Document of The World Bank FOR OFFICIAL USE ONLY Report No: 20717 IMPLEMENTATION COMPLETION REPORT (03730; 37380; 3738S) ON A IBRD LOAN IN THE AMOUNT OF US$20 MILLION TO THE JORDAN TELECOMMUNICATIONS CORPORATION FOR A TELECOMMUNICATIONS PROJECT July 26, 2000 Infrastructure Development Group Middle East and North Africa Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS (Exchange Rate Effective July 2000) Currency Unit = Jordanian Dinar (JD) JD 1.0 = US$ 1.40 US$ 1.0 = JD .71 FISCAL YEAR January 1 December 31 ABBREVIATIONS AND ACRONYMS BITS Swedish Board for Investment and LSP Letter of Sector Policy Technical Support CAS Country Assistance Strategy MOPC Ministry of Posts and Communications CLIP Calling Line Identification Prevent NISC National and International Switching Center COM Council of Ministers NTP National Telecommunication Program DEL Direct Exchange Line ODA Overseas Development Agency of the United Kingdom ECO Expanded Co-financing Operation PAC Product Acceptance Certificate EIB European Investment Bank PCM Pulse Coded Modulation EPU Executive Privatization Unit PDH Plesiochronous Digital Hierarchy FAC Final Acceptance Certificate PMO Project Management Office GOJ Government of Jordan PSTN Public Service Telecommunications Network GSM Global Mobile System RDLU Remote Distribution Line Unit ICB International Competitive Bidding RLU Remote Line Unit IP Internet Protocol SAR Staff Appraisal Report ISDN Integrated Services Digital Network SDH Synchronous Digital Hierarchy JBIC Japan Bank for International Cooperation TPD Telecommunications Policy Department (formerly JEXIM) JD Jordanian Dinar TRC Telecommunications Regulatory Commission JTC Jordan Telecommunications Company VAS Value-added Services (formerly TCC- Jordan Telecommunications Corporation) LLP Local Line Plant Vice President: Jean-Louis Sarbib Country Manager/Director: Inder K. Sud Sector Manager/Director: Jean-Claude Villiard Task Team Leader/Task Manager Robert Anton Mertz FOR OFFICIAL USE ONLY JORDAN TELECOMMUNICATIONS PROJECT CONTENTS Page No. 1. Project Data 1 2. Principal Performance Ratings 1 3. Assessment of Development Objective and Design, and of Quality at Entry 1 4. Achievement of Objective and Outputs 4 5. Major Factors Affecting Implementation and Outcome 8 6. Sustainability 10 7. Bank and Borrower Performance 11 8. Lessons Learned 13 9. Partner Comments 14 10. Additional Information 14 Annex 1. Key Performance Indicators/Log Frame Matrix 15 Annex 2. Project Costs and Financing 16 Annex 3. Economic Costs and Benefits 18 Annex 4. Bank Inputs 19 Annex 5. Ratings for Achievement of Objectives/Outputs of Components 20 Annex 6. Ratings of Bank and Borrower Performance 21 Annex 7. List of Supporting Documents 22 Annex 8. Partner Comments 23 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not be otherwise disclosed without World Bank authorization. Project ID: P005322 Project Name: JORDAN TELECOMM Team Leader: Robert Anton Mertz TL Unit: MNSID ICR Type: Core ICR Report Date: July 26, 2000 1. Project Data Name: JORDAN TELECOMM L/C/TFNumber: 03730; 37380; 3738S Country/Department: JORDAN Region: Middle East and North Africa Region. Sector/subsector: CC - Telecommunications & Informatics KEY DATES Original Revised/Actual PCD: 04/28/93 Effective: 10/26/94 06/27/95 Appraisal: 01/19/94 MTR: 09/01/96 09/13/97 Approval: 05/26/94 Closing: 09/30/99 01/31/2000 Borrower/Implementing Agency: Jordan Telecommunications Co./Jordan Telecommunications Co. Other Partners: STAFF Current At Appraisal Vice President: Jean-Louis Sarbib Caio Koch-Weser Country Manager: Inder K. Sud Ram Chopra Sector Manager: Jean-Claude Villiard Barbara Kafka Team Leader at ICR: Robert Anton Mertz Mohammad A. Mustafa ICR Primary Author: Svetoslav K. Tintchev 2. Principal Performance Ratings (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible) Outcome: HS Sustainability: HL Institutional Development Impact: SU Bank Performance: S Borrower Performance: HS QAG (if available) ICR Quality at Entry: S Project at Risk at Any Time: No 3. Assessment of Development Objective and Design, and of Quality at Entry 3.1 Original Objective: The original objectives of the project, as stated in the Memorandum of the President, were to improve the efficiency of telecommunications services in Jordan by: (a) developing a market-oriented sector policy and a transparent regulatory framework; (b) commercializing and subsequently privatizing the Jordan Telecommunications Corporation (JTC); (c) encouraging private investment in the sector; and (d) enhancing service quality, expanding network capacity and increasing coverage. The project objectives were consistent with the Country Assistance Strategy (CAS) at the time which emphasized financial restructuring, cost recovery, commercialization and privatization of public enterprises to improve resource allocation and reduce burdens on the budget. The project was also consistent with the Bank's telecommunications sector strategy of the time which called for shifting the role of governments from ownership and management to policy-making and regulation, promoting efficiency and quality through commercialization of operational activities and competitive provision of services, and using new financial instruments (such as guarantees). The project objectives supported the Government of Jordan's strategy for the telecommunications sector. As outlined in their Letter of Sector Policy (May 2, 1994), the strategy called for: (a) preparing and promulgating a new Telecommunications Law; (b) commercializing, corporatizing and privatizing the operations of JTC; and (c) promoting competition and private provision of services. Although these project objectives were ambitious, given the Government's commitment and the incorporation of technical assistance (TA) in the project design to assist with sector restructuring and to assist the project management unit in JTC, the Bank had strong reasons to believe the project's goals were attainable, which proved to be true by project closing. 3.2 Revised Objective: The project objectives were not revised. 3.3 Original Components: Sector Restructuring Component This component was designed to help the Government formulate and implement reforms that would lead to further development of the sector and facilitate opening up new possibilities for the private sector. Restructuring was to be implemented in two phases. The first phase, which was completed as a part of the project preparation, involved providing technical assistance to help the Government and JTC prepare proposals for a new sector policy and a draft Telecommunications Law. As a result of this work, the Government developed a new sector restructuring strategy to be implemented under the project on the basis of a time-bound action plan during the second phase. The program consisted of five distinct but interdependent activities: (i) legal changes to provide a robust legal foundation for the sector in line with the new sector policy; (ii) a Sector Policy Division to be established at MOPC; (iii) an independent Regulatory Office to be established and staffed with trained professionals; (iv) commercial management and organizational development of JTC; and (vi) a strategy and an action plan for the privatization of JTC. Although the outcome of the sector restructuring component was highly satisfactory, the preliminary timetable for the implementation of these reforms may have been overly ambitious. The initial delays in appointing sector restructuring consultants (financed under a grant from the Overseas Development Agency - ODA) and in the approval of the new Telecommunications Law by Parliament, had not been anticipated and consequently set back the timing of the reform process. The component, however, was largely completed by the time of project closing with the sale of a 40% stake in JTC to the private sector in early 2000. Physical Component The physical component was to comprise the following: (a) 225,172 additional lines of switching equipment; these lines included the establishment of 20 new main exchanges, 80 new remote subscriber units, the expansion of one existing main exchange and 24 remote sites; (b) microwave and optical fiber junctions to provide links between remote subscriber units and corresponding main exchanges; (c) -2- associated local networks for the connection of subscribers; (d) power and air conditioning equipment; (e) buildings; (f) specific initial training for operation and maintenance of switching and transmission equipment; (g) formation of an initial spare parts stock; (h) consultant services for assistance in project management and supervision of implementation; and (i) computerized customer service, billing, collection and operational support systems. The physical component was well designed, yet very large and complex, requiring strong project management to avoid delays in procurement. To ensure that JTC would have adequate capacity to manage this component, consultants (funded by BITS of Sweden) were hired to assist JTC with project management, procurement, monitoring and reporting. An implementation plan was prepared outlining the interdependencies of the tasks to be carried out under this component, including a time schedule for implementation. Despite these measures, the physical component did experience procurement and disbursement delays, mainly due to the Borrower's initial lack of experience with bid preparation and evaluation. However, by the closing date the project had exceeded almost all of the physical targets. 3.4 Revised Components: Procurement of the computerized customer care system using Bank funds was replaced by procurement of additional optical fiber, copper cables and cable accessories, following a formal reallocation of disbursement categories in March 1999. This reallocation, however, did not result in a project restructuring. It was determined that procurement of the customer care system could not be completed by the closing date of the loan and that it would be better to wait until the strategic partner was on board to finalize the design and selection of the system. The system is now being financed through JTC's own resources. 