Document of. The World Bank FOR OFFICIAL USE ONLY RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING

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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Document of The World Bank FOR OFFICIAL USE ONLY RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF Report No: MW REGIONAL COMMUNICATION INFRASTRUCTURE PROGRAM (SOP3) REGIONAL COMMUNICATIONS INFRASTRUCTURE PROGRAM MALAWI PROJECT (RCIPMW) TWICT AFR June 4, 2009 TO THE REPUBLIC OF MALAWI November 21, 2013 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. 1

2 ABBREVIATIONS AND ACRONYMS APL - Adaptable Program Loan BESTAP - Business Environment Strengthening Technical Assistance Project E kbps duplex ERP - Economic Recovery Plan ESMF - Environmental and Social Management Framework GWAN - Government Wide Area Network HRMIS - Human Resources Management Information System ICT - Information and Communication Technologies IDA - International Development Association IFMIS - Integrated Financial Management Information System IMF - International Monetary Fund IRU - Indefeasible Rights of Use Kbps - kilobits per second M&E - Monitoring and Evaluation MACRA - Malawi Communications Regulatory Authority Mbps - Megabits per second MGDS II - Malawi Growth and Development Strategy II MoEST - Ministry of Education, Science and Technology MoF - Ministry of Finance MoI - Ministry of Information PPP - Public Private Partnership PPPC - Public Private Partnership Committee RCIPMW - Regional Communications Infrastructure Program Malawi Project 2

3 RPF - Resettlement Policy Framework SDR - Special Drawing Rights SGS - Société General de Surveillance SOP - Series of Projects STM - Synchronous Transfer Mode US - United States Dollar VLP - Virtual Landing Point PIAP - Public Internet Access Point ISP - Internet Service Providers Regional Vice President: Regional Integration Director: Country Director: Sector Director Sector Manager/Senior Manager: Task Team Leader for RCIP 3: Task Team Leader for RCIP Malawi: Makhtar Diop Colin Bruce Kundhavi Kadiresan Jose Luis Irigoyen Randeep Sudan/Chris Vein Peter Silarszky Doyle Gallegos 3

4 AFRICA REGIONAL COMMUNICATIONS INFRASTRUCTURE PROJECT CONTENTS A. SUMMARY B. PROJECT STATUS C. PROPOSED CHANGES

5 DATA SHEET Africa RCIP3 - Regional Communications Infrastructure Program - Phase 3 (P111432) AFRICA TWICT Report No: RES11916 Basic Information Project ID: P Lending Instrument: Adaptable Program Loan Regional Vice President: Makhtar Diop Original EA Category: Partial Assessment (B) Country Director: Colin Bruce Current EA Category: Partial Assessment (B) Sector Director: Jose Luis Irigoyen Original Approval Date: 25-Jun-2009 Sector Manager: Randeep Sudan Current Closing Date: 28-Feb-2015 Team Leader: Peter Silarszky Borrower: Responsible Agency: Ministry of Science and Technology, Malawi Privatization Commission, Ministry of Communications, Science and Technology Restructuring Type Form Type: Full Restructuring Paper Decision Authority: Country Director Approval Restructuring Level: Level 2 Explanation of Approval Authority: A Restructuring Level 2 5

6 Financing ( as of 15-Nov-2013 ) Key Dates Project Ln/Cr/TF Status Approval Date Signing Date Effectiveness Date Original Closing Date Revised Closing Date P IDA Effective 25-Jun Jul Jan Feb Feb-2015 P IDA Effective 25-Jun Jul Oct Feb Feb-2015 P IDA Effective 25-Jun Jul Jan Feb Feb-2015 Disbursements (in Millions) Project Ln/Cr/TF Status Currency Original Revised Cancelle d Disburse d Undisbur sed % Disburse d P IDA Effective XDR P IDA Effective XDR P IDA Effective XDR Policy Waivers Does the project depart from the CAS in content or in other significant respects? Yes [ ] No [ X ] Does the project require any policy waiver(s)? Yes [ ] No [ X ] A. Summary of Proposed Changes The proposed restructuring would be the first for the Malawi project and would include (i) an extension of the closing date by sixteen months, from February 28, 2015 to June 30, 2016, (ii) a reallocation of credit proceeds between budget categories, and (iii) adjustments in the disbursement projections to account for the longer implementation period. The extension would allow for completion of the activities under the project and full achievement of the PDO. Change in Implementing Agency Yes [ ] No [ X ] Change in Project's Development Objectives Yes [ ] No [ X ] 6

