Burundi - Telecommunications Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 9013 PROJECT COMPLETION REPORT BURUNDI FIRST TELECOMMUNICATIONS PROJECT (CREDIT 1058-BU) SEPTEMBER 19, 1990 Energy Operations Division ical Department nial Office restricted distribution and may be used by recipients only in the performance of Its contents may not otherwise be disclosed without World Bank authorization.  ABBREVIATIONS AND ACRONYMS USED CCCE Caisse Centrale de Cooperation Economique (Paris, France) DEL Direct exchange line (connected, telephone) Expressed Demand Sum of working connections and waiting list FAC Fonds d'Aide et de Cooperation (Paris, France) ITU International Telecommunication Union Km Kilometer (1 kilometer = 0.62 miles) LD Long distance cransmission, channel or circuit Microwave Radio system working at frequencies above 1,000 Megahertz (normally used as long distance transmission carrier for telephone and television circuits) MTPT Ministere des Transports, Postes et Telecommunications, in charge of sector policy and supervision of ONATEL ONATEL Office National des Telecommunications, the telecommunications operating entity of Burundi created 01101/80 SCEP Service Charge des Entreprises Publiques STD Subscriber Trunk Dialing Telex Switched teleprinter service Trunk Long distance, for interurban service UNDP United Nations Development Programme  THE WORLD BANK FOR OFFICIAL USE ONLY Washmngon. D C. 20433 U.S A Offic, of Director-Cornral OperatioeA hallutati September 19, 1990 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Report on Burundi First Telecommunications Project (Credit 1058-BU) Attached, for information, is a copy of a report entitled "Project Completion Report on Burundi - First Telecommunications Project (Credit 1058- BU)" prepared by the Africa Regional Office. No audit of this project has been made by the Operations Evaluation Departr.ent at this time. Attachment This document hu a rmtnct distribution and may be used by rucpwens only in the perfornnceu of their official duueIs lu contents may not othemie be disckosed ithout World Bank 1utho1uation.  FOR OFFICIAL USE ONLY BURUNDI FIRST TELECOMMUNICATIONS PROJECT CREDIT 1058-BU PROJECT COMPLETION REPORT TABLE OF CONTENTS Page No. PREFACE .............................................. i EVALUATION SUMMARY ................................... ii PART I 1. PROJECT IDENTITY .. 1 2. BACKGROUND .............. ........ .... .1 3. PROJECT OBJECTIVES AND DESRIPTION. 2 - Project Objectives.. 2 - Project Description. 2 4. PROJECT DESIGN AND ORGANIZATION. 3 5. PROJECT IMPLEMENTATION. . . 3 - Implementation . ............. 3 - Procurement. - Project Cost. - Allocation of Credit Proceeds . .5 6. PROJECT RESULTS. . . 5 - Physical Results.. 5 - Financial Performance . . 5 - Rate of Return .. 6 7. PROJECT SUSTAINABILITY. 7 8. BANK PERFORMANCE. 7 9. BORROTER'S PERFORANCE. 8 10. PROJECT RELATIONSHIP. 8 11. CONSULTING SERVICES. 8 - Technical . . 8 - Financial Management and Audit . . 8 - Studies. 9 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  Page No. 12. PROJECT DOCUMENTATION AND REPORTING .................9 13. CONCLUSIONS AND FOLLOW-UP ACTION FOR BASIC SECTORAL OBJECTIVES ...........................9 kRT III STATISTICAIL DATA .................................... 11 3.1 Related Bank Loans and/or Credits ........... .. 11 3.2 Project Timetable ..... ........................ 11 3.3 Cumulative Estimated and Actual Disbursements . 12 3.4 Project Implementation . .13 3.5 Project Cost and Financing . .16 3.6 Project Results .........................,.. 18 3.7 Status of Covenants . .22 3.8 Mission Data ..23 3.9 Country Exchange Rates . .24 4NEXES 1.1 Income Statements .25 1.2 Funds Flow Statements .26 1.3 Balance Sheets .27  BURUNDI FIRST TELECOMMUNICATIONS PROJECT CREDIT 1058-BU PROJECT COMPLETION REPORT PREFACE 1. This report covers the First Telecommunications Project in Burundi supported by Credit 1058-BU. The credit for US$7.7 million to the Republic of Burundi was approved in July 1980, became effective in January l981. and was closed in March 1987, 21 months after the original closing date. 2. Parts I and III of the PCR were prepared by the Industry and Energy Operations Division of the Africa Technical Department, Africa Regional Office, based, inter alia, on the Staff Appraisal Report, the President's Report, the Credit, Guarantee and Project Agreements; supervision reports, correspondence between the Bank and the Borrower, information supplied by the Office National des Telecommunications (ONATEL), and a short mission in February 1989. 3. Part II and comments on Parts I and III were requested from the Borrower but none were received.  - i$ - BURUNDI FIRST TELECOMMUNICATIONS PROJECT CREDIT 1058-BU PROJECT COMPLETION REPORT EVALUATION SUMMARY Background 1. US$7.7 Million Credit 1058-BU was the fi=st IDA telecommunications credit in Burundi, following a sector mission carried out at government's request in early 1979. The study led to the preparation of a project for priority sector development and institution building, and, in January 1980, the government established the "Office National des Tdlecommunications, (ONATEL)", a parastatal entity, to operate, manage and develop the telecommunications sector in Burundi. 2. Telecommunications sector goals were: unlocking Burundi's isolation, increasing the growth and efficiency of the economy, and tightening the socio-economic fabric of a densely populated country. The government also intended to strengthen sector management and operation as part of the public enterprise reform. IDA's assistance was provided in that framework. Proiect Obiectives and Descriptior. 3. The main objectives of the project were to: (i) help the newly created ONATEL structure its organization and implement a commercially oriented management, and make its operation more efficient; (ii) integrate the new economic centers planned for agricultural and industrial projects into the communications network; and (iii) modernize, expand and improve network facilities and operations for domestic and international services. 4. The project included: (i) the improvement and expansion of cable systems in Bujumbura, installation of a new exchange at Ngagara in the Bujumbura area, and expansion of switching capacities in several provincial towns; (ii) the replacement and expansion of the telex exchange in Bujumbura; (iii) the expansion of the long distance transmission network; (iv) support facilities for maintenance, operation and construction of the networks; and (v) technical assistance and training in management, accounting, development planning and operation of the facilities.  - iii - Prolect Implementation 5. Because of underestimatad demand and difficulty in adapting new technology to the existing system, the original project scope was revised in 1982-83. Capacity added from the project was about twice what was originally planned for local telex and telephone, and four times for long distance service. 6. Seeking complementary financing, and planning and building the enlarged systems under ONATEL's revised program, resulted in an overall delay of about three years in project completion. 7. The original estimated cost of the project was about 9.1 Million. The final cost was increased by 722, .o abou. US$ 15.6 Million. Foreign cost overruns were financed by bilateral contributors. 8. The project went thus beyond its initial objectives, through improved access to telecommunications services in the country and better quality of services. It aleo introduced modern technology in switching and transmission systems (para 6.04). 9. In the managerial and financial areas, the results were disappointing, because ONATEL's financial management and accounting did not improve as much as had been envisaged at appraisal. The implementation of the institutional component was generally mediocre (paras. 4.04, 5.03 and 6.02). Conclusions, Findings and Lessons to be Learned 10. The main findings and lessons to be learned are: (a) during project preparation, telephone and telex demands were not realistically assessed; (b) during project revision, it took a long time to define the revised project and to assess its cost; (c) IDA should have insisted on borrower's compliance with: (i) the settlement of government's arrears; (ii) the need for implementing the tariff study; (d) IDA should have supervised more closely the financial status and overall management of ONATEL as a commercial, financially autonomous operation; and (e) Though assistance in technical matters was satisfactory, assistance in institution building and organizational matters was insufficiently coordinated and therefore inefficient.  - iv - 11. At the time of project revision, the government requested IDA's assistance for a second project, in association with reforms undertaken by the government for public enterprides in Burundi. In this context, a thorough diagnosis of ONATEL's overall organization and operational situation is under way.  _URUNDI FIRST TELECOMMUNICATIONS PROJECT CREDIT 1058-BU PROJECT COMPLETION REPORT PART I 1. Project Identity: Name = TCtecommunications Project Credit No.= 1058-BU RVP UTnit = Africa Region Country = Burundi Sector = Industry and Energy Subsector = Telecommunications 2. Background 2.01 Up to the end of 1979 domestic and international public telecommunications services in Burundi were the responsibility of the Telecommunications Department of the Ministry of Transports, Post and Telecommunications (MTPT). In January 1980, the Government established the National Office for Telecommunications (ONATEL), a Government-owned parastatal entity, to operate and manage the telecommunications sector of Burundi. ONATEL has a board of directors and its management is headed by a general manager. HTPT supervises sector policy and JNATEL's overall operation. Tariff changes are authorized by government. 