected to prepare a Management Letter giving observations, comments, and providing recommendations for improvements in accounting records, systems, controls and compliance with financial covenants in the Financing agreement. The project will be required to produce, no later than six month of the following fiscal year, audited annual financial statements.
27. Conditionalities. For effectiveness: Adopt the implementation manual of procedures.
28. Implementation support plans. FM implementation support mission will be consistent with a risk-based approach, and will involve a collaborative approach with the entire Task Team (including procurement). A first implementation support mission will be performed six months after the project effectiveness. Afterwards, the missions will be scheduled by using the AFTFM risk based approach model and will include the following diligences: (i) monitoring of the financial management arrangements during the supervision process at intervals determined by the risk rating assigned to the overall FM Assessment at entry and subsequently during Implementation (ISR); (ii) review the IFRs; (iii) review the audit reports and management letters from the external auditors and follow-up on material accountability issues by engaging with the task team leader, Client, and/or Auditors; the quality of the audit also is to be monitored closely to ensure that it covers all relevant aspects and provide enough confidence on the appropriate use of funds by recipients; and, (iv) physical supervision on the ground specially for the matching grant scheme; and (v) assistance to build or maintain appropriate financial management capacity.
29. Conclusions of the FM assessment. The overall FM risk is considered Moderate since the implementing agency is an existing and adequately-performing PIU endowed with all fiduciary requirements. The proposed financial management arrangements for this project are considered adequate to meet the Bank’s minimum fiduciary requirements under OP/BP10.02. The assessment recommended among other measures (i) the adoption of the Project Implementation Manual; (ii) the amendment of contract of the current external auditor.
2.2 Procurement
General
30. Use of Bank Guidelines: Procurement for the proposed Project would be carried out in accordance with the World Bank’s ―Guidelines: Procurement of Goods, Works and Non-
59 consulting Services under IBRD Loans and IDA Credits and Grants by World Bank Borrowers‖ dated January 2011 and ―Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits and Grants by World Bank Borrowers‖ dated January 2011 and the provisions stipulated in the Legal Agreement. The Bank's procurement guidelines will not apply to the financing of the ACE Consortium Fee, which is not a procurable item, in line with the waiver obtained for the previous operations under the ACE Cable. The anti-corruption guidelines that will apply will be the "Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants‖, dated October 15, 2006 and revised in January 2011."
31. Advertising: A General Procurement Notice (GPN) will be prepared and published in United Nations Development Business (UNDB), in Development Gateway’s (dgMarket) and in at least one national newspaper after the project is approved by the Bank. The GPN will show all International Competitive Biddings (ICB) for works and goods contracts and all international consulting services. Specific procurement Notices (SPN) for all goods and works to be procured under ICB and Expressions of Interest (EOI) for all consulting services to cost the equivalent of US$200,000 and above would also be published in the UNDB, dgMarket, as well as in the national press.
32. Procurement methods and Prior reviews: procurement methods and Prior-review thresholds for the project are indicated in table below.
Expenditure Contract value Procurement Contract Subject to Category Threshold (US$) method Prior Review 1. Works >=5,000,000 ICB All < 5,000,000 NCB Post review except> 800,000
< 250,000 Three quotations None (Post Review) 2. Goods >= 500,000 ICB All < 500,000 NCB None, except first 3 contracts < 100,000 Shopping None (Post Review)
3. Services >= 200,000 QCBS All a. Firms < 200,000 CQ, Other None (Post Review), except first 3 Single Source contracts and all Selection contracts for audit) All b. Individuals >= 100,000 IC All < 100,000 IC None (Post Review) Single Source All Selection
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Details of the procurement arrangements and Schedule for Goods and Works and consulting services
33. (1) Goods, works, and non-consulting services.
1 2 3 4 5 6 7 8 9 Estimated Selection Pre Domestic Review by Expected Comments Ref. Description of Cost (US$) Method qualification preference Bank Bids No. Assignment 1$ = 500 (yes/no) (yes/no) (Prior/Post) Opening FCFA Data 1 Works - terrestrial fiber optic link Libreville - Franceville - Bakumba – Lekoko / Border with Congo (approx. 800 km) and of a Carrier Hotel to access the 31 Dec. 48, 500,000 ICB Yes no Prior international and 2012 national backbone capacity and additional links such as a terrestrial fiber optic link from Lekoni to Koulamoutou via Franceville (approx. 340 km) 2 Goods - setup of 31 an Internet 357,821 NCB No no Prior March Exchange Point (IXP) 2013 3 Goods - Office 15 Aug. 40,000 Shopping No no Post supply 2012
4 Non-consulting 15 Aug. services - Internet 55,000 Shopping No no Post and Phone 2012
5 Goods - Software Single 30 July for fiduciary 30,000 No no Post management Source 2012 6 Goods - IT and telecoms 30 Aug. 70,000 Shopping No no Post equipments 2012
7 Goods - Car for 30 Aug. 75,000 Shopping No no Prior technical advisor 2012 8 Goods - 31 Equipment for 100,000 NCB No no Prior March ―.ga‖ domain name 2013
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34. (2) Consulting services.
1 2 3 4 5 6 7 Ref. Estimated Selection Expected Comments Review by No. Cost (US$) Method Proposals Description of Bank Submission 1$ = 500 (Prior/Post) Assignment FCFA Date
Technical Assistance to promote
and implement Open Access 1 Regime & PPP for international and for national connectivity including transaction/legal, regulatory and economic/financial support
600,000 QCBS Prior 15 Oct. 2012 Depending on 2 performance Technical Assistance to support of consultant tender design and evaluation of under the national backbone, of IXP and of Single 30 June PPA, same a Carrier Hotel to access the 135,000 Prior international and national Source 2012 consultant connectivity could be considered to do follow up work
3 Technical Assistance for the review, improvement and 30 Nov. development of (i) the telecoms 900, 000 QCBS Prior and (ii) the information laws 2012 (cyber-security, privacy, etc)
Study on key regulatory tools for 30 Sept. 4 400,000 QCBS Prior
broadband market and action plan 2012
5 Development of cost models for interconnection (fixed and mobile) and for broadband 31 Nov. 600,000 QCBS Prior wholesale offers including facility 2013 sharing
Study on broadband stimulation 30 Nov. 6 strategies, including in rural areas 400,000 QCBS Prior 2012 (universal access), and action plan
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7 Study on international best practice with digital dividend and 30 Nov. 300,000 QCBS Prior recommendations for Gabon to 2013 reap the broadband benefits
Feasibility study to set up an 8 200,000 CQ Prior 15 Oct. 2012 Internet Exchange Point (IXP) 9 Technical assistance to design 30 March management policy for ―.ga‖ 250,000 Prior domain name CQ 2013 10 Technical assistance to MCPEN and GoG to on e-government To be 500,000 QCBS Prior strategy and action plan to determined leverage new connectivity 11 Depending on performance of consultant under the Environmental and Social Single To be PPA, same Assessment including an ESMP, 100,000 Prior and a RAP or Abbreviated RAP Source determined consultant could be considered to do follow up work Depending on 12 performance of consultant under Single To be the PPA, same Indigenous Peoples Plan (IPP) 100,000 Prior Source determined consultant could be considered to do follow up work 15 Aug. 13 Technical advisor IC Prior 500,000 2012
15 Aug. 14 IT Staff 170,000 IC Prior 2012 15 Monitoring and Evaluation 30 Nov. 250,000 CQ Prior Survey 2013 16 Action Plan to reinforce the control environment: CN-TIPPEE to Single Audit Prior 6 Feb. 2012 sign contract 90, 000 Source with existing PDIL auditor to extend its use to the CAB4 Project 17 Technical assistance to set up the 15 Aug. contractual relations with 200,000 CQ Prior SETRAG 2012
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Short lists comprising entirely national consultants. The short list may comprise entirely national consultants (firms registered or incorporated in the country) if the assignment is below the ceiling of US$100,000 per contract, in accordance with para 2.7 of the Guidelines for Selection and Employment of Consultants under IBRD Loans and IDA Credits & Grants by World Bank Borrowers.
35. (3) Training, workshops, seminars and conference. The expenditure of these activities will be carried out on the basis of approved annual programs.
36. Procurement capacity assessment. A procurement capacity assessment of the Implementation Unit (CN-TIPPEE) was carried out during the pre-appraisal mission in November 2011. The assessment did not reveal any anomaly in the functioning of CN-TIPPEE. The CN-TIPPEE satisfactorily carried out all the preparatory studies and activities under Project preparation Advance for the project. Several post procurement reviews carried out in the CN- TIPPEE were satisfactory. The staff in the Implementation Unit includes a procurement specialist who has procurement experience at both national and international levels (including World Bank experience).
37. Strengthening of procurement capacities. The assessment did not reveal any anomaly within the procurement unit of the project Implementation Unit, except for the need of training in the use of procurement monitoring and management programs and the need to involve staff from beneficiary institutions (MCPEN, ANINF, ARCEP, etc) in all procurement procedure and more particularly in preparing the technical specifications and terms of references and participation in selection committees. Under the project, the procurement specialist as well as staff from beneficiary institutions will benefit from procurement training organized by specialized regional procurement training centers or at the Bank’s country office in Gabon. The following is a schedule of actions to be carried out for the strengthening of procurement capacities in the Project Implementation Unit:
Action to be undertaken Dates Responsible Institution Training in the use of procurement After Loan Project Implementation Unit monitoring and management programs effectiveness Participation for the procurement After Loan Project Implementation Unit specialists and staff from MCPEN, effectiveness ANINF and ARCEP in procurement workshops at the specialized regional procurement training centers Involvement of Staff from MCPEN, Before Negotiations Project Implementation Unit ANINF and ARCEP in the Procurement Committee
38. Procurement plan. The Recipient, at pre-appraisal in November 2011, has prepared a simplified procurement plan for project implementation that provides the basis for the procurement methods. This plan covering the first 18 months of project implementation has been reviewed and agreed between the Recipient and the project team during the pre-appraisal mission. A revised detailed version was submitted to the Bank during appraisal, reviewed and
64 agreed between the Recipient and the project team on February 13, 2012. It will be updated in agreement with the project team at least once a year reflecting the proposed activities for the following 18 months of project implementation as required to reflect the actual project implementation needs and improvements in institutional capacity. It will also be available in the project’s database and in the Bank’s external website once the Loan is approved by Bank Board of Directors.
39. Frequency of procurement supervision. In addition to the prior review supervision to be carried out from Bank offices, the Recipient and the Bank team have agreed to at least three missions per year for the first two years of project implementation to minimize the risk of failing to follow procurement procedures as well as for supervision of project activities. The Recipient and the Bank have also agreed to two supervision field visits to carry out post-review of procurement activities.
3. Environmental and Social Safeguards
40. From an environmental and social safeguard standpoint, the CAB4 GA project is a Category B project. That is, the environmental and social impacts of the project, for the most part, are expected to be minimal, site-specific and manageable to an acceptable level. There are five Bank Safeguard policies triggered under the project. These include: Environmental Assessment (OP 4.01); Natural Habitats (OP 4.04); Indigenous Peoples Policy (OP 4.10); Physical Cultural Resource (OP 4.11) and Involuntary Resettlement (OP 4.12).
Figure 11: CAB4 GA overview of triggered Bank safeguard policies Bank Safeguard policies International connectivity via National backbone connectivity the ACE submarine cable (Phase I) via a terrestrial fiber landing in Libreville optic link Environmental Assessment YES YES (OP 4.01) Natural Habitats (OP 4.04) YES YES Indigenous Peoples Policy NO YES (OP 4.10) Physical Cultural Resource YES YES (OP 4.11) Involuntary Resettlement (OP YES YES 4.12)
41. The project is expected to have positive social benefits - including increased possibility of better access to ICT services for the population and improved government service delivery. Improved quality and reduced costs of communications lower the cost of doing business and weaken the effects of insularity, improving access to markets. Several ICT applications are being developed in recent years and in different countries in the region which bring other sectoral improvements through ICT platforms. Examples are access to financial services through mobile banking, improvements on farmer’s livelihoods through increased information on agricultural techniques and crop prices, and positive impacts on education through access to eLearning
65 programs. More generally, the project will (i) enable ICT to become a driver for sustainable economic growth; (ii) set the basis for enabling the Government to use ICT to provide decentralized services; (iii) improve access and quality of ICT services for the population, businesses, and the Government; (iv) reduce isolation and enhance economic activities in rural areas; and (v) create additional opportunities for women entrepreneurs to own ICT-related SMEs.
42. Despite these expected positive social benefits, implementation of an effective connectivity system sometimes result in adverse impacts on the bio-physical, socioeconomic and cultural environments, if proper mitigation measures are not in place.
3.1. International connectivity via the ACE submarine cable landing in Libreville
43. The ACE submarine cable system has a submerged or ―wet plant‖ part, and a ―dry plant‖ part which starts where the submarine cable makes landfall and terminates at the Landing Station, which is the physical site at which the submarine cable connects into the land-based infrastructure or network.
“Wet plant” part
44. The ―wet plant‖ part of the ACE submarine cable comprises a Deep Sea75 portion and a Shallow Water portion. Sections of the cable lie within the territorial waters of the landing parties while remaining sections lie in international waters. According to the 1982 United Nations Convention on the Law of the Sea (UNCLOS), of which Gabon is signatory, international waters start 12 nautical miles from the coast. Beyond the 12 nautical mile limit, there is a further 12 or 24 nautical miles from the territorial sea, a contiguous zone, in which a State could continue to enforce laws on pollution, taxation, customs and immigration. UNCLOS further provides for exclusive economic zones which could extend from the edge of the territorial sea out to 200 nautical miles. In the exclusive economic zones, States have no sovereign rights but can enforce laws on pollution, taxation, customs and immigration. Within their territorial waters, on the other hand, States have sovereign rights. Foreign nations have the freedom of laying submarine pipes and cables in the exclusive economic zones. The seaward limit of coverage for the environmental and social studies for CAB4 GA is the seaward limit of the exclusive economic zone of Gabon, defined as extending 200 nautical miles (370 km) from the shorelines. It is possible, depending on the topology of the country that the 12 nautical miles of the territorial waters straddles between Deep Sea and Shallow Water.
