Philippines - Telecommunications Technical Assistance Project

Doeunent of The World Bank FOR OFFICIAL ISE ONLY Report No. 9609 PROJECT COMPLETION REPORT PHILIPPINES * ''TELECOMMIUNICATIONS TECHNICAL ASSISTANCE PROJECT (LOAN 2495-PH) MAY 31, 1991 Industry and Energy Operations Division Country Department II Industry, Trade and Finance Division Technical Department Asia Re ional Office This document nas a restricted distribution and mav be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Currency Unit - Peso (P) US$1.00 - P 20.00 (SAR) P 1.00 - US$0.05 (SAR) US$1.0 a P 23.5 (Project Composite) GOVERNMENT OF THE PHILIPPINES FISCAL YEAR January 1 - December 31 ABBREVIATIONS DOTC - Department of Transport and Communication MOTC - Ministry of Transport and Communication NTC - Na*ional Telecommunication Commission OECF - Overseas Economic Cooperation Fund PPF - Project Preparation Facility SAR - Staff Appraisal Report  FOR OmCIAL UE ONLY THE WORLD SANK Washington, D.C 20433 U.S.A. Omce co DMetfw.Gc~l Opeitrmms it '.alt"1M May 31, 1991 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Report on Philippines Telecommunications Technical Assistance Project (Loan 2495-PH) Attached, for information, is a copy of a report entitled "Project Completion Report on Philippines - Telecommunications Technical Assistance Project (Loan 2495-PH)" prepared by the Asia Regional Office with Part II of t'ne report contributed by the Borrower. No audit of this project has been made by the Operations Evaluation Department at this time. '~~ Attachment 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.  FOR OFFICIAL USE ONLY PHILIPPINES TELECOMMUNICATION TECHNICAL ASSISTANCE PROJECT (LOAN 2495-PH) PRCJECT COMPLETION REPORT Table of Contents Page No. PREFACE . . . . . . . . . . . . . . . . . . . . . . . . . . i EVALUATION SUMMARY . . . . . . . . . . . . . . . . . . . . . . .ii PART I. PROJECT REVIEW FROM THE BANK . . . . . . . . . . . . . .1 Project Identity . . . . . . . . . . . . . . . . . . . . . .1 Background .1... . . .e......t: . . . . . . . . . . . . . . Project Objective~s end DescriptLon .. # . . . . . . .. . 2 Project Design and 0Organization . ...... ....... 2 Project Implementattin .... . . . . . . . . . . . . 3 Project Results . . . . . . . . . . . . . . . . . . . 4 Project Sustainability .... . . . ... 5 Bank Perforaance .nc. . . . . . . . . . . . . . . . . . . . . 5 Borrower's Performance . . . . . . . . . . . . . . . . . . . 6 Project Relationship.. . . . . ..... 6 Consulting Services .... . . . . . . . . . . . .. . . 6 Project Documents and Data. . . . .. . . . 7 Part II of the PCR .... . ........ ....... . 7 PART II. PROJECT REVIEW FROM BORROWERS PERSPECTIVE . . . . . . . 8 PART III. STATISTICAL INFORMATION . . . . . . . . . . . 10 Related Bank Loans .... . . . . . . . . . . . . . . . . . 10 Project Timetable .... . . . . . . . . . . ... . . . . . 10 Loan Disbursement .................... . 11 Project Cost and Financing ..... ........... . 12 Studies . . . . . . . . . . . . . .. . . . . . . . . . 13 Status of Covenants. . . . . . 14 Use of Bank Resources ....... ...... ... .15 A. Staff Input . ..... .. ..... .. .. . 15 B. Missions ...... . . . . ........ 16 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.  PHILIPPINES TELECOMMUNICATION TECHNICAL ASSISTANCE PROJECT (LOAN 2495-PH) PROJECT COMPLETION REPORT Preface This is the Project Completion Report (PCR) for the Telecommunication Technical AssistanceeProiect in the Philippines for which Loan 2495-PH in the amount of US$4.0 million was approved on February 19, 1985. With the cancellation of US$45,065.31, the loan was closed on December 3, 1990. The last disbursement was made on November 29, 1990. The PCR, excluding Part II was jointly prepared by the Indtustry and Energy Division of Country Department and the Industry, Trade and Finance Division of the Technical Department, both of the Asia Regional Office. Part II was prepared jointly by the Department of Transportation and the National Telecommunication Commission. Preparation of this PCR was started in March 1990 after return of the final supervision mission. The report is based on, inter alia, the President's Report, the Loan Agreement, Supervision Reports, correspondence between the Bank and Borrower and internal Bank memoranda.  - ii - PHILIPPINES TELECOMMUNICATION TECHNICAL ASSISTAi.CE PROJECT (LOAN 2495-PH) PROJECT COMPLETION REPORT Evaluation Summary Obiectives 1. The project's objectives were to: (i) improve the regulatory framework and strengthen the National Telecommunication Commission's (NTC's) organizational structure; (ii) lay the groundwork for rationalizing the telephone tariff structure and levels; (iii) develop procedures and facilities for the efficient management of radio frequencies; (iv) improve network planning based on realistic demand forecasts and available technology; and (v) expand training to ensure the availability of qualified staff (Part I. para. 3.1). Implementation Experience 2. Project implementation was well planned, but a gap between the intent of the terms of reference and the reality of NTC's underlying problems, coupled with unforeseen difficulties and delays, especially during the early part of the implementation cycle, reduced the effectiveness of the project. The disruption caused by the change in government left the consultants without adequate support to properly perform their assignments. This was exacerbated by somewhat misdirected efforts of the consultants (Part I, para. 4.2). The impact of the disruptions was particularly severe on the frequency management study. The consulting firm selected for this study was appointed in accordance with the Bank's guidelines and awarded a contract in December 1985. The new tovernment was intent on cancelling the contract, but ultimately let it stand rather than lose Bank financing of the study. As a result, the study was set back by two years. In time, progress was made in avoiding and resolving such difficulties, and project implementation improved correspondingly (Part I, paras. 5.1 and 5.2). 3. The project revealed that NTC needs to improve its project management performance. Basically, NTC must assign a well qualified, experienced and full-time manager given the responsibility for carrying out future projects. NTC should also begin training staff to meet its needs in this area which is of fundamental importance to successful project executions (Part I, para. 5.3).  - iii - Results 4. Taken as a whole the project can be considered a success. Two of the project components were only modestly successful: (i) the recommended organizational changes to NTC have not been implemented and improved regulatory legislation is still being prepared; and (ii) the final phases of the tariff study have not been carried out, but useful results, such as a tariff manual have been achieved (Part I, para. 6.2). 5. The remaining three project components were successfully completed: ti) NTC now has the essential elements to effectively manage the frequency spectrum throughout the Philippines; (ii) the Government is implementing the National Telephone Program with the help of OECF and bilateral support; and (iii) selected NTC staff received technical and managerial training under the project, and additional training is to be provided und-r a Japanese grant administered by the Bank (Part I, para. 6.3). Sustainability 6. NTC's capacity to monitor and manage the radio frequency spectrum in the Philippines has been enhanced with the help of the computer facilities and other equipment supplied under the project. The existence of a well managed frequency spectrum will bring positive benefits to the users through better reception, less interference and similar improvements. For these benefits to be sustained, NTC must put in operation and properly maintain its new fre- quency management facilities and keep up a strong interest in the monitcring and managing of the radio spectrum. This endeavor is to be supported by a Japanese technical assistance grant which should help sustain the benefits (Part I, para. 7.1). Findings and Lessons Learned 7. The project highlights the need for technical assistance operations to go further than simply identify the major areas of organizational operation that require strengthening--and then require borrowers to engage consultants to strengthen those areas. This project did identify the areas of NTC's operation that required most development. However, the consultant's efforts fell short of realizing the improvements vlsualized at project inception. While the change in Government that took place early in the project was certainly a contributor to loss of project effectiveness, deficiencies in project design was another. The consultant's inability to muster full NTC support for their efforts and recommendations that were unable to be implemented by NTC are indicators of that deficiency (Part I, para. 6.2-6.3). 8. The lesson is: To achieve meaningful results and begin a change process that would be a catalyst for continued development, the preparation of TA projects should consider carefully the local environment, culture, absorptive capacity and the readiness to change of the organization under study. Also, any legal or external administrative impediments to change need to be known. The project design, including its implementation strategy, must then be crafted taking these characteristics into account (Part I, para. 6.4).  