world bank document · following standard procedures, oed sent copies of the draft report to the...

Doument Of

The World BankFOR omCL USE ONLY

Report No. 6666

PROJECT COMPLETION REPORT

OMAN

FIRST TELECOMMUNICATIONS PROJECT

(LOAN 1884-OM)

February 27, 1987

Industry Department

This document has a restricted distribution and may be used by recipients only in the performanceof their ofcial duties Its contents may not otherwise be disclosed without World Bank authorization.

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0R3 OFFICIAL USI ONLYTH WORLD SANK

Wa*nton.D.C. 20433U.S.A.

0fc of OIK,.to,nhf

February 27, 1987

MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT

Subject: Project Completion Report oi Oman - FirstTelecomuinkicatlons ProJect (Loan 1884-O?

Attached, for information, Is a copy of a reportentitled "Project Completion Report on Oman - First Telecommuni-cations Project (Loan 1884-OM)" prepared by the Industry Department.Further evaluation of this project by the Operations EvaluationDepartment has not been made.

Attachment

This documell hlS a tislo dbWbvbtim mly b W by ndWt* In* pWmaIof ther dllcia dutka It eotouts may no obev be dclsZ tid Wod Iba au _db.

LIST OF ABREVIATIONS AND ACRONYMS USED

DEL - Direct Exchange LineCaW - Cable and WirelessC'lo - General Telecommunlcations OrganizationMPTT Ministry of Posts, Telegrapbs and TelephonesOMANTEL - Oman Telecommunications CompanyPABX - Private Branch Automatic ExchangePCO - Public Call OfficeTELEX - Teleprinter Exchange

COUNTRY EXCHANGE RATES

Name of Currency: (R0) Omani RialUS..Dollar 1 -

Appraisal year average (1979-80) 0.345 R0

Intervening year average (1980-85) 0.345 RO

Completion year average (1985) 0.345 R0

OMANFIRST TELECOMMUNICATIOS PROJECT

LOAN 1884-OMPROJECT COMPLETION REPORT

Table of Contents

Page No.

PREFACEMM*ooeo*ooooooooooooooooooooooooooooooooooo i

BASIC DATA SHEETS,......,*.......*.....0.0....0....0.... ii

HIGHLIGHTSooooooooooooooooooooooeoooo¢¢ossve@ovvv* v

I. INTRODUCTIONo....,o... ..... **..........*.......e.. 1

II. PROJECT PREPARATION AND APPRAISAL..............,... 1Preparation, Appraisal and Negotiations............ 1Project Objectiveso...............o.e. oo .o.o.ooo 2Project Description o.oo.o.oo..ooooooc oooo.oo.o..o 2C-ovenants ... oooooooooo oooooooooooo 3

III PROJECT IMPLEMENTATION............... 0*0.0......**00 .00..... 4Loan Effectiveness and Start-up...................o 4Project Revision.oo .....0..*. *0 .0.0*..*00 ... e*. 4Implementation Schedule............................ 4Reporting ....o... e.oooooooo*o*oe***s* 5Procuremente......... .ooooeeo ....................o 5Project Costso.o..........,...........00 ....o...... 6Disbursementoos oo.o.o...... oee ooeo eooo 7Loan Allocation.o,.o,ooo.,.....,o........,. e oo.oeo 7Performance of Consultants, Contractors andSuppliers .ooooo..oooo. oooooo oo ooo 8

IV. OPERATING PI..RFORMANCE..........O...... .. 0..0 9

V. FINANCIAL PERFORMANCE..oE..o.ooooo..a.-oo..ee.eee. 10Financial Position.. 0.0 ...0*00*00*....0...0... O00 12

VI. INSTITUTIONAL PERFORMANCEo.........*.......*...*... 13

Organization and Managemento..*...........*........ 13Staff, Recruitment and Training.................... 14Accountingoo..o.o.o..oo.ooooo oo ....o.o.... oo*ooo 15Audit.04000000000000000*0066000000000*0*66060000* 15Tariffs o.o... ooooooooooooooo*eo 15

Pae No.

VII. PROJECT JUSTIFICATIONoeooo. eeeoooeeoooo.e, oeeoeeee 15Project Spin-off .... ,. *........... §** § ¢.O.O0. . 15Least Cost Solution .. o..,,, *..o.o..,...OOOe.o* .,.ooo 15Rate of Return..o..,...,,...oo.o,ooo o.. .o,,o*,oo*., 16

VIII. BANK PERFORMANCEo.o...oo.. ooo.ooooe oooooooo.oe.o.o 16Supervision. .O .......... .. .O*O0 0 0. . ... ... ^ ** 16Working Relationshipo........o..o..................O.* 17

IX. CONCLUSIONS.,ooooooooooo.oooooooo.o,e.,eee..0.,o..o 17

List of Annexeo

Annex 1: Compliance with Covenants9.,..o,,.,,,.,oe 18Annex 2: Project Revisions.oe...................ooooo 20Annex 3: Implementation Schedule...,.....0.0..,0. 25Annex 4: Procurement Schedule.oo.OO............OOOe 27Annex 5: Project Costs....................... 33Annex 6: Cumulative Disbursements9..a,...,o,.e.,, 34Annex 7: Allocation on Disbursements Categories.. 35Annex 8: Statistical Data..........,............ 36Annex 9: Income Statement..,,.,............,,.. .. 40Annex 10: Balance Sheet41,,......,........,,,..,. 4Annex 11: Funds Flow Statements..................O 42Annex 12: Summary of Principal Telecommunications

Tariffsoooooooo.ooo.oooo.oooo*ooooooo O43Annex 13: Performance Indicators*..ooo. o...... o.§ 45Annex 14: Return on Investments....,..,.,.,..... O 46

° I -

OMAN

FIRST TELECONKNCATIONS PROJECT

LOAN 1884-OH

PROJECT CONPLETION REPORT

PREFACE

1o This report covers the First Telecommunications Project In Omansupported by Loan 1884-ON. The loan for $22.0 million to GeneralTelecoumnications Organisation (GTO) of Oman wa approved on June 24,1980, becam effective on May 1, 1981 and was closed on December 31, 1985as originally planned.

2. This Project Completion Report (PCR) was prepared in the IndustryDepartment of the World Bank on the basis of information supplied by OTO.

3. In aecordanee with,the-revised prQcedureA gor project performanceaudit reporting, this Project Completion Report was read by the OperationsEvaluation Department (OED), but the project was not audited by OED staff.

4. Following standard procedures, OED sent copies of the draftreport to the Borrower and co-financiers. However, no comments werereceived.

FIRST TLECON CATXONS PROJCT

LOM 1884-ON

PROJECT COIMPLETION REPOT UASIC DATA SHEET

KEY PROJECT DATA

Actual orAppraisal Current

item Ms"ectation Estimate

Total project cost ($ million) 97.2 329.5 I/overrun (2) - 240 2 Loan amount ($million) 22.0 22.0Disbursed 22.0 22.0Canceled - -Date pbysical components completed 12/84 12/84Proportlon completion by expected

completion date (2) 100 100Proportion of time overrun (2) 0 0Economic rate of return (Z) 1817.2Financial performance SatisfactoryInstitutional performance Satisfactory

CUNULATIVE DISRURSEI4NTS

QIS8$ million)

FY80 -1' FY81 FY82 FY83 FY84 FY85Appraisal Estimate 0.1 1.3 7.5 18.9 21.5 22.0Actual 0.0 0.0 0.1 3.5 21.0 22.0Actual as 2 of Estimate 0.0 0.0 1.6 18.3 97.7 100.0

~/Appraisal estimate was based on $1 0.345 Rial Omani (30). The rateremained constant throughout project implementation, The -oman Rial wasdevalued In February 1986 to $1 w 0.38 10,

z/The proJect was substantially Increased in sixe, with the approval ofthe Bank. The actual cost overrun with reference to the revisedproject was only 242,

MCalendar year

- ill -

OMAN


LOAN 1884-OH

PROJECT COMPLETION REPORT BASIC DATA SHEET

OTHER PROJECT DATA

Actual orOriginal Current

Item Plan Revisions Estimate

First mention in files or timetable 02/22/77Government's applicationNegotiations 12/17/79 01/14/80 03/24/80

to03/25/80

Board approval 02/14/80 05/13/80 06/24/80Loan agreement date 10/22/80Loan effective date 01/22/81 03/31/81 05/31/81 05/01/81Closing date 12/31/85 12/31/85

Guarantor The Government of the Sultanate of OmanBorrower and executing agency General Telecommunications Organization

(GTO) of OmanFiscal year of borrower January 1, to December 31Follow-on Project Name Second Telecommunications ProjectLoan Number 2513-OMAmount (US$ million) 23.0Loan Agreement Date February 12, 1986

1/ Prenegotiations held in Oman between 02/17/80 and 02/24/80

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FIRST TLECONMUICATIONS PR)JECT

LOAN 1864-OK

PROJICT COMPLTIOII IPORT

BASIC DATA SHET

MISSION DATA

Month, No. of No. of Mon Date ofItems Y"r Weeks Persons Weeks Report

Identification 05/77 0.7 1 0.7 06/17/77Preparation I/Appraisal 06/79 3 2 6 04/22/80

Supervision I 11/80 0.6 2 1.2 12/04/80Supervision II 01/81 0.6 2 1.2 02/26/81Supervislon III 07/81 0.6 1 0.6 08/18/81Supervlsion IV 09/81 0.7 1 0.7 11/23/81Supervision V 12/81 1.7 1 1.7 01/19/82Supervision VI 06/82 06 1 0.6 07/06/82Supervision VII 08/82 1.0 1 1.0 09/07/82Supervision VIII 10/82 0.9 1 0.9 11/17/82Supervision IX 03/83 0.1 1 0.1 03/24/83 2/Supervision X 05/83 0.9 1 0.9 06/08/83Supervision XI 10/83 0.9 1 0.9 11/09/83Supervison XII 03/84 0.9 1 0.9 05/01/84Supervision XIII 07/84 3.0 2 6.0 08/13/84 3/

Total 23.4

/ Project preparation done by consultants through TA Loan 9855-0M.

/ One day visit by procurement adviser.

3 This was part of the appraisal mission for the SecondTelecomunications Project.

FIRST TURMLEONUICATIONS PROJCT

LOAN 1884 ON


RIORLIGRTS

1l The Government of Oman requested Bank assistance in financing Itstelecommunications sector development In February 1977. The Bank's Initialreview of the sector saw an urgent need for immediate assistance inpreparing a development program for the sector. Funds from an ongoingTechnical Assistance Loan 985-OM were used for employing consultants forthis purpose.

2. The Bank loan 1884-0K to General Telecommunications Organization(GTO) of Oman supported the First Telecommunications Project which formedpart of the Sultanate's Second five-year plan 1980-1985, which was a sliceof the 1979-1990 Master Plan. The project aimed to expand services to meetdemand and to provide good quality domestic and internationalcommiuncations, The project also provided institutional aeasures toestablish appropriate technical and financial management systeus.