75 Deep Sea is mainly a technical term with no precise definition used to describe zones/areas beyond which cable burial is not required (mainly because threats to the cable from trawling activities are non-existent) which starts usually after 1000/1500 meters depth. While the main cables are to be placed in non-territorial, deep sea locations, OP 7.50, Projects on International Waterways, does not apply. The types of waterways covered under the policy do not contemplate an ―open sea.‖ For purposes of the policy, international waterways include semi-enclosed coastal waters, closed seas, national rivers flowing into those waters, and transboundary groundwater. It should be noted that the definition of international waterways under the policy is at variance with the definitions under the rules established by the Institut de Droit and the International Law Association, as well as the United Nations Convention on the Law of the Non-Navigational Uses of International Waters Watercourses. 66
Deep Sea portion.
45. Deep ocean fiber optic cables are no larger than 17-21 mm diameter – about the size of a domestic garden hose - and are laid mainly upon the surface of the ocean floor (―surface laid‖). After the signing of the Supplier Contract, Alcatel-Lucent conducted a cable route study to refine the initial route (Cable Route Estimate) and corridor taking into account seabed contours, volcanoes, environmentally sensitive areas (i.e. conservation areas, coral reefs0, oil exploration zones and fisheries, etc., along the route and included visits to the possible landing countries/sites (including the Gabonese Republic) to discuss environmentally sensitive areas, requirements for permits, fisheries, etc. Information obtained during this period was instrumental in determining an optimal route of the cable system which reflects these discussions. Alcatel- Lucent has followed up the preliminary survey with a more detailed survey (called ―Marine Survey‖) of the seabed to fine-tune the cable route which has been based on confirmed landing sites (Libreville in the case of Gabon was surveyed in December 2010) and has provided more information on the level of the bottom trawl fishing and shipping activities (closer to the shore), and deep sea activities, including oil drilling. Main findings of these surveys have been made available to the World Bank by GoG.
46. Most of the larger companies operating in the submarine cable industry typically work to standards and quality management systems set by the International Organization for Standards under the ISO 9000 and ISO 9001 schemes. Furthermore, the International Cable Protection Committee (ICPC) publishes recommendations on key issues such as cable routing, cable protection and cable recovery that are available to anyone on request. This very stringent standard puts pressure on cable companies to adhere to strict environmental standards. The general experience is that there are no significant environmental issues concerning submarine cables in the deep sea, and in particular the section of the submarine cable that lies in the deep sea has minimal impact of marine mammals and fish. The threat of whale entanglements has diminished significantly with improvements since 1956 in the design of the cable and in the precision with which they can be laid in close conformity with the seabed profile, and without loops and twists.
47. The extensive studies that take place prior to final cable laying tend to work as effective safeguards against any possible environmental disruption, since in large part they are intended to identify routes for the submarine cable that will avoid seamounts, volcanoes, canyons, vents, seeps, deepwater reefs, dissected terrain – all areas that tend to be associated with higher biological value than the general abyssal plain.
48. Because much of the deep ocean lie beyond national jurisdictions, few Environmental Impact Assessments (EIAs) for marine activities have been undertaken in this zone and thus there is little evidence of any environmental issues, except in the case of oil and gas exploration and very deep sea trawling. No specific environmental studies are undertaken for submarine cables; rather the detailed Cable Route Survey (called ―Marine Survey‖) effectively services this purpose. At the surface, pollution of the high seas oil and wastes discharged from vessels laying
67 the submarine cable can be effectively controlled if those vessels observe compliance with maritime conventions such as MARPOL76.
Shallow Water portion.
49. As the submarine cable gets closer to the shores in water depths lower than 1,500 m, the cable’s diameter may increase to about 40-50 mm due to the need to add protective wire armoring. It may also be necessary to bury the cable to protect it. There may be some temporary low to moderate and social impacts including localized (because the duration of cable-laying operations is usually no more than a few days) impacts to near shore marine life and local fishermen access.
“Dry plant” part
50. The Landing station is located near to the seashore at Libreville and consists primarily of a building, power feed and a power grounding (earthing) system. The building has 150 square meters in size with approximately half of this space for equipment and the balance for maintenance, training and office spaces.
Safeguard instruments prepared for the “Wet plant” and the “Dry plant” parts
51. According to the ACE C&MA, the Gabonese Republic has to provide the ―wet plant‖ part situated within its territorial waters and the ―dry plant‖ part in due time so as to meet the contractual Ready For Provisional Acceptance date stipulated in the contract with the supplier of the submarine cable (Alcatel Lucent, chosen after international tender by the ACE Consortium). The ―wet plant‖ part is realized by the supplier of the submarine cable whilst the ―dry plant‖ part is realized by suppliers chosen by GoG after competitive tender and according to technical specifications set by the ACE consortium.
52. To implement the project in Gabon, GoG has set up by Ministerial Decision n.088/MCPEN from November 21, 2010 a Fiber Optic Commission (Commission chargée du suivi des projets de fibre optique au Gabon: Projet international Africa Coast to Europe (ACE) et Projet LBV-POG) with MECIT, MCPEN, the Line Ministry in charge of Mining, Petrol and Oil (MMPH) and TOTAL Gabon77. This is going to evolve into what is described in paragraph 40 of the main body of this document, with the issuance of a new ministerial decision for effectiveness. Such a Fiber Optic Commission is to be established for any project financed by GoG using resources of the PIH. After competitive tender, GoG has chosen the consultancy firm AQEST, a renowned expert company in submarine cable business, to assist the Fiber Optic Commission in the technical project management and ensure, with respect to the ACE project, that the ―wet plant‖ part situated within its territorial waters and the ―dry plant‖ part are built according to technical specifications defined by the ACE Consortium.
76 The International Convention for the Prevention of Pollution from Ships (MARPOL) is the main international convention covering prevention of pollution of the marine environment by ships from operational or accidental causes. It is a combination of two treaties adopted in 1973 and 1978 respectively and also includes the Protocol of 1997 (Annex VI). It has been updated by amendments through the years. 77 Updated by Ministerial Decision n.043/MCPEN from June 20, 2011 to include newly created ANINF. 68
53. As the Marine Survey has been performed, the final site of the landing station is known and the specific civil works identified, GoG has prepared and consulted upon an Environmental and Social Impact Assessment (ESIA), an Environmental and Social Management Plan (ESMP) and an Abbreviated Resettlement Action Plan (ARAP) for the cable and any associated equipment that will be laid from the junction with the main cable through territorial waters and onto the national shores to the landing station in Libreville.
54. The ESIA indicates the following overall moderate to low negative environmental and social impacts:
Figure 12: CAB4 GA ACE component – summary of negative environmental and social impacts Phase Environmental Negative Impacts Impacts on air quality through temporary and local deterioration of the air quality; Construction Risk of coastal erosion at the beach of la Sablière; phase Risk of change in soil structure and erosion risks along the route of the project; Potential impacts on flora (minor); Disturbance of natural habitats in the marine environment; Impact on the marine environment and risks of pollution of marine waters Environmental pollution by discharges of waste from the work Work in the marine environment: Increased turbidity of water, thus increasing the suspended sediments. Pollution of the environment and marine waters by waste from work disturbance of the seabed during the burial of the cable, and therefore the marine habitats of benthic species Operations Risk of pollution of the of marine environment during the maintenance of phase the cable
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Phase Social Negative Impacts Risk of disruption of economic activities along the Rights Of Way Interference/obstruction of traffic during the construction of the trenches Construction Risk of accidents at work (bad signs of excavation) phase No use of local labour Loss of income for people along the route Loss of property for horticulturists settled along the route Disruption of mobility in the project area Undermining of livelihoods Risk of social conflicts in case local labour is not used Risk of spread of STIs/HIV/AIDS among the populations and the workers Risks of theft, looting and sabotage, breaking into the sites Operations Risk of disruption during the maintenance of the network phase Source: ESIA
55. The ARAP indicates that number of Project-Affected People (PAPs) is 13, as the project has negative impacts on the living environment, mobility and livelihoods of some people located along the road between the shore and the landing station.
56. The safeguards documents have been disclosed by GoG to the Bank when works had started and were at an advanced stage. The Fiber Optic Commission provided to the Bank an official statement on its observance of the mitigation measures defined in the ESIA. The Bank requested GoG to stop works until final versions of ESIA, ESMP and ARAP (taking into comments by the Bank’s environmental and social safeguards team) were cleared by the Bank. Clearance was given on December 29, 2011. Submission for public disclosure in the Bank InfoShop has been made on January 4, 2012 and documents were disclosed publicly in local language in the country on January 31, 2012.
57. An Environmental Audit was conducted in Gabon from January 13 to 18, 2012 and ascertains that there are no outstanding issues with works under the ACE components. The opinion of the mission is summarized as follows: ―The mission has visited the ACE site and contacted and discussed with all entities that are involved in this ACE project. All entities were unanimous that this investment is key in the context of the development of a country such as Gabon. We noted that all structures in charge to implement and to follow up environmental and social mitigation measures are in place with mandates supported by legal texts. Nevertheless, flow of information and coordination between the aforementioned entities are weak. The mission noted that all works done consisting of the laying and connection of the submarine cable to the landing station is completed as well as the filling of holes along the cable route. They were performed according to the technical specifications in contract execution. So far, no adverse environmental impacts and complaints have been recorded. However, the cleaning of campsite located at the first section cable landing and the rehabilitation of pathways and road sections crossed by the cable need to be undertaken. To this end, public and road users have to be informed sufficiently in advance before and during works. In addition, putting in place long term protection and follow up measures of the use of the two back street sections respectively located
70 at la Sablière and Angonje is strongly recommended. As the ESMP has already been approved by the Bank, disclosed at the Infoshop and disclosed in country, the steering committee and the PIU are required to take action in completing the remaining works in compliance with the environment safeguards underlined in the contract execution and developed in the ESMP.
58. The estimated costs of the environmental and social impacts mitigation measures are (i) 45,000,000 XAF (US$90,000) in the construction phase (ii) and 15,000,000 XAF (US$30,000) per year in the operational phase. Relevant provisions of the safeguard documents (ESIA, ESMP, ARAP) have been included in the Project Implementation Manual.
3.2 National backbone connectivity (Phase I) via a terrestrial fiber optic link
59. The terrestrial fiber optic link is expected to follow major railway tracks78 or roads already in place, including in or near a national park (Lope Reserve). In line with the triggering of the five operational policies cited above and because of the lack of site-specific information about the environmental and social characteristics of future investments, GoG has prepared and consulted upon 3 safeguards instruments, namely and Environmental and Social Management Framework (ESMF), a Resettlement Policy Framework (RPF) and an Indigenous People Planning Framework (IPPF).
60. The ESMF confirms that there is no territorial dispute affecting the project area in the border with Congo for the purposes of OP/BP 6.60.
61. Negative environmental and social impacts of the project come mainly from the laying of the fiber (excavation and crossing human settlements, fields, forests, rivers, etc.). The negative environmental impacts of the project resulting from the work will mainly concern: soil erosion (due to the unstable nature of soils), the risks of water pollution and degradation, loss of vegetation due to deforestation to clear the right-of-way, risks of pollution and degradation of rivers, etc. The significant negative social impacts will mainly concern the acquisition of land for the construction of infrastructure, the disruption of life setting, the occupation of private lands, the possible destruction of crops, the deforestation of woodlands, the risk of encroachment on areas of indigenous peoples and the sacred forests, the risk of disruption of cultural areas during the excavation, the risks of accidents during the work, the risks of disruption of networks of dealers (water, telephone, electricity), etc.
62. The ESMF outlines: (i) Mitigation of impacts of the fiber laying, including environmental guidelines for contractors and guidelines applicable to Health, Safety and Environment; (ii) Measures in case of archaeological discovery; (iii) Institutional strengthening measures (Strengthening environmental expertise of the National Project Coordination); (iv) Strengthening
78 The exact nature and location of investments is not yet defined. The path along the railway track between Libreville and Franceville (Transgabonais) appears to be the most probable option as significant rebuilding works are needed but not fully scheduled for the national road (RN1) between Libreville and Franceville. It is not best practice to lay fibers alongside roads where significant works are expected in the future because of the risks of the fiber being damaged. Nevertheless the railway track is currently a single track and should be at some stage become a dual track. Agreement will therefore have to be made with the railway company to define appropriate future proof specifications for laying the fiber alongside the railway track. 71 technical measures (Provision for the implementation of Environmental Impact Assessments); Monitoring and Evaluation of the CAB4 GA activities; (v) Informing stakeholders involved in the implementation of the CAB4 GA and public awareness; (vi) A program of surveillance and monitoring; (vii) institutional responsibilities for environmental monitoring; (viii) The institutional arrangements for implementing the CAB4 GA ESMF; (ix) The recommendations for implementation; (x) The timing for the implementation of measures; and (xi) Costs of environmental and social measures. The total cost of activities is estimated at 220,000,000 XAF (US$440,000).
63. The RPF estimates that, all in all, the implementation of the CAB4 GA project is likely to cause the following potential impacts: (i) Impact on land: permanent acquisition of the land required for the facilities; (ii) Impact on buildings and other structures: loss of habitat or buildings, reduction of farmland following the realization of basic socio-economic infrastructure; (iii) Impact on livelihoods and incomes: damage to persons, including loss of land, of shelters and stores or other communal properties. The accurate estimate of the number of people who will be affected is not feasible at this stage of the study. However, a rough estimate could be made according to the planned route. Thus, for the whole railway route, the number of people likely to be affected by the implementation of fiber optic cable is estimated at 250, while along the terrestrial road the number is 200. Land requirements are estimated at 100 ha for the railway line and 80 ha for the terrestrial road. All in all, the overall cost of resettlement can be estimated at 170,000,000 XAF (US$340,000), based on estimates of affected populations and areas required for the implementation of projects.