PH:LIPPINES TELECOMMUNICATION TECHNICAL ASSISTANCE PROJECT (LOA-N 2495-PH) PROJECT COMPLETION REPORT PART I 1. Proiect Identity Project Name: Telecommunications T.A. Project Loan No: 2495-PH RVP Unit: Asia Country: Philippines Sector: Communications Subsector: Telecommunications 2. Background 2.1 The Philippine telecommunication sector appraised by the Bank in 1984 comprised mostly private companies which had obtained franchises from the Government and operating permits from the National Telecommunication Commission (NTC), the sector regulating body within the Department of Transportation and Communication (DOTC).1/ Although some improvements were starting to be instituted, the sector as a whole was still being badly administered and regulated. There was excessive fragmentation with dupli- cation of services, lack of any economy of scale provisions, low service standards and virtually no coordination of the facilities furnished by the private companies. In addition, little attention was given to the provision of a nationwide network. The private companies with the capability con- centrated their activities in the profitable areas (e.g. Metro Manila) and in providing the more profitable services (long distance and international telephone and telex). 2.2 MOTC was established in 1979 to carry out improvements in the sector. In 1982 it drew up, with the assistance of telecommunication experts, a National Telecommunication Plan (NTP) covering the period 1983 to 2000. The main initial objectives were the intercotmection of all telephone installa- tions in the country. a significant increase in the traffic handling capacity of long distance transmission facilities and the provision of facilities to meet at least 80 of the demand for telephone connections. The plan was to be implemented in staged phases. Phase I covering the period 1984 to 1988, was developed with the financial assistance of two US$500,000 Bank project preparation facilities (eventually included under this loan) and carried an estimated price tag of US$1.7 billion. The deteriorating economy caused the 1/ Prior to the change of Government in 1986 and the subsequent reorganiza- tion, DOTC was the Ministry of Transportation and Communication (MOTC).  - 2 - plan to be scaled down to US$186 million, but worsening economic conditions forced the Government to postpone completely all further investments in the sector. 2.3 The project under review evolved out of the preparation of Phase I of the NTP. When it became apparent that sector investments had to be completely curtailed, it was agreed with the Government that the Bank would support a technical assistance project which would focus on institutional and policy improvements. Negotiations for the project were completed on January 14, 1985. 3. Project Obiectives and Description 3.1 The main objective of the project was to strengthen NTC to enable it to more effectively ,egulate the sector. In that regard, the project sought to ti) improve the regulatory framework and strengthen NTC's organizational structure; (ii) lay the groundwork for rationalizing the telephone tariff structure and levels; (iii) develop procedures and facilities for the efficient management of radio frequencies; (iv) improve network planning based on realistic demand forecasts and available technology; and (v' expand training to ensure the availability of qualified staff. It was viewed that even if no major investment program was undertaken, the project would bring substantial benefits to the sector through improved regulation resulting in greater coordination of effort by the various telecommunications operators. 3.2 The project provided consulting services and equipment for: (a) strengthening NTC's ability to promote sound sector development and regulation; (b) carrying out a tariff study; (c) strengthening NTC's ability to manage the radio frequency spectrum; and (d) updating MOTC's National Telecommunications Plan (NTP) on the basis of demand and technology changes. Funds were also provided for carrying out a comprehensive training program. 4. Project Design and Organization 4.1 The project was conceived as the best mJnimum cost alternative to the sector investment program which was abandoned because of the prevailing economic crisis. In this context, the project was desigr.ed to bring about institutional and policy reforms which would bring maximum benefits to the sector in the absence of the previously planned sector investment. The Government and the Bank were fully agreed on the scope and objectives of the project.  4.2 Project preparation and organization was generally satisfactory, although it was deficient in one important respect. The project's scope and content were incorporated in clearly defined project components. Implementation responsibility was assigned to DOTC which appointed a project manager with terms of reference satisfactory to the Bank. The role and responsibilities of consultants were set forth in terms of reference prepared by Bank staff. These arrangements should normally have resulted in a relatively trouble-free project. However, the project design was deficient in not having made an adequate assessment of NTC's institutional capacity and underlying organizational culture or constraints contributing to its poor performance. The problem was, of course, exacerbated by the change in Government which disrupted the project, and this could not reasonably have been foreseen. 