3. The original estimated cost of the project ($97.2) was exceededby over 2001 due to a change in scope following the review of traffic anddemand. The additional cost was absorbed by GTO and loans from thegovernment, Arab Fund and Kuwait Fund. The actual cost overrun was only24Z above the revised project cost.

4. The project was completed in time, achieved all the physicaltargets and mest of the operational targets. Thirty thousand new telephonesubscribers were connected, an increase of 91X over the original appraisaltarget of 16,000. However, telex subscribers increased only by 1,000against an appraisal figure of 1,800 subscribers. This shortfall of 60Xhas been attributed to improper tariff structure and levels for thisservice (para 4.03).

5. During the project implementation the financial performance ofGTO was satisfactory with a rate of return higher than appraisalestimates. At the end of 1985, the financial rate of return was 281compared to an appraisal estimate of 11%. This performance, achievedwithout a change in tariffs, Wad ma4nly due to higher telephone revenue persubscriber connection than was estimated at appraisal (para. 5.03). Thefinancial position of GTO was also sound.

- vi. -

6. Performance on accounts receivable improved modestly In the firstfour years of the project, but took a turn for the worse in the last year.This remains as one of the main weaknesses of OTO (para. 5.05).

7. The Institutional performance targets set at appraisal have beenachieved. The sectoral objective of establishing a fully government ownedtelecommunications organisation was met. Appropriate management systemshave been Installed and a commercial accounting system Is in place. Therehas been considerable effort in training of Omanis for technical andmanagerial positions. The dependence on expatriate staff has decreased atthe top management level. All senior managers except the Finance Managerare Omanis. However, dependence on expatriates at the middle managementand technical levels has not improved.

8. One lesson to be learned from this project is that with judicioususe of consultants and execution of turnkey contracts, projectImplementation can be achieved in tiue even when the manpower capacity ofthe Borrower is insufficient. However, turnkey projects are on the average25-50% higher in costs than supply only contracts.

OMAN

GENERAL TELECOMMUNICATIONS ORGANIZATION

FIRST TELECOMMUNICATION PROJECT


Ia INTRODUCTION

101 The General Telecommunications Organization (GTO) was establishedon June 30, 1980 under Royal Decree 43/80. It was vested with theresponsibility of developing and operating all public telecommunicationsservices in Oman including international telephone and telegraph services.The Civil Aviation and Defence departments as well as the National OilCompany, Petroleum Development of Oman Ltd., operate their owntelecommunications facilities but also lease some circuits from GTO. TheMinistry of Posts, Telegraphs and Telephones (MPTT) regulates thetelecommunications services within the country, allocates radio frequenciesfor all services and licenses private radio installations. Until 1975,public telecomunications services in Oman were operated by the Britishcompany, Cable and Wireless (C&W). Between 1975 and 1980, the OmanTelecommunications Company SAO, owned by the government and C&W, operatedand maintained the national and international telecommunications services.

1.02 The GTO is organized as a government owned commercial enterpriseunder the overall direction of the Ministry of Posts, Telegraphs andTelephones. It has an adequate administrative and financial autonomye GTOis managed by the President who is the Chief Executive, and an ex-officiosember of the Board of Directors, He is responsible for carrying out thedirectives of the Board whose ex-officio Chairman is the Minister of Posts,Telegraphs and Telephones.

1.03 The Bank has been associated with the telecommunications sectorin Oman since 1977 through an extension of an ongoing Technical AssistanceProject, Loan 985-OM granted to the Government of Omane Consultants wereemployed at a cost of $75,000 for preparing the development program thatformed the basis for the first telecommunications loan 1884-ON, for $22million. The terms of the loan included an interest rate of 8,25%, 4.5years grace and repayment period of 5.5 years.

II, PROJECT PREPARATION ANY APPRAISAL

Preparation Appraisal and Negotiations

2.01 The Bank was approached by the Oman Government in February 1977to finance the development of the telecommunications sector. A Bankreconnaissance mission in Mew 1977 identified the need for technical

- 2 -

assistance to prepare a long-term (10-15 years) expansion program withinwhich a five-year medium term slice would be considered for Bankfinancing. On Bank's suggestion, the Government of Oman agreed to deployundisbursed funds available in an ongoing Technical Assistance Loan 985-OMgranted to Oman for the Ministries of Agriculture, Transport and EconomicPlanning* The Telecommunications component was Incorporated undercategory 1: Specialists' Services - Economic Planning and Management. TheBank assisted in preparing the terms of reference for the consultants whostarted work in October 1977. They finalized preparation of a 12 yeardevelopment program 1979-1990, in March 1979.

2.02 The appraisal mission visited Oman in June 1979, reviewed theoverall 1979-1990 telecommunications development program and recommended aloan of $15.0 million for the 1980-1985 slice to finance 252 of theprQjectts foreign exchange cost.

2.03 Prenegotiations were held in Muscat, Oman, during the period ofFebruary 17 to February 24, 1980 mainly to discuss Government's decision onfull ownership of OMANTEL and the new charter establishing the newcorporation. Negotiations were held in Washington on March 24 and 25,1980. The proposed loan amount was raised to $22.0 million, 36% of theproject's foreign cost of $61.0 million. (Total project cost was $97million). It was agreed that as a condition for Board presentation, thecharter establishing the new Corporation should have been published by theGovernment. The loan was approved on June 26, 1980, signed onOctober 22, 1980 and became effective on May 1, 1981 (pars 3.01).

Eroject Objectives

2,04 The project had the following objectives:

(a) to expand, extend and improve telecommunications services;

(b) to establish appropriate technical and financial managementsystem within the operating entity; and

(c) to develop local expertise for technical and managerialpositions.

Project Description

2.05 The project comprised of a time slice of GTO's 1979-1990development program and consisted of the following main Items:

(a) 15,700 new lines of subscribers local telephone switchingequipment and the replacement of 3,900 lines of obsolescentequipment;

(b) ducts and main subscribers' cables to provide for about16,000 new DEls and provide capacity for future growth;

(c) telephone terminal equipment for about 14,000 new subscriberservices and about 5,000 new PABX extensions;

- 3 -

(d) about 350 public call offices (P¢Oo) located in both urbanand rural areas;

(e) 69000 lines of switching capacity in private branchexchanges (PABX);

(f) international and national trunk switching and transmissionsystems;

(g) switching and miscellaneous equipment to iucrease theautomatic telex network to about 1,800 subscribers;

(h) construction of buildings, provision of; motor vehicles,training and test equipment, furniture and fittings; and

(i) consultants'services and technical assistance in management,training and engineering.

Covenants

2,06 Besides standard covenants the project agreement provided thatthe Borrower shall:

(a) employ not later than November 30, 1980 a technical expertand a financial expert or consultants to assist the Borrowerin the design, specifications and implementation ofappropriate management systems (para 3.11);

(b) maintain the overall level of its subscriber accountsreceivable at about three months' billings for fiscal years1981 through 1983 and at about two months' billings for thefiscal year 1984 and thereafter (para 5.05); and

(c) maintain an annual rate of return of not less than 10% inits fiscal year 1981 and thereafter (para. 5*04).

A full list of covenants and status of compliance is given in Annex 1. TheBor-ower complied with all the covenants except the level of subscriberaccounts receivable which were still more than three months' billings atproject completion (para 5.05).

2.07 Besides standard covenants the guarantee agreement provided thatthe Government shall:

(a) when there is cause to believe that funds available to theBorrower will be inadequate to meet the estimated projectexpenditures make arrangements to provide such funds; and

(b) cause all of its public agencies to settle promptly existingarrears and to pay bills for telecommunications servicesrendered by the Borrower within two months of the billingdates (para 2.06 (b)).

-4-

The Government complied with all the covenants except it could noteffectively cause all pusblic agencies to settle their bills within twomonths (para 5.05).

IIIo PROJECT IMPLEMENTATION

Loan Effectiveness and Start-up

3.01 The loan effectiveness date was originally set for January 22,1981, but this had to be extended to March 31, 1981 and then to May 31,1981, basically due to delays in receiving: (a) legal opinion; and (b)confirmation that the Board of Directors of GTO had approved the loan,There were no special conditions set for effectiveness of the loan.

3.02 The loan became effective on May 1, 19819 By then GTO hadalready employed the financial management consultant required in the loanagreement and was evaluating bids for consultancy services required forimplementing the project.

Project Revision

3.03 The project was substantially revised based on recommendations ofthe project implementation consultants. The scope of work was expanded dueto Increased demand following revision of population estimates and economicactivity particularly for the capital area. The revised project wasapproved by the Bank on January 22, 1982. The major changes included anincrease in:

(a) the number of exchange lines from 19,600 to 56,000 (185%);

(b) external line plant to meet the increase in exchange linesin (a) above;

(c) telephone terminal equipment from 14,000 to 54,000 (286Z);

(d) the number of PC0s from 350 to 370;

(e) telex terminals from 1,800 to 3,800; and

(f) consultancy services, construction of buildings, motorvehicles, test equipment, furniture and fittings tocorrespond with the increase in (a)-(e) above;

Details of the revised project are given in Annex 2.

Implementation Schedule

3.04 The original implementation schedule was fiscal years 1980-1985.The implementation schedule showing planned and actual dates is given inAnnex 3. The project was completed in time despite start-up delays causedby:

- 5 -

(a) OTOIs decision to defer calling for bids until they hadappointed consultants who would finalize the biddingdoceumnts as well as assist in the bid evaluation andsupervision of contracts;

(b) ongoing changes in OTO's organization structure and charter;

(c) absence of one of the key managers (manager for planning andprojects) who had left the country for 12 months training;and

(d) OTO's impending decision to chang from crossbar toelectronic telephone ewitching.

Other causes of delay were:

(c) incrse in the scope of work; and

(b) delays In construction of buildings and in the completion ofoutside plant due to changes in design to comply withgovernmat regulationse

eporting

3.05 GTO submitted quarterly progress reports regularly, financialstatements and audited accounts were also submitted within the periodallowed for in the loan agreement.

Procuremnt

3.06 Only two mjor problems were enountered during the procurementof equipment and material for the project. The first problem wae on thecriterion ued to.aard contracts. The bLd was issued in five packageswith bidders having the option to quote for an or all the packages. Thepackages were:

(1) switching plus junction network for the capital area;

(il) outside plant cables and conduits;

(iii) FDM microwave radio and multiplexing equipmnt;

(iv) telephone instrumnts;

(v) digital coaxial cable systems.