64. The IPPF indicates that the interviews with these different categories of Indigenous People players (wise men, women, and youth) show that the Project meets a massive support. This can be justified by the fact that after having explained the purpose of the project, the players interviewed understood how this can be brought to the indirect beneficiaries (Note that many young people in the villages visited are already using mobile phones and have an idea of the Internet). However, Indigenous People players expressed their concerns about certain realities about their lives and are likely to be marginalized by the future potential of Gabon to create additional jobs, increase production of various goods and services and to develop a trading system competitive with the rest of the world. In short, these concerns are: (i) Access to basic social services such as water, electricity, health facilities; (ii) Access to electricity, prior to access to ICT (concerns of the four villages); (iii) Access to birth (especially for the village Ntsati / Ndingui located 39 kms from Lastourville where children go to school without a birth certificate and therefore can enter the contest entry into 6th); and (iv) the inclusion of Indigenous People in the probability of hiring a workforce for the construction or maintenance by the project. The IPPF outlines capacity building and infrastructure building mitigation measures, including: (i) consultations with and participation by Indigenous Peoples in project activities; (ii) advocacy and information for parents about the benefits of registering births (Establishment of birth certificates for children pygmies and identity cards for the PA target villages); (ii) selection and implementation structures of literacy or mass education in the villages of Indigenous People (Support to functional literacy); and (iii) staffing of the four villages in sets of 16 KVA in order to feed from 40 to 50 households and Action for the promotion of ICTs for young indigenous people in four villages situated along the main road Franceville-Lastourville. The total cost of activities is estimated at 290,000,000 XAF (US$580,000).
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65. All three safeguard documents for national backbone connectivity were submitted in draft version to the Bank on December 27, 2011 and comments have been provided by the Bank’s environmental and social safeguards team on January 4, 2012. Final versions have been cleared by the Bank on January 23, 2012 for ESMF and on January 25, 2012 for IPPF. All documents have been subsequently disclosed publicly in the country on January 31, 2012 as well as in the Bank InfoShop. Relevant provisions of the safeguard documents (ESMF, RPF, IPPF) have been included in the Project Implementation Manual.
66. Once the final path for the terrestrial fiber foreseen alongside existing railway tracks and roads and the final location of the associated technical sites are chosen and the specific civil works identified, GoG will prepare an Environmental and Social Management Plan (ESMP) as well as a Resettlement Action Plan (RAP) or an Abbreviated RAP whichever will be appropriate and an Indigenous Peoples Plan (IPP). These safeguard documents will be prepared as part of project implementation but before the fiber optic link is laid. Key stakeholders for consultation will include current inhabitants (where applicable), the Line Ministry in charge of Ecology and Sustainable Development)79, businesses and civil society.
3.3 Arrangements for environmental and social safeguards supervision
67. The Fiber Optic Commission, in which the Line Ministry in charge of Ecology and Sustainable Development is being represented, will bear overall responsibility for the compliance of safeguard activities to national and Bank policies. The supervision of safeguards implementation for CAB4 GA will be done as part of the overall project implementation by the PIU CN TIPPEE (on behalf of the Fiber Optic Commission) in conjunction with the Line Ministry in charge of Ecology and Sustainable Development. The Fiber Optic Commission will designate within the PIU CN TIPPEE an Environment and Social Safeguards Focal Point (Point Focal Environnement et Social (PFES)) that will be in charge of coordinating the implementation, the monitoring (control and audit) of social and environmental aspects and be an interface between the project, local authorities and other stakeholders. The Fiber Optic Commission will sign a Memorandum of Understanding (“protocol d’accord”) with the Line Ministry in charge of Ecology and Sustainable Development, which will carry out external monitoring of the implementation of environmental and social safeguards and ensure compliance with national and Bank policies. The Firm (Bureau d’études (EES/BE)) selected to provide Technical Assistance to support tender design and evaluation of national backbone, of IXP and of a Carrier Hotel to access the international and national connectivity will have amongst its key experts an environmental and social expert. The Firm (Bureau de Contrôle (EES/BC)) selected to provide Project Management during the construction of Phase I of the National backbone will have amongst its key experts an environmental and social expert.
79 Ministère de l’Habitat, de l’Urbanisme, de l’Ecologie et du Développement Durable / Direction Générale de l’Environnement et de la Protection de la Nature. 73
68. Successful implementation of project safeguard requirements and performance measurement requires regular monitoring and evaluation of activities to comply with national and Bank safeguard policies. This will also help ensure that implementation of project safeguard measures are systematically carried out all throughout the life of the project. To do so, a list of verifiable indicators is defined in the ESIA for the ACE component and in the ESMF for the Phase I of the National Backbone component that will be measured as part of the project global monitoring plan. The Environmental and Social Safeguards Focal Point within the PIU will bear the primary responsibility for collecting data supported by the environmental and social experts mentioned above and by the Line Ministry in charge of Ecology and Sustainable Development.
69. To ensure successful implementation of the project safeguard measures, capacity of the PIU CN TIPPEE as well as of the Line Ministry MCPEN, the ANINF and of the Line Ministry in charge of Ecology and Sustainable Development will be strengthened throughout the project. To ensure effective Bank supervision, the PIU CN TIPPEE will prepare and update reports on the implementation of the safeguards instruments prepared under CAB4 GA before Bank supervision missions (see Annex 5). World Bank supervision teams will include the environmental and social specialists.
3.4 Financing of environmental and social safeguards
70. The funding requirement for the environmental and social safeguards is estimated in total at US$1,672,800, with US$340,000 for the International connectivity via the ACE submarine cable landing in Libreville and US$1,332,800 for National backbone connectivity (Phase I) via a terrestrial fiber optic link. Bank will finance US$1,468,800 and GoG US$204,000 (see details below).
Figure 13: CAB4 GA financing of environmental and social safeguards International connectivity via the ACE submarine cable landing in Libreville Funding (US$) IBRD Counterpart TOTAL Preparation of safeguards documents ESIA, ESMP, ARAP 100,000 0 100,000 Subtotal Preparation of safeguards 100,000 0 100,000 documents ESMP implementation (construction phase) 1. General civil works mitigation measures 0 Already included in (Mesures générales d’atténuation des contracts with nuisances liées à l’exécution des travaux) companies in charge of works 2. Environmental and social conditions to be 0 Already included in included in Tender and Contractual contracts with documents (Clauses environnementales et companies in charge sociales à insérer dans les DAO et les of works dossiers d’exécution) 3. Measures against pollution and nuisance 0 Already included in during works (Mesures de lutte contre la contracts with pollution et les nuisances lors des travaux companies in charge (PGESE)) of works
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Funding (US$) IBRD Counterpart TOTAL 4. Compensation of people negatively 4,000 4,000 affected by the project (Mesures sociales (2,000,000 XAF) liées aux pertes de biens socioéconomiques) 5. Support to monitoring by Public Works, 6,000 0 6,000 Fisheries Directorate, Municipality (Appui au (3,000,000 XAF) suivi des TP, Direction des pêches, Mairie) 6. Rehabilitation of streets and pavements 0 Already included in (Mesures d’aménagement et de réhabilitation contracts with de la voierie) companies in charge of works 7. Communication and information of 10,000 0 10,000 people, in particular in the terrestrial and (5,000,000 XAF) marine areas where works will take place (Communication, information et sensibilisation des populations, notamment dans les quartiers et la zone marine) 8. Environmental monitoring (Surveillance 20,000 0 20,000 environnementales) (10,000,000 XAF) 9. Support to environmental and social 10,000 10,000 monitoring by Line Ministry in charge of (5,000,000 XAF) environment (Appui au suivi environnemental et social (DGE)) 10. Development of tools to monitoring, 20,000 0 20,000 management and maintenance (Elaboration (10,000,000 XAF) d’outil de surveillance, de gestion et maintenance) 11. Training of stakeholders to implement 20,000 20,000 safeguards (10,000,000 XAF) (Formation des acteurs clés dans le suivi de la mise en œuvre) Subtotal ESMP implementation 86,000 4,000 90,000 (construction phase) (43,000,000 XAF) (2,000,000 XAF) (45,000,000 XAF) ESMP implementation (operation phase) 1. Monitoring, Maintenance and 50,000 50,000 Management Plan (Plan de surveillance, (5,000,000 XAF per d’entretien et de gestion des ouvrages) year; 25,000,000 in total) 2. Communication, Information and 20,000 20,000 Awareness Plan (Plan de communication, (2,000,000 XAF per information et de sensibilisation) year ; 10,000,000 in total) 3. Provision for monitoring and evaluating 30,000 30,000 the implementation of the ESMP (3,000,000 XAF per (Provision pour la surveillance et le suivi de year ; 15,000,000 in la mise en œuvre des PGES) total) 4. Information and Awareness in the 50,000 50,000 terrestrial and marine areas where works took (5,000,000 XAF per place (Information/sensibilisation dans les year; 25,000,000 in quartiers et la zone marine) total) Subtotal ESMP implementation 150,000 0 150,000 (operation phase) (75,000,000 XAF) (75,000,000 XAF) TOTAL 336,000 4,000 340,000 75
National backbone connectivity (Phase I) via a terrestrial fiber optic link Funding (US$) IBRD Counterpart TOTAL Preparation of safeguards documents ESMF, RPF 80,000 0 80,000 IPPF 40,000 40,000 ESIA, ESMP, RAP, IPPP 200,000 200,000 (100,000,000 XAF) Subtotal Preparation of safeguards 320,000 0 320,000 documents ESMP/IPPP/RAP implementation 1. ESMP implementation (Provision pour 0 100,000 100,000 la mise en œuvre des EIES) (50,000,000 XAF) 2. RAP implementation (Provision pour 0 100,000 100,000 les besoins en terre (50,000,000 XAF) (déplacement/indemnisation ; démolition et réfection de chaussées ; indemnisation ressources économiques, forestières et agricoles, etc.) 3. IPPP implementation (Provision pour 392,800 0 392,800 la mise en œuvre de l’IPPP) (196,400,000 XAF) Subtotal ESMP/IPPP/RAP 392,800 200,000 592,800 implementation (196,400,000 XAF) (100,000,000 XAF) (296,400,000 XAF) Monitoring and Evaluation ESMP 1. Permanent monitoring during estimated 72,000 0 72,000 3 year duration of works (Suivi permanent (36,000,000 XAF) du projet) 2. Institutional support to Line Ministry in 24,000 0 24,000 charge of environment (Appui (12,000,000 XAF) institutionnel à la DGE dans le suivi) 3. Specific support for National Park la 24,000 0 24,000 Lopé (Appui au suivi spécifique dans le (12,000,000 XAF) Parc National la Lopé) 4. Final evaluation (Evaluation finale) 20,000 20,000 (10,000,000 XAF) Subtotal Monitoring and Evaluation 140,000 0,000 140,000 ESMP (70,000,000 XAF) (70,000,000 XAF) Monitoring and Evaluation RAP 1. Permanent monitoring during estimated 80,000 0 80,000 3 year duration of works (Suivi permanent (40,000,000 XAF) du projet) 2. Final evaluation (Evaluation finale) 20,000 0 20,000 (10,000,000 XAF) 3. Capacity building (Renforcement des 40,000 0 40,000 capacités) (20,000,000 XAF) Subtotal Monitoring and Evaluation 140,000 0,000 140,000 RAP (70,000,000 XAF) (70,000,000 XAF)
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Funding (US$) IBRD Counterpart TOTAL Information and Awareness 1. Workshops to share and inform on the 60,000 60,000 ESMF (Ateliers de partage et (30,000,000 XAF) d’information sur le CGES) 2. Information and Awareness of people 40,000 40,000 in the terrestrial areas where works will (20,000,000 XAF) take place (Information et Sensibilisation des populations dans les zones du projet) 3. Awareness-raising on RAF and RAP 40,000 40,000 (coûts pour la sensibilisation sur le CPR (20,000,000 XAF) et les PAR) Subtotal Information and Awareness 140,000 0,000 140,000 (70,000,000 XAF) (70,000,000 XAF) TOTAL 1,132,800 200,000 1,332,800
4. Monitoring and Evaluation
71. Monitoring arrangements and data collection. The PIU CN TIPPEE will monitor and evaluate all project indicators, plus additional one as they see fit. PDO Level Results Indicators and Intermediate Results. The PIU CN TIPPEE will get its information from ARCEP but also directly from the operators or other stakeholders when necessary. ARCEP will bear the primary responsibility for collecting data from the operators and ISPs and from ANINF and will conduct ad-hoc surveys as appropriate (e.g. for the purpose of Increased access to ICT services: Number of localities with broadband Internet access (256Kbps) assessment); in order to ensure a smooth and regular collection of information, ARCEP will identify within each source of data (operators, ISPs, ANINF) a focal point that will serve as ARCEP’s counterpart for M&E so that the person can anticipate data collection and the necessary resources and provide data to ARCEP. Indicators will be collected yearly as a minimum, but ARCEP will endeavor to collect them every 6 months. ARCEP will designate a focal point for M&E that will provide the PIU with collected monitoring and evaluation indicators. Environmental and Social Indicators. The PIU CN TIPPEE, through its Environmental and Social Safeguards Focal Point, will bear the primary responsibility for collecting data relative to verifiable indicators defined in the safeguard documents for the ACE component and for the Phase I of the National backbone component that will be measured as part of the project global monitoring plan.
72. Views of direct beneficiaries. The views of the direct beneficiaries will be brought into the monitoring and evaluation process. Comprehensive M&E reporting will be needed to monitor the results and performance of the project. It will involve mainly the direct beneficiaries of project activities, but will be extended to other beneficiaries such as telecommunications operators, Internet Services Providers and private ICT firms, which ultimately are the main beneficiaries of the project’s outcome.
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73. Indicators.