3.5 Quality at Entry: The project was not reviewed by QAG. However, at the time of this ICR, the Quality at Entry is considered to have been satisfactory. As mentioned above, the project was designed in line with both the Bank's and the Government's priorities for the sector. Throughout project preparation, the Government showed strong commitment to the sector restructuning program and ensured the support of other groups (Council of Ministers, Steering Committee, private sector, Association of Engineers and JTC managers) by holding interactive workshops to debate issues and develop the sector policy. Additionally, several measures were taken to ensure that the project would be ready for implementation upon effectiveness. Prior to negotiations, all bidding documents were prepared and issued, a detailed project implementation plan was developed and a comprehensive project management organization had been established. It should be noted that there was a one year delay between the project Board date and project effectiveness. This was mainly due to difficulties in meeting the conditions for effectiveness. The submission of the draft Telecommunications Law to Parliament was delayed, as was the issuance of the new by-laws granting JTC autonomy. The Bank also experienced some glitches in securing firm commitments from cofinanciers and in finalizing, with JTC, the bond issue. These unforeseen delays, however, did not greatly affect the overall implementation schedule of the project, as project procurement (preparation of bidding documents, bid evaluation and award, selection of consultants, etc.) was still able to move forward without the project being effective. In retrospect, it may have been better to make the effectiveness conditions less stringent, or to have put them up front, as conditions of board or negotiations. - 3 - 4. Achievement of Objective and Outputs 4.1 Outcome/achievement of objective: The project was highly successful in achieving its overall objective of improving the efficiency of telecommunications services in Jordan. Telephone service coverage was expanded to 25 new primary areas and 356 new villages. Teledensity (main lines per 100 inhabitants) increased from 7.7 in 1994 to an estimated 17.1 in 2000. Installed switching capacity increased from 320,000 in 1994 to 840,000 in 1999, and the number of users and connections almost doubled from 287,000 subscriber lines in 1993 to 565,000 subscriber lines in 1999. A broader range of services is now available to customers on a competitive basis, including internet, paging, cellular and payphones. The cellular market is growing rapidly. Fastlink, currently the country's sole cellular provider, has increased its subscriber base from 11,500 in 1995 to more than 150,000 by April 2000, and it is expected that the number of subscribers will double when JTC's Mobilecom begins operating at the end of 2000. The project achieved or surpassed many of the original performance indicators (Annex 1) outlined in the Staff Appraisal Report (SAR). The project also achieved its goal to commercialize and eventually privatize JTC. After an unsuccessful attempt at privatization in March 1998, the Government re-launched the bidding process in April 1999 which successfully resulted in the receipt of three competitive bids from reputable operators. On January 23, 2000 the privatization transaction was completed, and 40% of the Company's shares, with management control, were sold to the Joint Investment Telecommunications Company (88% of which is owned by France Telecom and 12% is owned by the Arab Bank). The project was also successful in terms of its policy objectives. The Government's telecommunications sector policy, as agreed and discussed with the Bank during project preparation, was issued in early 1995. The Telecommunications Law was ratified by the Jordanian Parliament in September 1995 and became effective on October 1, 1995. In November 1995, the Telecommunications Regulatory Commission (TRC) was established as an independent statutory agency for regulating and monitoring the telecommunications sector. 4.2 Outputs by components: Sector Restructuring Component The outputs of this component are rated as satisfactory. As depicted below, there were major changes to the sector during the life of the project: Jordan - Telecommunications Sector - 1994 Ministry of Posts Miistry of Policy | 1 i nance . .. .. . .and Communications ... _ _ _ _j_ _ (MOPC) i Regulation Network Jordan ; Operation i International Telecommunications ................................................... ............................................ Corporation Long TCC . ... Private ; Distance (state) Paging Local Service Customers for Public TelecommunicaTion Services Provision -4 - Jordan - Telecommunications Sector- Jan. 2000 Ministryof Posts and Communications (MOPC)_ Policy |Telecommunications Regulatory Commission (TRC) Regulation ,____________ _ ! Network Jordan Operation Telecommunications Cellular ; International JTC Fast LinkDac (state-privAe (i Pa ngistance Cstoellor PublcTelmunlitio i |Local 1"tustomersfor PublicTelecommunicationSelvices Provision All of the reform measures initiated under the project were advanced: (a) the new Telecommunications Law, which allowed for the corporatization of JTC and the establishment of a regulatory authority, was approved by Parliament in September 1995; (b) the Telecommunications Policy Department (TPD) was established within the MOPC to provide forward-looking, long range policy advice to the Government; (c) the Telecommunications Regulatory Commission (TRC) was established and staff were hired and trained. During the life of the project, TRC built its credibility by issuing more than 16 licenses, covering the various market segments, in a transparent manner; (d) the Government's sector policy, promoting competition and private provision of services, was issued in early 1995; and (e) the privatization of JTC was successfully completed in January, 2000. Physical Component. The outputs of this component are highly satisfactory as the project achieved the following physical results, generally exceeding the original estimates: Switching - new digital switching equipment was installed for 22 primary centers and 81 remote switches, increasing the switching capacity to 840,000 lines (exceeding the SAR estimate of 640,000). Transmission - PDH equipment was installed at 128 sites, SDH equipment at 49 sites, and microwave equipment and towers at 26 sites. Local Line Plant - approximately 80% of the contracted work on the local line plant had been completed at project closing. The work thus far has allowed 40 manual service sites to be converted to automatic service and the transfer of more than 100,000 customers from the old network to the new one. Buildings - 128 new buildings were constructed, 26 of which are main-exchange buildings for combined technical and administrative use; four of the existing primary center buildings were enlarged. Customer Service Improvement Plan - procurement of the computerized customer care service system was halted as JTC was experiencing delays and complications with bid evaluations and it was decided that it would be better to wait until the new strategic partner was on board to make decisions regarding the design of such system. Funds for the system were then used to purchase additional optical fibre cables, copper cables and accessories. -5 - 4.3 Net Present Value/Economic rate of return: The economy-wide benefits from the project are substantial. The project increased the level of private participation in the sector through the successful privatization of JTC and by establishing a regulator which helped to build investor confidence. The proceeds from the sale of JTC, (US$508 million) brought an amount equivalent to 159% of the average annual inward direct investment flow for the period of 1997-99. Even beyond JTC, foreign interest in the Jordanian telecommunications sector has included the sale of a 51% stake in two local ISPs to the Bahrain Telecommunications Company and the sale of a 20% stake in Maktoob.com, the leading Arabic language communications server to Egypt's EFG-Hermes. Jordan's IT conference in March 2000, attracted over 100 international and 50 local companies, including Microsoft which expressed interest in working with the GOJ in developing a computerized network connecting government departments. New employment opportunities were generated through the development of new services and the addition of new service providers in the various market segments (cellular, paging, etc). JTC's cellular subsidiary, Mobilecom, will create 350 jobs alone in its first year. Businesses, which increasingly rely on telecommunications and internet services to enhance productivity, greatly benefited from JTC's improved efficiency, service quality and expanded network capacity. Improved telecommunications services will allow for business to have better access to international markets, creating new export opportunities and reducing purchasing costs. A significant share of the project's economic benefits were realized by rural and low-income communities. By project closing, JTC had expanded their geographical coverage to include 356 new villages. In rural areas manual service was replaced by remote digital line units and, as a result of exchange modernization, new value-added services were introduced for the first time to rural customers. Through tariff reduction, telecommunications services became more affordable for all consumers. Competition in the mobile sector has already resulted in an average 30% reduction in cellular tariffs. Resource mobilization was one of the main economic benefits of the project. The US$50 million Eurobond issue helped to mobilize private sector finances from the local and international markets that would have been otherwise placed in bank accounts or invested abroad. The bond issue also helped to improve the overall image of the Jordanian economy, as reflected in the recent upgrade of the country risk rating from "C" to "B" by the Economist Intelligence Unit, Country Risk Service Report, June 2000. 4.4 Financial rate of return: JTC's financial performance during the project period (1994-1999) was strong enough to generate sufficient funds from operations to cover 35% of total project costs, close to the 37% projected at appraisal, and to comfortably meet all financial covenants. However, JTC suffered pressure on revenues and profitability due to a combination of factors including a tariff rebalancing plan initiated in 1997 as part of the project, declining international revenues and a sluggish local economy. Despite strong growth in the physical telephone network with the number of subscribers increasing by 100 % to 565,000 between 1994 and 1999 and telephone traffic (minutes billed) doubling as well (with the largest gains in local and outgoing international traffic), total revenues only grew by 29%. Domestic revenues nearly doubled as the cross subsidy from high international charges was reduced through tariff rebalancing, but international revenue grew by only 1% per annum and incoming international revenue declined by 11% per annum due to declining international settlement rates. Total revenues grew by just 5% per annum, while operating expenses increased 13.5% per annum, causing JTC's gross and net operating ratios to decline. As a result of these trends, average annual revenue per subscriber declined from JD546 in 1994 to JD 342 in 1999, a decline of 37%. Further negative comparisons can be expected until the five-year tariff rebalancing -6 - program runs its course in 2001, unless JTC is able to increase revenues through more rapid growth in cellular traffic, data and value added services. The company's financial position - though still strong - exhibited a gradual weakening during the period (as shown in the following summary table). Accounts receivable have been a continuing problem for JTC, growing faster than revenues until 1999, and provisions for uncollectible accounts have remained high at about two-thirds of receivables. It is expected that the investment of a major private shareholder and the eventual purchase of a sophisticated customer care/billing system will have a positive effect on tighter commercial practices at the JTC and an improved financial