The bids were evaluated by consultants who reco_uded combination ofpackage I and V and for each of the resultant four packages they gave asbort lst of suppliers whom GTO could conduct discussions with to seekfurtber clarifications on technical and price issues, The lBak reviewedthe consult a s' evaluation report and indicated that if OTO decided toplace contracts with the lowest evaluated bid for each package, then the

-6-

procurement would conform with the Bank's procurement guidelineso Out ofthe short lists, two offers for each package were presented to the GTOBoard for approval. The Board decided that a complete package offer beobtained from four of the short listed bidders and award be made to thebidder with lowest evaluated complete package. The GTO proceeded withrestricted tendering from the four bidders without seeking Bankconcurrence. The quotations were evaluated again by the same consultantsand based on their recommendations the Board decided to award the totalpackage to the successful bidder. GTO issued a letter of intent to thesuccessful bidder without prior consultation with the Bank. GTO thensought Bank clearance for the contract with the sele^ted bidder. The Bankrejected GTO's contract on the grounds that the rebidding was inconsistentwith Bank's procurement guidelines mainly because it called for proposalsfrom only four suppliers excluding all others who had bid in response tothe original bid invitation. Instead the Bank proposed to GTO that itwould be prepared to finance a contract to the extent of the Bank loan forany of the original five packages if awarded to the lowest evaluatedbidder, selected with the Bank's concurrence, on the basis of the initialbids. Since the finally selected bidder for the total package was in factthe lowest evaluated bidder for package I, on the basis of the initialbids, GTO agreed to split the contract and the Bank agreed to finance theforeign portion of package 1 - switching and junction equipment for thecapital area, awarded to the lowest evaluated bidder in the original bids.

3.07 The second problem was regarding currency of the bid. Thecontract was signed in Deutsch marks (DM), currency of the bid, withpayments to be made in dollars at fixed rates agreed during contractnegotiations. The Bank rejected this arrangement with the reason that thebidder had to exercise the option between his own currency and the dollarat the time of submission of the bid and not Pt any later date. GTO arguedthat payment in dollars at the agreed rate would lead to mejor savings toGTO because the DM was appreciating relative to the dollar. Followingprotracted correspondence and visit by Bank's procurement advisor to Oman,the Bank agreed after being convinced that GTO would gain financially bysuch an agreement.

Project Costs

3.08 A detailed comparison of the appraisal estimates, the revisedestimates and the actual costs are shown in Annex 5 and summarized in Table3.1 below.

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ThbL 3.1: ESTI= AND ACAL PFElE 0018 (IN MILIO )

EorE Lld bTO Forein lalbtal So reiNU lEDa JT1

In RD 21.2 12.4 33.6 47.4 44.3 91.7 64.7 49.3 114.0

In $ 6102 3600 9702 136.9 12708 264.7 186.9 142.6 329.5

Variation fromapisl stimtes 124X 256X 173 20d 30( 24(

Variation fromredved estimstes 371 111 24%

The scope of the project was substantially increased leading to a costincrease of 1731. The actual costs were 24% above the finally revisedestimates, This cost overrun was due to underestimation in the revisedestimates. The additional costs were absorbed by GTO and loans from theGovernment, Arab Fund and Kuwait Fund.

Disbursements

3.09 The estimated and actual disbursements on cumulative basis forthe loan were as in Table 3.2 below.

Table 3.2: ESTIMATED AND ACTUAL DISBURSEMENTS (IN $ MILIJONS)

Fiscal Year ending Appraisal Actual Actual as ZDecember 31 Estimate Disbursements of Appraisal

1980 .100 - -

1981 1.300 - -

1982 7.500 0.119 1.61983 18.900 3.462 18.31984 21.500 21.003 97X71985 22e000 22e000 100.0

22X000 22.000

Loan Allocation

3.10 Following the revision in scope of work (para 3.03) and agreementthat the loan be utilized to finance categories 1 (switching equipment) and6 (consultants) only, (para 3.07), reallocation of the loan proceeds wasmade on June 13, 1984, The revised allocation is shown in Table 3.3 below.

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Table 33: ALLOCATION 0 DISBURSEMNT CATEGORIES (IN $ MILLIONS)

Original Revised ActualCategories Allocation Allocation Disbursement

(1) Local switching and 6.10 21.224 21e336junction equipment

(2) External plant 3.40 - -

(3) Subscribers plant 2.10 - -

(4) Long distance 8.20 - -terrestrial systems

(5) Testing equipment 0.60 - -and other equipmentfor training center

(6) Consultants services 0.50 0.734 0.664and technicalassistance

(7) Unallocated 1.10 0.042 -

Total 22.00 22.000 22.000

Performance of Consultants. Contractors and Suppliers

3011 In the loan agreement GTO was required to employ consultants toassist in the design, specifications and implementation of appropriatemanagement systems. Two consultants were mployed; a financial expert forthree years and a technical expert for two years.

3.12 GTO also decided to employ consultants for review andimplementation of the project including finalizing bld documents, bidevaluation, and supervision of contractse One consultant was engaged toImplement the works on the capital and -ral areas. Another was engaged toimplement works in the Salalah area.

3.13 The project was executed on turikey basis with suppliersinstalling and commissioning the equipment. Civil works for external cablenetwork and buildings was done using local consultants.

3.14 The performance of consultants, suppliers and contractors wassatisfactory.

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IV* OPERATING PERFORMANICE

4.01 Physically, all equipment in the project was installed as plannedand is operating satisfactorily; details of physlcal achievements are shownin Annex 2. The actual additional DELS connected during 1982-84 were lessthan appraisal estimates due to over estimation of plant that would beavailable during these years. Connection rate substantially exceededappraisal estimates after plant installation at the end of 1984, asindicated in the performance indicators in Table 4.1 below and detailed inAnnex 8.

Table 4.1: PERFORMANCE INDICATORS

For FY ending Dec. 31: 1980 1981 1982 1983 1984 1985 TOTAL

Additional TelephonesConnections (DELs)Istalled

Appraisal 2,008 2,008 2,695 4,296 3,275 3,100 18,880Actual 3,881 2,242 356 1,746 2,021 17,929 30,175

AdditLonal TelexLines Connected

Appraisal 200 300 200 300 300 300 1,600Actual 234 164 89 127 166 270 1,050

Number of aloyeesMer 1,000 Telephones

Appraisal 71 70 67 60 60 56 56Actual 80 78 70 71 70 70 46

4.02 The project aimed at satisfying expressed demand at the end ofthe project. The appraisal demand figures at the end of the project wererevised from 38,600 lines to 69,000 lines. At the end of 1985, thenumber of DELs had increased from 15,000 lines at the time of appraisal, to41,000. Enough exchange capacity (74,000) has been installed to meet allexpressed demand now. The exchange fill at the end of 1985 was low, 55%,but this is expected to rise to 80% by the end of 1987.

4.03 Telex demand was expected to grow at 25% during implementation ofthe project and at the end of the project the number of telex subscriberswas expected to be 1,800. A figure of 1,500 subscribers was achieved whichis about 17% below appraisal target. The demand for this service hasfallen below expectation due to improper tariffs (levels and structure)which have made prospective subscribers opt for cheaper facsimile service.The GTO is currently studying recommendations from consultants on revisedtariff levels and structure for this service.

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Quality of Service

4e04 The overall quality of service for domestic and internationalservice is good. Although the appraisal report did not set performanceindicators for the quality of service, the performance improvedsubstantially during the implementation of the project.

V. FINANCIAL PERFORMANCE

5.01 GTO's detailed financial statements during 1980-1985 are given inAnnexes 9 to IIo Performance indicators for operating results andfinancial position during the period are summarized in Table 5.1 below.

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Table 5 .1 P3RFORMMIAN INDICATORS

FOR ('ERATlIB RESULTS AND FInANCIAL POSITION

Year 1980 1981 l982 1983 1984 1985

Operating Revenue R0(000)Appraisal 9,631 12,512 i5,211 17,937 20,835 24,269Actual 10,612 13,089 169338 21,081 27,094 35,694

Operating Expentes Ro(000)Appraisal 7,821 9,184 10,865 13,038 15,335 17,723Actual 9,774 9,958 10,849 12,958 15,094 21,057

Net Operating Income RO(000)Appraisal 1,810 3,328 4,346 4,899 5,500 6,546Actual 838 3,131 5,849 8,123 12,000 14,637

Rate of return onaverage net fixedassets book value

Appraisal % 8 13 15 14 13 14Actual 2 4 13 23 33 49 28

Operating ratioAppraisl % 81 73 71 73 74 73Actual X 92 76 66 62 56 59

Ourrent ratio (tiias)AppFraisal 3 3 3 3 2 2Actual 2 3 3 3 1 1

Debt/(equity+debtratio)

Appraisal 2 7/93 11/89 119/83 20/81 19/81 16/84Actual 1 4/96 6/94 5/95 6/94 23/77 30/70

Debt service coverage(timrs)

Appraisal 65 75 42 21 17 6Actual - 105 164 147 24 5

Averag revenue/DELAppraisal 427 450 473 474 472 480Actual 485 502 557 673 783 774

Subscriber accountsreceivables (dys)

Appraisal 140 108 98 90 74 60Actual 168 150 146 101 105 124

5.02 GTO's financial performance was satisfactory. The actualoperating revenue figures were much higher than appraisal estimates due tothe large increase in the scope of the project and the subsequent increasein revenue generating assets. Despite an expanded scope of work, the rateof return on average net fixed assets has been well above the covenantedrate of 101 after 1981. This has been achieved without an increase oftariffs. Although actual operating expenses were higher than appraisal

- 12 -

estimates, mainly due to a much higher rate of expansion than estimated,the actual operating ratio has been lower than estimated at appraisal. In1985 the operating ratio was 59% against an appraisal estimate of 73Z.

5.03 The actual revenue per DEL was substantially higher thanestimated at appraisal mainly due to an increase in the economic activityof Oman due to oil, and expansion of the network which generated moretraffic for each DELe The appraisal report underestimated the impact ofoil on the economic activities in Omano During this period the GNP percapita rose from $4,930 in 1980 to $6,230 in 1985.

Financial Position

5.04 Other than accounts receivable, GTO's financial position has beensatisfactory. The estimated and actual balance sheets (FY1980-1985) are inAnnex 10. As of December 31, 1985, GTO's total net fixed assets amountedto RO 104 million, some 320% higher than at December 31, 1980. The totalnet fixed assets were higher than appraisal estimates (by 651) due to theincrease in the scope of project (para 3.03).

5.05 Performance on accounts receivable improved steadily during1980-1983, but took a turn for the worse during 1984-1985. The covenantedtarget of 60 days at the end of 1985 could not be realized. The accountsreceivable at the end of 1985 were 124 days and this remains GTO's weakestarea. More than half of the accounts receivable are due from thegovernment and its agencies. During appraisal for the secondtelecommunications project this issue was thoroughly discussed andassurances were obtained from the government that it will undertake tocause all of its agencies, no later than December 1987, to pay bills fortelecommunications services rendered within two months of the billingdates. GTO also intends to improve the accounts receivable by cutting itsbilling cycle from quarterly to monthly by more computerization of itsbilling process.