PDO Level Results Indicators and Intermediate Results. The project includes 12 indicators to measure the success or not of this operation. The first 5 are PDO level indicators, measuring the progress toward PDO achievement. Each of these 5 indicators assesses a particular aspect of the Project Development Objective. At the end of the project, the success of this operation will be measured against the target values of the PDO indicators (see Annex 1). Intermediate Results Indicators will assist in measuring more specifically the results of component 1 - Enabling environment and of component 2 – Connectivity; these indicators have been defined building upon lessons learned in previous APLs (in particular CAB2 STP for international connectivity with the ACE submarine cable, CAB3 CG for terrestrial backbone links). The Fiber Optic Commission and the PIU will be able to measure whether the implementation is on track or not by benchmarking the yearly targets of these 12 indicators. If the project execution goes off track, the Fiber Optic Commission must propose a list of corrective actions (see section on Reporting). Environmental and Social Indicators. The project includes 12 strategic indicators to follow the ESMP for the ACE component, complemented by 8 indicators to follow specifically the ARAP. The project includes also 6 strategic indicators to follow the ESMF for the Phase I of the National backbone component, complemented by 22 indicators to follow specifically the RAF and 7 indicators to follow specifically the IPPF. The Fiber Optic Commission and the PIU will be able to measure whether the implementation of environmental and social safeguards is on track or not. If the implementation goes off track, the Fiber Optic Commission must propose a list of corrective actions (see section on Reporting).
74. Reporting. The PIU CN TIPPEE will have overall responsibility for reporting to the MCEN and to the Fiber Optic Commission. There is already a person responsible within CN TIPPEE for M&E. This person will liaise with ARCEP’s focal point as well as with environmental and social stakeholders and will put together the M&E report biannually that will include the updated Results Framework and the Action Table, listing the corrective actions to be implemented with deadlines and persons responsible clearly identified. The report will be sent to the Bank for information.
75. Mid-Term Review. The Fiber Optic Commission and the PIU CN TIPPEE will have one opportunity to revise the results framework: the mid-term review mission will look at the realism and relevance of the indicators and targets and will propose changes if necessary.
5. Role of Partners
76. The French Development Agency has indicated its willingness to finance additional national backbone links that will ―branch out‖ towards the northern borders from the link financed under CAB4 GA. Regular exchanges of information with AFD have taken place throughout project preparation. The AFD has indicated that the PPP structure and implemented open access rules defined in the Bank CAB4 GA project shall also apply to the AFD project.
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77. GoG decided to use some of the resources of the Oil Investment Fund PIH (Provision pour Investissement en Hydrocarbures), financed by the TOTAL Group, to fund a share of the ACE consortium fee as well as new national capacity via a submarine cable from Libreville to Port Gentil80. As in any intervention in the context of a PIH funding, the TOTAL Group has provided expertise and support in project management for the ACE component to the Fiber Optic Commission established by GoG.
80 The projects to be financed under the PIH are jointly decided by GoG and the TOTAL Group (with GoG owing 25% of the Gabonese subsidiary of the TOTAL Group). According to the GoG’s new economic vision called -―Emerging Gabon‖ (Gabon Emergent), the PIH shall finance major infrastructure projects. Other such projects are e.g. the sanitation program and the upgrade of the airport in Port Gentil. 79
Annex 4 Operational Risk Assessment Framework (ORAF)
AFRICA: Central African Backbone - APL4 - Gabon Project (CAB4 GA)
Project Development Objective(s)
The development objective of the proposed project is to contribute to increase geographical reach and usage of regional broadband network services and reduce their prices in the territory of the Gabonese Republic.
PDO Level Results 1. International internet bandwidth Indicators: 2. Access to internet services (number of subscribers per 100 people) 3. Access to telephone services (fixed mainlines plus cellular phones per 100 people) 4. Average monthly price of wholesale international E1 capacity link from capital city to Europe 5. Number of project direct beneficiaries (percentage of female)
Project Stakeholder Risks Rating Substantial Description : Risk Management : - Despite very strong interest to join ACE and national backbone In order to obtain effective financial commitment by the private sector, consultants have projects, the buoyant private sector remains insufficiently been hired in October 2011 under the PPA to assist in showing that GoG’s proposed informed about GoG’s proposed approach to implementing PPP approach complies with open access principles and PPP as well as improving via and open access principles to make a financial commitment. workshops the interaction with private sector. In particular business cases enabling to Furthermore there is a concern that GoG may not effectively compute fully cost oriented prices have been presented to ensure private sector handling over operation and maintenance to the private sector committing to purchasing capacity and secure payback (see Annex 7). Guidelines on how to despite commitments formalized in its request for financing. implement open access and PPP principles have been discussed and agreed with GoG - Despite representatives of both MCPEN and ANINF participation during appraisal and will be included in a supplemental letter to the loan agreement. on the GoG’s ACE project steering committee, there is insufficient Disbursement conditions have been set to ensure that the HoldCo and its ACE subsidiary coordination between MCPEN and newly created ANINF. are duly created, registered and made operational and to ensure that the independent - The sector regulator ARCEP has not been adequately involved in private wholesale operator is selected in form and substance satisfactory to the Bank. the ACE project so far and lacks expertise to guarantee Finally performance of private wholesale operator against appropriate KPIs in monitored implementation of open access principles and sound competition in as part of project supervision. the developing broadband market. There is a risk that new submarine Status: Not yet Resp: Client Stage: Preparation Due Date : 03/22/2012 capacity and terrestrial national fiber backbone do not feed quickly due enough into lower retail prices and higher bandwidth available in the A Fiber Optic Commission with high level representatives of MECIT, MCPEN, ANINF and country. ARCEP will be set up and be in charge of overall operative guidance, direction and coordination during project implementation. The team will monitor during preparation and implementation how coordination is performed and advise should the need for improvements or streamlining arise. 80
Status: Not yet Resp: Client Stage: Preparation Due Date : 03/22/2012 due Risk Management : TA will provide ARCEP with a study and specific training on key tools for broadband regulation. Stage: Preparation / Status: Not yet Resp: Client Due Date : 09/30/2012 Implementation due Implementing Agency Risks (including fiduciary) Capacity Rating: Moderate Description : Risk Management : There is a risk that decisions may not be made in a timely manner as The Bank will fund targeted TA and capacity building activities throughout project capacity of both the Line Ministry MCPEN and the newly created implementation to all key stakeholders (MCPEN, ARCEP, ANINF) as well as to the PIU CN- ANINF are low. TIPPEE. The strategy for implementation support (see Annex 5) has also been developed to provide mitigation measures to capacity risk. In addition, telecommunications TA has been planned within the new RTA. Status: Not yet Resp: Client Stage: Implementation Due Date : 06/30/2012 due Governance Rating: Moderate Description : Risk Management : - The project implementation unit (PIU) will be an already Commitment of GoG to cover operating costs of CN-TIPPEE will be included in the legal established and experienced PIU (CN-TIPPEE). However, there is (i) covenants. In addition the team will monitor the staffing situation at the PIU during preparation a need for GoG to cover the operating costs as counterpart funding and implementation and advise on how to handle the additional workload generated by CAB4 and (ii) there may be an issue of capacity when the PIU is required to GA. Based on the experience of similar projects, the budget will cover the costs of some manage CAB4 GA in parallel with other projects or if PIU staffing additional staffing to process CAB4 GA should the need arise. decreases in 2012 because the WB project PDIL is not extended. Stage: Preparation / Status: Not yet - The Line Ministry MCPEN and the ANINF may also encounter Resp: Client Due Date : 06/30/2012 difficulties in managing activities scheduled under CAB4 GA as Implementation due experience in Gabon shows that the Government has a weak capacity Risk Management : in the management of externally funded projects (leading in the past A technical advisor will be placed at the Line Ministry MCPEN and the ANINF to handle the to delays in the implementation and low disbursement rate). additional workload generated by CAB4 GA. Trainings will be organized throughout project
implementation for the staff of the Line Ministry MCPEN, the ANINF and ARCEP on the
Bank’s project cycle and procurement and FM guidelines of Bank funded projects.
Stage: Preparation / Status: Not yet Resp: Client Due Date : 06/30/2012 Implementation due
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Project Risks Design Rating: Substantial Description : Risk Management : - PPP structuring negotiations are in general difficult. PPA will provide extensive support for PPP negotiations, including capacity building for - While GoG has confirmed its commitment to counterpart funding Gabonese shareholders. PPP negotiations will be well advanced before Board because guidelines for the PIU, some project delays were experienced due to on how to structure the PPP have been agreed with GoG (see Annex 2) and because the ACE counterpart funding issues during the course of the last CAS. cable will have been laid down and required operations and maintenance arrangements have therefore to be put in place pursuant to the ACE Construction & Maintenance Agreement. This support includes a detailed economic study to confirm robust pending demand and identify any need for appropriate demand stimulating approaches. It also includes discussion appropriate rules to ensure that the private sector is involved in defining the next phases of national backbone roll- out. Resp: Bank Stage: Preparation Due Date : 01/17/2012 Status: achieved Risk Management : The MECIT will be responsible for collecting contributions from relevant institutions and will channel the subventions to the PIU according to a specific schedule in order to mitigate risks of untimely availability of counterpart funding. Status: Not yet Resp: Bank Stage: Preparation Due Date : 02/07/2012 due Social & Environmental Rating: Moderate Description : Risk Management : - The submarine cable will be laid in international and territorial Final versions of the safeguards documents (ESIA, ESMP, ARAP) were reviewed and cleared waters between June and December 2011, starting with the segment by the World Bank on December 29, 2011. Submission for public disclosure in the Bank France/Senegal, followed by Senegal/Ivory Coast and finally Ivory InfoShop has been made on January 4, 2012 and documents were disclosed publicly in local Coast/STP (serving Gabon); in each country, a landing station will be language in the country on January 31, 2012. Environmental audit was conducted from built close to the shore to connect the submarine cable with terrestrial January 13 to 18, 2012 and ascertains that there are no outstanding issues with works networks. The necessary environmental and social safeguards under the ACE components. Relevant provisions of the safeguard documents will be instruments (ESMP, ARAP) for the cable and any associated included in the Project Implementation Manual. Also, since CAB4 GA will involve PPP equipment that will be laid from the junction with the main cable schemes, appropriate technical clauses will be prepared and included in the biddings/binding through territorial waters and onto the national shores have been documents for the SPV(s) when necessary, to ensure the execution of agreed environmental and prepared by consultants hired under the PPA but delivered when social safeguards measures and implementation of the recommendations in the instruments. works had started and were at an advanced stage. Arrangements for environmental and social safeguards supervision have been defined and agreed - The exact path of the fiber and the location of associated technical as well as funding requirements. Relevant provisions of the safeguard documents have been sites are not yet known: there is a risk of adverse social and included in the Project Implementation Manual. Inputs from Bank’s environment and social environmental impact of the project. specialists will be provided throughout project implementation, to support the Environmental and Social Safeguards Focal Point (Point Focal Environnement et Social (PFES)) within the PIU as well as the Line Ministry in charge of Ecology and Sustainable Development) in monitoring the effective implementation of safeguards. Resp: Client Stage: Preparation Due Date : 02/07/2012 Status: Not
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yet due As the final paths / sites are not yet chosen nor the specific civil works identified for the terrestrial fiber optic link between Libreville and Franceville and the Border with Congo, an ESMF, an RPF and an IPPP have been prepared by consultants hired the PPA. All three safeguard documents for national backbone connectivity were submitted in draft version to the Bank on December 27, 2011 and comments have been provided by the Bank’s environmental and social safeguards team on January 4, 2012. Final versions have been received cleared by the Bank on January 23, 2012 for ESMF and on January 25, 2012 for IPPF. All documents have been subsequently disclosed publicly in the country on January 31, 2012 as well as in the Bank InfoShop. Once the final path / sites will be chosen and the specific civil works identified, the necessary environmental and social safeguards instruments (ESMP, RAP or ARAP) will be prepared. Also, since CAB4 GA will involve PPP schemes, appropriate technical clauses will be prepared and included in the biddings/binding documents for the SPV when necessary, to ensure the execution of agreed environmental and social safeguards measures and implementation of the recommendations in the instruments. An Environment and Social Safeguards Focal in the PIU will be in charge of coordinating the implementation, the monitoring (control and audit) of social and environmental aspects and be an interface between the project, local authorities and other stakeholders. Arrangements for environmental and social safeguards supervision have been defined and agreed as well as funding requirements. Relevant provisions of the safeguard documents have been included in the Project Implementation Manual. Inputs from Bank’s environment and social specialists will be provided throughout project implementation, to support the Environmental and Social Safeguards Focal Point (Point Focal Environnement et Social (PFES)) within the PIU as well as the Line Ministry in charge of Ecology and Sustainable Development) in monitoring the effective implementation of safeguards. Stage: Preparation / Due Date : 01/09/2012 Status: Not Resp: Client Implementation (ESMF, RPF) yet due Program & Donor Rating: Moderate Description : Risk Management : - AFD is discussing with GoG a possible operation to finance The Fiber Optic Commission with representatives of MECIT, MCPEN, ANINF and ARCEP that additional national backbone links - under subsequent phases of roll will be set up and be in charge of overall technical and operative guidance, coordination and out of a national backbone - that will ―branch out‖ from the link direction during project implementation will cover the whole backbone, i.e. Bank funded CAB4 financed under CAB4 GA, in particular new national capacity via GA and any future projects financed by other donors such as AFD. terrestrial fiber to the border with Cameroun, and is in agreement Status: Not Resp: Client Stage: Preparation Due Date : 03/22/2012 with the Bank to promote PPPs and open and competitive access yet due principles. However project is not dependent on counterpart funding Risk Management : not materializing as the AFD financed links are ―branching out‖ from The teams for CAB4 GA and for CAB3 CG will organize reciprocal information between the Franceville and will bring some additional traffic on the links Project Steering Committee of both projects to ensure appropriate planning and implementation financed by the Bank. of cross border interconnection.