5. Project Implementation 5.1 Project implementation was initially well planned but the unforseen change in Government disrupted the process and contributed to delays. This, plus the effect of superficial terms of reference diluted the anticipated benefits of some components. Initially two foreign consultant firms were selected in a timely manner, in accordance with Bank guidelines, to undertake the project studies. The first firm began work on December 15, 1985 but encountered implementation problems with regard to the institutional strengthening and tariff components of the project. The change in Government and resultant changes in key NTC and DOTC staff left the consultants without the strong support needed to properly perform their tasks. Also, without approval of the Congress, NTC was unable to implement organizational changes recommended by the consultants, and attempts to obtain that agreement were not successful. The tariff study component was adversely affected when earlier recommendations by local consultants were rejected by the Government and the industry and resulted in the need to redefine the terms of reference for the foreign consultants which reduced the intended effectiveness of their work. 5.2 The change in Government and subsequent changes in management in NTC and MOTC also affected the work of the second firm. This firm was selected in December 1985 to undertake the frequency management study, but approval to proceed was deferred for two years while the incoming Government sought to reverse the previous selection decision. Finally the Government agreed to proceed with the originally selected firm which was able to start work in January 1988. This delay necessitated an extension of the loan closing date and was an indirect factor in the breakdown of contract negotiations with a local consultant counterpart and the subsequent inability of NTC to complete this project component by loan closing. A further factor was the poor communication between NTC and the consultant. 5.3 The task of project m4uager was assigned by the Government to MOTC which in turn assigned this task to NTC, the implementing agc .y. Day-to-day responsibility for project management within NTC varied over he project period but was usually vested with a Deputy Commissioner, the Commissioner retaining overall responsibility. On occasions when a separate coordinator was appointed, with more time to oversight the project, project management  - 4 - improved. In retrospect, the appointment of a project manager whose primary responsibilities were concerned with management uf the project could have improved project implementation 6. ProeLtRe s 6.1 In general, the project was successful although individual components achieved mixed results. 6.2 The first two project components are unlikely to fully achieve their intended objectives. The first component, a study aimed at strengthening NTC's regulatory capacity, has been completed, but NTC has been unable to implement the consultant's recommendations on a revised organizational structure because of the lack of government approval. However, as legislation to strengthen NTC, currently under consideration by Congress, requires a review of NTC's organiza- tional structure, it is likely that changes based on the consultant's recom- mendations will eventually be implemented. It is less clear whether the con- sultant's work under the second component, a rationalization of sector tariffs, uill manifest in any tangible improvements. Under this component, foreign consultants were to participate in Phases III to V of a six phase study being lead by local consultants. It was intended that this scudy develop a plan to rationalize the sector tariff structure. Phases I and II recommended the restructuring of the sector structure and implementation of new tariff arrange- ments, but these recommendations were not accepted by the Government or the industry; and Phase III, a study on the application of Usage Sensitive Pricing, intended to be undertaken jointly with the foreign counterparts, was completed beforehand by the local firm. In the light of these events the foreign consultant's efforts were redirected (with Bank agreement) to developing a tariff manual to provide NTC with the necessary operational tools for the proper evaluation and formulation of tariffs under the existing structure. This work was completed. Under Phases V and VI local consultants were to conduct a final review of the tariff process and help .ITC develop a data base and computerized tariff evaluation system. These phases have yet to be completed. 