5.06 The current ratio remained within estimated value of three infour years of the project (1980-1983). In 1984 and 1985 the ratio fell toone (against an appraisal estimate of two), with liquid resources rundownto finance the expanded works program. This will need to be closelywatched under the second project. There was also a significant increase inthe debt/debt + equity ratio in the last two years of the project due to anincrease in long-term debt secured to finance the expanded program. Thedebt/debt + equity ratios in the two years were 23/77 and 30/70respectively against appraisal figures of 19/81 and 16/84 respectively.

5.07 Despite a more than twofold increase in borrowings, the debtservice coverage was only marginally lower than appraisal estimates mainlydue to substantial increase in internally generated funds. The actualfigure for the debt service coverage at the end of 1985 was five comparedto an appraisal figure of six. The statements of sources and applicationsof funds are given in Annex 11 and summarized below in Table 5.2. Theworking capital was much lower than appraisal estimates due to increasedinvestment program and overreliance on internally generated funds tofinance the expanded program.

- 13 -

Table 5.2: SUMMARY OF SOURCES AND APPLICATIONS OF FUNDS

1980 - 1985-- Appraisal- --- Actual--

RO(OOO) % RO(OOO) %

SOURCESInternal generation 46,827 78 64,874 67Borrowing 13,095 22 32,533 33

Total Sources 59,922 100 97,407 100

APPLICATIONSDebt Service 3,231 5 4,171 4Capital expenditure 53,817 90 99,624 102Increase in working capital 2,874 5 (6,388) _6)

Total applications 59,922 100 97,407 100

VI. INSTITUTIONAL PERFORMANCE

Organization and Management

6.O1 During appraisal in July 1979, public telecommunications serviceswere operated and maintained by Oman Telecommunications Company, SAO(ONANTEL SAO) formed in 1975. The Government, through MPTT, owned 60% ofOMANTEL SAO shares, the remaining 402 were owned by Cable & Wireless Ltd.,a British private company.

6.02 The Government took full ownership of OMANTEL SAO and establishedGeneral Telecommunications Organization (GTO) by Royal Decree ofMay 6, 1980, effective from July '.. 1980. GTO was created as a fullygovernment owned entity under the Ministry of Posts, Telegraphs andTelephones (MPTT), It is directed by a seven member Board of Directors,directors whose chairman is the Minister of NPTT. The President of GTO isan ex-officio member of the Board. GTO enjoys considerable autonomy. Ithae the authority, in coordination with the Ministry of Finance on fiscalmatters, to determine GTO's development policy, investment program, annual

- 14 -

budget, borrowings, organization and staffing. Tariffs are subject tocabinet approval. OTO's day-to-day affairs are administered by theexecutive president, assisted by three general managers and threemanagers. This structure has remained basically the eams during theimplementation of the project save for one change made in 1984 to bring itinto line with the rapidly expanding network; the functions of themanager, transmission and manager, telephones, were merged under thefunctions of the new manager of operations and maintenance.

6.03 The management and control of GTO has improved remarkably duringthe implementation of the project. The Bank recommended the employment oftwo consultants, one with technical, and the other with financtalbackground. These consultants were employed ant through these budgetingand control systeme have been established, management information has beenstructured, and as a result the Information provided to management is nowrelevant, systematic and regular.

6.04 While GTO's management is presently capable of efficientlyadministering the present organization, the decision making structure ishighly centralized and GTO together with the Bank are addressing this issuein the second project. Consultants have already been appointed to proposea suitable organization structure and their report is being reviewed byGTO. Nevertheless, GTO has a strong and stable management team which hascontributed to the continuity and effectiveness of the organization.

Staff Recruitment and Training

6.05 The number of staff grew at an average of 10% during the project(from 1,200 at the end of 1980 to 1,900 at the end of 1985) with the numberof staff per 1,000 DELa falling from 80 at the start of the project to 46by the end of December 1985, which was better than appraisal estimates of53. This was a commendable achievement.

6.06 Although one of the Government's objectives of telecomunicationsdevelopment was to implement a training program to achieve as rapidly aspossible total "Omanization' of the staff of GTO this has not been possiblemainly because:

(a) the requirement for qualified staff has grown due to rapidexpansion of the network; and sech staff are not availablelocally.

(b) the shortage of Omanis with the basic qualification fortraining limits the potential for upgrading lower c.adrestaff to technical status. Training with the objective of"Omanization" remains the single most important issue in theGTO. This issue is also being pursued wtder the secondproject.

6.07 Despite the above problems GTO has made commendeble effort totrain Omanis for technical and managerial positions. Intensive trainingwas conducted both within the Sultanate and overseas. Except for the

- 15 -

manager finance, all top level management positions are filled by Omanis,In the middle management and technical levels there is still a highproportion of expatriate (about 60-70 Z) staff.

Accounting

6.08 ' OTO changed over from cash accounting to commercial, accrualaccounting in January 1981, GTO has maintained records adequately toref j.p¢t the ,perations and financial condition as stipulated in the projectagreement. Remarkable improvements have been made in budget preparationprocesses and control procedurese Improvements in cash management andstores control have also been affected. GTO produces its annual accountsIn time; within three months after the end of the fiscal'year compared tofour months stipulatedin the loan agreement. The quality of the accountsis satisfactory. Computerization of accounts as part of an integratedfinancial system is currently under implementation under the second, telecommunications project.

Audit

6.09 GTO has been employing independent external auditors throughoutthe project as required by the project. Audited accounts are issued ontime. The accounts for 1984 and 1985 were issued within six months ascovenanted.

Tariffs

6.10 There were no changes in tariff levels and structure during theimplementation of the projecto However, a tariff study was agreed to underthe second project aimed mainly at addressing the structure.

VII. PROJECT JUSTIFICATION

7.01 The project achieved and in most cases exceeded the objectivesset at appraisal, The targets for expanding and improving service wereexceeded (para 3LIN). Annex 13 compares performance indicatorsanticipated at appraisal with actuals. Organizationally the OTO performedsatisfactorily. The GTO has established a sound financial and accountingsystem and laid the base for an appropriate management information system.

Project Spin-off

7002 There was no special spin-off from the project.

Least Cost Solution

7.03 GTO adopted the design of systems and components which provideleast cost solutions as determined during the project preparation and alsoduring project implementation. Specific actions include adoption ofdigital technology for the switching systems and application of modernpractices for the outside plant.

* 16 -

Rate of Return

7e04 The rate of return for the project (investment program 1980-1985)was 17% (Annex 14)o The rate estimated at appraisal was 181. The rate ofreturn, though a fair estiUate of measureable economic benefits does notcapture all project externalities and understates the overall economicbenefits of the project such as the consumer surplus. It also does notcapture the effect of network deterioration that would have resulted if theproject was not implemented. The rate of return Is ,therefore, actuallybetter than 17%.

nIIf. BANK PERFORMANCE

8.01 The overall Bank performance in this project has been good.Right at the onset the Bank identified basic problems in thetelecommunications entity including lack of plans, lack of engineering andcommercial accounting systems, overdependance on expatriate personnel andfinancial operating losses. The Bank embarked on solving some of theseproblems even before appraisal. Through an ongoing TA project to theGovernment, consultants were hired to prepare a long-term plan (10-15years) for OMANTEL (now GTO), which formed the basis of the appraisalreport. There was serious underestimation of demand in this plan which, onhindsight could have been reduced with closer coordination with Governmentplanners. The Bank assleted in preparing terms of reference, recruitmentof the consultants and quality control of their work. After appraisal theBank played a similar role in the emploryent of consultants to set upengineering and commercial accounting aystems and to implement theproject. GTO leaned heavily on the Bank in identifying suitableconsultants. The Bank also rendered nich needed technical and financialadvice required in the formative years of GTO and continues to do so.

8.02 The Bank dealt with the processing of bid documents promptly; biddocuments and bid evaluation reports were in fact reviewed in Oman to speedup the process. Some implementation delays were caused due to GTO'snonfamiliarity with the Bank's procurement guidelines (para 3.06), butthese delays were not significant. Nevertheless, the issue on currency ofpayment could have been resolved much faster than it was, (it took fourmonths, para 3.07).

Supervision

8.03 The Bank performed well in supervision. A total of 13supervision missions were conducted during the implementation of theproject. These missions were adequate. Through regular supervisionmissions, the Bank monitored project implementation very closely and tookappropriate actions when the need arose. GTO sent regular quarterlyreports which helped supervision.

- 17 -

Working Relationship

8.04 The working relationship between GTO and the Bank was good. Theprocurement issues strained relations slightly mainly because GTO was notfamiliar with the rationale behind the Bank's procurement guidelines.The present working relationship (on the Second Telecommunications Project)is excellent.

IXo CONCLUSIONS

9.01 There were no major problems encountered in this project.Project start-off was delayed mainly due to lack of sufficient staff withinGTO to prepare and implement the project. After employment of consultantsproject implementation proceeded smoothly except for minor procurementdelays caused by GTO's nonfamiliarity with the Bank's procurementguidelineso The project has been implemented within the time estimatedduring appraisal.

9.02 The objectives of the project were substantially fulfilled.Through the project the telecommunications facilities have increased from adensity of 1.0 DELs per 100 people at the end of 1978 to 2.7 DELs per 100people at the end of 1985 which was better than appraisal estimates. Thenewly formed entit- (GTO) has developed into a well managed institutionfollowing the installation of requisite management, technical and financialsystems through the project. The GTO has, as a result of the project,become one of the most viable public institudions in Oman.

9.03 The problem of overdependance on expatriate staff still remains.The proportion of expatriate staff at middle management and technicallevels still remains high. This problem, although being addressed in thesecond project, is going to exist for some years to come because GTO's rateof expansion of physical facilities far outstrips the rate at which localtrainable staff are being turned out from academic and traininginstitutions in Oman and outside Oman.

9.04 One lesson to be learned from this project is that with Judicioususe of consultants and execution of turnkey contracts, projectimplementation can be achieved economically within time. Although this mayappear costly in the short run, the long-term benefits far outweigh thedisadvantages. There is, therefore, a need to instill this fact to ourborrowers especially those with inadequate trained staff,

-18 - -X Page 1 of 2

OAN"


6GNERAL TELECOWNICATIONS ORGANIZATION


LoanAgreement Brief Description of Covenants Status

3.02 Appointment of a technical expert and Compliedfinancial expert not later thanNovember 30, 1981.

3.03 Insure or make adequate provision for Compliedthe insurance of the imported goods tobe financed out of the proceeds of theloan

3004(a) Furnish to the Bank promptly upon Compliedtheir preparation the plans,specifications, reports, contractdocumeats and work and procurementschedules for the project

(bi) Maintain records and procedures C,'mpliedadequate to record and monitor theprogress of project.