2.02 IDA Credit 1058-BU for $7.7 million was the first credit for telecommunications in Burundi. IDA first became associated with the sector through a sector mission carried out in March 1979. Government was then considering to create an autonomous parastatal entity to resolve the problems encountered in the sector's organization and operation as a government department, and to better develop the services. The sector study focussed on both the inadequacy under all aspects of existing facilities and the need for institution building. The rationale for the latter was to provide a stronger base for sector development, through improved planr.ing, operation and resource utilization. The study leu to preparation of a project for priority sector development and institutional reform. Short-term experts to assist in project preparation were recruited under the Second Technical Assistance Project financed by IDA Credit 917- BU. 2.03 Telecommunications sector goals give priority to the need to overcome Burundi's geographical isolation vis-a-vis other countries and also the enclavement of areas within the country. Communications are seen as important means of achieving this goal and considered as determinant factors of the country's socio-economic progress. Government also intended  to restructure sector management and operation as part of its policy of public enterprise reform. As a follow-up to the sector study, Government requested IDA's assistance in achieving these goals. 3. Project Objectives and Descriotion 3.01 Project Objectives: The main objectives of the project were to: (a) help the newly created ONATEL to implement a commercially- oriented management and make its operation more efficient; (b) improve and expand the telecommunications system to the interior in order to promote rural, industrial and commercial development; (c) integrate into the communication network the new economic centers planned for agricultural and industrial projects; (d) modernize and expand domestic networks facilities to improve operation and provide better access to basic telephone and telex services in and between major urban and rural areas, and to the increased external telecommunications capacity. 3.02 Project Description: The project consisted of the most urgent works for modernization and expansion of ONATEL's domestic systems under its investment program for the period 1980-1984. The project provided for: (a) installation of junction cables in Bujumbura and the improvement and expansion of urban cable networks in Bujumbura and various provincial towns (a total of 1,050 new main lines would be provided); (b) installation of a new 1,200 lines exchange at Ngagara in the Bujumbura area, and of three new provincial exchanges, with a total initial capacity of about 150 lines; renabilitation of various provincial exchanges and increase in their capacity by about 300 lines; (c) connection to the national telephone network of about 40 villages and production centers, previously unserved, through public call office installations; (d) improvement and expansion of the long distance transmission network through: (i) installation of three new UHF links; (ii) replacement of three UHF links with facilities of higher cdpacity; and (iii) overhaul and increase in capacity of all other UHF links;  (e) replacement of the telex exchange at Bu'umbura and provision of teleprinters for 50 additional subscribers; (f) purchase of a bills processor, vehicles, tools, and other miscellaneous equipment; (g) construction of a warehouse and of other project related buildings; and (h) technical assistance and training. 4. Project Design and Organization 4.01 The project followed a classical model in telecommunications. Need for expanding the network and improving the services was clear to everybody concerned, and all parties involved agreed on the implementation of the physical part. The scope was modified during the implementation (para. 5.01). On the institutional aspect, there were differences between Bank's intentions in establishing a management system similar to those in industrial countries and the degree of acceptance by the country for such a model. The confl.oting attitudes during implementation of the project led to mediocre implementation of the institutional component. 