6.3 The three other project components were more successful. The third component, which was aimed at improving frequency management, has provided NTC with: (i) a computer system to help streamline the issue of licenses;2/ (ii) the methodology for rationalizing the f-equency spectrum and improving the efficiency of future frequency allocations; and (iii) equipment and procedures for monitoring and cleaning up the frequency spectrum in and around Manila. Although at loan closing NTC was still working to finalize the computer system and put it into operation, once this system is working NTC will have the es- sential elements needed to properly manage the frequency spectrum in Manila, and the procedures to improve spectrum management throughout the Philippines. The fourth component, revision of the NTP, has been completed. The DOTC has used the revised plan as the basis of their National Telephone Program which is designed to provide improved telephone coverage in the areas of Regions III through XII lacking facilities. The Government is implementing this plan with the help of OECF and bilateral support. The fifth component, the training program, has provided selected NTC staff with training over a range of 2/ With reference to the borrower's comments in Part II, pera. 96, the project was designed to lift the stp dard of NTC's frequency management In Metro Manila through training and provision of basic facilities. Apart from not completing the computer system, the project provided the necessary training and facilities to meet its objectives. The horrower correctly points out, however, that far more needs to be done to enable NTC to provide, to an acceptable standard, frequency management throughout the Philippines.  -5- appropriate technical r. I managerial areas. One shortcoming of this program was that courses provicz%g training on regulatory processes appropriate to NTC staff could not be found. To overcome this limitation it was proposed that specialized training, to meet NTZ's specific needs, be developed and presented through a range of seminars in Marila. This arrangement had to be postponed, however, due to late changes in key Commission staff and pending legislation which promised further management changes. It is now proposed that training of this type be provided under technical assistance funded through a separate Japanese grant administered by the Bank. 6.4 Overall, as indicated earlier (pars. 4.2), insufficient attention was given during project preparation to what would in reality be achieved in view of NTC's institutional constraints and fundamental organizational weaknesses. While the consultants' terms of reference focussed on key problem areas, they did not take adequate account of NTC's underlying problems. Consequently, the consultants' expectations if NTC's performance were unrealistically high and their unfamiliarity with the local culture masked many of the underlying prob- lems causing a lack of effective communication between the two and further masking the causes. Thus, some of the consultant's recommendatioans were not immediately appropriate, or were not implementable in the short term. 7. Project Sustainability 7.1 NTC's capacity to monitor and manage the radio frequency spectrum in the Philippines has been enhanced with the help of the computer facilities and other equipment supplied by the project. The availabil'.ty of a well managed frequency spectrum will bring positive benefits to the users through better reception, less interference and similar improvements. For these benefits to be sustained, NTC will have to put in operation and properly maintain its new freqtvncy management facilities and keep up a strong interest in the monitor- ing and managing of the radio spectrum. This endeavor is to be supported by a Japanese technical assistance grant which should help sustain the benefits. 8. Bank Performance 8.1 Although the Bank had received earlier requests from the Government to help develop the country's telecommunication sector, it was 1982 that a Bank identification mission first visited the PhA.ilppines. The Bank then concluded that the time was appropriate for addressing the telecommunication sector's technical, institutional and policy issues. With this objective, the Bank devoted a considerable effort into shaping an investment program designed to promote its sector aims. The Bank's performance during this period was constructive and to some extent essential to the development of a modern and efficient telecommunication system. 