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- Project is partly dependant on successful interconnection with Status: Not Resp: Clients / Bank Stage: Implementation Due Date : Ongoing the CAB3 CG (link Dolisie – Mbinda). yet due - Project is dependent on timely payment of installments to the Risk Management : ACE Consortium. The only (minor) risk is that Gabon loses its Installment scheduling is shared between GoG’s own funds, contributions from a special voting rights during a period of approx. 1 month if installment #7 development fund financed by Total Group and IBRD funds. Installments financed by GoG’s is paid in June. own funds and contributions from a special development fund financed by Total Group have already been paid. Gabon intends to pay installment #7 with own funds and request retrofinancing. Status: Not Resp: Client / Bank Stage: Preparation Due Date : 02/07/2012 yet due Delivery Monitoring & Sustainability Rating: Moderate Description : Risk Management : Mitigation measures for the risk that the implementing agency is not Training will be made available during implementation for monitoring and evaluation for the able to adequately sustain its efforts (use of an existing PIU, technical Line Ministry MCPEN, the ANINF, ARCEP and for the PIU as well as technical assistance to advisor to be placed at the Line Ministry MCPEN and at ANINF) define specific actions that will ensure efficient data collection. The system will be designed in have been mentioned at Implementing Agency Risks. such a way as not to affect the operators’ competiveness.
Key data collections and sharing, particularly from operators, may be difficult as the market is highly competitive. Furthermore the country has not the culture of monitoring and evaluation. Stage: Preparation / Status: Not Resp: Client Due Date : Ongoing Implementation yet due Setting up a PPP for operating the international, regional and national connectivity shall ensure effective operation and maintenance of the infrastructure. Other Rating: Moderate Description : Risk Management : Despite strong strategic interest of the railway SETRAG for the Technical assistance including transaction/legal, regulatory and economic/financial project, there is a risk that appropriate terms and conditions support will be provided under Component 1 of the project to define with SETRAG the under which the fiber will be laid down and operated by the SPVs terms and conditions under which the fiber will be laid down and operated by the SPVs. A are difficult to define. route survey will be undertaken by GoG to determine jointly with SETRAG the best technical solution for laying down the fiber (fully manual, use of machines alongside the tracks when sufficient space is available, use of machines positioned on specially equipped wagons, etc.. Status: Not yet due
Stage: Preparation / Resp: Client Due Date : 12/31/2012 Implementation
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Overall Risk Following Review Preparation Risk Rating: Substantial Implementation Risk Rating: Substantial Comments: Comments: The preparation is rated Substantial. While there are a number of risks involved, the PPA will allow for these The implementation is rated Substantial as well due risks to be contained and appropriate mitigation measures to be put in place. Despite delays caused by the set up to the risks linked to weak implementation capacity. of the newly established ANINF, there is high commitment from the GoG to open access and PPP principles and GoG’s proposed approach has generated strong appetite from the private sector.
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Annex 5: Implementation Support Plan
AFRICA: Central African Backbone - APL4 - Gabon Project (CAB4 GA)
Strategy and approach for Implementation Support
1. The strategy for implementation support (IS) has been developed based on the nature of the project and its risk profile. It will aim at making implementation support to the client more flexible and efficient, and will focus on implementation of the risk mitigation measures defined in the ORAF.
PPP and Open Access principles. Resources have been provided to ensure that Gabon has the requisite transaction/legal, regulatory and economic/financial experts to ensure open access and effective structuring of the PPP in close interaction with the private sector.
Environmental and Social Safeguards. Resources have been provided under the PPA to support Gabon to undertake environmental and social assessments as well as to put in place mitigation measures. Final versions of the safeguards documents (ESIA, ESMP, ARAP) for international connectivity were reviewed and cleared by the World Bank on December 29, 2011. Submission for public disclosure in the Bank InfoShop has been made on January 4, 2012 and documents were disclosed publicly in local language in the country on January 31, 2012. Final versions of the safeguards documents for the National Backbone have been cleared by the Bank on January 23, 2012 for ESMF and RPF on January 25, 2012 for IPPF. All documents have been subsequently disclosed publicly in the country on January 31, 2012 as well as in the Bank InfoShop. Relevant provisions of the safeguard documents will be included in the Project Implementation Manual. The Bank team will supervise the implementation of the agreed plans and provide guidance to address any issues. In particular the Fiber Optic Commission is requested to designate within the PIU an Environment and Social Safeguards Focal Point (Point Focal Environnement et Social (PFES)) that will be in charge of coordinating the implementation, the monitoring (control and audit) of social and environmental aspects and be an interface between the project, local authorities and other stakeholders.
Procurement. A procurement capacity assessment of the Implementation Unit (CN-TIPPEE) was carried out during the pre-appraisal mission in November 2011. The assessment did not reveal any anomaly in the functioning of CN-TIPPEE. The CN-TIPPEE satisfactorily carried out all the preparatory studies and activities under Project preparation Advance for the project. Several post procurement reviews carried out in the CN-TIPPEE were satisfactory. The staff in the Implementation Unit includes a procurement specialist who has procurement experience at both national and international levels (including World Bank experience). The procurement filing and archiving system in the Project Implementation Unit was found to be acceptable by the Bank and the same system will be maintained during the project’s life. The assessment did not reveal any anomaly within the procurement unit of the project Implementation Unit, except for the need of training in the use of procurement monitoring and management programs and the need to involve staff from beneficiary institutions (MCPEN, ANINF, ARCEP. etc...) in all procurement procedure and more particularly in preparing the technical specifications and terms of references and participation in selection committees. Under the project, the procurement specialist as well as staff from beneficiary institutions will benefit from procurement training organized by specialized regional procurement training centers or at the Bank’s country office in Gabon
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Financial management. The overall FM risk is considered Moderate since the implementing agency is an existing and adequately-performing PIU endowed with all fiduciary requirements. The proposed financial management arrangements for this project are considered adequate to meet the Bank’s minimum fiduciary requirements under OP/BP10.02. The assessment recommended among other measures (i) the adoption of the Project Implementation Manual; (ii) the amendment of contract of the current external auditor.
Other Issues. Sector level risks will be addressed through policy dialogue with MCPEN, ANINF and ARCEP.
Implementation Support Plan
2. The Bank team members will be based either in Washington DC, or in the Africa Region, and will be available to provide timely, efficient and effective implementation support to the client. Formal supervision and field visits will be carried out semi-annually initially, with possibility of annual visits in later years of the project. Detailed inputs from the Bank team are outlined below:
Technical and Legal/Regulatory inputs. Technical telecommunications and legal/regulatory related inputs are required to review bid documents to ensure fair competition through proper technical specifications and fair assessment of the technical aspects of bids. ICT Policy Specialists will provide technical support and conduct supervision visits whenever needed. Legal support will be provided as necessary.
Fiduciary requirements and inputs. The team will help the CAB4 GA PIU identify capacity building needs to strengthen its financial management capacity and to improve procurement management efficiency. Both the financial management and the procurement specialist will be based in the region to provide timely support. Trainings will be organized throughout project implementation for the staff of the Line Ministry MCPEN, the ANINF and ARCEP on the Bank’s project cycle and procurement and FM guidelines of Bank funded projects.
o Procurement implementation support. In addition to the prior review supervision to be carried out from Bank offices, the Recipient and the Bank team have agreed to around three missions per year for the first two years of project implementation to minimize the risk of failing to follow procurement procedures as well as for supervision of project activities. The Recipient and the Bank have also agreed to two supervision field visits to carry out post-review of procurement activities o FM implementation support. FM implementation support mission will be consistent with a risk- based approach, and will involve a collaborative approach with the entire Task Team (including procurement). A first implementation support mission will be performed six months after the project effectiveness. Afterwards, the missions will be scheduled by using the AFTFM risk based approach model and will include the following diligences: (i) monitoring of the financial management arrangements during the supervision process at intervals determined by the risk rating assigned to the overall FM Assessment at entry and subsequently during Implementation (ISR); (ii) review the IFRs; (iii) review the audit reports and management letters from the external auditors and follow-up on material accountability issues by engaging with the task team leader, Client, and/or Auditors; the quality of the audit also is to be monitored closely to ensure that it covers all relevant aspects and provide enough confidence on the appropriate use of funds by recipients; and, (iv) physical supervision on the ground specially for the matching grant scheme; and (v) assistance to build or maintain appropriate financial management capacity.
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Safeguards. Inputs from an environment specialist and a social specialist will be required, to support the Environmental and Social Safeguards Focal Point (Point Focal Environnement et Social (PFES)) within the PIU as well as the Line Ministry in charge of Ecology and Sustainable Development)81 in monitoring the effective implementation of safeguards. Field visits are unlikely to be required, but this will be confirmed – the social and environmental specialists will be available on a need basis.
Operation. The TTL will provide day to day supervision of all operational aspects, as well as coordination with the client and among Bank team members. If needed, a consultant may be used to support this role.
3. The main focus of implementation support by the Bank team is summarized below.
Time Focus Resource Estimate Partner Role First Ongoing twelve exchanges of Team leadership, technical and months information as procurement review of the bidding ICT Policy Specialist required by the documents and Institutional arrangement preparation of and project supervision coordination the partner’s project Procurement specialist, Financial N/A Strengthening of PIU specialist Transaction/Legal and Regulatory N/A Legal support advisory work Environmental specialist, social N/A Environmental and social safeguards specialist 12-48 Ongoing months exchanges of Team leadership, technical and information as procurement review of the bidding ICT Policy Specialist required by the documents and Institutional arrangement preparation of and project supervision coordination the partner’s project Procurement training and issues Procurement specialist N/A
FM training and supervision FM specialist N/A Environmental and social safeguards Social specialist N/A supervision Environmental specialist Transaction/Legal and Regulatory N/A Legal support advisory work Other Egovernment advisory work Egovernment Specialist N/A Note: SW – Staff-Week
81 Ministère de l’Habitat, de l’Urbanisme, de l’Ecologie et du Développement Durable / Direction Générale de l’Environnement et de la Protection de la Nature. 88
4. Bank staff skill mix required is summarized below.
Skills Needed Number of Staff Weeks Number of Trips Comments Task team leader and ICT 8 SWs annually Fields trips as required. Washington, DC or Policy Specialist Country office based Procurement specialist 3 SWs annually first twelve Fields trips as required. Country office based months 2 SWs annually
Financial management 2 SWs annually Fields trips as required. Country office based specialist Social specialist Fields trips as required. Country office based 1 SW first twelve months 0.5 SWs annually afterwards Environment specialist Fields trips as required. Country office based 1 SW first twelve months 0.5 SWs annually afterwards Legal support 1 SWs annually Fields trips as required. Washington, DC based Egovernment specialist 2 SWs annually in year 3 and Fields trips as required. Washington, DC based year 4 Note: SW – Staff-Week
Partners
Name Institution/Country Role Agence Francaise de Développement France Finance additional national French Development Agency backbone links - under subsequent phases of roll out of a national backbone - that will ―branch out‖ from the link financed under CAB4 GA, in particular new national capacity via terrestrial fiber to the border with Cameroun TOTAL Group Gabon As in any intervention in the context of a PIH funding, the TOTAL Group provided expertise and support in project management for the ACE component to the Fiber Optic Commission established by GoG
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Annex 6: Team Composition
AFRICA: Central African Backbone - APL4 - Gabon Project (CAB4 GA)
World Bank staff and consultants who worked on the project:
Name Title Unit
Michel Rogy Task Team Leader ICT Sector Unit ICT Policy Advisor Maria Isabel A. S. Neto Senior ICT Policy Specialist ICT Sector Unit Jerome Bezzina Regulatory Economist ICT Sector Unit Doyle Gallegos Lead ICT Policy Specialist ICT Sector Unit Laurent Besancon Senior Regulatory Specialist, ICT Sector Unit Regional Coordinator Africa Marc Jean Lixi Senior Operations Officer ICT Sector Unit Alan Carroll Operations Adviser ICT Sector Unit Michele Ralisoa Noro Senior Program Assistant ICT Sector Unit Erica Monique Daniel Program Assistant ICT Sector Unit Aissatou Diallo Finance Officer CTRLA Alexandra Bezeredi Regional Environmental and AFTOS Safeguards Advisor Bienvenu Rajaonson Sr. Environmental Specialist AFTEN Lucienne M’Baipor Sr. Social Development Specialist AFTCS Ningayo Charles Donang Senior Procurement Specialist AFTPC Kouami Housinou Messan Senior Procurement Specialist AFTPC Ousmane Maurice Megnan Finance Management Specialist AFTFM Kolie Patrick Bongotha Financial Management Analyst AFTFM Claudia M. Pardiñas Senior Counsel LEGAF Ocaña Alexandra C. Sperling Paralegal LEGAF David Satola Senior Counsel LEGPS Casey Torgusson Operations Analyst AFCAD Frode Davanger Senior Operations Officer AFCRI Deo Ndikumana Senior Operations Officer AFCRI Frode Davanger Senior Operations Officer AFCRI Julie Dana Senior Financial Officer BDM Fatima Revuelta Junior Professional Associate BDM Luis de la Plaza Lead Financial Officer BDM Rick Emery Tsouck Economist AFTP3 Ibounde Sonia Vanecia Boga Team assistant AFMGA
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Annex 7: Economic and Financial Analysis
AFRICA: Central African Backbone - APL4 - Gabon Project (CAB4 GA)
International connectivity via the ACE submarine cable landing in Libreville
1. Connecting to ACE is most cost-effective long term option for improved access to international connectivity in Gabon. Financial analysis was performed for Gabon82. The analysis considered a variety of radio wave, satellite and fiber options and concluded that for a coastal country like Gabon a submarine fiber link is the best overall option in terms of long- term cost effectiveness and bandwidth availability when international connectivity required is multiples of Gbps as it is the case for broadband services as well as in terms of quality of service83. Since 2002, the country has access to international bandwidth via the Libreville SAT3-WASC submarine cable landing station, but Gabon Telecom is rationing access to the bandwidth on this international fiber optic link despite regulatory intervention84 and does not allow open access to the SAT3-WASC landing station in Libreville. Furthermore, Gabon Telecom pushes the price of submarine international bandwidth (on which it has a monopoly) to the cost of the next alternative: the satellite link (which is currently used by mobile operators for their international long-distance telephony and by ISPs for their international Internet bandwidth). Finally, the SAT3-WASC submarine cable has experienced in recent months several availability problems that have pushed coastal countries on the West African coast towards alternative submarine cables to SAT3-WASC for redundancy and security purposes. The new ACE submarine cable – available in accordance with Open Access principles - is the best submarine fiber option as it has the potential to address rapidly the urgent need for high capacity to the international backbone at a substantially lower cost than currently available in Gabon by satellite (VSAT)85. Its design is both ―state of the art‖ and proven, uses well- established procedures, and involves no significant technology risk. The choice of SDH / WDM electronics is conservative and has reasonable efficiencies carrying Internet Protocol (IP) traffic. The disadvantage of a submarine cable option is that upfront costs are higher (higher cost per Mbit/s for initial capacity) whilst subsequent capacity upgrades are at a much lower cost per Mbit/s: in the case of ACE, initial capacity is 3.7 Gbps86 for US$30 million, whilst subsequent
82 Based on the report and financial model developed by Mr. Yves Rouhaud, Technical and Economical consultant advising GoG (see : Projet CAB4-CITGB, Plan d’entreprise du PPP pour l’accès au câble sous-marin ACE, Date : 12 décembre 2011). 83 The latency factor introduced in satellite links can be a problem with some communication services, especially high data interactive multimedia applications. The almost 1-second delays introduced by satellite connectivity significantly reduces performance of international services and limits the types of services that can be provided, such as the use of secure Virtual Private Networks (VPNs) which time out when performance is degraded by satellite links. While it is possible to circumvent these problems to some extent through use of sophisticated traffic shaping devices at each end of the link, this creates additional capital and human resource costs for the user. The perceived disadvantages of satellite can limit foreign investment in the sector, especially among high bandwidth consuming large businesses that Gabon is seeking to attract. 84 Gabon Telecom has activated on SAT3-WASC an international Internet bandwidth of 1.2 Gbits/s (equivalent to 8 STM-1). 85 Once operators and ISPs have migrated the bulk of the international connectivity onto ACE, SAT3-WASC could become an alternative to satellite for back up / redundancy. 86 The capacity available on the submarine cable is expressed both in terms of bandwidth (STM-1) and of distance (km). The total initial capacity for Gabon is 190,840 STM-1 x km. To estimate the corresponding capacity available from Libreville, assumptions have to be made on the average typical distance used from Libreville. The distance depends on which locations an operator wishes to connect with the submarine cable. The distance from Libreville to Penmarch (France) is 7208 km and 6324 km to Sesimbra (Portugal). In the case of Gabon, the average typical distance used has been estimated at 8,000km. With one unit of 8,000 STM-1 x km, an operator or ISP in Gabon will connect Gabon with Europe and also with some capital cities on the ACE 91
upgrades are estimated to be approximately US$2 million for 10 Gbps. Therefore this solution offers the lowest price in the medium to long term in Gabon as average cost for Mbit/s will tend towards incremental costs with successive upgrades.