4.02 Expansion works for the international systems were already underway at the time of project appraisal, and the project was designed to foster expansion of the domestic telephone and telex networks and to improve the quality of service. The expansion of the telephone network brought service to areas which were not or were insufficiently served and pr.jvided access to all expanded domestic and international service facilities. The telex expansion had to increase the capacity of a network about to reach saturation point. The project thus; (i) introduced semi electronic and electronic sw-tching systems in the telephone and telex exchanges; and (ii) enabled interworking between expanded and new automatic exchanges for nationwide subscriber trunk dialing (STD). Existing exchanges were equipped for STD service. The capacity of interurban transmission links was increased and new links were established between local systems. Project planning to enable future expansion, was made possible with the help of consultants. Simultaneously, the project was designed to foster institutional building and training improvement. 5. Project Implementation 5.01 Implmentation The original project scope was revised in 1982-Z3. liemand had been underestimated under ONATEL's 1980-84 program, as requests for new connections proved higher than expected at project inception. In 1982, additional capacities from the project were increased by about 35Z for telex, 66Z for local telephone and about four times for long distance service. During the project period, actual yearly growth of new connections averaged about 10.5Z for telephone aad 20Z for telex,  compared to appraisal estimates of 8Z and 102 respectively. The 1980 estimates had assumed that growth rates would average about 1.5 times the rates observed during the five preceding years. Actual increase in growth rate proved to be about twice that assumption. Furthermore, Government requested, in compliance with regional policy decisions, to add capacities to the planned systems for television transmission and long distance interconnection with Burundi's neighboring countries, Rwanda, Tanzania and Zaire. Consequently, distribution and capacities of telephone exchanges were rearranged to take advantage, from the technical and cost viewpoints, of the faster introduction of new electronic technology in ONATEL's networks. At the same time, capacities of the main long distance links were increased to meet the requirements of the redesigned local systems. The need to seek complementary financing and the additional time required to build the enlarged microwave links under ONATEL's revised program resulted in an overall delay of about three years in project completion. 5.02 It now appears that, in the preparation of the project, the decision not to use the latest technology in building the Ngagara exchange was made on the basis on a poor quality demand forecast (para. 5.01). As a result, the exchange could not be expanded in the second project, as equipments of different technologies are not economically compatible, and it had to be retired and partly reused in the provinces before it was fully depreciated. 5.03 The implementation of the institutional component was mediocre (para 4.04). On the part of the Bank, there was little follow-up to Bank's supervision. Covenants providing for a satisfactory accounting system were insufficiently fulfilled, particularly the covenant concerning Government's receivables, which were supposed not to exceed 4 months of consumption and were well above that level during the implementation of the project before reaching 20 months in 1988. On the part of the Borrower, telecommunications censtructors eager to supply equipment, and bilateral lenders ready to finance it on easy terms, led to reduced financial discipline, including insufficient attention to non-payment of utilities. 5.04 Procurement. The procurement process went generally well, though new to ONATEL. Tenders for cables, switching and terminal subscribers were issued in 1981 and 1982 and deliveries took place in 1983-84. Tendering for transmission equipment had to be delayed by about one year, due to the project revision needed to increase and redistribute switching capacities (para 5.01). Final award for this equipment had to be delayed by about another year to enable complementary financing arrangements to be finalized. Most installations were then delivered on contractual times, except for rural public call offices, that were delivered about 18 months behind schedule. Performance of the suppliers was satisfactory, as a whole, with only few minor problems which were resolved.  - 5 - 5.05 Project Cost. The estimated cost of the project during appraisal was about US$9.1 million. The final cost is about US$15.6 million representing an overall increase of about 722 as shown in Table 3.5.A of Part III. The reason for the increase was the revision to increase capacities of the local and long distance systems (para. 5.01). Though unit costs of some items, such as telex and telephone electronic switching and rural telephone equipment, proved higher than estimated at appraisal, procurement of larger quantities through ICB resulted in lesser than prorated increases for the foreign costs of these items. Local costs expressed in US$ increased in proportion to the number of additional lines in the revised project. When expressed in BuF the basic local expenditures per added line increased by about 37?, according to 'local inflation during the 1980-1987 implementation period. 