(bii) Enable the Banks accredited Compliedrepresentatives to visit thefacilities and construction sitesincluded in the project.

(biii) Submit within six months after the Compliedclosing date a project completionreport.

3.05 Acquire as and when needed all such Compliedland as shall be required for theconstruction of the facilitiesincluded in the project.

4.01(b) Maintain the overall level of its Not Compliedsubscriber accounts receivable atabout 3 months billing for fiscalyears 1981 through 1983 and at abouttwo months billing for the fiscal year1984 and thereafter.

A

- 19 - ~~~~ANNEX 1- 19 - Page 2 of 2

LoanAgreement Brief Description of Covenants Status

5.01 Maintain records adequate to reflect Compliedin accordance with consistentlymaintained appropriate accountingpractices its operations and financialcondition.

5.02(i) Furnish to the Bank its accounts and Compliedfinancial statements in unaudited formnot later than 6 months for the fiscalyears 1980 through 1982 and not laterthan four mDnths for the fiscal years1983 and thereafter, after the end ofeach such financial year.

5.02(i) Have such accounts and financial Compliedstatements audited, in accordance withappropriate auditing principles byindependent auditors acceptable to theBank.

5.02(iii) Furnish such audited accounts to the CompliedBank within the stipulated timeperiod.

5.02(iv) Furnish such other information Compliedconcerning the accounts and financialstatements and the audit thereof asthe Bank shall from time to timerequest.

5003 Any lien created on any assets as Compliedsecurity for any debt will ip0o factoequally and ratably secure the paymentof the principle of, and interest andother changes on, the loan, and on thecreation of any such lien expressprovision quill be made to the Bank.

5.04 Maintain an annual rate of return of Compliednot less than ten per cent (10%) inits fiscal year 1981 and thereafter.

- 20 - ANNMX 2

Page 1 of 5

OMAN




Proect Revsions

Details of Main Items in the Bank ProjectCompared with Revisions and Implementation

1. Local Switching

Number of Telhphone linesAppraised Revised Implemen-

Exchange , Project Project tation Remarks

Muscat 5,000 5,000 5,000 New digital exchange

Greater Muttrah 5,000 17,000 17,000 New digital exchange(Extension)

Unspecified 400 - -

Qurum 2,000 4,000 6,000 New digital exchange(Extension)

Wattayah 2,000 4,000 4,000 New digital exchange

Azaiba 2,000 2,000 2,000 New digital exchange(Replacement)

Madinat AlNahda 200 1,000 1,000 New digital exchange(Al Hajar) later expanded to

2,000 lines

Quryat 200 - - Included in the RuralPlan to be implemen-ted under Phase II

Masnah 200 - - Relocation of 4xlOOOline exchangesplanned under Phasellof the rural plan

2-ANN 2-P21a- 1 Of 5

Number of Telephone linesAppraised Revised Implemen-

Exchange Project Project tation Remarks

Salalah 2,000 12,000 10,000 3 new digitalexchanges in additionto 4,000 lineexchange in existence

Raysut 200 - - Served by one of thenew Salalah digitalexchanges

Unspecified 200 - -

Ghala - 3,000 3,000 New digital exchange

Muttrah - 4,000 4,000 New digital exchange(Replacement)

Rusail - 1,000 1,000 New digital(container) exchange

Al Khodh - 2,000 2,000 New digital(container) exchange

Maabela - 1,000 1,000 New digital(container) exchange

HHSQU University - 1-000 New digital exchangeincluded at a laterstage

Total 19,600 56,000 57,000

-22- ANNEX 2

Page 3 of 5

2. External Plant

Appraised Project To match with additional 16,000 lines

Revised Project To match with 56,000 lines(replacement of old network)

Implemented To match with 57,000 lines

3. Subscriber and Distribution Plant

Appraised Project Provisions for 13,800 subscriber,5,500 PABX extensions and 360 PCO8e

Revised Project Provisions for 54,000 subscriber,buried service wires, 60,000telephone instruments, 370 PCOS andPABX extension to met the demand.

Implemented Provision of 54,000 buried servicewire contracted, 26,746 completed by30th June 1985 and 33,865 by 31stDecember 1985. Procured 60,000telephone instruments and 20 cardoperated payphones (PCOs).Procurement of further 350 coinoperated payphones (PCOs) inprogress*

4. Transit Switching*

Appraised Project Additional capacities to carry extratraffic generated by increasedsubscribers lines,

Revised Project (a) Tandem/Primary exchange atGre Nuttrah to match with expansionof lines.

(b) Primaiy exchange at Salalahcombined witt the main localexchangee

-23 - ANNEX 2

Page 4 of 3

(c) Primary exchanges at Nizwa sadSohar combined with local exchangesfor rural expansion project.

(d) New International transitexchange.

Implemented (a) & (b) Completed with the capitaland Salalah area expansion.

(c) & (d) Implementation underprogress and exchanges expected to becommissioned by June and July 1986respectively*

5. Telex and Telegraph

Appraised Project Expanslon of telex network to providefor up to 1800 telex subscribers byend of 1984.Commencement of Gentex service in1981 or 1982.

Revised Project : Provision up to 3,000 telexterminations for subscribers,international trunks and specialservices. Introduction of Gentexservice.

Implementation Telex exchange expanded to 3,000terminations in early 1985 and Centexintroduced by end of 1982.

6. Long Distance (Terrestrial)

Appraised Project : Following microwave radio linksNizwa - SalalshNizwa - IbriGreater Muttrah - Azaiba

Revised Project: No change

Implemented : Nizwa - Salalah and Greater Muttrah-Azaiba links were commissioned intime for commissioning the Salalahnew exchanges. Nizwa - Ibri linkwas commissioned in August 1985.

24 - ANNEX 2

Page 5 of 5

7. Long dietance (Satellite)

Appraised Project : Standard Earth Station (Antenna) atAl-Rajar to work with Arabsato Your11 meter non-standard antennae threeat Musandam peninsula and the fourthat Maslrah Island.

Revised Project Expansion of Khaeab Earth Station atMusandan and instead of EarthStations at other locations InMusandam, access by microwave radiolinks. Antenna and connectedequipment at Al-Hajar Earth Stationfor access to ARABSAT.

Implemented : Rhasab Earth Station expanded.Implementation of Microwave radiolinks to other locations in MusandamPeninsula in progress. Antenna andconnected equipment at Al Hajar EarthStation for access to ARABSATcommissioned in October 1985.

Note: Implementation of the remaining items of the appraised project completedsatisfactorily with changes where necessary to suit the situations,

- 25 - ANNEX3Paoge 1 f 2

OMANFIRST TELECOMMUNICATIONS PROECT

GENERAL TELECOMMUNICATION8 ORGANIZATIONPROJECT COMPLETION REPORT

Impleeantatio Sbchedule

A. Sxchange Equipment and Main Cables

Comissioning dateExchange Appraisal

Report Actual Remarks

Muscat June 1982 01/11/84 Completed

Gr. Muttrah (Local) Ex. June 1982 20/10/84 Completed

Qurum (Extension) December 1982 09/01/85 Completed

Wattayah December 1983 22/09/84 Completed

Azaibah December 1982 15/01/85 Completed

Medinat Al Nabda December 1982 24/04/85 Completed, but not put(Al lajar) Into service due to

local network not beingready.

Quryat December 1983 Included In RuralDevelopment Project.

Masnah December 1982 Relocation of Redundantexchanges planned.

Salalah (Extension) December 1983 13/11/84 Completed

Raysut December 1982 Served by one of theexchanges in Salalah

Gr, Muttrah 2 T/P 29/09/84 Completed

Ghala (Muttrah 19/12/84 CompletedReplacement)

Rusail 06/11/84 Completed

Al Khodh 02/04/85 Completed

Maabela June 1985 Completed

NEQ University July 1985 Completed

-26- ANNX 3Page 2 of 2

S. satellite Barth Station

-S---"-- oNk dateExchange Appraasal

Report Actual Remarks

Arabsat 3/8 December 1983 October 1985 New Project(Al Rajar)

Satellite K/S December 1983 December 1985 Expansion(Ihasab)

Satellite 3/8 December 1983 April 1986 New Project(Masirah)

C. Nicrowave Radio 8ystem

Co1i0ssionig dateExchange Appraisal

ReoBrt Actual Remarks

Nicrowave Radio December 1983 November 1984 CompletedSystemNizwa-Salalah

Microwave Radio December 1983 August 1985 CompletedSystemNizva-Ibri

Microwave Radio December 1982 November 1984 CompletedSystem

cuttrah-Azaiba

MN

SRAL S N MMUCATaG : MANUATHRPmEgr are~~ wnEUr

Proanmt Sdle

DA OF SaIRJ1E MSR DUE CF ILOT1 aIftACT DM 1r DMSE (F nVAML a (rrU) INND KI N UMCISRFII(1 TENIE ARMAN cmuI(IETQ 04PIEflCf IV'000

I IR2 Sigalling eqtip.t for ND teder sI the 27/07/81 15/11/82 15/11/2 23ABM e iteus are

Proprietary for A

2 9c satellite equipmea for 23/06/81 to 01/11/81 31108/82 31/0/82 306stard 'A' Earth statiml 12/07/81Al-Waar

3 Providirg sola par for 6 29/07/81 tD 16/01/8 31/07/82 31/07/82 133 1mxmtaln top rqeater in 17/08/81plac of 13

4 41000 cotainer The tendr in 1980- 17/04/82 15/11/82 2 uxzaIm delayed 966emhwgm detals rAxt by 6 uaths

available

Cpit arl- telq*cne 21/02/82 t 22/12/82 22I10&86 Eapt 3 e BiadestexpaIim - inclx 21/03/82 tmt camled an 31,431swtddng, outside plait, 22/10/84. There _ vaietfomjiuntin network, law deay in aitl& 3,786 tctAdistane be plat & log 35,217Msmct-Salalah ad Thri dlstam

~~AU S:complete by July O198.