position. The documents showing the calculation of the FRR and ERR at appraisal could not be lQcated for preparation of the ICR so the financial and economic rates of return on the project have been calculated on the basis of the incremental cash flows from the new investment financed by the project, over a 20-year period 1993-2013. The FRR is calculated at 20 percent, slightly less than the 22 percent calculated at appraisal, although the two calculations may not be on a comparable basis. This calculation assumes a further three percent per annum decline in the net weighted average tariff in 2000 and 2001 as part of the ongoing five-year tariff rebalancing plan. The economic rate of return has been calculated on the basis of the incremental cash flows after deducting the taxes and other fees and transfers paid by the company and on the assumption that income tax will be payable at the current rate of 30 percent of taxable income for the period 2000-2013. On this basis the ERR is calculated at 28 percent compared with 24 percent at appraisal, although again the two calculations may not be on a comparable basis. Annual Financial Indicators (JD) im I99 1- 1 L9 19 |Gross Revenues J 155,992,402 172,646,298 169,252,743 186,654,255 193,004,768 Increase (decrease) in Revenue 4.0% 10.7% -2.0% 10.3% 3.4% Operaitgng Expensnes 45,316,076 50,333,366 64,267,686 76,243,948 75,345,287 Depreciation ____ 8,821,199 10,854,428 25,530,764 24,418,493 26,414,493 Operating Revneues 110,676,326 122,312,932 104,985,057 110,410,307 117,659,481 gNet Income | | 93,403,120 73,738,578 79,203,250 64,603,291 73,091,859 Gash Generation from Operations 102,224,319 1 84,593,006 104,734,014 89,021,784 99,506,352 Capital Expenditures 35,094,180 61,252,537 42,506,433 61,245,576 50,359,887 Operating Margin (%) 70.9% 70.8% 62.0% 59.2% 61.0% Net Profit Margin (%) 59.9% 42.7% 46.8% 34.6% 37.9% Retum on Total Assets (%) 31.9% 22.4% 22.8% 16.5% 17.9% Retum on Equity (%) 36.7% 28.1% 30.2% 22.8% 24.7% Debt Service Coverage Ratio 19.94 33.06 49.49 24.15 18.23 Debt to Equity Ratio (%) 14.2% 19.2% 24.0% 29.2% 27.5% Asset Tumover Ratio (%) 117.1% 123.9% 108.2% 67.4% 64.1% Current Ratio 7.04 4.51 3.64 2.98 2.27 Accounts Receivable (gross) 56,559,329 54,790,481 66,764,611 76,381,266 76,547,609 Provisions (bad debts) 32,410,448 35,000,000 46,000,000 51,000,000 49,000,000 Provisions as % of A/R 57.3% 63.9% 68.9% 66.8% 64.0% Provisions as % of Revenues 20.8% 20.3% 27.2% 27.3% 25.4% Increase (decrease) in AIR -46.0% -3.1% 21.9% 14.4% 0.2% A/R Tumover 2.76 _ 3.15 2.54 2.44 2.52 -7 - 4.5 Institutional development impact: The institutional development impact of the project was substantial: Government of Jordan / Ministry of Communications developed the capacity to design and implement the sector restructuring program. The role of the Ministry with respect to policy making was expanded with the creation of a Telecommunications Policy Department to advise on the introduction of new services and to promote and support the development of the telecommunications policy. The Government, with the assistance of the Bank, was able to successfully implement a large program which included legal, sector policy and regulation activities as well the strategy and action plan for the privatization of JTC. JTC staff were charged with designing and implementing the ambitious National Telecommunications Plan (NTP) and managing the program's financial plan which amounted to approximately US$250 million. Throughout the life of the project, JTC improved its capacity for financial management, as demonstrated in the financial performance ratios, which generally exceeded those stipulated in the financial covenants of the Loan Agreement. JTC also improved its capacity to carry out the procurement of goods under international competitive bidding procedures. Although initially weak in this area, by project closing, JTC had effectively reduced project costs through successful international competitive bidding and contract negotiation procedures. TRC's institutional capacity to regulate the sector was developed under the project through training of staff, and TA provided by ODA-funded international consultants. Since its establishment, TRC has issued more than 16 licenses, including JTC's license, in a credible and transparent manner. Although, not originally envisaged under the project, it is now apparent that TRC could use further TA (study tours, workshops) and financing for the set-up of a proper frequency management system, in order to strengthen its authority as a regulator. The Bank is discussing with the GOJ possible future assistance to TRC in this capacity. The institutional capacity developed under the project is most clearly demonstrated, however, in the ability of all three parties (Government, JTC and TRC) to learn from the mistakes of the initial unsuccessful attempt to privatize JTC, revitalize the bidding process a second time, and successfully complete the privatization transaction. 5. Major Factors Affecting Implementation and Outcome 5.1 Factors outside the control of government or implementing agency: None 5.2 Factors generally subject to government control: The Government's strong commitment to sector reform greatly contributed to the overall success of the project. However, there are two instances in which factors subject to Government control may have actually impeded reform progress: (a) Sector Policy - after issuing its Letter of Sector Policy (LSP) in 1995, the Government proceeded to change its sector policy several times, creating uncertainty for potential investors in the sector. The original LSP indicated that competition in PSTN services would commence at the time of JTC privatization. In December 1996, however, the Council of Ministers (COM) issued a decree delaying introduction of competition in PSTN until 2002. Regarding the cellular segment, the COM issued a decree in November 1995 permitting the issuing of a second cellular license. However, just prior to JTC's privatization, the second license was granted to JTC (rather than through a competitive bidding procedure) and the Government announced it would award a third license in 2001. Although this decision may have helped to maximize the sale price of JTC, it also may have adversely impacted the - 8 - level of competition in GSM service in the sector in the long run. A more consistent sector policy may have helped to avoid delays in the reform and to increase private investment in the sector. (b) Privatization progress - the initial attempt at JTC privatization was not successful for a number of reasons, some of which were subject to the Government's control : (i) the GOJ was not able to reach a political consensus among key stakeholders on the privatization strategy; (ii) the absence of a ministerial "champion" for the privatization, which may have been interpreted by potential buyers as a lack of commitment on the part of the GOJ; (iii) the GOJ did not undertake a comprehensive transactional and value analysis of other privatization transactions around the world, which could have been used as a basis for setting realistic expectations; and (iv) the inability of the Government to reconcile the issue of sovereignty and the perceived erosion of its patrimony of a key national public asset, against the urgent need to obtain management expertise and financial resources for that asset. Nevertheless, the Government was able to reconstruct its privatization strategy and re-launch the tender for a strategic investor utilizing a revised information memorandum in May 1999. Following this second round of bidding, the privatization transaction was completed successfully in January 2000, after receiving three competitive proposals from reputable operators. 5.3 Factors generally subject to implementing agency control: The Project Management Office (PMO) in JTC carried the bulk of the responsibility for implementing the National Telecommunications Program (NTP), the physical component of the project. The PMO was well staffed with a project manager, procurement specialists and financial management specialists. The PMO benefited during project preparation and implementation from the international expertise of consultants from Telia Swedtel (financed by Swedish BITS and JTC). Procurement management was the main factor largely subject to the control of the PMO that caused some initial delays in project implementation. In particular, procurement of the computerized customer care system was not well managed. Working with a consulting firm (Booz-Allen & Hamilton), JTC spent many months preparing the bidding documents for the system, yet in the end no bidder could adequately meet the technical specifications. Bid evaluation, also took several months and was not carried out properly, according to the evaluation criteria specified in the bidding documents. The Bank, therefore, did not give its clearance to the bid evaluation report, and given the closing date of the project, it was agreed that the purchase of the system could not be completed on time. The funds allocated to the system were reallocated for the purchase of additional fiber optic and copper cables and accessories. 5.4 Costs andfinancing: The project's original financing plan, revised loan amounts and total disbursement at project closing (January 31, 2000) are shown in the table below: (US S miillion) Original Financing Plan Revised Disbursed Local Foreign Total Loan Amount (Jan. 31. 200 Internal Cash Generation 90 - 90 90 71 World Bank - 20 !20 20 15.4* EIB - 30 30 57 55 JBIC (Japan) - 23 23 16 15.6* ODA (UK) - 6 6 6 6 BITS (Sweden) - 4 4 2.2 2 Eurobond - 50 50 50 36.1* Total 90 133 223 241 201 Disbursed as of June 28, 2000 9 - Prior to effectiveness, the original financing plan was reduced by US$8.8 million (the JBIC loan was reduced to US$16 million and the BITS financing was reduced to US$2.2 million) to reflect cost savings on tenders for equipment and technical assistance. A second loan from EIB became effective in March 1996 to help finance additional works on the Local Line Plant, thus increasing EIB's total contribution to US$57 million. The revised overall financing for the project totaled approximately US$241 million. For the first time in the telecommunications sector, the project financing included US$50 million funded through a Eurobond issue supported by an ECO Guarantee. The purpose of the Guarantee was to provide JTC with a vehicle for private sector involvement in its investment program in the form of private sector debt and subsequent equity participation. The Guarantee was specifically intended to: (i) help mobilize Jordanian foreign currency deposits held offshore and direct them back into the country for the purpose of productive investment in a priority sector; (ii) facilitate Jordan's re-access to the financial markets, following the Brady debt restructuring, thereby assisting the country to diversify its borrowing sources; (iii) establish a track record for JTC in the market by exposing the company to the rigors of market discipline, thus facilitating the commercialization and privatization process; and (iv) provide impetus to the domestic capital market, as well as help to open up a foreign institutional investor base for the country. The