5.06 Allocation of Credit Proceeds. The original and revised allocation of funds and final disbursement for the credit are shown in Table 3.5.B in Part III. The revised allocation was agreed in October 1986 to reflect changes in project scope. It was based on actual quantities and costs of equipment, and it was agreed that the allocation for long distance system woutld be limited to the down payment for the contract, representing the available balance of the credit allocation for equipment. In 1984 and 1985, Government and ONATEL arranged for additional financing under concessional terms from the suppliers' countries (Italy, Netherlands and France) for the increased foreign costs of the local lines and trunk systems. 6. Project Results 6.01 Physical Results. The physical targets of the project as planned and achieved are shown in Tables 3.4.A and 3.6.A of Part III. Additional facilities from the revised project were about twice the initial number of local telephone lines and four times the number of long distance circuits, and television transmission was added (Table 3.4.A). Furthermore, the subscribers, in the 21 cities where automatic telephone exchanges are operated, could communicate with each other through nationwide STD service, and subscribers from Bujumbura and the three main provincial capitals, representing about 87Z of all the working lines, had access to automatic international service. 6.02 Financial Performance. In the financial area, the results were substantially different from what was planned. (a) ONATEL established an accounting system as requested, and accountants are now able to produce financial statements for past years on demand, but those statements are not fully reliable, because accounting procedures are still weak, the procurement-inventory and the billing-receivables cycles do not function satisfactorily, there is no assets register, and end- of-year entries are not reliable;  - 6 - (b) Accounts were examined by independent verificators, for five financial years during the project period, but not according to international norms; (c) Billing was slow because ONATEL is using the services of a computer contractor. Also, collecting from Government services and agencier was poor, as receivables rose to close to two years compared to the four month-covenant. Budget of Government agencies are established in such a way that telecommunications charges are far below actual expenses (para. 4.01); (d) Tariff studies were carried out as requested, but decisions were made without consultation with IDA; (e) Fixed assets were not revalued as requested, so that rates of return on assets were calculated on book values. However, it can be inferred that although the rate of return was well below 102 from 1985 to 1987, it was above it ir. 1988, when the new equipment was fully commissioned. 6.03 Rate of Return. The internal economic rate of return of the program/project is estimated at 18Z. A high internal rate of return, well above the opportunity cost of capital estimated at 10?, gives a good measure of the economic impact of the project within its sector, but it fails to show the importance of the development of the sector for the economy of the country. Ai telecommunications project has to be considered within such a context. P.ecause the telecommunications density in Burundi is about 1/200th of what it is in most advanced industrial countries and because increase of such density is linked to increase in GNP, the positive spill over effects of the project in the economy are probably much higher. 6.04 The project, within the revised program, went beyond its initial objectives, by quantitatively increasing access to telecommunications services throughout the country, by bringing to consumers a more complete coverage of the communications network in the country and by improving the quality and type of services for both telephone and telex. It also introduced modern technology through electronic telex and semi electronic telephone switching systems which are more efficient, expandable and flexible than electromechanical systems. ONATEL, the entity created to operate public telecommunications with greater financial and administrative autonomy, acquired useful experience in the fields of technical planning, development and operations of the new systems, but remained short of reaching an acceptable standard of management proficiency.  