8.2 However, because of severe resource constraints, the investment program had to be abandoned and a stop-gap technical assistance project substituted instead. It can be seen in retrospect that possibly because of an urgency to salvage some of the institutional and policy aspects of the  investment program, the Bank's preparation of the technical assistance project lacked thoroughness in defining its content and execution. This deficiency was further compounded by ineffective Bank supervision, both in terms of the number and duration of the missions and their staffing, during the critical first two years of the project. In particular, the Bank did not at any time field an expert on regulation, although such an expert should have played a key role in supervising the project early on. From 1987 on Bank supervision improved in all respects, and this was reflected in the implementation of the project. In fact, it was the belated but strong Bank supervision effort which can take credit for a good share of the project progress during the ensuing years. 9. Borrower's Performance 9.1 The borrower's performance was affected to a large degree by the unforseen change in Government and resultant changes in key DOTC and NTC management and staff. As the project had been prepared under the previous government, the new administration lacked ownershii of the project and this impacted negatively on project management. Without a strong attachment to the project and faced with more serious policy problems, the new management was unable to take timely decisions on many of the consultant's recommendations and this sometimes reduced the effectiveness of the consultant's ongoing work. Also, while staff were appointed to manage the various project components in the early stages man7 lacked the background and skills needed to address the complex issues that evolved during day-to-day interactions. Following changes in NTC management late in the project, project management improved markedly thereby enabling urgent actions on the frequency management component to be taken which significantly advanced that component almost to the stage of completion by loan closing. 10. Proiect Relationships 10.1 The Bank's current good working relationship with Government and NTC officials has had a positive impact on the quality and pace of project implementation. This relationship was slow in developing, a natural consequence of the fact that the project was the Bank's first lending operation in the telecommunication sector and the disruptive policy and personnel changes which accompanied the change in Government. NTC's relationship with consultants appears to have followed the same course as the Bank's with a similar impact on project implementation. 11. Consulting Services 11.1 Consultants assigned to the project carried out their assignments satisfactorily within the constraints noted earlier (Part I, paras. 5 and 6).  7- 12. Proiect Documentation 12.1 The project's legal documents were definitive and well drawn up. There was no Staff Appraisal Report, but the President's Report gave a good account of the background, evolution and objectives of the project. As noted in para. 8.2, the Bank could have been more precise in preparing the project, but this was not a major deficiency; it could have been corrected by a more active and properly directed supervision effort in the early stages of implementation. Draft terms of reference prepared by the Bank were effective in defining the duties and responsibilities of the consultants assigned to the project. 12.2 The Borrower's quarterly reports were too infrequent to be of much help in following the project's progress. On the other hand, the Bank's supervision reports were generally comprehensive and informative. However, it should be noted as a general comment that the format and content of both supervision and periodic progress reports should be expanded to include the statistical data required for Part III of the PCR. A statement defining the statistical data requirement should be included in the reporting requirement for all future projects. Ready access to the pertinent statistical data would simplify and possibly also improve the quality of PCRs. 13. Part II of the CPR 13.1 Part II of this PCR was prepared jointly by DATC and NTC. The views they express in Part II are in general agreement with the Bank's evaluation of the projects execution. Some clarification is needed, however, with regard to the disbursement difficulties noted in para. C of Part II. The Borrower's difficulty in the disbursement of funds amounting to less than US$20,000 was mainly due to the following: (a) approval to open a Special Account for the project was initially withheld pending resolution of differences with the Bank over a consultant appointment (para. 5.2); (b) su'jsequently, when a Special Account could have been opened, NTC chose not to do so; and (c) in accordance with Bank policy, the minimum size of loan withdrawal applications is US$20,000 equivalent, although a number of applications less than this amount were processed for the project, especially final payments to suppliers.  PHILIPPINES TELECOMMUNICATION TECHNICAL ASSISTANCE PROJECT (LOAN 2495-PH) PROJECT COMPLETION REPORT PART II (As prepared by NTC, the implementing Agency) A. Confirmation of the Adequacy and Accuracy of the Factual Information contained in Part III of the Project Completion Report. Borrower confirms the adequacy and accuracy of the factual information in Part III of the Project Completion Report (PCR). B. Comments on the Analysis in Part I 1. We (Borrower) fully agree with the objectiveness set forth in the PCR Evaluation Summary. 