2. Detailed demand study has been conducted to assess and confirm robust pending demand for international connectivity in Gabon. GoG, operators, ISPs as well as large business international connectivity needs have been assessed with a ―bottom up‖ analysis through interviews and questionnaires. Short term connectivity needs are of 26 units of STM-1 x 8,000km, which is slightly above the initial capacity on the ACE submarine cable. Medium connectivity needs are estimated at 80 units of STM-1 x 8,000km, primarily driven by the roll out of 3G services by mobile operators and large business customers in Libreville and Port Gentil significantly expanding usage of broadband services provided by operators and ISPs following improved access to international connectivity. Would Gabon Telecom manage to improve both its technical and financial conditions of access to SAT3-WASC, the estimated impact on the Medium Term needs for ACE is a decrease of 20%, as operators and ISPs in Gabon would look for limited redundancy on the SAT3-WASC cable.
Figure 14: Short term and Medium term needs for international connectivity on ACE in Gabon (bottom up analysis) Short term connectivity needs Medium term connectivity needs Comments (2012) (+ 5 years) Users ACE STM-1x8,000km % STM-1x8,000km % GoG 4 15% 4 5% Gabon Telecom 0 0% 8 10% Airtel Gabon 16 62% 16 20% Libertis 0 0% 8 10% Medium term needs assuming Atlantique Telecom 1 4% 8 10% 3G license Usan (Azur) 0 0% 8 10% No short term needs Assuming flexibility in paying ISPs 5 19% 10 13% the IRUs (see Annex 2) Broadcasters 4 5% Financial sector 4 5% Total 1 1% Other oil companies 3 4% Postal 1 1% Railways 1 1% Other large businesses 4 5% TOTAL NEEDS: 26 100% 80 100%
The robustness of this assessment of Short term and Medium term needs for international connectivity on ACE in Gabon has been confirmed by a ―top down‖ demand analysis. As of December 2010, the broadband penetration in Gabon is already 14% (0.5 % for fixed
submarine cable in Africa (1,980 km to Abidjan, 178 km to Bata, etc). On the basis of this average typical distance of 8,000 km, the initial capacity of ACE is 190,840 / 8,000 = 23.86 STM-1, which is 3.7 Gbit/s. 92
broadband market and 13.5% on mobile EDGE-GPRS, which indicates a real need for Internet despite existing constraints on connectivity. The Medium term objective set by the International Telecommunications Union (ITU) in the context of the Millennium Development Goals (MDG) is to reach by 2015 an Internet penetration of 40% on households. Such an objective could be considered within reach for Gabon with improved access to international connectivity through ACE reducing retail prices given that Gabon belongs to the Upper Middle Income Group and that more than 70% of the population is living in urban areas (more than 50% in Libreville and Port Gentil that will immediately benefit from the project). With a population of around 1.7 million inhabitants in 2015 and 340,000 households, the targets for 2015 would be 136,000 households connected to broadband Internet either via fixed or via mobile broadband and having a fairly permanent usage of Internet87. The following table estimates the international connectivity needs for different scenario of bandwidth per person and shows that a conservative assumption of an average bandwidth per household of 1 Mbps within 5 years would imply Medium connectivity needs of 76 units of STM-1 x 8,000km (to be compared with 80 units in the bottom up analysis).
Figure 15: Medium term needs for international connectivity on ACE in Gabon (top down analysis) Basis = 136,000 households Hyp. 1 Hyp. 2 Hyp. 3 Hyp. 4 Residential customers and very small businesses Average bandwidth per household (Mbps) 0.25 1.00 2.00 5.00 Total bandwidth required prior to contention 34,000 136,000 272,000 680,000 for households (Mbps) Contention ratio88 20 20 20 20 Total bandwidth required after contention for 1.7 7 14 34 households (Gbps) Total bandwidth required after contention 11 44 87 218 for households (SMT-1) Total bandwidth required for very small 10 10 10 10 businesses (SMT-1) Total needs for residential customers and 21 54 97 228 very small businesses (STM-1x8,000km) Business customers Total needs for business customers and GoG 22 22 22 22 (STM-1x8,000km)* Total needs for Gabon (STM-1x8,000km) 43 76 119 240 * considered fairly inelastic once access to international connectivity has been improved
87 As opposed to persons, which may have a non permanent usage of Internet (e.g. using a GPRS/EDGE key only for some days in the month). 88 The contention ratio is the ratio of the potential maximum demand to the actual bandwidth. The higher the contention ratio, the greater the number of users that may be trying to use the actual bandwidth at any one time and, therefore, the lower the effective bandwidth offered, especially at peak times. 93
3. Assumptions of financial analysis. Financial comparisons of satellite versus submarine cable options were done using the following assumptions on a study period of 15 years. Scenario 4 is the base scenario. Scenarios 5, 6 and 7 enable to simulate the impact of a decrease in the price of the IRU STM-1 x 8,000 km. Scenario 1, 2 and 3 enable to simulate the impact of project costs higher than budgeted or demand for connectivity not materializing as expected.
Figure 16: Assumptions of economic and financial analysis for ACE international connectivity
Scenarios Key parameters Units 1 2 3 4 5 6 7 Exchange rate 1 Euro = XAF 655.957 655.957 655.957 655.957 655.957 655.957 655.957 89 1 Euro = US$ 1.38 1.38 1.38 1.38 1.38 1.38 1.38 90 CAPEX ACE Increase in initial investment compared to budget of US$30 million US$ mio 3 3 2.5 2 2 2 2 Cost for upgrade (per 10 Gbps) US$ mio 3 3 3 2 2 2 2
Discount rate % 15% 15% 15% 15% 15% 15% 15%
% of expected demand effectively materializing % 40% 50% 60% 70% 70% 70% 70% Annual growth rate of demand from 2016 % 5% 5% 5% 5% 5% 5% 5% Annual ACE OPEX as a percentage of CAPEX % 3.5% 3.5% 3.5% 3.0% 3.0% 3.0% 3.0% Annual increase of operating staff costs in the OpCo % 3% 3% 3% 3% 3% 3% 3% Price IRU STM-11 x * 8,000 km ACE US$ mio 0.900 0.900 0.900 0.900 0.700 0.500 0.450 Average geostationary US$ per satellite transponder month per costs Mbps 3,000 3,000 3,000 3,000 3,000 3,000 3,000
4. Connecting Gabon to ACE is a project that will result in a very suitable economic return to Gabon. All scenarios show positive IRR after 15 years, even in adverse conditions caused by project costs higher than budgeted or demand for connectivity not materializing as expected. Scenarios 4 and 3 have a positive NPV, indicating an IRR after 15 years equal or greater than 15%. The project would be cash-flow positive between 2014 and 2020 depending on the scenario. In the base case scenario 4, assuming a discount rate of 15%, the project is estimated to have a NPV of US$8 million over 15 years and an IRR of about 26%, breakeven
89 Estimated value for 2010-2012 period. 90 CAPEX estimate to not include the share of the interests of the IBRD Loan to be allocated to the ACE component. If estimated interests would be allocated 50/50 to the two components (catering for higher profitability of the ACE component), the situation would be comparable to a scenario between 2 and 3, with an IRR of 15% and a NPV of 5,183,853. 94 payback occurring in 2014. The financial analysis provides GoG and private sector with a methodology to define the appropriate Price per IRU STM-1 x 8,000 km ACE enabling to achieve an IRR of 15% after 15 years and a NPV equaling 0, if so wished by GoG and private sector: depending on the scenario, the range would be between US$1,200,000 and US$700,000.
Figure 17: Results of financial analysis for ACE international connectivity
Units of IRU IRR Initial Total 8000 STM11 after Scenario CAPEX NPV CAPEX x km ACE 15 Initial sold in 2015 years (US$) (US$) (US$) 1 33,000,000 34,500,000 28 5% -7,804,787 2 33,000,000 36,000,000 34 11% -3,114,765 3 32,500,000 35,500,000 41 18% 2,317,809 4 32,000,000 35,000,000 48 26% 8,057,199 5 32,000,000 35,000,000 48 15% -74,749 6 32,000,000 35,000,000 48 5% -8,206,697 7 32,000,000 35,000,000 48 2% -10,239,684
5. Impact of improved international access through ACE will provide significant potential to decrease retail prices for broadband services in Gabon either via fixed broadband (DSL, WiMax) or mobile (3G) broadband access networks for residential and very small businesses. Compared to current average US$30 per month per Mbps via satellite, the ACE submarine cable will allow an almost 6 fold decrease towards around US$5 per month per Mbps91. Membership in the ACE submarine cable, if accompanied with robust regulation to ensure competitive pricing releases demand, has potential to provide low cost international access to a broad range of the population and very small businesses because broadband demand is very sensitive to changes in price, and even small reduction in price can generate substantial demand and penetration in the country. Recent research92 indicates for example that a compound annual decline of 3% in cost of broadband access in the Africa and Middle East region could increase penetration rate by more than 4 times by 2015. Given the penetration rate of broadband services in Gabon as of December 2010, such multiplier effect93 is likely to have a significant effect in Gabon: monthly prices for broadband decrease, in turn improving affordability and increasing uptake of broadband services.
91 This analysis is inspired by margin squeeze tests performed by Regulatory authorities for broadband services. It provides a straightforward information on how significant is the costing block ―international connectivity‖ for the setting up of the end user price. Key parameters are the depreciation time for the asset and the contention ratio (see below). 92 Pyramid Research, New Undersea Cables Help Boost Africa’s Broadband Prospects: The Role of African Regulators to facilitate market development and ensure affordable prices, presented by Sonia Jorge, Research Director, at the ITU-FTRA, Banjul, The Gambia, July 12-14, 2010. 93 The multiplier effect describes how an increase in some economic activity starts a chain reaction that generates more activity than the original increase. 95
Figure 18: Comparison of average cost of international connectivity per customer satellite vs. ACE submarine cable (Medium term)
Submarine cable Satellite Hyp. 1 Hyp. 2 Hyp. 3 Hyp. 4 Households 136,000 136,000 136,000 136,000 136,000 Average bandwidth per 0.25 0.25 1.00 2.00 5.00 household (Mbps) Total bandwidth required prior to 34,000 34,000 136,000 272,000 680,000 contention for household(Mbps) Contention ratio94 25 20 20 20 20 Total bandwidth required after 1.36 1.7 7 14 34 contention for households (Gbps) Total bandwidth required after contention for households (STM- 9 11 44 87 218 1) Bandwidth required by very 22 22 22 22 22 small businesses (STM1) Total STM-11 19 21 54 97 228 Average geostationary satellite 3 000 transponder costs (S) CAPEX (M$) 30.0 30.9 32.3 36.4
Average CAPEX per STM-1 (M$) 1.4 0.6 0.3 0.2 Depreciated CAPEX (over 10 years95) per month per STM-11 23 857 9 594 5 524 2 653 ($) OPEX per month per STM-1 ($) 7 982 3 114 1 718 732
Average cost per customer ($) 30.00 4.89 5.00 5.17 5.67
6. Broadband internet has also been shown to boost the productivity of firms as well as generate employment opportunities. New growth theory suggests that long-run economic growth emanates from spillover arising from innovation and investment in new technologies. Fast internet access can be considered one important new technology, and broadband is increasingly recognized to promote productivity and boost aggregate economic growth (OECD, 2003). Analytical studies have shown that firms using standard broadband (defined as connection speeds above 256 Kbps (OECD, 2002)) were on average 10 percent more productive than firms using dial-up internet access. Faster internet speeds are also causally related to increased employment opportunities with analysis showing that for every one percentage point increase in broadband penetration within a region, employment increases by
94 The contention ratio is the ratio of the potential maximum demand to the actual bandwidth. The higher the contention ratio, the greater the number of users that may be trying to use the actual bandwidth at any one time and, therefore, the lower the effective bandwidth offered, especially at peak times. 95 The depreciation is usually determined on the basis of the average duration of a client commitment in developed countries (3 to 5 years). In the Gabonese case, it is assumed that the appropriate duration should be longer (around 10 years). Sensitivity analysis was done on this parameter showing no significant change in the overall conclusions. 96
0.2-0.3 percent per year for the private, non-farm economy (Crandall et al, 2007). Indeed, studies show a clear positive relationship between employment and broadband penetration in the manufacturing and service industries, with business growth shown to be particularly significant for larger businesses and for IT intensive sector (Lehr et al, 2006). The results of these studies support the hypothesis that broadband penetration enhances economic activity. Increased broadband speeds and less expensive data access have the potential to promote economic activities in Central Africa, supporting the growth and productivity of businesses and gradual transfer of employment from agricultural to service industries and expansion of the region’s nascent ICT and BPO sector.