use of the ECO Guarantee proved to be very successful, not only in terms of catalyzing private sector investment for the telecommunications program, but also in facilitating Jordan's access to the Eurobond market. As it was the first bond operation for Jordan, which did not have a credit rating at the time, it also helped to establish a track record for the country in international capital markets. Through the ECO bond operation, JTC became the first Middle Eastern corporation to tap the Eurobond market. Exposing the company to the commercial discipline of the capital markets helped commercialize JTC's corporate culture in preparation for privatization. In addition, the bond issue involved the participation of local banks and facilitated the mobilization of domestic foreign exchange deposits for investment in the company. Following the very successful reception of the JTC bond, Jordan was able to re-access the Eurobond market for subsequent bond operations without the Bank's support. Throughout the project there were disbursement lags, mainly due to the initial delay in effectiveness and procurement delays and inefficiencies (in some cases bid evaluation took 4 to 6 months). The closing dates of the Bank loan and the JBIC loan were extended by 4 and 6 months, respectively in order that JTC might use balances that remained undisbursed due to delayed procurement. By project closing, however, substantial savings had been achieved. In particular the final contracts under the Bank loan for the procurement of copper cable & accessories and optical fibre cable and accessories, originally estimated to cost US$5.7 million, amounted to only US$1.4 million, partly due to successful use of ICB procedures by the Borrower. The remaining undisbursed balance of US$4.6 million under the Bank loan has been canceled. 6. Sustainability 6.1 Rationale for sustainability rating: The sustainability of the project's achievements are highly likely. The sector reform achieved under the project has already allowed for and will continue to increase private participation in the sector. The newly-privatized JTC is planning for further expansion and improvement of the network to prepare for competition, following the end of their exclusivity period. The Government intends to continue to promote competition in the sector through the award of a third GSM license in 2001, and two licenses for international operators in 2004. JTC's tariff rebalancing plan has been underway since 1997, and it is expected that the entrance of new operators in the sector will result in further tariff rebalancing as determined by the market. - 10 - All of the above should continue the progress made under the project to improve the efficiency and accessibility of telecommunications services in Jordan. 6.2 Transition arrangement to regular operations: The Government has expressed a need for continued Bank assistance in the sector, particularly in the following areas: * TRC - further support to strengthen the regulatory framework created under the project and improve the independent functioning of the regulator. TRC staff require additional training and a proper spectrum management system, including equipment, is yet to be put in place. * Postal Services - support for the Ministry's recently launched Postal Sector Restructuring Project, which aims at expanding the coverage and improving the quality of Jordan's postal services. This project also includes a plan for privatization of the postal operator. * Informnation Technology - assistance to the GOJ in the implementation of its recently developed National IT Strategy (REACH Initiative), and possible support for an "administration on line" initiative to improve the efficiency of public administrative systems through the use of IT. 7. Bank and Borrower Performance Bank 7.1 Lending: Bank performance at identification, preparation and appraisal of the project was satisfactory. The project team built on the relationship developed between the Bank and GOJ during the preparation of the First Telecommunications Project (loan 2953-JO), a project which was approved by the Board but canceled shortly after by the Government due to changes in the macro-economic conditions in Jordan which led to cancellation of the investment program for the telecommunications sector and related financing. During the 12 months of preparation, from the initial identification mission to Board approval, the Bank maintained a close dialogue with the GOJ to ensure that the project objectives were directly in line with the Government's goals for the sector. The staff mix and continuity during preparation and appraisal were highly satisfactory. Financial analysts and telecommunications engineers provided the core expertise, while IT and Private Sector Development specialists also provided valuable input in missions and as peer reviewers. Several of the preparation missions included the participation of a Financial Officer from the Project Finance and Guarantees Department to deal with issues relating to the World Bank Guarantee. The loan amount and project execution period was well estimated at the time, although the one year delay in effectiveness was not anticipated and the project closing date was extended by four months to give the Borrower more time to complete procurement actions. It should also be noted that several of the performance indicators (Annex 1), were not in line with rapidly developing technology trends, and may have been overly ambitious given the initial level of sector development in the country. There was clear recognition by the preparation team of the project risks, namely the potential for political interference in the implementation of the sector restructuring and the risk of delays in the investment part of the program due to procurement or insufficient institutional capacity. These risks were discussed with the Borrower during negotiations and the agreements reached to minimize these risks were reflected in the conditionalities of the project. - 11 - 7.2 Supervision: The overall supervision of the project was satisfactory. Regular supervision missions were canied out generally every six months and the documentation in the project file is adequate. A mid-term review was conducted in September of 1997, though it did not involve co-financiers. There was a change in task managers 18 months before project closing. However, this did not disrupt project supervision and had no impact on project achievements. Project performance indicators and financial indicators, as outlined in the SAR, were monitored on a regular basis and generally served as realistic measures of the project's achievements, with the exception of the quality-of-service targets, which had been over-estimated, as mentioned above. The Borrower noted that in several instances there were delays in obtaining the Bank's non-objection on procurement matters. Following the first attempt at privatization of JTC, the Bank participated in a mission, with two external consultants, to provide the Government with a neutral and independent perspective of international experience in telecommunications privatization transactions. This mission, which was carried out at the request of the Chairman of the Executive Privatization Unit, analyzed the reasons for the failure of the first attempt and helped the Government re-think its privatization strategy in order to re-launch the bidding process with successful results. 7.3 Overall Bank performance: Overall Bank performance was satisfactory. Bank staff worked closely with the Government and the implementing agency to push the sector reform ahead and to monitor progress on the physical component. The Bank gave strong advice to the GOJ on maintaining a consistent sector policy, in following international best practice for the privatization transaction and in establishing a credible and transparent regulatory environment. Project modifications, including extensions of the effectiveness date, a credit reallocation and one extension of closing date, were generally processed by the Bank team in an efficient manner in order to respond to the Borrower's needs. The Bank also assisted in securing the cofmancing for the project which involved five different donors, with the loan from JBIC (formerly the Japan Exim Bank) being administered by the Bank. The project successfully piloted the use of a World Bank Guarantee in the telecommunications sector. The US$50 million Eurobond issue was oversubscribed, illustrating a successful approach to finance a well justified investment program. Borrower 7.4 Preparation: The quality of the Borrower's commitment and contributions to project preparation were notable. In terms of the restructuring program, the Government and JTC took several steps to ensure the support of key stakeholders: (a) in the process of developing the sector policy, the Council of Ministers, the Steering Committee, the private sector, the Association of Engineers and JTC managers worked closely and debated issues in workshops held for this purpose; and (b) in order to ensure the ownership of its middle management, JTC established working groups to serve as "change agents" to help explain to staff the objectives, expected outcome and benefits of the reform process. In terms of the investment component, the Borrower organized program management on two levels: (i) a Program Management Unit, responsible for strategic issues, including global scheduling, information management, financial and contractual matters, human resources planning and technical advice, was established in 1994; and (ii) a project management structure was defined to handle micro-scheduling and implement supervision of the different works (buildings, switching, transmission, outside plant), including quality and quantity control and the issuance of performance certificates. - 12 - Prior to negotiations, the Borrower had developed a detailed project implementation plan and the bidding documents for all major procurement had been prepared and issued. 7.5 Government implementation performance: The Government, and in particular the Project Management Unit, was mainly responsible for implementation of the sector restructuring component. Although there were some hitches and delays along the way, given the overall progress made on the sector reform during the period of 1994 to the present (Telecommunications Law adopted, Sector Policy Statement issued, regulatory agency established, policy division in MOPC created, and corporatization and subsequent privatization of the telecommunications operator), the Government's performance can be considered satisfactory. 