2. Implementation Experience We fully agree with the content. 3. While we fully agree with the analysis made, we want to add that not only a well-qualified, experienced and full-time manager is needed to be assigned to carry out future projects, but also one will have a fixed tenure of service (removable only for cause) and should be supported by a staff which should also be given a fixed term of office and most important, a funding support not only from the foreign source but also from local source as counterpart funCes. 4. We would like to consider, as a whole, the project as fairly successful. As stated, the recommended organizational change to NTC have not been implemented, the final phase of the tariff study had not been carried out and the recommended regulatory legislation to lstrengthen NTC is still undergoing public hearing in Congress. 5. We fully agree to comments (ii) and (iii) (para. 6.3 of Part I], but we want to disagree with (i). NTC still lacks some essential elements to effectively manage the frequency spectrum throughout the Philippines. The reasons is that the essential element needed for an effective Frequency Management such as nationwide Radio Frequency  - 9 - Monitoring System, technical standards laboratory for type- acceptance/approval test of radio communication equipment and computerized systems and procedures for automated frequency managemeiut analysis are not yet completed. 6. Sustainability While we agree with the observation made hereto, we would like to stress the need for additional technical assistance grant to bring into existence a well aged frequency spectrum in the Philippines. 7. Findings and Lessons Learned We fully agree with the analysis made. C. Evaluation of the Bank's Performance during the evolution and implementation of the project, with special emphasis on lessons learned that maybe relevant for the future. The Borrower encountered difficulties in disbursement of funds costing less than $20,000. Furthermore, we cannot provide Philippine counterpart funds for goods and services to be acquired within the country due to financial constraints and unavailability of such funds locally. D. Evaluation of the Borrower's Own Performance during the evolution and implementation of the project, with special emphasis on lessons learned that may be relevant for the future. The Commission's inability to manage various projects are affected by frequent reshuffling of personnel and the lack of pernanency of the head of agency. Timely decisions cannot be fixed due to lack of juris- dictional authority of working staff for a certain project. It is recommended as far as practicable the designation or assignment of full- time project managers be made for future projects. E. Assessment of the Effectiveness of the Relationship between the Bank and the Borrower during the evolution and implementation of the Project. There existed a good working relationship as both Borrower and the Bank experts executed all efforts to effectively carry out its goals and objectives in spite of all the constraints enumerated. Aloysius R. Santos Project Manager  - 10 - PHILIPPINES TELECOMMUNICATION TECHNICAL ASSISTANCE PROJECT (LOAN 2495-PH) PROJECT COMPLETION REPORT PART III 1. Related Bank Loans (None) 2. Project Timetable Item Date Planned Date Actual Identification May 1982 May 1982 Preparation November 1983 April 1984 Appraisal Mission April 1984 Loan Negotiations December 10, 1989 January 1985 Board Approval January 1985 February 19, 1985 Loan Signature March 1985 April 2, 1985 Loan Effectiveness May 1985 July 1985 Loan Closing June 30, 1989 September 30, 1990 Project Completion June 30, 1989 Sept. 30, 1991 (est)  - Ul - 3. Loan Disbursements Cumulative Estimated and Actual Disbursements (US$ million) IBRD fiscal year Actual Appraisal Actual as X and semester disbursement estimate of av2raisal 1986 December 31, 1985 1.00 1.3 8 June 30, 1986 1.27 1.6 79 1987 December 31, 1986 1.38 2.0 69 June 30, 1988 1.95 3.2 65 1988 December 31, 1987 2.19 2.8 70 June 30, 1988 2.19 3.2 65 1989 December 31, 1988 2.42 3.5 69 June 30, 1989 2.69 3.8 77 1990 December 30, 1989 3.15 4.0 79 June 30, 1990 3.27 4.0 82 1991 December 31, 1990 3.96 4.0 96 Closing Date: 9/30/90 6/30/89 Final disbursement: November 29, 1990 Cancellation: US$45,065.31 undisbursed balance on December 3, 1990. 4. Project Implementation See discussion in Part I.  - 12 _ S. Pro1ect Cost and Financing A. ComDarison of SAR and Final Proiect Cost (Us$ '000) -Appraisal Estimate-- -----Final Cost- Local Foreign Totat Local Foreign Total Strengthening of NTC 92 432 522 92 432 524 Tariff study 90 216 306 90 216 306 Radio frequency management: Consultancy 130 576 706 70 752 822 Equipment and services 208 700 908 90 1,115 1,205 Updating of network plan 60 72 132 60 149 209 Training 60 250 310 5 192 197 Subtotal La 638 2,246 2.884 407 2.856 3,263 Physical contingencies - 225 225 - - - Price contingencies 162 529 691 - - - Refinancing of PPF - 1,000 1.000 - 1,099 1,099 Total Proiect Cost 80Q gQ "Q 6Q A43 La Local final costs are estimated. B. Project Financing (US$ '000) Appraisal Estimate Actual Funds Local Foreign Total Local Foreign Total IBRD - 4,000 4.000 - 3.955 3,955 Government 800 - 800 407 - 407 Total Ag LAQ jjgg Q 2  - 13 _ 6. Project Results (See discussion in Part I). Studies Purpose as Defined Study at Appraisal Status Impact of Study 1. Determine appropriate Partly completed. The Moderate. When organizational structure study proposed changes implemented and recommend legisla- to the staffing and will provide a tive changes to organizational structure foundation for strengthen NTC's of NTC. The recommend- improved NTC capacity to regulate. ations have been ac- operation. cepted in principle but not implemented (see Comment below). 2. Review NTC's tariff set- Four of the six phases Minimal. ting principles and of the study have been their effect on opera- completed. Consultant tors and recommend im- recommendations were not provements. fully accepted by the Government or industry. 3. Update the National Study completed and used High. Expected Telecommunications as the basis for Govern- to result in Plan. ment development plans. provision of about 128,000 lines of new telephone ex- change equip- ment in poorly served provin- cial areas. 4. Make Recommendations on, Study completed and Potentially and assist NTC in, im- recommends methodology high. Impact proving the management for improving efficiency will depend on of the frequency of frequency alloca- NTC's comple- spectrum. tions. NTC has accepted tion of the most recommendations. computer system and implementa- tion of consul- tant's recom- mendations.  - 14 - Comment: The consultant's terms of reference did not require their preparation of draft legislation for improvement of sector regulation as originally intended by the project. However, because in the course of the project various legislative proposals for strengthening the NTC and clarifying the sector's policies were drafted separately through political initiatives, the Bank did not push for compliance with covenants on this point. At loan closing the legislative proposals were in various stages of review by Congress. Specialist regulatory advice in relation to those initiatives was provided by consultants engaged under an Asian Development Bank Technical Assistance project implemented on the basis of the World Bank's recommendations to DOTC. 7. Status of Covenants Loan Agreement _ Section Covenant Comnliance/Comment 3.02 (a) The Borrower shall appoint in MOTC not later Complied than May 31, 1985 a qualified project manager. 3.02 (b) Borrower through appropriate legislation Not complied. See ensure (i) that NPC possesses the full Comment under range of functions and powers to regulate, 'Studies", Section supervise and administer the telecommunica- 6 of Part III. tion sector and (ii) that existing legisla- tion, decrees and regulations are updated and incorporated into a comprehensive telecommunications and broadcasting code. 3.04 (a) The Borrower shall ensure that MOTC enters Complied but not into contracts for consultants' services on as originally or before September 30, 1985. scheduled. 3.04 (b) The Borrower shall consult with the Bank on Complied. the conclusion and recommendations made by the consultants and shall implement such recommendations in a manner and in accord- ance with a timetable satisfactory to the Bank.  - 15 - 8. Use of Bank Resources A. Staff Inputs Task Input (Staffweeks) /a Project preparation Project appraisal Loan negotiation 5.8 Loan processing 5.0 Project supervision 53.0 Project completion report 4.9 Project administration 4.5 TOTAL 73.2 la Excludes staff input prior to FY85. Data for prior years is unavailable.  - 16 - B. Missions Stage of project Month/ No. of Days in Speciali- Performance Type of cycle year persons field La zation Lb rating /c problems /d Through appraisal 05/82 2 8 E,FA - - 02/83 1 15 LO - - 06/83 1 2' E - - 09/83 1 7 E - 11/83 1 12 E - - 04/84 2 7 E,FA - - Through effectiveness 01/85 1 3 CON - - Supervision 11/85 1 3 EC - _ 05186 1 5 E 1 - 11/86 1 3 EC 3 OS 02/87 3 15 E,FA,EC 2 Os 07/87 3 7 E,FA,EC 2 OS 11/87 3 4 E,EC,EC 2 OS 06/88 2 21 E,FA 2 OS 11/88 2 16 E,FA 2 Os 04/89 1 16 E 2 OS 09/89 1 11 E 2 Os 03/90 1 13 E 2 Os 07/90 1 14 E 2 OS La Includes time devoted to other operations in the country. /b E - Engineer, EC - Economist, FA - Financial Analyst, CON - Consultant, LO = Loan Officer. /c 1 - No or minor problems, 2 - Minor problems, 3 - Major problems being taken care of. It OS - Overall status.