7. Economic Benefits to Gabon of Investment in ACE. Recent evidence suggests that increasing overall service coverage and promoting access to telecommunications services provide a substantial economic benefit to low and middle income countries. World Bank research on the economic multiplier effect of increased broadband penetration rates, presented in the chart below, indicates that each 10% increase in broadband penetration increases overall GDP growth in developing countries by 1.38%.96 Although causality in the relationship between broadband and growth is hard to prove with the data available, analysis suggests high likelihood of causality. The multiplier for broadband penetration is far higher than for any other major telecommunications service. Lower-cost broadband connectivity provided by ACE can be expected to encourage substantially higher broadband penetration in Gabon, thereby increasing GDP growth. Based on the economic multiplier and estimated penetration rate in Gabon with or without ACE capacity, the analysis indicates that the project will increase annual GDP per capita in Gabon by an annual average of approximately 0.91% over the first 10 years of operation of the ACE submarine cable.
Figure 19: Broadband Investment Effect on Economies97
96 Source: "Information and Communications for Development 2009: Extending Reach and Increasing Impact, World Bank. Chapter: Economic Impacts of Broadband, page 45. Authors: Christine Zhen-Wei Qiang and Carlo M. Rossotto with Kaoru Kimura. 97 All results are statistically significant at the 1 percent level except for that of broadband in developing countries, which is at the 10 percent level. 97
Figure 20: GDP Growth in Gabon from Increased Broadband Penetration98
Impact on Gabon Growth in GDP resulting from increased Broadband Penetration 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Effective demand satisfied without ACE 85% 80% 75% 75% 70% 70% 65% 65% 65% 65% Broadband Penetration rate without ACE 14% 14% 14% 15% 15% 16% 16% 17% 17% 18% Broadband Penetration rate with ACE 16% 17% 19% 20% 22% 23% 25% 26% 27% 27% GDP multiplier / 10% increase in Penetration 1.38% 1.38% 1.38% 1.38% 1.38% 1.38% 1.38% 1.38% 1.38% 1.38% Increase in GDP Growth Rate with ACE 0.33% 0.48% 0.64% 0.69% 0.90% 0.97% 1.22% 1.25% 1.29% 1.31% Average in GDP Growth Rate with ACE 0.40% 0.48% 0.54% 0.61% 0.67% 0.75% 0.81% 0.86% 0.91%
8. New international capacity from ACE will be disseminated immediately via a new submarine cable from Libreville to Gabon’s second main city and key economic area Port Gentil (GoG’s counterpart funding). Port Gentil is currently accessing international connectivity via satellite and is linked with Libreville via terrestrial radio waves. This option is not longer appropriate for the international and national connectivity needs of the GoG (eGovernment applications) as well as of the oil companies and other businesses located in Port Gentil. Furthermore maintenance of terrestrial radio waves is particular difficult on the path from Libreville to Port Gentil. Demand analysis shows that Port Gentil would generate close to 50% of the capacity on the ACE submarine cable. Immediate dissemination of ACE international capacity to Port Gentil is therefore a key factor to achieve suitable economic return of ACE to Gabon.
9. A similar financial analysis was performed for Libreville Port Gentil and concluded that connecting Libreville and Port Gentil is a project that will also result (provided the ACE connectivity is available) in a suitable economic return to Gabon99. The project would be cash-flow positive between 2015 (best case scenario) and 2026 (worst case scenario). In a base case scenario, assuming a discount rate of 15%, the project is estimated to have a NPV of US$0.5 million over 15 years and an IRR of about 16%, breakeven payback occurring in 2015. The financial analysis provides GoG and private sector with a methodology to define the appropriate Price per IRU between Libreville and Port Gentil enabling to achieve an IRR of 15% after 15 years and a NPV equaling 0, if so wished by GoG and private sector: depending on the scenario, the range would be between US$1,900,000 and US$1,100,000 (with GoG’s initial proposal of US$1,100,000 being towards the lower end of the range).
98 Calculation of impact on GDP Growth in Gabon. Without ACE, only a fraction of effective demand would be satisfied (85% in 2012, 80% in 2013, etc.) as depicted in the first row. Broadband penetration without ACE is derived in the second row and compared with the scenario 4 with ACE in the third row. The fourth row recalls the 1.38 broadband multipler per 10% increase in broadband penetration. The fifth row computes in increase in GDP growth rate by multiplying the difference between Broadband Penetration with and without ACE, divide it by 10% and multiply it 1.38. The last row shows the average over the years of the increase in GDP growth rate. In such a situation, it would be highly likely that within a 10 years period, another submarine cable would consider setting up a landing station in Gabon. 99 Based on the report and financial model developed by Mr. Yves Rouhaud, Technical and Economical consultant advising GoG (see : Projet CAB4-CITGB, Plan d’entreprise du PPP pour l’accès au câble sous-marin ACE, Date : 12 décembre 2011). 98
Figure 21: Assumptions of financial analysis for national connectivity between Libreville and Port Gentil
Scenarios Key parameters Units 1 2 3 4 5 6 7 Exchange rate 1 Euro = XAF 655.957 655.957 655.957 655.957 655.957 655.957 655.957 100 1 Euro = US$ 1.38 1.38 1.38 1.38 1.38 1.38 1.38 CAPEX LBV-POG Increase in initial investment compared to budget of US$26 million US$ mio 3 3 2.5 2 2 2 2 Cost for upgrade (per 10 Gbps) US$ mio 3 3 3 2 2 2 2
Discount rate % 15% 15% 15% 15% 15% 15% 15%
% of expected demand effectively materializing % 40% 50% 60% 70% 70% 70% 70% Annual growth rate of demand from 2016 % 5% 5% 5% 5% 5% 5% 5% Annual increase of operating staff costs in the OpCo % 3% 3% 3% 3% 3% 3% 3% Price IRU 8000 STM1 x km LIB- POG US$ mio 1.200 1.200 1.200 1.100 0.900 0.900 0.900
Figure 22: Results of financial analysis for national connectivity between Libreville and Port Gentil
Units of IRU Initial Total IRR after Scenario STM-1 sold NPV CAPEX CAPEX 15 years in 2015 (US$) (US$) (US$) 1 25,000,000 25,000,000 13 0% -9,100,469 2 24,500,000 24,500,000 20 10% -2,877,255 3 24,500,000 24,500,000 20 13% -1,248,464 4 24,000,000 24,000,000 23 16% 426,623 5, 6 and 7 24,000,000 24,000,000 23 10% -3,362,923
100 Estimated value for 2010-2012 period. 99
National backbone connectivity via a terrestrial fiber optic link
10. Building a terrestrial fiber optic link is most cost-effective long term option for improved access to international connectivity on the Libreville – Franceville link as well as for cross-border traffic with Congo. Financial analysis was performed for Gabon101. The analysis considered a variety of radio wave, satellite and fiber options and concluded that given pending demand on the Libreville - Franceville link as well for cross-border traffic with Congo a terrestrial fiber link is the best overall option in terms of long-term cost effectiveness and bandwidth availability.
11. Detailed demand study has been conducted to assess and confirm robust pending demand for international and national connectivity for Phase I of the national backbone, using a combination of ―empiric‖ data from interviews and questionnaires with GoG, operators, ISPs as well as large businesses and of ―theoretical‖ data from a broadband demand forecasting tool using population data estimate for every area connected by the Phase I of the national backbone102 and the PDO indicator International internet bandwidth103. Building the fiber link alongside railway tracks allows addressing the internal connectivity needs of the railway company SETRAG (which is currently using VSAT connections) offsetting the relative cost disadvantage of civil works alongside existing railways vs. existing roads (see Figure 24) and enabling a transformational impact on SETRAG that is expected to use the infrastructure to deploy a technology similar to ERTMS104. Technical assistance including transaction/legal, regulatory and economic/financial support will be provided under Component 1 of the project to define with SETRAG the terms and conditions under which the fiber will be laid down and operated by the SPVs. A route survey will be undertaken by GoG to determine jointly with SETRAG the best technical solution for laying down the fiber (fully manual, use of machines alongside the tracks when sufficient space is available, use of machines positioned on specially equipped wagons, etc.).
101 Based on the report and financial model developed by Mr. Yves Rouhaud, Technical and Economical consultant advising GoG (see : Projet CAB4-CITGB, Plan d’entreprise du PPP pour l’accès au câble sous-marin ACE, Rapport N° 2 : Phase I du Backbone National, Date : 24 décembre 2011). 102 The Libreville to Franceville / Border Congo link covers approx. 6.7% of the total population. The Lekoni to Koulamoutou via Franceville link covers approx. 2.6% of the total population. 103 See: Annex 1: Results Framework and Monitoring. 1 kbps is added to the PDO indicator for International internet bandwidth to cater for estimated limited demand for National Internet traffic. 104 The European Rail Traffic Management System (ERTMS) is an initiative backed by the European Union to enhance cross- border interoperability and signalling procurement by creating a single Europe-wide standard for train control and command systems. 100
Figure 23: Short term and Medium term needs for connectivity on Phase I of the national backbone in Gabon
Short term connectivity needs Medium term connectivity needs Comments (2014) (+ 5 years) Users Phase I of the national backbone STM-1 % STM-1 % Operators and ISPs 8 13% 11 12% Representing 10% of total International traffic of Gabon is secured through submarine cable WASC landing station in Congo and assuming symmetrical traffic flows with Cross border traffic Congo (mutually redundant with Congo 5 8% 15 42% links) Assuming initial capacity requirements of 4 STM1 per Type 1 Site (Libreville, Franceville), of 2 STM1 per Type 2 site (provincial capital) and of 1 STM1 per Type 3 site GoG 23 37% 37 5% (regional capital) Broadcasters 2 3% 2 2% Equivalent to 20 HDTV channels following digital switchover Railways 24 39% 24 27% 24 railway stations to be connected between themselves and with the railway operating center located in Owedo Other large Several large businesses have businesses expressed interest: Comilog in the mining sector, companies in the wood sector in the special economic zone of Nkok, etc. TOTAL NEEDS: 62 100% 89 100%
12. Due diligence has been made on the investments associated with Phase I of the national backbone, confirming a total Capital Expenditure (CAPEX) of US$39,366,132105. The estimated average total CAPEX per km for the project is 34,962 US$ per km, to be compared with an Average Cost Per Km To Deploy Fiber Optic Networks (Excluding Highest and Lowest) in Africa of US$27,846 per km (according to sample data available to the Bank’s ICT unit). Technical assistance under the PPA will support GoG in defining the appropriate
105 The Component 2 – Connectivity of the project foresees a total of 27 + 12 = 39 US$ million (i.e. 4% contingencies) to finance the terrestrial fiber optic link Libreville - Franceville - Bakumba – Lekoko / Border with Congo (approx. 800 km) to interconnect with the Congolese link Dolisie – Mbinda (already financed under CAB3 CG) and the additional link Lekoni - Franceville – Koulamoutou (approx. 340 km) within the first phase of roll out of a national backbone. . 101 strategy for the competitive and open tender in the specific context of Gabon to ensure best value for money. Civil works and Fiber amount to 76% of total CAPEX. A 48 pairs fiber optic cable will be laid down, which is a robust forward looking assumption when considering additional backbone links to be built in the future under ―Digital Gabon‖ as well as likely future requirements for dark fiber. Consistent with best practice, the business case is also based on the assumption that three ducts will be laid down, one for the fiber optic cable and two spares for future cables or if required by works on the infrastructure. Due diligence on the CAPEX (analysis of recent information obtained in the context of the ACE and Libreville – Port Gentil project, international benchmark, etc.) was performed and the base case sets values that cater for the specificities of the project (higher costs associated with laying fiber alongside railway tracks) and with the small size of the Gabonese market (higher costs for services). Sites and Buildings amount to 10% of total CAPEX, reflecting lower expect costs in the remaining of the country compared to Libreville and Port Gentil. Transmission equipments amount to 5% of total CAPEX, with unit prices broadly consistent with available costing information from suppliers. Network supervision amount to 1% of total CAPEX, with unit prices broadly consistent with available costing information from suppliers. Project management and training amount to 9% of total CAPEX, based on the conservative assumption that GoG will not award a turnkey contract, but will award different tenders (e.g. for Civil works and Fibers, for Sites and Building, etc.) 106.