7. Project Sustainability 7.01 Telecommunications projects have a certain amount of built-in sustainability because, under normal circumstances, telephone services are bound to increase, or at worst to remain stable. This is du., to a variety of reasons: the economic need for better communications, the social attraction to improve them, the gap between industrial and developing countries, the constantly evolving technology which brings equipment and operating costs down, the high rate of return on assets of well managed operating agencies and the eagerness of constructors to sell their equipment, and of lenders to lend funds at concessionary terms. The obvious risk to sustainability is poor management of the operating agency, which can lead to reduction in the quality of services offered, underutilization of equipment and loss of revenues. 7.02 Under this project, demand for services far exceeded forecast and actual facilities made available during the project period. It is foreseen that this situation will continue in the future. The newvly established modern infrastructure for the sector will continue to provide benefits throughout its economic life for both the installations already made available and those to be added to expand and complete them. Dur.ng project implementation ONATEL prepared its next stage of development, mainly doubling current existing capacities. The new program is now underway with IDA's assistance under a second project (Credit 1805-BU). Enlarged cofinancing from France, Netherlands, African Development Fund and UNDP was arranged. Further strengthening of sector institutions and ONATEL's management is also being addressed under a plan to reform and improve public enterprises in Burundi, with the Bank taking an active role through relevant structural adjustment and technical assistance operations. 8. Bank Performance 8.01 Throughout the project, the Bank was able to make a positive contribution to the development of the sector at a time when sector responsibilities were handed over from a Government department to a newly established autonomous entity. The Bank insisted on adequate usage of consultants in project planning and implementation, and to help ONATEL build up and improve its administration and financial operations. Table 3.8 gives details of the supervision missions which took place timely at the pace of two visits each year, except in 1984 and 1985 following project revision. 8.02 The review of projec.t implementation shows some areas in need of improvement. This concerned: (i) the demand forecast (para. 5.01) at project preparation stage; and (ii) follow-up during project implementation to encourage ONATEL to address in earnest the financial and organizational issues faced by its management (para 5.03). Steps are being taken to remedy these weaknesses under the second project, in cooperation with the other cofinanciers and within the framework of IDA's efforts to improve public sector management and operations in Burundi.  - 8- 9. Borrower's Performance 9.01 Government was the Borrower and ONATEL was the implementing agency. Table 3.7 in Part III contains a review of the performance of the Government and ONATEL. in complying with the covenants of the development credit and project agreements. Government's performance was satisfactory except for: (i) the settlement of accounts receivable for services rendered by ONATEL, which was practically disregarded; and (ii) the decision on and implementation (in consultation with IDA) of changes in tariff structure and ievel. ONATEL's performance was satisfactory except for: (i) the setting up of financial management and commercial accounting systems; (ii) the revaluation of assets and the application of a plan for periodic revaluation and assets amortization; (iii) the settlement of accounts receivable from Government; and (iv) the tariff study which was completed after project closing. The support needed was provided to IDA by Government and ONATEL during project preparation, appraisal, revision and supervision. 10. Project Relationship 10.01 IDA relationship with Government and ONATEL on the project has been good. Adequate liaison and communication was established and maintained under the project with the other donors or contributing agencies (France, Italy, Netherlands, UNDP, etc.). 11. Consulting Services 11.01 Technical: The project provided for technical consultancy services to assist ONATEL in overall project management, detailed planning and supervision of execution of most of the works. About 72 man/months of technical expert services were financed from the proceeds of the credit. Following project revision and the large increase in the facilities provided, additional expertise was required in particular for the planning and supervision of the enlarged external plant and transmission systems. Experts for approximately 60 additional man/months were provided through agreements with the bilateral cofinancing agencies (Italy, Netherlands and France), through UNDP, or as part of the construction contracts. The services were generally satisfactory. 