7.6 Implementing Agency: The implementing agency's (JTC) performance was highly satisfactory. The Project Management Office provided quarterly progress reports on a regular basis with performance indicators generally exceeding expectations. Financial management of the project was carried out in a very professional manner. Audit reports were usually received on time and were unqualified, and the financial covenants, as specified in the Loan Agreement, were adhered to. Given the high level of overall funding for the NTP (US$250 million), JTC did an excellent job of managing the various grants and loans and ensuring that funds were used properly. The success of the bond issuance (ECO Guarantee), further demonstrated JTC's maturity in financial management practices. Procurement management, however, was a problem during the initial phase of project implementation. Multiple layers of review in the national public procurement system (JTC, national tender board, Ministry of Planning, etc.), sometimes delayed the bid evaluation process by 4-6 months, throwing off the time schedule for planned delivery and installation of goods. Due to procedural delays it was frequently necessary to update the technical specifications of the various tenders to take into account new technologies and to request variation orders to signed contracts. Although JTC noted that they felt the Bank's procurement procedures were time consuming and did not allow for flexibility, they did manage to use ICB procedures effectively to reduce equipment prices resulting in significant project cost savings. Despite these initial difficulties, JTC's management of the physical component of the project was highly successful, and generally exceeded expectations. 7. 7 Overall Borrower performance: Overall Borrower performance and participation in both preparation and implementation is highly satisfactory. 8. Lessons Learned The main lessons to be drawn from this project implementation experience are the following: Sector Regulation. The support of regulatory reforms does not end with the creation of the independent sector regulator. Although the telecommunications regulator was successfully established and staffed under the project, more attention could have been given to building the capacity of the regulator through more specialized training and study tours, and in emphasizing the importance of complete separation of the regulator from the ministry, including the allocation of a separate and independent budget for the TRC. Project Financing. The efficient implementation of different financial instruments, in particular the bond issue, not only ensured the investment program financing, but more importantly, stimulated the - 13 - enhancement of financial management skills and positive evolution of JTC corporate culture. The project provides the first "best practice" example for the use of a WB guarantee in the telecommunications sector. Privatization. Any privatization transaction should be preceded by a well designed public relations campaign and involvement of all current and potential stakeholders in the sector. A consistent sector policy and strong display of Government commitment is crucial in attracting private investors. Cofinancing Arrangements. Cofinancing arrangements should be secured as early as possible in project preparation. When the Bank is charged with administration of a cofmancier's loan (as was the case for the JBIC loan in this project) there is a necessity for a common supervision approach and eventual joint missions to ensure faster reaction to a Borrower's requests for extension, reallocation, etc. Technical Assistance. The early provision of quality technical advice to the GOJ for sector restructuring and to JTC for implementation of the physical component, as well as the Borrower's capacity for absorbing and using the TA, greatly contributed to the overall success and sustainability of the project. 9. Partner Comments (a) Borrower/implementing agency: See Annex 8. (b) Cofinanciers: Comments were requested from JBIC but none were received. (c) Other partners (NGOs/private sector): Not applicable. 10. Additional Information Not applicable. - 14 - Annex 1. Key Performance Indicators/Log Frame Matrix Outcome I Impact Indicators: lncatorMatrbl ProJected In hst PSR Actual/Latest Estimate 1. Production Targets: a) Customer Growth: Number of Lines a) 12199 - 560,000 a) 12/99 - 565,000 12/94 - 280,000 12/99 - 542,000 b) Increase in exchange capacity b) 6/99 - 567,000 b) 497,083 (total actual increase 1994-1999) 271,000 (total estimated increase by end of project) c) Number of new subscibers connected c) 6/99 - 350,000 c) 12/99 - 312,655 230,000 (by end of project) 2. Implementation Targets a) Staff allocated to Project Management a) 12/98 (actual) - 45 a) 12/99 - 415 12194 - 47 12/99- 16 b) Staff allocated to Project Supervision b) 12/98 (actual) - 105 b) 12/99 - 1095 12/94- 10 12199 - 29 * Staff reduction, as originally planned, did not take place. Existing trained staff were retained for the proposed second phase of the NTP which had been scheduled to start in Jan. 2000. Following the privatization, JTC is carrying out an overall restructuring and staff will be reallocated accordingly. Output Indicators: Indicator/Matrix Projected In last PSR ActualLatest Estimate 3. Quality of Service Targets a) No. of faults per line / per year a) 12/99 - 0.6 a) 12/99 - 0.4 12/94 - 0.8 12/99 - 0.4 b) Percentage of successful calls b) 12/99 - 40 b) 12/99 - 43.7 12/94 - 40 12/99 - 65 c) Percentage of faults cleared the next c) 12/99 - 80 c) 12199 - 76 working day 12/94 - 50 12/99 - 90 End of project - 15 - Annex 2. Project Costs and Financing Project Cost by Component (in US$ million equivalent) A00pas00 Actuallte iPercentage 6f Estimate Estimate Appraisal Project Cost By Component US$ milion USt million Switching 50.02 41.14 82 Transmission 32.60 29.90 92 Line Plant (materials & works) 73.70 69.63 94 Cables 30.03 31.56 105 Poles 6.53 4.24 65 Customer Services Improvement Plan* 6.78 0.00 0 Buildings 12.76 19.60 153 Consultants 10.20 4.49 44 Total Baseline Cost 222.62 282.84 Total Project Costs 222.62 282.84 Total Financing Required 222.62 282.84 * This component was dropped from the project Project Costs by Procurement Arrangements (Appraisal Estimate) (US$ million equivalent) Procuremlent Method Expenditure Category ICB NCB 2t N.B.F. .M Total Cost 1. Works 0.00 0.00 0.00 79.71 79.71 (0.00) (0.00) (0.00) (0.00) (0.00) 2. Goods 20.49 0.00 0.00 111.62 132.11 (19.40) (0.00) (0.00) (0.00) (19.40) 3. Services 0.00 0.00 0.60 10.20 10.80 (0.00) (0.00) (0.60) (0.00) (0.60) Total 20.49 0.00 0.60 201.53 222.62 (19.40) (0.00) (0.60) (0.00) (20.00) - 16 - Project Costs by Procuremnt Arrangements (Actual/Latest Estimate) (US$ million equivalent) . _ ~~~~~~~Procurement Method Expenditure Category lCB NCB 2he N.B.F. Total Cost _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _N C _ O ther' 1. Works 0.00 0.00 0.00 89.24 89.24 (0.00) (0.00) (0.00) (0.00) (0.00) 2. Goods 35.80 0.00 0.00 71.04 106.84 (15.30) (0.00) (0.00) (0.00) (15.30) 3. Services 0.00 0.00 0.00 4.49 4.49 (0.00) (0.00) (0.00) (0.00) (0.00) Total 35.80 0.00 0.00 164.77 200.57 (15.30) (0.00) (0.00) (0.00) (15.30) 'X Figures in parenthesis are the anounts to be financed by the Bank Loan. All costs include contingencies. v Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staff of the project management office, training, technical assistance services, and incremental operating costs related to (i) managing the project, and (ii) re-lending project funds to local government units. Project Financing by Component (in US$ million equivlent) ... _ _ __ t .. _ . ~~~~~~~~~~~~~Percentage of Appraisal Appraisal Estimate Actual/Latest Estimate Swi.ching Bank Govt CeF. Bank Govt CoF. Bank Govt CoF. Switching 50.01 41.14 0.0 0.0 82.3 Transmission 32.60 29.90 0.0 91.7 0.0 Line Plant (materials & 36.41 37.32 13.83 55.80 0.0 38.0 149.5 works) Cables 14.30 3.30 12,40 14.30 4.93 12.33 100.0 149.4 99.4 Poles 2.93 3.60 0.57 3.67 0.0 19.5 101.9 Customer Services 5.70 1.09 0.0 0.0 0.0 Improvement Plan Buildings 12.76 19.60 0.0 153.6 0.0 Consultants 2.00 8.20 2.42 2.07 0.0 121.0 25.2 - 17 - Annex 3: Economic Costs and Benefits Tables with the calculations for the ERR and FRR (as noted in section 4.4) can be found in the project file. Financial Indicators amounts are in Jordanian Dollars I~~~~~~~ ~ loq! 4 -96 44. _4 1 Prooerty Plant and EeuIment 1 313,164.863 139.363.809 156,442,053 276,975,536 300,920.930 Investments 8,572,327 7,924,685 3,181,227 2,649,944 13,263,944 Prolects In Progress' 41,750,662 67,254,813 83,706,346 - - Deferred Charr es 958.351 1, 787,319 1,450,391 1,113,463 776,536 Current Assets Cash on hand and at banks _ 42,041,777 42,286,478 25,778,320 36.150,496 35,977,706 A/R, and prepayments 37,073.518 33,553,096 32,313,124 42,408,025 48,411.790 Amounts due from other telecom. admin. 33,868,732 30,154,589 21,981,609 19,494,183 14,364,836 Current Account Gov. of Jord n - 14, 111,905 19,248,006 - Materials and supplies, net 11,117,149 18,556,054 17,243,745 12,284,920 11,454,940 TOTAL CURRENT ASSETS 124 101 176 124.550.217 111.428.703 129.586.630 110.209.272 TOTAL ASSETS _3088647.379 340.880,843 356.208.720 410.324.673 426.170.682 Current Liabilities Current portion of term loan - - 605,169 2,308,621 A/P and other credit balances 11,795,772 25,189,138 27720668 36,417,342 38,507,108 Amounts due to other telecom. admin. 5,844,519 2,441,293 2855397 6,415,876 7,706.949 TOTAL CURRENT LIABILITIES 17.640.291 27,6190431 30. 76,065 43.438.387 48.522.678 NET CURRENT ASSETS 106,460,S85 96.939,786 B0,862,63B 86_147.243 61.686.594 TOTAL ASSETS LESS CURRENT LIABILITIES 290.907,088 313.270.412 325.632.655 366,886.186 376.648.004 Non Current LiabilItles | Term Loans 727242 15,038,631 27,515,359 47.482,551 45,765.262 Bonds | 35,450,000 35,500,000 35,500,000 35,500,000 35,500,000 TOTAL NON CURRENT LIABIL.ITIES 36.177,242 50.538.631 63.016.359 S2.982,551 81,265.262 Shareholder's EQultV Capital _250 154 242 223,955,787 250,000,000 25 0,00 0,000 250,000,000 Statutory (Legal) Reserve - - 11,117,210 20,389,969 30,646,528 Voluntary Reserve - - 12,132,963 13,341,856 Land and buildinps revaluation surplus _ . 34,848,032 . - - Investments revaluation surplus 4,575,604 3,927,962 1,500,086 1,380,730 1,392,358 TOTAL SHAREHOLDER'S-EQUITY 254.729.846 262,731.781 262,617.296 283,903.662 295.382.742 l _ TOTAL SHAREHOLDER'S EQUITY 290.907.088 313,270.412 325.632.655 366,886,213 376.64B.004 & NON CURRENT LIABILITIES . TOTAL REVENUES 155.992,402 172,646.298 169.252.743 186,654,255 193.004.768 TOTAL EXPENSES 45.316,076 50.333.366 64.267.686 76,243.948 75,346,287 GROSS MARGIN _ 110,676,326 122.312.932 104.986.057 110,410,307 117,659.481 OTHER INCOME 4,96S.614 6.769.435 S.303.296 4.064.194 7.376.725 FINANCIAL IDEBT) CHARGES 5.127.791 2.558.776 2.116.253 3.081.481 3.160.137 TOTAL INCOME _ 110,517,049 126,523,591 111.172.100 111.393.020 121,586.069 Other Expenses Exclusivity Fees 19,665,425 19,300,477 University additional fees 11,11 1,721 927,275 1,025,656 Scientific research and vocational reserve 1,111,721 927,275 1,025,856 Income Tax T 29,745,408 26,269.754 27,442,021 Amortization of capitalized foreign currency difference! 