Document of The World Bank FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No. 12444 PROJECT COMPLETIONREPORT TANZANIA Public Disclosure Authorized SECONDTnELCOMMUNICATIONS PROJECT (CREDIT 1810-TA) NOVEMBER2, 1993 Public Disclosure Authorized MICROGRAPHICS Report No: 12444 Type: PCR Public and Private Enterprise Division Country Department II Africa Regional Office Public Disclosure Authorized This document has a restdcted ds oibutimand may be used by redplena only in the pertfonanae of their ,fficd duties Its contents my nt oterwise be diosed w_t Wodd Bank suthulaton. CURRENCYAND EOUIVALENTS Currency Unit = TanzanianShilling (Tsh) Tsh 1 = US$ 83.72 (1987) = US$ 125.00 (1988) = US$ 192.30 (1989) = US$ 196.60 (1990) = US$ 233.90 (1991) = US$ 325.00 (1992) ABBREVIATIONSAND ACRONYMS DEL Direct ExchangeLine EAC East African Community ERP Economic Recovery Program - 1986 ESAP Economicand Social Action - 1989-1992 GOT Governmentof the United Republicof Tanzania IDA InternationalDevelopment Association MTC Ministryof Transport and Communications PPF Project PreparationFacility SAP StructuralAdjustment Program - 1982 TDP Total Demand Potential TPTC Tanzania Posts and TelecommunicationsCorporation TRP TelecomsRecovery Program FISCAL YEAR January 1 to December31 FOROFFICIAL USE ONLY THEVORLD BANK WasIlngton,D.C. 20433 U.SA Office of Director-General Operations Evaluation November2, 1993 MEMORANDUMTO THE EXECUTIVEDIRECTORS AND TUE PRESIDENT SUBJECT: Project Completion Report on Tanzania Second TelecommunicationsProiect (Credit 1810-TA) Attached is the "Project CompletionReport on Tanzania - Second TelecommunicationsProject (Credit 1810-TA)prepared by the Africa Regional Office,with Part II preparedby the Borrower. The project'sphysical components were completedwithout major cost overrunbut suffereddelays due to procurementproblems and turnoverin project management.Modernization of billingand accountingwas onlypartially completed due to designproblems (incompatibility of computer hardware and software).Most significantly,the projectfailed to keepTPTC (Tanzania'sPTT agency)on a sound financialfooting. By 1988, TPTC had gone technicallybankrupt. The Bank wvs slow to respond,did not invokeremedies and, indeed,waited until 1989 to halt processinga third project. Subsequentto the completionof the SecondProject, the Governmentdid agree on a Plan of Action to restructureTPTC's finances, under the Third TelecommunicationCredit (No.2486-TA), approved in April 1993. On balance,the project'soverall outcome is ratedas unsatisfactory, given TPTC's dismal financialsituation throughout project implementation (an unusualoccurrence in telecommunicationsprojects). The institutionalimpact is rated as partial,and sustainabilityuncertain as it dependson the eventual c4nsolidationof TPTC's financialrehabilitation. The PCR could have been more thorough in its coverage of, intoe alia, the evolutionof key operational performanceindicators, most recentfinancial results, and the evaluationof the Bank's supervisionperformance. No audit is planned. Attachment I This docwmsnthas a nestricted distribution and may be used by recipients only in the performance of| their official duties. Its contents may not otherwise be disclosed without World Bankauthorization.| FOROmCI4L USEONLY EM12mmtnLfro= Prefac Trablegf C"ontents.S Preface ................................. *.................. 14. EvaluationSummary ........................................... ii Part I ................................ 1 1. ProjectIdentity ................................. 1 2. Backgrund .................................. 1 3. ProjectObjectives and Description............................... 2 SectorDevelopment Objecdves .............................. 2 ProjectObjectives ....................................... 2 ProjectDescription ...................................... 2 Part A. - Rehabilitation ... ... ............... 2 PartB.- TechnicalAssistance and Training. ............. 3 4. ProjectDesign and Organization................................ 4 5. ProjectImplementation .................................. 4 CreditEffectiveness and ProjectStart-up ............ ............. 4 ImplementationSchedule .... , S........ Disbursements........................ S CreditAllocation .S......... ....................... S 6. ProjectResults ....................... , . , , 6 PhysicalResults ...................... 6 FinancialResults ...................... 6 HumanResource Development. ..................... 9 7. ProjectSusinabiity ......................... 9 8. Bank'sPerformance .................... 9 9. Bornower'sPerformance .................. 10 10. ProjectRelaonships .................. 10 11. ConsultingSerices ..................... 10 12. ProjectDoumetat ndDaD.............. .... 