11.02 Financial Management and Audit. The performance of the financial consultant was partially successful. He helped ONATEL set up an accounting system, but could not complete it. In retrospect, it appears that the Bank did not follow up his efforts with enough insistence. Covenant providing for accounts and financial statement audited in accordance with appropriate principles was insufficientl; fulfilled. The independent verificators examined the accounts for five financial years through 1985, but not according to international norms (para 6.02), and the verificators refused to certify the last verified accounts, per 1985.  - 9 - 11.03 Studies. The Project Agreement provided for a tariff structure study to be completed by July 1981. Table 3.6.D gives details of the purpose of the study as it wa3 defined at appraisal and completed in two stages. An initial study made in mid-1982 was part of an ongoing UNDP/ITU technical assistance project. It was considered insufficiently based on marginal and real costs of the services and weak in its economic aspects. Government authorized only insignificant changes in tariff levels at that time (1983). IDA recommended a complementary study which was completed in 1986. Tariff structure was partly revised on the basis of recommendations from the study, and tariff levels increased by about 40Z in August 1987. Each time tariffs were changed during the project period, ONATEL and Government failed to consult with IDA, as required in the Project Agreement. 12. Project Documentation and Reporting 12.01 The development credit and project agreements were adequate for achieving project objectives in the key areas of institutional building and sector development. As project revision became necessary in the course of project implementation, it was discussed and agreed with IDA, to allow for appropriate reallocation and usage of the available development funds. IDA assisted in determining and arranging for the additional funding required. ONATEL submitted the necessary information during project supervision and through quarterly reports for review and updating of the execution of the works. The reporting and exchange of information was, however, much less adequate with regard to institution building and strengthening financial management of ONATEL. This was noted during preparation of the second project and efforts are being made to improve this aspect under the new Credit 1805-BU. 12.02 ONATEL and Government have informed IDA that a draft project completion report is being prepared to reflect the Borrower's perspective on the project, its implementation, and its results and impact. The report has not been received yet. 13. Conclusion and Follow-up Action for Basic Sectoral Objectives Shortly after the project revision, the Government requested IDA's assistance for a second project. The complexity of the efforts and tasks implied by the rapid sector development, both technical and institutional, constituted a strong rationale for continued IDA involvement in the sector. Substantial cofinancing was arranged for the physical component of ONATEL's new program for 1988-92. The thrust of IDA's continued intervention was put on the institutional and training aspects. The experience gained through the first project should be fully used by IDA and the Borrower when implementing the second project which is now effective under Credit 1805-BU. Also IDA's efforts to support the sector's institutional development will be associated with those underway by IDA and Government for public enterprise reform in Burundi. In this context, a thorough diagnosis of ONATEL's overall organization and operational  - 10 - situation is already being undertaken by the service in charge of Government's program for the reform of public enterprises (SCEP). The diagnosis is expected to determine the measures and an action plan in order to improve ONATEL's status as a sound and efficient operation. As a whole, all these efforts and operations should enable to consolidate the telecommunications sector set-up and managerial/operational capabilities in Burundi, as required for the balanced and efficient socio-economic development of the country.  - 11 - PART III STATISTICAL DATA Table 3.1: RELATED BANK LOANS AND/OR CREDITS IDA Credit 1058-BU for $7.7 million was the first World Bank Group operation for telecommunications in Burundi. Table 3.2: PROJECT TIMETABLE Date Date Date Item Planned Revised Actual Sector/identification mission 03179 Preparation 08/79 Government's application 09/07/79 Appraisal Mission, 12/03-/12/19/79 Credit negotiations 05105-05/09/80 Board approval 07/29180 Credit signature 08/07/80 Credit effectiveness 11/07/80 01/07/81 1l Credit closing 06/30/85 1.06/30186 2/ 2.03/31/87 31 03/31/87 Credit completion 06/30/85 12/24/87 4/ Borrower : Republic of Burundi Executing Agency : ONATEL 5/ Fiscal Year of Executing Agency: January 1 - December 31 l/ One extension of date of effectiveness was required due to delay in hiring and signing the contract for a management consultant. Extension was agreed on 11/04/80. 2/ First extension of closing date was agreed by IDA on 06/24/85. 