29.347,9894 - - - TOTAL OTHER EXPENSES l l 29,347,994 _ 31.968.850 46,789,729 48.794.210 NET INCOME BEFORE DISCONTINUED OPERATION 81.169,055 126.623.591 79.203,250 64.603.291 73,091.859 & EXTRAORDINARY LOSS Revenue from disposfl Of mobile phone service, net 2,234,065- - Extraordinary loss net l 52785013- NET INCOME i 93.403.120 73.738.578 79.203.250 64.603.291 73.0 91.S.6 9 * Projects in Progress was accounted for as part of Property Plant and Equipment in the audited financial statements for 1998 and 1999. Note: GOJ instituted a 10% Exclusivity Fee as of January 1, 1998. - 18 - Annex 4. Bank Inputs (a) Missions: Stage of Project Cycle No. of Persons and Specialty Performance Rating (e.g. 2 Economists, I FMS, etc.) Implementation Development Month/ear Count Specialty Progress Objective Identification/Preparation June 1993 4 1 fin. analyst, 2 telecom engineer, 1 financial officer* October 1993 4 1 fin. analyst, 2 telecom engineer, 1 financial officer* Appraisal/Negotiation January 1994 7 2 fin. analyst, 3 telecom engineer, 1 financial officer*, I Informatics Specialist May 1994 2 1 fin. analyst, 1 financial officer* October 1994 1 fin. analyst, I financial officer* Supervision April 1995 2 1 fin. analyst, 1 telecom S HS engineer July 1995 2 1 fin. analyst, 1 telecom engineer S HS Dec. 1995 2 1 fin. analyst, 1 telecom engineer S HS July 1996 2 1 fin. analyst, 1 telecom engineer S S March 1997 2 1 fin. analyst, 1 information mgt. HS S Sept. 1997 1 1 fin. analyst S S May 1998 2 1 fin. analyst, 1 telecom engineer S HS Dec. 1998 2 1 fin analyst, 1 telecom engineer S S June 1999 1 1 telecom engineer S S ICR Dec. 1999 2 1 telecom engineer, 1 S HS projects assist. * A Financial Officer from the Project Finance and Guarantees Department participated in preparation missions specifically to deal with JTC's Bond issue. (b) Staff: Stage of Project Cycle Actual/Latest Estimate No. Staff weeks US$ (,000) Identification/Preparation 86 239 Appraisal/Negotiation 41 131 Supervision 173 596 ICR Total 300 966 The SAP system combines the data for ICR with Supervision - 19 - Annex 5. Ratings for Achievement of Objectives/Outputs of Components (H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable) Rating F Macro policies O H *SUOM O N O NA 0 Sector Policies O H *SUOM O N O NA Z Physical * H OSUOM O N O NA 0 Financial O H *SUOM O N O NA X Institutional Development 0 H O SU O M 0 N 0 NA Environmental O H OSUOM O N * NA Social Z Poverty Reduction O H OSUOM O N * NA F Gender OH OSUOM ON *NA D Other (Please specify) O H OSUOM O N O NA X Private sector development 0 H O SU O M 0 N 0 NA F Public sector management 0 H * SU O M 0 N 0 NA 2l Other (Please specify) O H OSUOM O N O NA - 20 - Annex 6. Ratings of Bank and Borrower Performance (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory) 6.1 Bankperformance Rating F Lending OHS OS OU OHU C3 Supervision OHS OS OU OHU 0 Overall OHS OS OU OHU 6.2 Borrower performance Rating I Preparation OHS OS O U O HU F Government implementation performance O HS O S 0 U 0 HU F Implementation agency performance OHS O S 0 U 0 HU Z Overall OHS OS O U O HU - 21 - Annex 7. List of Supporting Documents * All Back-to-Office Reports and Aide Memoires * PSRs * JTC's Quarterly Progress Implementation Reports * Staff Appraisal Report (SAR) * Memorandum and Recommendation of the President (MOP) * JTC Planning Department Report on Telecommunications Indicators (1998) * JTC Evaluation Report (December 1999) * JTC Audited Financial Statements 1995 - 1999 - 22 - Annex 8. Partner Comments JORDAN TELECOM NATIONAL TELECOMMUNICATION PROGRAM (NTP) FINAL REPORT December 1999 Summary JORDAN TELECOM - NATIONAL TELECOMMUNICATION PROGRAM During the period 1995 to 1999 Jordan has undertaken substantial new developments within the Telecommunications sector. The introduction of the new Telecommunications Law has: (i) promoted competition and private provision of services, (ii) facilitated establishment of the Telecommunications Regulatory Commission to ensure fair play, (iii) transformed the Telecommunications Corporation into a commercial company - Jordan Telecom, and (iv) ensured commencement of the strategic partnership and privatization process within JTC. The National Telecommunication Program has been implemented simultaneously and in harmony with these changes The objective of the Program is to enhance service quality, expand network capacity and increase coverage. These objectives have been achieved through a substantial increase in infrastructure volume; in terms of switching and local line plant capacity the figure for 1994 was 320,000, in comparison the 1999 figure is 840,000. The number of users and connections has almost doubled from 287,000 installed lines in 1993, to 565,000 lines in December 1999. Financing of the NTP was secured at an early stage through loans, grants and intemal JTC budgetary commitments. The total investment in the NTP to date amounts to 200 million USD and covers the construction of buildings, the procurement and installation of switching equipment, associated power and transmission systems and outside plant civil works and LLP material. Jordan Telecom has internally financed a quarter of the total investment from operating revenue. Service coverage has been extended to within the reach of 98% of the population of Jordan; in rural areas the manual service has been replaced by remote digital line units and as a result of exchange modernization new value-added services have been introduced. The dedication of the Program Management Office and its staff has ensured adherence to contractual agreements and financial commitments, the NTP implementation phase has been efficiently supervised. The selection of a single supplier/contractor resulted in a simplification of coordination activities and scheduling of works. The direct involvement of several local partners in a joint venture with the main LLP contractor gave varied results. Management of both Employer and Contractor work forces must be strong and clear to ensure quality in performance and compliance with agreed standards. The "on-going works" are carried out internally by JTC for network expansion in specific target areas. Four major sub-projects with a total capacity of 139,000 lines have been implemented at a total cost of 54 million USD Further expansion through variation and continuation of work by existing suppliers is awaiting the outcome of the strategic partnership issue; expectations are that this will be concluded positively in the very near future. The purpose of the detailed report that follows is to accurately record the latest statistics and financial figures, compare objectives with achievements and present an overall picture of implementation progress in a format acceptable to finance institutions, donors and directly concerned entities. -23 - Background 0.1 Introduction Preparation for the National Telecommunication Program (NTP) commenced in early 1994. A decision was taken by the Govemment of Jordan to expand the existing network in light of the increased demand. A World Bank appraisal mission identified the main elements of the proposed project and subsequently a WB loan, and an Expanded Co-financing Operation (ECO), was approved. WB Report No. 12788-JO Other financial institutions were approached and suitable loans and grants were negotiated to cover in all 50% of the total program cost (Heading 4) The target period for project implementation was from 1995 to 1998. The planning and the tender documentation were prepared by TCC and released for international bidding in 1994. The NTP was divided into four disciplines, Transmission, Switching, Local Line Plant, and Buildings, with specific terms of reference for materials and services for each one. The switching contract included power systems, fire control and air treatment equipment. Supply contracts for cable and wooden poles were issued separately. Evaluation, negotiation and award of contracts were undertaken intemally, within the then TCC, in accordance with acknowledged international procurement procedures. In mid-1995 a Program Management Office was appointed to oversee all undertakings relating to the physical implementation of the NTP, the PMO mandate extends until the final resolution of all technical and financial matters. I NTP Objectives 1.1 Enhance Service Quality Achieved through: * The introduction of new value-added services, i.e. CLIP & ISDN. * Decentralization and increase in the number of Customer Service reception points through the addition of administrative office facilities to 26 new main exchange buildings. * Emphasis on adherence to agreed technical specifications and work methods in the field during implementation. 1.2 Expand Network Capacity From WB report, page 15, para. 66, The physical component will: * Increase infrastructure capacity from 320,000 to 600,000 NTP contribution + 384,000 On-going works + 139,000 Infrastructure capacity increased from 320,000 to 840,000 * By 1999 the number of subscribers expected to be between 520,000 - 540, 000 JTC achievement: 565,000 subscribers (December 1999) * NTP as-built quantities Direct exchange lines: 384,022 (annex 8.3) Main cable pairs: 536,235 (1999-12-31) Distribution pairs: 868,475 (1999-12-31) 1.3 Increase Geographical Coverage The main areas covered by the NTP are Greater Amman, Central Region and North Region, in addition on-going works aim to further increase coverage across the Kingdom. - 24 - Greater Amman: Serving 13 new primary areas and 23 new villages Central Region (Balqa, Madaba and Zarqa Governorates Serving 7 new primary areas and 146 new villages North Region (Ajloan, Irbid and Jarash Governorates) Serving 5 new primary areas and 187 new villages (Maps are attached for reference in the Appendix.) 2 Performance Indicators 2.1 WB Appraisal Report 1994, table 4.5 1994 1995 1996 1997 1998 1999 Production Targets 1) Increase in Exchange Capacity 13,000 40,000 80,000 74,000 64,000 2) Nr. of new subscribers connected 10,000 20,000 40,000 50,000 50,000 60,000 Quality of Service Targets 3) Nr. Of Faults per Line per Year 0.8 0.7 0.7 0.6 0.5 0.4 4) % of Faults cleared the next 50 50 60 70 80 90 working day 5) Percentage of Successful Calls 40 45 50 55 60 65 Implementation Targets 6) Staff allocated to Project 47 50 51 21 16 16 Management 7) Staff allocated to Project 10 37 50 54 35 29 Supervision 2.2 JTC/NTP Achievements 1994 1995 1996 1997 1998 1999 Production Figures 1) Increase in Exchange Capacity*) 2,236 17,930 73,364 175,166 187,017 41,370 2) Nr. of new subscnbers connected 21,819 11,732 28,004 59,127 104,262 87,711 Quality of Service Figures 3) Nr. Of Faults per Line per Year 0.75 0.58 0.41 4) % of Faults cleared the next working day 52 67 76 5) Percentage of Successful Calls 50.2 49.5 48.2 48.2 49.2 43.7% Implementation Figures 6) Staff allocated to Project Management 20 33 48 50 41 7) Staff allocated to Project Supervision 131 138 107 109 ) *) The increase in exchange capacity is the combined result of the NTP and on-going works. **) PMO and O&M staff continue to be engaged in cut-over & FAC activities - 25 - 3 Financing 3.1 Program Financial Plan (1995) External Source Amount Purpose Current status (31 Dec. 99) '000 USD World Bank 20,000 Copper and fibre optic cable and cable Effective June 1995 accessories. 15.7 m US$ utilised ECO 48,500 Switching equipment. 12,7 million US$ of the Bond proceeds are available with the Central Bank of Jordan EIB 1 25,340 LLP Accessories, LLP Installation works, Effective March 1996, fully utilised Submanne Cables, Technical Assistance EIB 2 31,660 LLP Accessories, LLP Installation Works. Effective March 1996, fully utilised JBIC (Japan) 16,000 Copper cables (Contract 1). Poles Effective March 1996, fully utilised Sida (Sweden) 2,200 TA, Phase 1 Finalised 1996-12-31 (1,459) TA, Phase 2 Finalised 1998-12-31 (636) TA, Phase 3 Reallocation of funds from Phase 2 ODA UK 7,852 Sector restructuring Finalised Islamic bank 8,840 Switching, Transmission and LLP for Effective October 1996 Aqaba Govemorate. 