7 Change in Results Framework Yes [ ] No [ X ] Change in Safeguard Policies Triggered Yes [ ] No [ X ] Change of EA category Yes [ ] No [ X ] Other Changes to Safeguards Yes [ ] No [ X ] Change in Legal Covenants Yes [ ] No [ X ] Change in Loan Closing Date(s) Yes [ X ] No [ ] Cancellations Proposed Yes [ ] No [ X ] Change to Financing Plan Yes [ ] No [ X ] Change in Disbursement Arrangements Yes [ ] No [ X ] Reallocation between Disbursement Categories Yes [ X ] No [ ] Change in Disbursement Estimates Yes [ ] No [ X ] Change to Components and Cost Yes [ X ] No [ ] Change in Institutional Arrangements Yes [ ] No [ X ] Change in Financial Management Yes [ ] No [ X ] Change in Procurement Yes [ ] No [ X ] Change in Implementation Schedule Yes [ X ] No [ ] Other Change(s) Yes [ ] No [ X ] Appraisal Summary Change in Economic and Financial Analysis Yes [ ] No [ X ] Appraisal Summary Change in Technical Analysis Yes [ ] No [ X ] Appraisal Summary Change in Social Analysis Yes [ ] No [ X ] Appraisal Summary Change in Environmental Analysis Yes [ ] No [ X ] Appraisal Summary Change in Risk Analysis Yes [ ] No [ X ] 7

8 B. Project Status The project was approved on June 25, 2009, and the credit became effective on October 14, As of September 25, 2013, out of the commitment amount of SDR 13.5m (equivalent to US$20m), SDR 5.46m (equivalent to US$8.37m) has been disbursed representing 40.46% of the credit amount. The project Development Objective of the RCIP Malawi Project is to support the Recipient s efforts to improve the quality, availability and affordability of broadband within its territory for both public and private users. The approach to achieving the stated objective is implementation of two components. The primary component is the provision of a competitive international capacity link to Malawi under a PPP arrangement. The bid and selection processes have been completed. Contract closing discussions with the selected bidder were completed on October 29, Completion of the tendering process took longer than anticipated at the time of project design due to longer than expected time to prepare network feasibility studies and routing plans and extensive consultation with the Bank s Regional Procurement Management given the unique nature of the tender. The implementation period for this new contract extends beyond the current closing date of the project. The proposed extension is necessary to allow for completion of activities under the project, namely the tender for provision of a competitive international capacity link to Malawi which comprise approximately 50% of project funds and are essential to meet the connectivity objective. The proposed changes and reallocations are consistent with the PDO and the existing breakdown in regional/national IDA allocation. The team confirms that the proposed changes do not entail any change in scope or nature of project activities, or change in implementation arrangements or other amendment to the Legal Agreement not detailed. The Task Team confirms that the requirements of OP/BP regarding closing date extensions have been met, specifically, (i) the project objectives continue to be achievable if the network is completed, as this is the main component under the project; (ii) the performance of the Borrower is satisfactory; (iii) the Bank and the client have agreed on an action plan to complete the project within the revised closing date; and (iv) there are no outstanding or unsatisfactory audits, or interim financial reports for the credit. Development Objectives/Results Project Development Objectives (P RCIP3 - Regional Communications Infrastructure Program - Phase 3) Original PDO Project development objectives for RCIP 3 include the following: Malawi: Support the Recipient#s efforts to improve the quality, availability and affordability of broadband within its territory for both public and private users Mozambique: Support the Recipient'sefforts to contribute to lower prices for international capacity and extend the geographic reach of broadband networks and to contribute to improved efficiency and transparency through egovernment applications. Tanzania: Support the Recipient's efforts to: (i) lower prices for international capacity and extend the geographic reach of broadband networks; and (ii) improve the Government's efficiency and transparency through egovernment applications. 8