O'

Dl! CP samNmuJZ meSR DIE (P FWaVM aMl!ACr OE orM OF AaUAL a[Wi) INMD MUMF IES(RIT( T AWMI 09M ON (1KPaNhR NYOOO'

6 ofAific4, A & ARK lb Tuier ad tim 2/01/84 25/11/84 2511/82 )exdmng to suit inw jucticn iteas are 23/0/84 31/12/84 3111V84 )34network waft - 3 contracts propdetary framinM 23/08/84 31/12/84 31/12/84 )

7 Salalah Telec e inml Estemim to wpital 21/04/84 20/02/86 20/02/86 7,472(includes switdng, outside area 0i n 1p;It shp portimplant, and su1B. Nb Teder a astsde plaitpIA)

8 Autazutic call Dl1tribui 15/06/84 to 06/10/84 08/11/84 08/11/84 118sytem 30/06/84

9 One terised lrectory, Bnitry My 1985 12/10/85 11/06/86 Wer prcgrens 366system

10 Sbl3ibr Service e for 21/11/83 to 03/04/84 30/11/8i4 O(bor I985 4,1D4capital ace 04/12/83

11 Supply of 2D0000 teplw 21/01/84 to 30Q07/84 3D111/84 30/11/84 18631/01/84

12 Supply of 20,000 telq*dm 21/01/84 to 30/07/84 30D/11/84 30/1/84 19331/01/84

30/07/84 30/11/84 30/1/84 19213 Supply of 20,000 Welephx 21/01/84 to

31/01/84

14 Auttmtic Telehxie EThmn Through quat1sti 30/08/82 30/07/83 30/07/83 463

15 Pardme of TltIsim DivU26/06/82 21/09/82 21/01/83 21/0/86 30IMbtlpLexc (UK) & V2:!1 XrpynM O>0

MIE or saCuNII AK=SR DArE (F FLaUMT aFtR DUE (F M1E (F ACf Oita= DSR~~~~~~ lEscEna AE W (iNPIDEII0 (141[EhI K)'0 mND nENUT T3R. AD apor a CaO=Ow YoOD

16 Supply of 650 nos of Rman 26/09/81 to 13/05/82 30/01/84 30/01/84 759Teleprliters & 350 ncs of 29/10/81bLlixoml teleprirters

17 Prebase of Facatidle 01/09/83 29/01/84 08/05/84 08/05/1W 48Equlpmxt for G*e= servl

18 Azedai eNiza coxial cable Thrcug quwatiml 29/06/W4 29/06/84 29/06/84 1,422upydr being prmetr

item

19 Dslsi & supervIsion of 14/01/82 to 22J05/82 2Z/05/83 6 noDths exteislon 300D205 forTedmical bildIdi 30/01/82 gtiv var'atiom

D .TICC, 2 e2xhanges. 2 repeaters 07/12V 82 30/04/84 30/04/84 30/06/84 3,511449820/12/82

21 5 e_ iage bulding 07/12/82 to 30/04/83 30/08/84 30/10/84 2,59F3I720/12/82 vaiaati,oW

22 I O C Salalsh + 2 esrX02/10/83 to 31/01184 11/A9/84 11/09/84 3,250+N8910/10/83 vardat*i

23 ExrbaWg Buldirg Mbinrah January 1984 29/04/84 25/10/84 25/10/84 215

24 Arabeat bAlding, Al-Bajar Janry 1984 09/04/84 07/08/84 07/10/84 174

25 D1s1# & coxwultancy evices July 1982 13/12/82 B/12/83 Dac0 1985 233for GMO/MPI' oxIplax Al

Ch

DRE aF SaEIE -SR DAWe C FUTn a3 Ac nrRaM F DUE (F aAML a2M INND BRIE MCIMN TEN. AR amz=02IEE BDaOqO

26 GJX)MIT Aeai Complex 01/11/82 to 10/03/83 30/11/84 30/11/85 3,671ff6108/11/82 varati=

2 O£fioe Firniture for 08/05/85 to 09/07/87 Nov. L985 Feb. 1986 371GaD/rr 22/05/85

28 Offi<e Furnitue for GT) 06/04/85 to 07/10/85 Dec. 1985 IDc. 1985 42Salalah 13/04/85

29 Ezpertise services J ion. 82 June 86 Jume 86 4Q5

30 Thlecam Qiwultary 04/11/80 to 21/06/81 21/06/83 20/06/86 1,000 + 80015/12/8D

31 Civil yxilt=W for Salalah July 1982 O/11/82 02/11/84 02/11/K 98

32 Suhsciber Service I 14/183 to 03/04/84 30/09/84 July 85 189 + 3Couitauc Servic 05/12/83

33 Salalah eoxm Cotzlmary 14/11/83 tD 03/04/84 30/11/84 July 85 425Servic 05/12/83

34 mtster PBa Etaulmi to main 01/12/84 01/12/85 01/03/86 99

35 Eqpsmian for coast statimi 13/09/81 to 14/05/82 21/02/83 21/02/83 432 1415/10/81 00

36 scerdied VHF to 3 statiots 23/04/83 10/01/84 12/07/84 12/07/85 204from midn coet statlm

DAN OF SCEf1E -rSR DATE OF aFxrTDC 0)aRACF M OF DM (F ACW& ([44FUR) INND 3RM LES(1RIFfl1K TamE M)W (IHLEJCW Cav=CK1(I 330000'

37 g ower supply& 29/12/83 XD 23/08/84 23/08/85 23/10/85 135securty ligh4z for WAttayah 02/01/84cXSt station

38 Eyeiion of adEtig only quoation 2g 2D/07/82 19/01/84 19/01/84 500IterrmtimAl exdbm in 2 ppiaetary itwIPq

39 Supply of now ,-X0 18/02/85 to 21/09/85 31/05/86 uner prres 9emdvoge s 25/02/85

40 Arabsat earth station & 09/11/83 to 28/03/84 22/06/85 28/11/85 2,015asinh earth statim 22/11/83

41 Rwdme of Ha Lpsact Q xtaton beidw 29/12/84 28/02/86 28/02/86 300jrprlotarv

itse

42 PNbUc Moble Automatic 22/08/83 to 21/04/84 06/09/85 Pkojert eapled, 6,000Telepkm Systm 11/09/83 et}m g Ca

Mar 1986

43 lWephn EthuW Bulidtig 01/11/83 to 2D/04/84 W1 of 84 impleted 462Ibri 07/11/83

44 Upga of Azailz-6da By uoati blM 12/07/84 11/10/84 Nt* campleted 1,711Co-axal cble prprietary iteme

45 hei rw bddn lIil 23/06/84 27/11/84 26/05/85 26/05/85 1,811 iNt2 -, Sdr, &rw a R wO

-32- ~~~~ANNE1 4gi ~~~~~~~~~~~~~~Page 6 of 6

, ~ ~~ ~ a a' v

| tS I I i.

Siii liii *

PWTG~fL!I W PProject Costs (In R) M4ifm)

Apraisal Fatimate Revised Estimated I Actal

Item local Foreiti TOW local Rel4 Total local Foreigi Tctal

1. loal _itdbg 2,120 0,88D 3,000 2,245 5,979 8,224 2,536 9,836 12,3722. kternal plant 1,169 3,945 5,114 20,631 10,361 30,992 10,001 6,865 16,8663. Mabacribais plant 0,738 0,669 1,407 1,632 2,448 4,080 6,652 0,063 6,7154. PAKX uitdilng 0,429 0,171 0,600 0,300 0,700 1,OOD - 0,140 0,1405. mamait switd4*qg 0,433 0,091 0,524 0,704 1,056 1,760 0,901 0,499 1,4006. Telaz and telegraph 2,183 0,136 2,319 0,266 2,444 2,710 0,874 1,490 2,3547. Loq dist8noe terrtrial 2,832 1,061 3,893 7,157 12,794 19,951 6,188 10,065 16,2538. Iong di8tane satellite 2,068 0,830 2,898 1,176 4,702 5,878 2,203 0,430 2,6339. Ikdhnical bzildmip 1,000 0,449 1,449 6,175 - 6,175 11,827 - 11,827

10. ?I,-tedutical uilding 1,180 0,490 1,670 3,140 - 3,140 3,953 - 3,95311 motor Viicles 1,180 0,208 1,388 2,470 - 2,470 1,266 - 1,26612. Trainng espjimnt 0,150 0,023 0,173 0,087 0,783 0,870 0,244 0,651 0,89513. Ebrniture and flttings 0,641 0,094 0,735 0,930 - 0,930 1,127 - 1,12714. eset aipjLuuit 0,055 0,006 09061 0,012 0,108 0,12D 0,001 - 0,00115. 1"ical eqtd4iput 0,012 0,002 0,014 0,012 0,048 0,060 - - -16. TedmRicl assistace. 0,170 0,000 0,170 - 0,240 0,240 0,365 0,003 0,36817. Cblaml - - - - 1,100 1,100 3,048 - 3,048I&; lbabLle tB£belq*w£m - - - - - 09125 5,460 595B5

19. Ra tl - -- - - - 11,475 13,833 25,3082). Otbm - - - - - - 1,893 - 1,893

Total bas cost 16,360 9,055 25,415 46,937 42,763 89,700 64,679 49,35 114,014Cwthi lsu physial 0,766 0,434 1,200 0,433 1,460 11,893 - -

Cm idqpncies prl 4,030 2,937 6,967 - - - - - -

Total Costs 21,156 12,426 33,582 47,370 44,223 91,593 64,679 49,335 114,014 U'

=zzcmm smcmm ----- mm

- 34 -

ANX 6

OMAN

FIRST TELECOMUNIOCATIONS PROJECT


PROJECT COPTION REPORT

Cumlative Disbursements ($ Millions)

Fiscal year Total Actualended Appraisal Actual as Percentage

December 31 Estimate Disbursements of Appraisal

1980 091oo - -

1981 1,300

1982 7,500 0,119 1.59

1983 18,900 39462 18.32

1984 21,500 21,003 97.69

1985 22s000 22,000 100

- 35 -

AEX 7

OMAN




Allocation on Disbursements Categories ($ Millions)

Appraisal Revised ActualCategory Original Allocation Disbursement

1. Local switching 6.10 21.224 21.336equipment

2. External plant 3.40 - -

3. Subscribers plant 2.10 - -

4. Long distance 8.20 - -terrestrial systems

5. Testing equipment 0.60 - -and otherequipment fortraining center

6. Consultants services 0.50 0.734 0.664and technicalassistance

7. Unallocated 1.10 0.042 -

Total 22.00 22.0i00 22.000

Revision of allocation was approved by the Bank on June 13, 1984.

ONAN

FIRST TELECONMUNICATIONS PROJECT


PROJECT COMFLETION REPORT

Statistical Data

Particulars 1980 1981 1982 1983 1984 1985

I. NATIONAL TELEPHONES

1. No of exchanges 28 28 28 28 34 362. Total installed capacity 16,260 16,260 23,060 23,060 65,096 73,4563. Total DEL 15,044 17,286 19,642 21,370 23,391 41,3204. Waiting list for telephones NfA N/A N15,000 N20,000 N19,000 N1,0005. No. of parallel (total) - N35% N35X N40% N40% N40%6. Annual growth in DEL 2 - 15% 14% 8.7% 9.5% 76.65%

II. SHORT DISTANCE JUNCTION NETWORKS

1. No. of microwave links 2 2 2 2 4 162. No. of total capacity 960+TV 960+TV 960+TV 960+TV 4800+TV 4800+TV3. No. of installed capacity 420 420 420 420 3660 96544. No. of TV channel (one way) - - - -5. No. of TV channel (two way) 3 3 3 3 3 66. No. of coaxial links - - - - 6 107. No. of total capacity - - - - 4800+TV 12480+TV8. No. of installed capacity - - - - 4170 78909. No. of TV channel (one way) - - - - - 110. No. of TV channel (two way) - - 1 1 1 211. No. of fibre optical links - - - - 7 812. No. of total capacity - - - - 960+5TW 1440+5TV13. No. of installed capacity - - - - 960 144014. No. of TV channel (one way) - - - - 5 515. No. of TV channel (two way) - - - - - -

III.1. No. of RPTs in use 30 60 68 95 106 114

IV.