10 Thisdocument has a restricteddistribution and may be used by recipientsonly in the performance of their oMcialduties. Its contentsmay not otherwisebe disclosedwithout World Bank authorization. TABLEOF CONTENTS(Cont.d) 13. Rate of Retun ........................ 11 14. Lesson Learned From Experience ........................... I1.... I Part ............................ !. 12 ParttI .......................... 36 1. RelatedBank Loans and/or Credits .. 2. ProjectTinetable. 37 3. Credit Disbursements.38 4. Project Implementation. .......... 39 5. Project Costs (US$miilion). 4 5A. Credit Allocation ............... 4l 6. Project Results ............... 42 7. Status of Covenans ............... 43 8. Missions ............... 44 AnneL. 1. FinancialStatements 4. Second TelecommunicadonsProlect Credit 1810 TA Projlet Comtion Report 1. This report covers the SecondTelecomnmunications Project in Tanzania, supportedby Credit 1810-TA. The Credit for SDR 17.9 million to the United Republicof Tanzania on- lent to Tanzania Posts and TeleconmmunicationsCorporation (TPTC) was signedon June 16, 1987, became effective on August 12, 1987 and was closed on December31, 1992. 2. Parts I and HI were prepared by Bank staff based on informationavailable in the project files and informationsupplied by TPTC. 3. Part II has been prepared by the Borrower to give its perspectiveof the design, iplementation and the developmentimpact of the project. - ii - Ta-nznaa Second Telecom,muncaionsProject Proiect CompleffonRewrt EvqluW9_nSummslr Backrou_nd 1. Public telecommunicationsservices in Tanzania are provided by the Tanzania Posts and TelecommunicationsCorporation (TPTC). TPTC is a monopolisticg3vernment owned institutionresponsible for operating, plannming,managing and developingof domestican, internationalpublic teleconmnunicationsand postal services. Tanzaniahas no telecommunicationsmanufacturing industry. The Corporationis administeredby an eight- member Board of Directors, whose Chairmanand Director General are appointadby the President of Tanzania. The other six members are appointedby the Minister of Communications. World Bank Involvement 2. The World Bank Group has been associatedwith the telecommunicationssector in Tanania since 1966, first throughthe East African Community(EAC) and then directly with Tanzania. The Bank approved 3 loans to EAC TelecommunicationsCorporation; a US$13 million loan in 1967 (Ln 483-EA), a US$10.4million loan in 1970 (Ln 675-EA) and a third loan of US$32.5 million in 1973 (Ln 914-EA). These were completedsatisfactorily. The first credit to Tanzania, following the breakup of EAC in 1977, was approved *n July 1982 (Credit 1173-TA)for SDR 22.1 million (US$27million equivalent). The credit supportedan essentWialpart of TPTC's 1980-86investment program, focussingon service expansionto rural areas and expansionof the networkto unserved or underservedareas at the time, both urban and nual. It also had a broad institutionalobjective of developingTPTC, mainly through expandin training facilities. The second project (Credit 1810-TA)for SDR 17.9 million was approved in June 1987. The Third project has been approved by the Board on April 27, 1993. project Obiectivesand Descrinton 3. The project was designed to (a) addres the key institutionalconstraints of the sector by strengtheningTPTC's management,organization, financial and engineeringsystems to maintain and operate the existing network, to undertakefurither rehabilitation and to plan for expansion; and (b) rehabilitatekey parts of the network, removingbottlenecks and imbalances to maximizecapacity utilizationof existing installations. 4. The project was designed in line with the TPTC's 1986-90Investment Program within the frameworkof the country's EconomicRecovery Program. The project's goals were to - iii - overcome the key constraints of the sector namely, (i) lack of managementskills, systems, and trained manpower; and (ii) lack of foreign exchangefor essentialmaintenance and spares and to provide for rehabilitationand expansion. Proect Implementation 5. The project start-up was smoothand on scheduie. TPTC, by undertakingadvance procurementaction, avoided all initialdelays. Both conditionsof effectivenessnamely, (i) appointmentof a project coordinatorand (ii) signingof the SubsidiaryAgreemnent; were fulfilled on time and the Credit was made effectiveon August 12. 1987. Progress during the flrst two years of implementationwas reasonable,with about 90% of the IDA credit being committedby the end of 1988. Since 1989, the project implementationactivities started to lag behind schedule and continuedto do so throughoutthe span of the project. The main problem with the implementationhas been the inabilityof TPTC to rneet commitmentsin respect of tariff increases and capital restructuring.