3/ Second extension of closing date was agreed by IDA on 06/26186 to enable completion of microwave transmission component of project. Final reallocation of credit proceeds was agreed on 10/09/86. 4/ Undisbursed balance of $3,712.49 was cancelled 12/24/87 at closing of credit accounts. 5/ Office National des Telecommunications, the beneficiary and executing agency under the project, was formally established on 01/01/80.  - 12 - Table 3.3: CREDIT DISBURSEMENTS CUMULATIVE ESTIMATED AND ACTUAL DISBURSEMENTS (S Million) Bank Fiscal Year Appraisal Disbursements ended June 30 Estimate Actual Actual 2 of Estimate 1981 0.10 - 1982 1.20 0.27 22.5 1983 2.60 1.41 54.2 1984 5.20 4.89 94.0 1985 7.70 6.02 78.2 1986 7.70 6.95 90.3 1987 7.70 7.30 94.8 1988 7.70 7.69 1/ 99.9 1/ An amount of US$3,712.49 remaining undisbursed was cancelled as of December 24, 1987.  - 13 - Table 3.4: PROJECT IMPLEMENTATION Table 3.4.A: ADDITIONAL FACILITIES. ESTIMATED AND ACTUAL Appraisal Actual Estimate Installations Indicators Installations (or PCR Estimate) 1. Local Telephone 1/ - External plant capacity 1,050 2,500 31 (main lines) - Exchange capacity (lines) - New 1,500 2,400 - Expanded 150 300 - Total 1,650 2,700 4/ - Telephone sets 2,000 3,000 2. Long-Distance Systeml/ - Noof LD telephone circuits 70 300 31 - No. of LD television channels 0 3 3. Rural Telephone - PCOs in villages 2/ 40 40 4. Telex - Exchange zapacity 300 400 - Teleprinters 50 100 S. Miscellaneous - Processor, tool sets, vehicles 1,1,4 1.1,3 - Warehouse, buildings 1,4 1,6 6. Technical Assistance - Expert manmonths 86 140 5/ 1/ See comments on project revision, following Table 3.4.B. 2/ Public call office (PCO). 3/ PCR estimate at project completion, in December 1987. 4/ Includes equipment for replacement of about 400 lines in existing exchanges to be partly reused elsewhere. 5/ Project technical assistance activities were coordinated and combined with those from other multilateral (UNDP) and bilateral donors (France, Netherlands, Italy) under ONATEL's program.  - 14 - Table 3.4.Bt COMPLETION DATES, ESTIMATED AND ACTUAL Completion Dates Appraisal Component Estimate Actual 1. Local Networks - External Plant 12/84 06(87 1/ - Switching 06/84 02/86 2. LonR Distance Network - Microwave links (new, replaced and expanded) 12/84 12187 1/ 3. Rural Network 06/84 03/87 4. Telex 12/84 06/85 5. Miscellaneous - Processor, tool sets, 12/83 12/85 vehicles - Warehouse and buildings 12/83 12/85 6. Technical Assistance 09/84 06/86 Complete Project Initial Estimate Actual Closing Date 06/30/85 03/31/87 2/ Physical Completion 12/31/84 12/31/87 1/ This includes delivery of additional capacities to the initial project as revised during implementation. Financing for these additions was arranged by Government in separate bilateral agreements with the suppliers countries. 2/ Last payment was made on 12/24/87.  - 15 - Comments on Tables 3.4.A and B Project Revision and Completion Dates 1. Local Telephone: In the course of project detailed planning, tha expansion, reuse and adaptation to automatic trunk service of existing electromechanical exchanges appeared more difficult and costly than initially expected. Also demand had been underestimated under ONATEL's 1980-84 program. Exchange and external plant capacities were incxtsed to take the best technical and cost advantage of the new electronic technology being introduced. Costs obtained through IC9 for switching and miscellaneous equipment remained within the range of the IDA credit allocations. Additional cost of external plant were met through bilateral credit from the supplier's country (Netherlands). Most installations, including for telex were realized by the end of 1985, about one year beyond initial schedule. 2. Long Distance Service: Capacities of the long distance links were increased in accordance with the changes made in the local network systems. Capabilities to interconnect Burundi's long distance system. including television carrier channels. with those of neighboring countries (Rwanda, Tanzania and Zaire) were also added to the systems. Cost of the enlarged long distance scheme of radio links was about twofold the ttimate for the initial system. Down payment of $0.4 million onl" was financed from Credit 1058-BU. Additional bilateral financing on concessional terms for about $2.6 million from the supplier's country (Italy) had to be arranged.. This took about a year through mid-1985. The links were completed late in 1987, or about three years beyond project schedule as was estimated during appraisal.  - 16 - Table 8.5: PROJACT COST AND FINANCING Table 3.6.A: PROJECT COSTS M ILLION) Actual ort PCR Estimated Revisod Completion ltles Estimate E.itiate12/86 2/ Costs ( L'7o 3/ Item ~~~~~Ly FJ/Total L f TOMa Tota 1. Local Network - External 0.4 1.3 1.7 0.8 2.0 2.8 0.7 2.8 3.6 plant - Switching 0.1 1.3 1.4 0.6 2.6 8.8 0.6 3.1 3.7 Subtota.l0 .O .1