1. No. of UHU links in use 1 1 1 2 3 5 02. Total no. of channel 11 11 11 33 39 89

Particulars 1980 1981 1982 1983 1984 1985

V. LONG DISTANCE TRANSMISSION NETWORK

1. No. of microwave links 4 4 4 4 7 82. No. of total capacity 2,904 2,904 2,904 2,904 3,864 4,8243. No. of installed capacity 264 264 264 264 924 1,0444. No. of TV channel (one way) - - - - -5. No. of TV channel (two way) - - - 2 36. No. of coaxial links 5 5 5 5 6 67. No. of total capacity 2,280 2,280 2,280 2,280 4,980 6,1808. No. of ivstalled capacity 870 870 870 870 1,398 1,5789. No. of lf channel (one way) - - - - - -

10. No. of TV channel (two way) - - - - 1 111. No. of optical fibre link - - - - -12. No. of total capacity - - - - -13. No. of Installed capacity - - - - - -14. No. of TV channel (one way) - - - - - -15. No. of TV channel (two way) - - - - - -

VI. LONG DISTANCE SATELLITE COMMUNICATIONS

1. No. of total capacity (INTELSAT)transamit carrier 1 2 2 2 2 22. No. of Installed/used capacitY(INTELSAT) 96/46 96/68 156/106 216/142 240/174 300/2203. No. of TV transmit capacity(INTELSAT) 1 1 1 1 1 14. No. of TV RX capacity (INTELSAT) 2 2 2 2 2 25. No. of total capacity (ARABSAT) - - - - - 1*6. No. of installed/used capacity (ARABSAT) - - - - - 216/14

7. No. of TV transmit capacity I - - - - 18. No. of TV RX (ARABSAT) - - - - I9. No. of total capacity (MUSCAT/SALALAR) 24 72 72 72 72 7210. No. of installed capacity ' 24 72 72 72 72 4811. No. of TVTX & TVRX (SLL-MUS Domeat) 1 1 1 1 1 112. No. of total capacity (MUSCAT/KHASAB) 12 12 24 24 24 2413. No. of lnstalled - 12 12 24 24 24 2414. No. of TVRX (KRASAEB-US) 1 1 1 1 1 115. No. of total capacity (MUSCAT/NASIRAR) - - - - - 24*16. No. of installed - - - - - - 2417. No. of TVRX (MASIRAR-MUS) _ - - - - 118. No. of TVRO in Oan 4 4 4 4 4 4 {

VII. NATIONAL TELEX CIRCUITS 0

I. No. of telex exchange 1 I I I I I2- Total exchange capacity 4,032 4,032 4,032 4,032 4,032 4,032 4 _3. Total Installed capacity 1,212 1,212 1,212 3,052 3,052 3,0524. Total oumber of subscribers 576 742 839 972 1,209 1,358

* Operational since November 1985.

Particulars 1980 1981 1982 1983 1984 1985

VIII. DATA NETWORK

1. No. of data customers 8 22 48 98 149 207

IX. TELEGRAPH NETWORK

1. No. of public telegraph circuitsto international 1 1 3 4 5 5

2. No. of public telegraph circuitsin Oman - - - 14 21

3. No. of leased telegraph circuitsto international N/A 18 22 29 32 35

4. No. of leased telegraph circuitswithin Oman N/A 168 173 178 187 199

X.1. No. of direct access station for

international telex Traffic from Oman 7 7 12 12 16 162. No. of channel used for international

telex t.raffic 112 112 175 175 189 195XI.

1. No. of direct access station forinternational telephone traffic fromOman 2 9 12 13 16 18

2. No. of channel used for internationaltelephone traffic 46 68 106 147 189 209

XII.1. No. of telegraph circuits from Wattayah

coast station 2 2 2 2 2 22. No. of R/T circuit from Wattayah Coast

station 2 3 3 3 3 3 f3. No. of extended R/T from Wattayah Coast 3 3

station - - - _

- 39 -

Annex 8Page 4 of 4

OMAN

FIRST TELECONMUNICATIONS PROJECT



Statistical Data

Particulars 1980 1981 1982 1983 1984 1985

STAFF

Total staff 1185 1339 1375 1494 1683 1896operational staff - - - - - -Other staff - - - - - -Staff per 1000 DELs 80 78 70 71 70 46

FINANCIAL

Telephone revenue peraverage DEL (RO) 485 502 551 673 783 774

Operating cost peraverage DEL (RO) 580 470 448 492 530 487

0

p c cmFIRST EJ.MM4WICATcEM PR0JECr

GENAL HE TE JNIMCTO! a ZATIU

PrINEC aCMIMaq REPr

luc Stataent - RD '0W0I

1 9 8 0 1 9 8a1 1 9 8 2 1 9 8 3 1 9 8 4 1 9 8 5APM AUIA1 APW. P-M APR A 1 AM. AMAL A.L ACLA A_L _M41,

(Vwratirg IL-enues

1~~~~~~~~~l- ~ ~ ~ ~ ~ ~ ~ ~- Imoalatio. 171 290 87 189 107 185 178 2D3 154 239 188 947- lRtals 1,3)4 1,288 1,43) 1,556 1,619 1,750 1,886 1,933 2,189 2,25D 2,498 2,908- IDal Casl 2,967 2,563 3,65D 3,186 4,270 3,799 4,825 5,061 5,453 6,623 6,162 9,2- International ca1 s 1,879 2,109 2,631 3,028 3,289 4,615 3,946 6,6)7 4,736 8,951 5,F83 12,332- OtCw 46 677 54 6)8 61 384 72 435 82 482 95 68)

9b-total 6,267 6,924 7,852 8,367 9,346 10,733 10,907 14,236 12,614 18,545 14,626 26,079

Tl.ex 2,191 2,788 3,428 3,467 4,569 4,200 5,664 5,154 6,781 6,24R 8,122 6,839Telegraph 431 439 431 563 431 522 431 581 431 641 431 578Other 742 461 8D1 692 865 883 935 1,110 1,009 1,66D 1,090 2,198

Ttal 9,631 1O,612 12,512 13,089 15,211 16,338 17,937 21,081 23,835 21,094 24,269 35,694

Cperatirg Expemses

Staff expene 3,661 5,115 4,441 5,333 5,410 5,980 6,478 6,691 7,561 7,696 8,753 9,346 °Other operating cost 2,351 2,489 2,603 2,270 2,837 2,283 3,148 3,407 3,490 4,297 3,893 6,515

Oni book value 1,772 2,170 2,019 2,355 2,392 2,586 3,053 2,863 3,756 3,101 4,343 5,196RPVl. adjust. 37 - 121 - 226 - 359 - 528 - 734 -Total 7,821 9,774 9,184 9,958 10,865 10,849 13,038 12,958 15,335 15J094 17,723 21,057

(peratirg inromx 1,810 838 3,328 3,131 4,346 5,489 4,899 8,123 5,900 12,000 6,546 14,637Add: 0thw incr. 137 226 151 486 166 1,628 182 1,036 231 1,111 221 (2,089)1Sm: Interest 58 1 75 57 171 59 40D 82 581 679 564 1,7581Et 11D112 1,889 1,063 3,404 3,5S3 4,341 7,048 4,681 9,077 5, 12,432 66,3 10,790

peratirg ratio 81.2 92 73.4 76 71.4 66.4 72.7 61.5 73.6 55.7 73 59

Pate base:Book value 23,512 22,985 25,732 24,571 29,744 24,134 38,051 24,570 46,537 24,506 52,092 52,676Revalued 23,997 - 27,266 - 32,472 - 42,196 - 52,220 - 59,894 -

Rate ofretursmZBock valu 8 4 13 13 15 23 14 33 13 49 14 28Oa revalued+ assets 8 - 12 - 13 - 12 - 11 - 11 -

TP WJ/DEL 427 485 450 502 473 551 474 673 472 783 480 774%1 REV/U1W 3,701 6,009 4,033 5,16) 4,154 5,D34 4,291 5,633 4,281 5,889 4,272 5,347

FWUr TUDWOU E1 PRUE_=

PRXI= 03oqE9903Ra

PA 9bet - RD *(W.t

1 9 8 0 1 9 8 1 1 9 8 2 1 9 8 3 1-9 8 4 1 9 8 S~~~Ft Ct^ JWRAIUIL SY . M B aenm

-S

Pla¢ I qi atlb* value 32,218 32,562 35,06 34,9D 44,653 36,256 57,127 40,079 68,072 41,63 76,67 04,0lnalm sdj. 9 - 2 - 4,729 - - 10734 - 1409 -

9.-Ibtfi 33,457 32,632 37,76 34.3) 49,382 3626 66,359 ,079 78,46 41,638 90,5 14,99

on book vilue 6,901 7,783 8.92) 9,918 11,312 12.351 14,365 14,844 18,12 17,861 22,46a 22,483kva1i e adj. 26 - 712 - 1371 - 2.31 - 3-59 5,2 -

Sb-mDta 7,169 7,783 9.632 9,918 12,683 12,351 16.666 14,864 21,700 17861 27,753 22,483

at pt 26,2M 24,779 24.24 24,362 36,699 23,905 47,693 25.235 56.746 23,m 63.042 81,576s In pr 1)8 786 5,784 l,25 6.128 3,= 4.614 12,12 3.649 55,2 52 2

Total fi l ias 27,896 25,565 34,05 25,616 42,827 27,107 52,337 7,3 95 79,D01 ,325 108,136

C anbth 1,443 2,3D5 1,752 72 2,S5 11,965 2,8W0 12.00 3.234 5,849 3,057 1.,3kt. v, 3,61D 4,041 3,754 4,468 4,107 5,172 4,484 6,482 4,16 8,077 4,12 13JB5

l btgim 1,476 659 1,682 629 1,993 1,426 2.544 2,2)1 3,1M 2,M 3,619 3,449Otbr 144 247 173 348 2)7 to" 249 169 299 1.185 358 1,977 .Tt a t 6,t23 7,25 7,361 12,647 8,592 1f.8)7 10,077 21.921 10.8 ,1 11,1 2DW,36

Total 34,619 32,817 41,389 38,23 51,419 46,714 62,384 59,3)8 n7Z5 96792 79.483 125,D3

vital 27,332 27,436 ,221 25.449 32.625 32,059 36,966 39,107 41.647 48,184 46,767 0,376stmfw fhru Qwt. fL. - - - - - - - - - 12 -