Figure 24: CAPEX estimate for Phase I of the national backbone
Civil works and Fiber Length Unit price / Total price Total price % of total (km) km (EUR) (EUR) (US$) CAPEX Civil work alongside 646 20,000 12,919,300 16,924,283 43% existing railways Civil work alongside 480 16,000 7,680,000 10,060,800 26% existing roads Fiber provision and lay 1,126 2,000 2,251,930 2,950,028 7% down Subtotal Civil works and 1,126 20,295 22,851,230 29,935,111 76% fiber Sites and Buildings units Unit price Total price Total price % of total (EUR) (EUR) (US$) CAPEX Type 1 - 125 m2 2 304,898 609,796 798,833 2% Type 2 - 55 m2 1 152,449 152,449 199,708 1% Type 3 - 25 m2 12 114,337 1,372,041 1,797,374 5% Type 4 - 5 m2 24 30,090 731,755 958,599 2% Subtotal Sites and 39 2,866,042 3,754,514 10% Buildings
106 Technical assistance under the PPA will support GoG in choosing the most appropriate tender strategy and to define with SETRAG the most economical works procedure along the railway tracks (See: Annex 2: Detailed Project Description). 102
Transmission units Unit price Total price Total price % of total equipments (EUR) (EUR) (US$) CAPEX Type 2 121,959 243,918 319,533 1% 1:DWDM+MUX+Router Type 1 60,980 60,980 79,883 0% 2:OADM+MUX+Router Type 12 45,735 548,816 718,950 2% 3:OADM+MUX+Router Type 24 30,090 731,755 958,599 2% 4:OADM+MUX+Router Subtotal Transmission 39 1,585,470 2,076,965 5% equipments Network supervision units Unit price Total price Total price % of total (EUR) (EUR) (US$) CAPEX NMS 1 22,258 22,258 29,157 0% Synch. Primary + Secondary 1 68,602 68,602 89,869 0% Fiber testing equipment 1 65,248 65,248 85,475 0% Subtotal Network 3 156,108 204,501 1% supervision Project management Total price Total price % of total and training (EUR) (US$) CAPEX Project management 2,286,735 2,995,623 8% Training 304,898 399,416 1% (EUR) (US$) % of total CAPEX TOTAL CAPEX 30,050,482 39,366,132 100% Average CAPEX per 26,689 34,962107 km
13. Assumptions of financial analysis are as follows on a study period of 15 years. Scenario 4 is the base scenario. Scenario 6 simulates the impact of a higher Monthly price per Mbit – other customers on the base case whilst Scenario 5 simulates the impact of a shorter length of the network (without compromising key objectives of the Phase I of the national backbone). Scenario 1, 2 and 3 enable to simulate the impact of project costs higher than budgeted, combined in Scenarios 1 and 2 with higher Monthly price per Mbit – other customers.
107 Average Cost Per Km To Deploy Fiber Optic Networks (Excluding Highest and Lowest) was estimated according to data available to the Bank’s ICT unit at 27,846 US$ per km.. 103
Figure 25: Assumptions of economic and financial analysis for connectivity on Phase I of the national backbone
Scenarios Key parameters Units 1 2 3 4 5 6 Exchange rate 1 Euro = XAF 655.957 655.957 655.957 655.957 655.957 655.957 108 1 Euro = US$ 1.31 1.31 1.31 1.31 1.31 1.31 CAPEX BB National 109 Phase 1 Civil work costs per km along existing railways US$ 23,120 30,360 30,360 27,600 27,600 27,600 Civil work costs per km along existing roads US$ 27,600 24,840 24,840 22,080 22,080 22,080
Discount rate % 15% 15% 15% 15% 15% 15%
Scope of Phase I Base case Base case Base case Base case Koulamoutou Base case (1,126 km) (1,126 km) (1,126 km) (1,126 km) connected (1,126 km) directly to Lastourville and not via Franceville (1,015 km) Initial Growth Rate of GoG’s demand % 10% 10% 10% 10% 10% 10% Annual growth rate of GoG’s demand from 2020 % 10% 10% 10% 10% 10% 10% Annual increase of operating staff costs in 110 the OpCo % 3% 3% 3% 3% 3% 3% Monthly price per Mbit US$ 400 540 200 200 200 390 Monthly price per Mbit for GoG (bulk capacity) US$ 50 50 50 50 50 50 Annual decrease in % 3% 3% 3% 3% 3% 3% monthly price per Mbit
14. Phase I of the national backbone is a project that will result in a suitable economic return to Gabon. All scenarios show positive IRR after 15 years, even in adverse conditions caused by project costs higher than budgeted. All but one scenario have a positive NPV, indicating an IRR after 15 years equal or greater than 15%. The project would be cash-flow positive between 2017 and 2019 depending on the scenario. In the base case scenario 4,
108 Estimated value for 2013-2015 period. 109 CAPEX estimate do not include the share of the interests of the IBRD Loan to be allocated to the BB National component. If estimated interests would be allocated 50/50 to the two components (catering for higher profitability of the ACE component), the situation would be comparable to scenario 3. 110 Initial operating costs based on 30 people located on 3 sites (Libreville, Franceville, Oboué) with 8 cars, with subcontracting provisions for Civil Works and Transmission Equipment assistance. . 104 assuming a discount rate of 15%, the project is estimated to have a NPV of US$0.3 million over 15 years and an IRR of 15%, breakeven payback occurring in 2019. The impact of GoG’s demand not materializing has also been simulated: assuming half of the expected initial connectivity needs and annual growth rate (initial and from 2020) of 5%, the IRR would be 12% and the NPV minus US$4.6 million. The financial analysis provides GoG and private sector with a methodology to define the appropriate Price per Mbit for a given Monthly price per Mbit for GoG (bulk capacity) enabling to achieve an IRR of 15% after 15 years and a NPV equaling 0, if so wished by GoG and private sector.
Figure 26: Results of financial analysis for connectivity on Phase I of the national backbone
Monthly IRR Total Scenario price per after 15 NPV CAPEX Mbit years (US$) (US$) (US$) 1 45,266,189 400 26% 24,629,384 2 42,316,160 400 20% 9,679,164 3 42,316,160 200 14% -2,104,763 4 39,366,132 200 15% 293,181 5 36,539,058 200 16% 2,167,512 6 39,366,132 390 28% 27,968,666
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Annex 8: CAB Program Background and Vision
AFRICA: Central African Backbone - APL4 - Gabon Project (CAB4 GA)
1. The Central African Backbone Program (CAB) is a World Bank Group regional instrument aimed at catalyzing private sector investment to improve connectivity in Central Africa. The World Bank CAB Program is designed to provide broadband connectivity in Central Africa to all capital cities, main secondary cities and establishing redundancy linkages which is estimated at a cost of about $700m. Broadband access and international and national traffic in the region and countries targeted are expected to increase, while bandwidth costs and broadband access prices for end-users are expected to decline rapidly. By the end of the program, all capitals and major cities in Central Africa should be linked to the global Information and Communications network through competitively priced high-bandwidth connectivity. Traffic in the region is expected to increase by at least 36% CAGR111, and bandwidth price projected to start at around US$300/Mbit in 2010 at retail level and rapidly decline thereafter. This in turn should lead to lower prices for telephone services and better access to the Internet, which will significantly improve foreign and local private investment opportunities in the region, decrease the cost of doing business and increase the prospects for job creation and wealth generation while enabling countries to reap the benefits of ICT as a platform to deliver services to their citizens and support natural hazards and emergency management systems.
2. The proposed amount of IDA and IBRD contribution for the CAB Program is $215m over a ten-year period. The CAB Program is aiming at leveraging additional $97.8m from the private sector. Other financing will be contributed and leveraged through other institutions (e.g. AfDB and others). The CAB program is structured as both a horizontal and vertical APL. Following APLs have already been discussed and approved by the Board: APL1-A (vertical) on September 24, 2009, APL1-B (vertical) on June 30, 2011, APL2 (horizontal) on January 12, 2011 and APL3 (horizontal) on May 25, 2011. The World Bank Group is well placed to contribute in the context of a multiple development partners’ effort: the WBG has been involved in the CAB program since 2005. The Declaration of the CEMAC heads of state adopted in May 2007 called explicitly for WBG financial support for the implementation of the CAB program. The overall program has been formulated with other key stakeholders and DFIs (the AfDB joined the initiative in 2007 and is providing parallel financing for the CAB Program; the African Union (AU) is also playing an important role in facilitating inter-governmental cooperation and policy harmonization, in conjunction with the CEMAC, moreover, the Islamic Development Bank and Japan International Cooperation Agency expressed their interest to participate to the Project.
3. Project development objectives for CAB. The CAB Program development objectives are to contribute to increase geographical reach and usage of regional broadband network services and reduce their prices. The program will seek to achieve the objective by focusing on investments linked to fostering open and cost-effective access to communications infrastructure. The main development outcomes will include: (i) support opening up the telecommunications
111 Compound annual growth rate 106 market to competition, improving policies and regulatory framework, (ii) support the development of infrastructure with a secondary impact on the market through reducing the cost of broadband services and making them more accessible, (iii) improve efficiency of transaction processed through electronic e-government services and improved user perception of services through electronic application. Result indicators will be defined accordingly and in order to comply and be consistent with ICT Core Sector Indicators and Definition as defined under the Bank’s project coding system as of December 2009.
4. Menu of Options. To maximize flexibility, client-responsiveness in a multi-country environment and the specific national situation of each country (in terms of existing infrastructure or policy environment), CAB has been designed as a menu of options which individual Governments choose from in order to package their CAB operation. The individual projects under the program will therefore include a customizable set of activities which have been grouped under four broad headings or components, described in more detail below.
5. Regionality for the purpose of using the Regional IDA envelope. Following discussions with Financial Resource Management, all of the options eligible for CAB financing have been deemed regional in nature for the purpose of qualifying for the use of the Regional IDA envelope – with the exception of eGovernment Applications (if applicable), which have to be funded solely from the individual country national IDA allocation.
6. Guiding principles. The following principles will guide the design of each component of the proposed project: (i) utilizing a programmatic approach with detailed phasing of activities; (ii) incorporating a results-based Monitoring and Evaluation framework; (iii) leveraging Public Private Partnerships; and (iv) leveraging participatory approaches and harmonization with development partners. Based on the above considerations, the proposed operations can cover the following four components.
7. Component 1 - Enabling environment at the regional and national levels – This component will include the following activities : (i) Modernize and harmonize legal and regulatory framework the Information Communication Technology (ICT) sector and the Information Society; (ii) Strengthen capacity of public key stakeholders (i.e. Ministry and independent regulatory agency); (iii) Promote a pro-competitive environment (i.e. develop regulatory tools, liberalize the telecom sector, support introduction of new service providers, restructure and privatize public incumbent operators, PPP promotion) to maximize benefit from the regional backbone; (iv) Strengthen M&E capacity.
8. Component 2 – Connectivity – This component will include the following activities: (i) Finance the national infrastructure for the CAB including fiber-optic cables (with a potential contribution for a submarine cable), terminal equipments, switches, to guarantee the establishment of an open access network (open to all operators) on the basis of PPPs, leveraging private sector investment; (ii) Finance the purchase of capacity on the CAB for targeted users (schools, universities, hospitals eGovernment use) with discounted capacity prices; (iv) Support to extend ICT in rural areas on the basis of PPPs and/or with competitive award of subsidies (including country-specific innovative demand stimulation programs such as Digital Villages and the SMS eService programs)
107
9. Component 3 – Good Governance and Transparency, E-Government and Flagship ICT applications – This component will include the following activities: (i) Finance the establishment of government Virtual Private Networks (VPNs) to collect all the government communication needs (voice and data) to be routed via the CAB and the establishment of national and regional Internet Exchange Point (IXP), (ii) Support the relevant government or public authority to ensure that the ccTLD is being administered in the public interest, within the framework of its national public policy and relevant laws and regulations, and (iv) Deploy flagship applications for which country champion and commitment have been identified to improve internal systems, deliver services more efficiently and effectively, and make information & services more accessible to the population.
10. Component 4 – Project Management – This component will consist of support to finance management related issues at the Project level. Depending on the specific implementation arrangements for each country, this component may include elements such as human resources support with management, procurement, financial management, M&E, internal and external audit, and communications expertise, operating expenses and equipments.
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IBRD 33408 GABON
SELECTED CITIES AND TOWNS MAIN ROADS PROVINCE CAPITALS RAILROADS NATIONAL CAPITAL PROVINCE BOUNDARIES RIVERS INTERNATIONAL BOUNDARIES
10°E12°E14°E CAMEROON
Minvoul Bitam 2°N 2°N
o d n i EQUATORIAL v ATLANTIC Oyem I WOLEU-NTEM ua OCEAN GUINEA Djo g n u o v MékamboMékambo M Mitzic OGOOUÉ-IVINDOOGOOUÉ -IVINDO a g Makokou n Ekata a b A o LIBREVILLE nd Ivi To Ovendo Makoua
no
C Kango C ka
° O gooué °
r
0 r O 0 ESTUAIRE BoouéBooué
NdjoléNdjolé
y
s s CONGO
t
MOYEN- a
OGOOUÉOGOOUÉ l ué
o Lambarene f Okondja Port Gentil Of OGOOUÉ-LOLOOGOOUÉ -LOLO é M b Lac Onangué Sé
o
u Kaulomoutou
n OGOOUÉ-OGOOUÉ - NGOUNIÉNGOUNIÉ t HAUT-OGOOUÉHAUT-OGOOUÉ N a Chaillu MARITIME g o i Lagune u Massif LékoniLékoni n n Masuku Omboué i Nkomi é
s O
Mbigou g
Mouila o
Iguéla o 2°S Mt. Birougou u 2°S (1190 m) é
Lagune NdendéNdendé Ndogo To Zanaga
TTchibangachibanga N To y Kayes an ga NYNYANGAANGA
Mayumba 0 40 80 120 Kilometers To Loubomo GABON 0 20 40 60 80 100 Miles CONGO 4°S 4°S
This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries.
10°E12°E14CABINDA °E (ANGOLA) SEPTEMBER 2004