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         Telecommunications project

The Western Samoa Telecommunications Project, supported by Credit 2034-WSO for US$4.6 million equivalent, was approved in FY90. The credit was closed in FY94, eighteen months behind schedule, and US$2.6 million equivalent was canceled. Cofinancing was provided by the Asian Development Bank (ADB) for US$7.4 million; in addition, the International Telecommunications Union (ITU) financed studies in the amount of US$0.1 million. The Implementation Completion Report (ICR) was prepared by the East Asia and Pacific Regional Office. It includes the Project Completion Report (PCR) prepared by ADB. The Borrower neither contributed to, nor commented on, the ICR or ADB's PCR.

The project’s objectives were to: (i) upgrade the telecommunications network as a basis for the system’s future expansion; (ii) prepare the ground for telecommunications development in rural areas; (iii) support the Government in formulating an adequate sector policy; and (iv) strengthen the Posts and Telecommunications Department (PTD). The project components comprised: (i) telephone exchanges for 3300 subscribers; (ii) digital microwave links to the new exchanges; (iii) subscriber cable networks; (iv) vehicles, operation and maintenance equipment; and (v) technical assistance for training, institution building, and project implementation. The credit financed items (ii) and (iii).

The project met its physical objectives. The scope of the project was expanded (to more than double the number of subscribers to be served) in order to take advantage of the dramatic fall in the prices of digital switching equipment. But, in 1990 and 1991, cyclones caused severe damage to PTD’s system, calling for repair work and contributing to a two-year delay in project completion. Partly as a result of these delays, the recalculated ERR is 25 percent, somewhat lower than the 34 percent estimated at appraisal.

The project’s institutional objectives were not achieved, in part because the Government and PTD were unable to hire qualified local staff to act as counterparts to the consultants in charge of strengthening the sector institutions, and in part because of PTD’s inadequate commitment to the project's institutional goals. PTD seems to have had adequate revenues yielding returns of 40 percent to 80 percent on net assets (valued at historic cost). However, this performance could not be assessed against the corresponding loan covenant because PTD failed to revalue its assets. During the entire project period, the accounts receivable remained in excess of 70 days billings against a covenanted maximum of 45 days.

Despite the above shortcomings, the Operations Evaluation Department (OED) rates the project’s outcome as satisfactory. The project's institutional development impact is rated as negligible mainly because its primary objectives were physical. Recent operational performance suggests that the sustainability of the project is likely.

Bank performance is rated as satisfactory. However, the fact that cooperation with ADB did not result in substantial savings in Bank supervision costs suggests that synergies could have been better identified and used. The quality of the ICR, which complements the more thorough analysis in ADB’s PCR, is satisfactory.

ADB is planning to audit the project. OED expects to have an opportunity to comment on that evaluation.

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