0¢O jut ierg 1,85 1.06 3.4D4 3*5 _4,?i1 7,Mq 4.E ,7 GMX 24i3W2 J I.9Total cpital ,221 28,499 32,625 32,0S9 36,966 39,817 U.47. 48,184 46,767 8)736 52,9WD 7,sz6Fol. e raum8 - 2.2 0 3 742 - t,o4 -Tota eqdty 3D,2 25.4S9 34,811 32,059 40,708 39,107 47,321 48,184 54,833 8D,736 63784 71,26

log tem 1 2,406 I,06 4,227 1,864 8,057 1.973 12,046 3,111 12,92 19,737 11,713 32,69low: tt pw - - - - - - - - I I 134 I,D 1,631

Total 2,406 1,864 8,087 1 9 1 2,046 3. 111 11,540 18,33 9,913 3D,998

Omt lIx 1,984 3,25 2,22 4,310 2,64 5,634 3,017 8,013 3,i0 16,319 3,991 24,38OmtI/T debt -- -Tad --- _ _ _ ID 1-

_W_ 3,017 8.634 1 7103 519

1al Iitl 34,619 32,817 41,389 38,23 51,419 46,714 62,3B4 59,38 71,225 96,92 79,488 1285,3

Ditd t + eqity(2) 7 3.6 11 5.5 17 4.8 5D 6.1 19 23.2 16 3D.2et ratio 3.4 2.2 3.2 2.9 3.3 3.5 3.3 2.7 2.2 1 1.9 0.8

E:rU am OrA

,Fns FIO t<eert - RD 'OOD*

1 9 8 0 19 8 1 1 9 8 2 1 9 8 3 1 9 8 4 1 9 8 5APIPP WflW An WACML AE AFf A I A APMlL 4 P M l

Before Irnerest 1,947 1064 3,479 3,617 4,512 7,107 5,081 9,159 5,701 13,111 6,?67 12,548Dqeedat*im 1,839 2,170 2,140 2,355 2,618 2,586 3,412 2,36 4,M4 3,101 5,077 5,196

lltal 3,756 3,23'4 5,619 5,972 7,13D 9,693 8,493 12,019 9,985 16,212 11,844 17,744

Drakm

Prq3x .d ImD 35 - 415 - 2,142 41 3,959 1,112 876 4,272 173 1J,21G0rt. nal othe bcrracrgz 2,371 1,6)8 1,4D6 796 1,718 68 - 26 - 10,97- 12,"

To,tal 2,406 1,608 1,821 796 3,863 109 3,959 1,138 876 15,242 173 14,18D

TotaiL sotwe cf fuids 6,162 4,3D2 7,440 6,768 10,99D 9,8D2 12,452 13,157 10,86 31,454 12,017 31,924

Ts Of funks

Oagoix uatck 1,46D 95 - -

Fropvoe piroject 4,200 6,930 9,13D 7,76D 3,7s30 1,862Fatue -ks- 8a0 3,21D 6,XM 8,400

5,66) 2,353 7,025 2,186 9,933 3,924 10,963 12,773 9.9,D3 44,631 10),262 33,757

Deb- Serviee

A013umet - - - - - - - - - 1,382 1,535interest 58 1 75 57 171 59 40D 82 581 679 564 1.758

lta 58 1 75 57 171 59 400 82 581 679 1.946 3,293

Qage in trkdig ca;dtal 444 _,948 340 4,525 889 5,819 I'm 3D2 330 (13,856) (191 ) (126)

Total *f fwi¶s 6,162 4,3D2 7,4b0 6,768 10,990 9,8D2 12,452 13,157 10,861 31,454 12,017 31,924-_ - -=- -_- -_ I' ,

Debt r tfin 64.8 - 74.9 104.8 41.7 164.3 21.2 146.5 17.2 23.9 6.1 5.4

- 43 -

ANNEX 12Page 1 of 2

OMAN




Summary of.Principa l Telecommunications Tariffs (In RO)

---- Telephone-1. hustallation Charies Buisiness Residential Telex

(a) Capital Area 100 10 100(b) Interior 10 10 100(c) Salalah Area 100 10 100

2. Annual Rental 56 56 480

3. Telephone and Telex Services

(a) National (Telephone):

(i) Unit call charge is: RO 0.03

(ii) There are 6 charge bands for national subscriberdialled calls. There are different tariffs for day(0600-1800 hours) and night (1800-0600) calls. Pulseduration is inversely related to distance, varyingfrom 6 to 36 seconds per unit in the day, and 6 to 48seconds per unit at night.

(iii) Calls to the United Arab Emirates can ",a made at thesame unit call rate, with a pulse duration of 4seconds, both day and night.

(b) International (Telephone and Telex):Charges

--per miuute-Zone Telephone Telex

Gulf 0.5 0.5Lebanon, Saudi Arabia, Yemen 0.8 0.8East Africa, Middle East, Indian Sub-continent 1.0 1.4Far East, Europe 1.6 1.6Rest of Africa, Northland South America,

Jkpan, Australia 1.8 1.8

- 44 -

ANNEX 12Page 2 of 2

4. Telegraph Services

Zone Charges per word (RO)

Gulf, Indian Sub-continent, Iran 0.1Middle East, East Africa, Yemen 0.2Rest of Africa Europe, Australia,

North and South America 003

Telegram is subject to 7 word minimum charge.

5. Details of all other charges, equipment and hire rentals andmiscellaneous services are given in the project file.

OMAN




Performance Indicators

For Fiscal Year Ending 1980 1981 1982 1983 1984 1985December 31 APPR. ACTUAL APPR. ACTUAL APPR. ACTUAL APPR. ACTUAL APPR. ACTUAL APPR. ACTUAL

1. Additional telephone 3,506 3,871 2,008 2,242 2,695 2,356 4,296 1,855 3,275 2,496 3,100 17,327connections (DELs)installed

2. Additional telex 200 234 300 164 200 89 300 127 300 166 300 270lines installed

3. Number of employees per 71 80 70 78 67 70 60 71 56 70 53 461000 DELs

4. Gross operating 9.6 10.6 12.5 13.1 15.2 16.3 17.9 21.1 20.8 27.1 24.3 25.7revenue (RO million)

5. Telephone revenue 427 485 450 502 473 551 474 673 472 783 480 774per average DEL (RO)

6. Operating ratio (%) 81 92 73 76 71 66 73 62 74 56 73 76

7. Rate of return on 8 4*/ 12 13*/ 13 23*/ 12 33*/ 11 47*/ 11 28*/b revalued assets (%)

8. Debt service coverage 65 - 75 105 42 164 21 147 17 24 6 5(times)

9. Debt/equity ratio (%) 7/93 4/96 11/89 6/94 1 7/83 5/95 20/80 6/94 19/81 23/77 16/84 30/70

10. Current ratio (times) 3 2 3 3 3 3 3 3 2 1 2 1

11. Subscriber accounts 140 168 108 150 98 146 90 101 74 105 60 124receivable (in days)

*/ On average fixed assets.

-46 ANNEX 14Page 1 of3

OMAN


GENERAL TELECONMUNICATIONS ORGANIZATION


Return on Investments

1. The benefit period of the program extends from 1980-2005 when onaverage the equipment provided under the prograt is expected to havesubstantially completed its useful life,

2. All costs and benefit streams have been expressed in 1979 prices0

3. Actual capital cost streams are based on the project as actuallyimplemented 1980-1985.

4, Actual operating cost streams are calculated by multiplyingIncremental subscribers due to the project by average cost per connectedsubscriber connections were projected over the period 1980-1985 at appraisal,but actually occured/will occur during 1980-1987.

5. Actual benefits are calculated as follows:

(a) the revenues derived from additional subscribers only measuredby tbhe number of such subscribers multiplied by the averagerevenue per subscriber,

(b) with the additional revenue earned from existing subscriberswhich could not have been obtained in the absence of theproject.

6. The cost-benefit streams at appraisal were summarized as follows:

Capital - Operating- NetYear Expenditure Costs Revenues Benefits

1978 3.6 0 0 - 3.61979 1.4 0 0 - 1,41980 5.2 0.8 2.3 3.71981 5.8 1.5 4.5 2.81982 7.4 2.3 6.0 3.71983 6e7 3.0 7.4 2.31984 2.1 3.6 8.5 2.81985 0.3 4.2 9.6 5.11986-2005 0 4,0 9.6 5.6

The rate of return of the streams is 182

- 47 - ANNEX 14Page 2 of 3

7. The following is a summary of the actual and projected incrementalcost and benefit streams due to the project expressed in 1979 prices.

A. Without additional revenue from existing subscribers

Capital -----Operating-- NetYear Expenditure (000) Costs Revenues (000) Benefits (000)

1980 21,358 1,020 853 - 2,3021981 1,888 2,021 2,159 - 1,7501982 3,316 2,749 3,380 - 2,6851983 10,723 3,936 5,289 - 9,3701984 40,990 5,463 8,082 - 38,3711985 31,730 9,700 15,415 - 26,0151986 - 5,540 24,698 + 9,1581987 - 19,667 31,257 + 11,5921988-2005 - 28,246 44,892 + 16,646

IRR - 14.93X

- 48 - ANNO 14Page 3of 3

B. With additional revenue from existing subscribers.

Capital -----Operating- NetYear Expenditure (000) Costs Revenues (000) Benefits (000)

1980 2,135 1,020 ,853 - 2,302

1981 1,888 2,021 2,241 - 1,668

1982 3,316 2,749 3,691 - 2,3741983 10,723 3,936 6,190 - 8,4691984 40,990 5,463 9,613 - 36,840

1985 31,730 9,700 16,941 - 24,4891986 0 15,540 26,316 10,7761987 0 19,667 32,606 12,9391988 0 28,246 46,510 18,264

1989 0 28,246 46,510 18,2641990 0 28,246 46,510 18,2641991 0 28,246 46,510 18,264

1992 0 28,246 46,510 18,2641993 0 28,246 46,510 18,2641994 0 28,246 46,510 18,2641995 0 28,246 46,510 18,2641996 0 28,246 46,510 18,264

1997 0 28,246 46,510 18,2641998 0 28,246 46,510 18,2641999 0 28,246 46,510 18,2642000 0 28,246 46,510 18,2642001 0 28,246 46,510 18,2642002 0 28,246 46,510 18,264

2003 0 28,246 46,510 18,2642004 0 28,246 46,510 18,264

2005 0 28,246 46,510 18,264

IRR - 17.2

Sensitivity Analysis1) Assuming 10% increase in operating cost IRR - 14.3%2) Assuming 10% decrease in operating revenues IRR -12.473) Assuming (1) and (2) together IRR - 9.1%

C. The assumptions made in the sensitivity analysis are unlikely to happen

unless there is severe depression in the economy which could betriggered by a slump in oil prices.

world bank document · following standard procedures, oed sent copies of the draft report to the...

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