1,2 million US$ utilised Subtotal 160,392 Internal TCC/JTC 20,000 - Buildings 30,000 - Transmission 25,000 - L1P (Amendment il) 6,000 - Materials 1,000 - Technical Assistance 55,000 - On-going works. Subtotal 137,000 Grand 289,540 total Note 1: 5.7 mUSD of the WB loan was initially allocated for a MIS. The WB has agreed to a reallocation for procurement of fibre optical cables and LLP installation accessories. Note 2: The following loans are in denominations other than US$: EIB 1 20 million ECU EIB 2 25 million ECU JBIC Yen equivalent to 16 MUSD. Note 3: The amount allocated by Sida is a bilateral grant for services provided by Telia Swedtel AB Note 4: ODA (Overseas Development Authority), UK grant to Jordan for services provided by Price Waterhouse - 26 - 4 NTP & on-going works costs NTP Shedule of Costs per Discipline Conversion rates: 1 DM = 0.465JD & 1 USD = 0.71JD & I USD = 7.57SEK As Contracted + VO's Total As Built Total NTP% Switching JD DM '000$ JD DM '000$ (Annex 8.2) 979,438 65,183,893 44,070 952,715 60,767,377 41,140 20.5% Transmissil JD DM JD DM (Annex 8.4) 4,800,000 33,000,000 28,373 7,575,603 29,356,324 29,896 14.9% LLP JD USD JD USD (Annex 8.5) 47,235,599 13,818,798 80,348 40,343,944 12,810,725 69,633 34.7% Cables JD USD JD USD (Annex 8.7) 247,457 30,274,919 30,623 192,258 31,289,774 31,561 15.7% Poles JD USD JD USD (Annex 8.7) 406,926 3,671,452 4,245 406,926 3,670,634 4,244 2.1% Consultants JD JD RSS (JT) 892,646 1,257 878,213 1,237 Telia Swedte JD SEK JD SEK (BITS + Sida) 16,656,429 2,200 15,723,962 2,077 (JT) | 316,992 5,908,740 1,227 305,971 5,654,670 1,178 Total Consultants 4,492 2.2% Buildings JD J Main Exchange 13,919,114 19,604 9.8% & RLU I| I_ _ _ ___ ._ _ _ _ __ _ NTP SUBTOTAL 200,570 JT on-going works (NICSI, NISC2, Mafraq, Tia' Al All) Switching 18,563,000 26,145 Local Line Plant 10,425,000 14,683 Transmission 4,759,000 6,703 Cables & Poles 2,000,000 2,817 Buildings I 2,760,000 3,887 Subtotal on-going works 38,507,000 54,235 TOTAL L 254,805 5 Physical Results 5.1 Buildings The building project for the National Development Programme started in 1995, one year in advance of system implementation. All NTP related buildings were completed by March 1999. In total 128 new buildings have been constructed, 26 of these are main-exchange buildings for combined technical and administrative use with a floor area of approximately 1100 m2, and in addition four existing primary centre buildings were enlarged. The remaining 98 buildings have approximately 108 m2 of floor space and are mainly used to accommodate the remote exchanges, power and transmission equipment. One main exchange and 17 RLU buildings will be used in future network expansion. -27 - Building type No. Average cost per Equivalent in USD unit in JD Primary exchange 26 312,000 440,000 Extensions (one floor) 4 72,000 101,000 RLU exchange 98 56,000 79,000 Units per region Greater Amman = 19 Central Region = 39 North Region = 48 South Region = 22 The total cost of the building construction project was 13,919,114 JD, equivalent to 19.6 million USD, this includes building permits and the connection of utilities, but excludes land acquisition costs. 5.2 Switching The contract for the supply and installation of digital switching equipment for 22 primary centres and 81 remote switches was awarded to Siemens AG of Germany. The initial contracted switching capacity was for 300,304 Direct Exchange Lines (DEL'S). During implementation a further 76,968 DEL's, 3 main exchanges and 1 RLU, were added through 4 variation orders. An additional 4 variation orders included ISDN facilities and other hardware items. The Aqaba project has added a further 6,750 lines bringing the NTP total to 384,022. Stand-by diesel generators were installed at 95 sites together with power plant (rectifiers and batteries) at 119 sites. Fire fighting/fire alarm and air treatment systems were installed at 94 and 100 sites respectively. Power equipment for some transmission sites is included in these figures as well as sites where existing power plant has been upgraded under the NTP. The installation work was completed in accordance with the implementation time schedule and a final settlement for the switching contract has been agreed upon. The total as-built value for the completed switching works is equivalent to 41 million US$. A breakdown of costs and quantities is included under Annex 8.2 & 8.3. 5.3 Transmission The contract for the supply and installation of transmission equipment was awarded to Siemens AG of Germany. The contract includes the following: 1. PDH equipment for 128 sites. 2. SDH equipment for 49 sites. 3. Microwave equipment and towers for 26 sites. 4. 1400 km fibre optic cables, plus duct and direct buried copper cables. 5. Two network management centres. 6. Civil works for duct and excavation for direct buried cables. The scheduled completion period was 750 calendar days, subsequently a further 151 days were allowed for specific works and delays and a final settlement has been concluded between the Employer and the Contractor. The agreed as-built cost of the transmission project is equivalent to 30 million US$. A breakdown of equipment costs and services is included under Annex 8.4. 5.4 Local Line Plant The contract for local line plant civil works and accessories was awarded to Siemens and Partners - Jordan, the initial implementation period was 36 months. - 28 - The bidding document was released to bidders in early 1995 with a bill of quantity (BQ) based on estimates from only 20% of the network design sites completed at that time. The final design BQ was received from JTC Planning Department on March 31, 1998, and by then the estimated quantities were far in excess of the contracted quantities. JTC was therefore obliged to initiate two variation orders to overcome the quantity increase as a consequence of the increase in the contracted switching capacity and the extended coverage to remote areas. A 12-month time extension was agreed upon with the Contractor for the completion of the work. During the implementation of the LLP project a further increase in the as-built quantities of between 10% and 20% has caused JTC to transfer some 30 RLU sites to a 'Buffer Zone", as a temporary measure. These sites will be implemented during the next phase of network expansion. The project was divided into work-packages (WP) per exchange area and each WP subdivided into a number of jobs. Performance Certificates were issued upon completion of jobs and Preliminary Acceptance Certificates awarded per WP upon successful completion of acceptance tests. At the time of preparation of this draft report (November 1999) 130 work packages have been completed together with 1938 jobs; 39 work packages and 220 jobs remain in progress. As of November 30th 1999 the as-built cost of the LLP works is equivalent to 68 million US$ A breakdown of site costs and overall material usage is included under Annex 8.5. 5.5 JTC on-going works The urgent relief projects were implemented by TCC/JTC to accommodate the demand in the rural areas by increasing the exchange capacity, modernizing the existing service from manual to automatic and by adding a new National & International Switching Centre (NISC). Mafraq Govemorate (several projects) Works started in 1994, the main components are: Buildings The construction of one primary center and 24 RLU's . Transmission Delivery and implementation of transmission fiber optical cable routes between the primary center and the 24 RLU's Switching Delivery and installation of one primary switching center and 24 RLU's, total capacity of 20,000 lines. Local Line Plant The material for the LLP was supplied by TCC/JTC and implemented by local contractors. NISC Due to high national and intemational traffic TCC/JTC contracted Siemens for the delivery and installation of a second gate way and also to replace the existing one. NISC One has a capacity of 379 PCM systems and NISC Two 356 PCM systems. Upgrade existing E1OB switches The upgrade of the existing switches at Ashrafiyyeh, Zarqa and Irbid, plus a new exchange at Sweileh (in total 71,000 lines) was implemented by CIT Alcatel through the French Protocol. Tia al Ali Project The TIa Al Ali project consists of: Buildings The Construction of a Main Center for NISC, local switch and customer -29 - service in addition to 3 RLU'S Transmission Delivery and installation of the required transmission routes. Switching Delivery and installation a primary center and three RLU'S of a total capacity 34,000 lines. LLP Delivery of installation material, cables, poles and accessories and implementation of the civil work. Ma'an Governorate Project The Ma'an project consists of: Buildings The addition of one floor to the existing building and the construction of 3 new RLU buildings. Transmission Delivery and installation of the transmission equipment for the primary centre and the three RLU's. Switching Delivery and installation of one primary centre and three RLU's with a total capacity of 13,440 lines. LLP All the installation material was supplied by TCC/JTC, a local contractor implemented the civil work. 6 Conclusions and Recommendations 6.1 Program Management Office An important corner stone of the Program was the establishment of a dedicated Program Management Office (PMO) in mid-1995. The PMO mandate was clearly defined and authority given to co-ordinate all NTP related activities. Responsibility was delegated to the levels where decisions were taken, both in the office and in the field. An early commitment to quality in both management and operations, through the introduction and adherence to agreed processes and formats, has given positive results. Together with competent and motivated staff the PMO has ensured relatively problem-free procurement and implementation phases in relation to the size of the investment and the complexity of the Program. In particular the attachment to the PMO of a Finance Department for Development has contributed positively to the transparent and effective handling of all Program related financial matters. There has been some turnover in recently trained and experienced NTP staff with their departure to other telecommunications entities in the Gulf States. While this may be beneficial to the individual and in the medium-term interest of Jordan, for JTC and the NTP it is a negative factor. Due to the current downsizing of NTP staff numbers this does not appear to be of immediate concem, however in the long-term JTC should ensure that its investment in human resources benefits both staff and employer. 6.2 Privatization and Strategic Partnership The approaching (for the past 12 months) merger of JTC in a 60/40 partnership with an alternative telecommunications operator has caused some disturbance to the decision process within JTC upon which the NTP is dependent. For the NTP the clock is still ticking; material has to be purchased, further network expansion has to be taken into account, staff need to be gainfully employed, contractors, if they are delayed, expect to be compensated, etc. It is in the interest of both JTC and any new partner that the NTP continues uninterrupted to its logical and scheduled conclusion. - 30 - 6.3 Procurement Process - JTC The bid evaluation process was time consuming; on average it took 4 - 6 months. Some methods for pre-qualification of bidders should be considered together with realistic time frames for evaluation deliberations. Terms of reference and evaluation criteria need to be made clear to all. JTC technical specifications require modernizing to take into account new technologies, services and developments in the telecommunications sector. The commercial conditions and procurement policy should reflect the new company's independence from previous purchasing constraints. 6.4 Procurement Process - Financiers The rules and procedures applied by financial institutions, such as the World Bank, are considered complicated by the end user. Restraints in the utilization of allocated funds can cause the borrower (telecom operator) delay in purchasing additional or altemative goods under current loan agreements. Some flexibility should be allowed to ensure that the telco could make adjustments within an agreed framework, to take into account changes in requirements due to market or technological developments. Thus the financiers time-consuming procedures for verification and approval of changes could be streamlined. 6.5 LLP Network Design The initial LLP design could have been more accurate; inconsistencies were mainly due to an increase in the initial exchange quantities from 220000 to 377000 lines. This in turn increased substantially the total volume of survey work and its geographic disbursement. Other factors that negatively affected the results were time constraints, a lack of design tools and methods, insufficient control and supervision of staff and the scarcity of accurate municipality maps. More in-house training is needed for new staff before deploying them in the field. The experienced LLP designers must be given higher status. Modern tools, such as computers and quantity/design programs, must be made available. 6.6 Variations Variations to all technical disciplines have occurred partly because insufficient time was allocated for overall planning before inviting tenders and negotiating contracts, and because the initial design was made before all priorities and changes could be taken into account. Delays in the decision process and extemal influences have also contributed. Variations and changes in priority are likely to cause disturbance and disruption to a contractors sequential work schedule, and may cause delays. Where variations are considered unavoidable, or even advantageous, they must be clearly documented, priced and acknowledged by all parties. 6.7 Purchasing and Delivery In the continuous development and expansion of a telecom network, fundamental items such as cables and poles are constantly required. While appreciating some financial benefits of 'just-in-time" procurement, the "a-little-too-late" supply of basic items can cause unnecessary delay in field implementation. In light of the knowledge gained of suppliers performance and the quality of goods supplied to the NTP, Jordan Telecom should be able to select a number of proven suppliers of standard items and negotiate regular delivery arrangements at competitive prices. Less complicated procurement procedures should reduce the need for frequent international tenders, the production of which can be both time-consuming and costly. -31- 6.8 Further Network Expansion Repeated 5-year major network expansion programs tend to produce 'staircase" development, e.g. intense activity over relatively short periods followed by "wait-and-see" periods. Continuous linear network development, based on market forecasts, would result in smooth growth without over-straining JTC's financial and human resources. Utilization of the knowledge and experience of the PMO staff and its organization in major network development should be continued, possibly through closer integration with the line organization of JTC i.e. the Planning and Development Division. The current NTP network expansion will probably be fully utilized within the first two years of the new millennium. To meet the competition from a second fixed service operator JTC must plan for continued network expansion to accommodate for market driven developments in the form of IP-based technology and services. 7 Annexes 7.1 Extract from World Bank Appraisal Report, May 1994 From WB Appraisal ReporiPage 16 Table 4.1 Estimated Invetment Program and Project Costs IJD = 1.43USD JD '000' USD '000' _ Item Local Foreign Total Local Foreign Total _. On-going Works 14,400 43,350 57,750 20,572 63.421 84,013 _1. Project Switching 1,800 28,811 30,611 2,574 41,200 43,774 Transm ission 2,900 16,986 19,886 4,147 24,290 28,437 Line Plant 39,129 30,490 69,619 55,954 43,601 99,555 Buildings 7,826 0 7,826 11,191 0 11,191 Base Cost 51,655 76,287 127,942 73,866 109,091 182.957 Physical Contingencies 5,166 3,814 8,980 7,387 5,455 12,842 Price Contingencies 5,928 5,690 11,618 8,477 8,137 16,614 Subtotal 11,094 9504 20,598| 15,864 13,592 2 9,456 Technical Assistance (Grants) - engineering 0 2,937 2,937 0 4,200 4,200 - sector restructuring 0 4,196 4,196 0 6,000 6,000 Subtotal 7,133 7,133 10,200 10,200 Tota I Project Cost 62,749 92,924 155,673 89,730 132,883 222,613 LITota I Investm e n t P l a n 77,149 136,274 21 3,423 110,302 196,304 306,626 - 32 - 7.2 Switching Costs Conversion rates: 1 DM = 0.465 JD & I USD = 0.71 JD Contrac Description Quantity Contract Sums Total in As-built Cost Total in (DEL's) JD DM USD JD DM USD 71/95 Network expansi 300,304 915,890 49,837,312 33,929,916 915,890 46,981,884 32,059,811 Contingency sum 1,470 959,641 630,568 VO1 Abdali expansior 40,000 24,263 5,536,605 3,660,260 0 4,985,921 3,265,427 V02 Queen Alia Int'l 2,368 2,255 808,123 532,440 2,255 804,851 530,297 __ _ _ A irport__ _ _ _ __ _ _ _ _ _ _ _ _ _ V03 ISDN 0 1,816,356 1,189,585 0 1,816,356 1,189,585 V04 Wadi Essier 33,000 4,150 3,816,871 2,505,627 4,150 3,816,871 2,505,627 V05 Terminal blocks 0 250,960 164,361 0 250,960 164,361 V06 Over-voltage 0 73,100 47,875 0 73,100 47,875 protectors _ _ ___ V07 Swaimeh RLU 1,600 0 221,796 145,261 0 221,796 145,261 V08 Equip. interface 0 29,353 19,224 0 29,353 19,224 for QAIA _ 12/97 Aqaba 6,750 31,410 1,833,775 1,245,233 30,420 1,786,285 1,212,736 Totals 384,022 979,438 65,183,893 44,070,349 952,7151 60,767,377 41,140,205 7.3 NTP Exchange quantities Parent Exchange RDLU Training Area Number Lines Number Lines Number Lines Amman 13 221,464 8 6,256 1 32 Madaba 1 3,552 4 4,016 Irbid 3 19,776 38 34,848 Jarash 1 2,640 8 4,048 Ajloan 1 2,512 6 5,616 Salt 1 3,568 10 9,920 Zarqa 5 53,120 7 5,904 Aqaba 1 6,000 2 750 Subtotals 26 312,632 84 71,358 1 32 Total Switching 384,022 Lines Note: The Ain El-Basha site in the Salt Area is awaiting switching equipment. - 33 - 7.4 Transmission Costs Contr Description Contract Sums Total in As-built Cost Total in .___________ JD DM USD JD DM USD 126/9 Transmission 4,800,000 33,000,000 28,373,239 0 0 0 System Fibre Optic Equipment 0 7,839,274 5,134,172 Services 134,266 30,103 208,822 Transportation 35,446 0 49,924 Transmission Equipment 0 17,377,126 11,380,794 Services 1 452,495 2,086,620 2,003,906 Civil Work Materials 139,680 716,932 666,272 Services 3,520,914 718,945 5,429,892 Transport 4,311 0 6,072 Additional Training 393,109 257,459 Variation Order 1 778,264 3,417 1,098,384 Variation Order 2 4,931 66,839 50,720 Variation Order 3 309 20,624 13,942 Variation Order 5 0 103,335 67,677 TR/LLP Common routes 2,504,987 0 3,528,151 _~~~~~~~ I Totals 1 4,800,000 33,000,000 28,373,239 7,575,603 29,356,324 29,896,188 7.5 LLP Costs NTP LOCAL LINE PLANT PROJECT Conversion rates: 1USD 5 0.71JD Contrac Description Contract Sums Total in As-built Cost Total in JD USD USD JD USD USD 115/95 LLP Works & Installations 19,653,161 7,012,615 34,693,123 19,653,161 7,012,615 34,693,123 Anmmendment No. 1 11,578,343 4,446,928 20,754,453 11,578,343 4,446,928 20,754,453 Arrmendmnent No. 2 16,004,095 2,359,255 24,900,234 9,112,440 1,351,182 14,185,605 ._Reallocation for hardware -923,761 1,459,998 0 0 Totals 46,311,838 15,278,796 80,347,811 40,343,944 12,810,725 69,633,181 Note: The as-built costs reflect financial payments up to the 31st of December 1999 - 34 - 7.6 Cable & Wooden Pole Costs Conversion rates: 1USD = 0.71JD Contr CABLES Contract Sums Total in As-built Cost Total in JD USD USD JD USD USD 38/95 LG International 182,168 11,286,173 11,542,748 V.0. LG International 36,177 3,901,736 3,952,690 LG International . , 163,187 15,976,493 16,206,334 77/9 Turk Siemens 13,785 3,882,935 3,902,350 13,765 3,890,688 3,910,075 78/9 METE/JR Interna 15,327 3,031,999 3,053,586 15,306 3,250,526 3,272,084 5/98 Taihan Electric 2,749,984 2,749,984 2,749,984 2,749,984 81/9 Taihan Electric 491,756 491,756 491,756 491,756 73/9 LG International 3,663,043 3,663,043 V.O. LG International 1,267,293 1,267,293 _LG International 4,930,327 4,930,327 Totals 247,457 30,274,919 30,623,450 192,258 31,289,774 31,560,560 Contr POLES Contract Sums Total in As-built Cost Total in ____________ ~ JD USD USD JD USD USD 23/9E Stella Jones 326,650 2,937,500 3,397,570 326,650 2,937,500 3,397,570 V. O. Stella Jones 80,276 733,952 847,017 80,276 733,134 846,199 Totals 406,926 3,671,452 4,244,587 406,926 3,670,634 4,243,769 7.7 Contract Milestones 7.7.1 Contract 71/95, Switching Tender issued 1994-03-08 TCC 4/94 Agreement signed 1995-10-12 Contractor: Siemens AG Effective date of contract 1995-12-01 L/C opened & advance payment paid Completion period 24 months 97-12-01 Arrival of first equipment delivery 1996-06-17 First PAC issued 1997-04-22 Nazal 5301 Last PAC issued 1999-09-25 Wadi Essier V04 Variations 1 - 8 Completed 7.7.2 Contract 126195, Transmission Tender issued 1994-03-08 TCC 5/94 Agreement signed 1995-12-17 Contractor: Siemens AG - 35 - Advance payment paid 1996-01-23 Effective date of contract 1996-05-13 L/C opened Completion period 750 days + 151 days for agreed extensions Arrival of first equipment delivery 1996-06-17 First PAC issued 1998-01-05 Last PAC issued 1999-06-07 Variation 1 - 3 Completed 99-07-31 Variation 4/5 Pending 7.7.3 Contract 115/95, LLP Civil Works and Installation Tender issued 94-10-18 TCC 48/94 Agreement signed 95-10-31 Contractor: Siemens & Partners Advance payment paid 96-01-23 Effective date of contract 96-01-15 L/C opened & advance payment paid Completion period By 99-12-31 Arrival of first equipment delivery 96-05-14 Bill of lading date First PAC issued 97-12-08 Nazal Last PAC issued Pending Variation 1 97-07-27 Variation 2 98-09-16 7.7.4 Material Contracts Cables Contract 38/95 95-06-28 LG International Variation 1 to 38/95 97-12-18 - Contract 77/95 95-09-19 Turk Siemens Contract 78/95 95-09-24 METE/JR International Contract 5/98 98-05-10 Taihan Electric - 36 - Contract 81/98 98-09-14 Taihan Electric Contract 73/98 98-11-10 LG International Variation 1 to 73/98 99-03-06 a Wooden Poles Contract 23/96 96-05-29 Stella Jones Variation I to 23/96 98-03-03 - 7.7.5 Contract 12/97, Aqaba Switch Agreement signed 97-03-01 Contractor: Siemens AG Effective date of contract 97-08-02 UC opened & advance payment paid Completion period 240 days Arrival of first equipment delivery First PAC issued 97-12-15 Last PAC issued 98-09-09 - 37 -