9 Change in Project's Development Objectives Financing Change in Loan Closing Date(s) Explanation: For IDA (Malawi project): Extension of Closing Date of the Credit till June 30, The additional 16 months would allow the project team to complete the activities under the project, especially under the Component - which represents about 50% of the project funds. This component is for the provision of a competitive international capacity link to Malawi under a PPP arrangement. The bidding for the component closed in July The bidder has been selected. The implementation period of the contract goes beyond the current closing date and requires additional 16 months for completion. Ln/Cr/TF Status Original Closing Date Current Closing Date Proposed Closing Date Previous Closing Date(s) IDA IDA IDA Effectiv e Effectiv e Effectiv e 28-Feb Feb Feb Feb Feb Jun Feb Feb Feb Feb-2015 Reallocations Explanation: For IDA (RCIP Malawi): The reallocation of credit proceeds is proposed to reflect the adjustments within the components : (i) lower costs to perform the planned activities in Component 1, (ii) completion of activities in the Component (Comp. 2), namely the provision of competitive international capacity link, (iii) additional funds for the extended implementation (Comp. 3). Reallocation between categories is shown in the table below. Ln/Cr/TF Currency Current Category of Expenditure Allocation Disbursement % (Type Total) Current Proposed Curre nt Proposed IDA XDR GDS/WKS/CS/TR/OP(A 17,600, ,600,

10 -D)NON-CS(B) Grants Part B.5(d) 100, , Telecom Serv. Part B.2 2,700, ,700, PPF REFINANCING 500, , Designated Account Designated Account Total: 20,900, ,900, IDA XDR Con & Non-Cons ser,trng-prt A prj 1,300, ,260, Gds,Wrks, Con& Non con ser -Prt B 9,800, ,660, Gds,Con ser & IOC - Prt C of Prj 1,300, ,580, UNALLOCATED 1,100, Designated Account Total: 13,500, ,500, IDA XDR GDS/CS/TR/OP(A- D),WKS(B&C)NS(A,B &C) 41,500, ,500, CAPITAL SUBSIDIES, PT B.3 OF PJ 20,000, ,000, PPF REFINANCING 500, , UNALLOCATED 5,000, ,000, Designated Account Total: 67,000, ,000,

11 Components Change to Components and Cost Explanation: Changes in Component costs: (i) lower costs needed to perform the planned activities in Component 1, (ii) completion of activities in the Component (Comp. 2), namely the provision of competitive international capacity link, (iii) additional funds for the extended implementation (Comp. 3). Current Component Name Proposed Component Name Current Cost (US$M) Proposed Cost (US$M) Action MALAWI - Enabling Environment Component 1: Enabling Environment (including M&E capacity Building) MALAWI - Component 2: MALAWI - Project Management Component 3: Project Management MOZAMBIQUE - Technical assistance Component 1: Enabling Environment (Including M&E capacity Building) MOZAMBIQUE - Component 2: MALAWI - Enabling Environment Component 1: Enabling Environment (including M&E capacity Building) MALAWI - Component 2: MALAWI - Project Management Component 3: Project Management MOZAMBIQUE - Technical assistance Component 1: Enabling Environment (Including M&E capacity Building) MOZAMBIQUE - Component 2:

12 MOZAMBIQUE - egovernment Component 3: egovernment MOZAMBIQUE - Project management Component 4: Project Management Support TANZANIA - Enabling Environment Component 1: Enabling Environment TANZANIA - Component 2: MOZAMBIQUE - egovernment Component 3: egovernment MOZAMBIQUE - Project management Component 4: Project Management Support TANZANIA - Enabling Environment Component 1: Enabling Environment TANZANIA - Component 2: TANZANIA - egovernment Applications Component 3: egovernment Applications TANZANIA - egovernment Applications Component 3: egovernment Applications TANZANIA - Project Management Support Component 4: Project Management Support TANZANIA - Project Management Support Component 4: Project Management Support Total:

13 Other Change(s) Change in Implementation Schedule Explanation: Timeline Table 1 : Proposed Implementation Schedule Priority activities Contract finalisation with preferred bidder Project extension to June 2016 effected Contract signing with preferred bidder Issuance of telecom license to the preferred bidder Q2 FY 14 Oct Dec 2013 Q4 FY14 Apr Jun 2014 Q4 FY15 Apr Jun 2015 Q4 FY16 Apr Jun 2016 Commencement of ESMF and RPF activities Commencement of land acquisition activities Commencement of activities to design technical, financial and legal aspects of a telecom backbone in Malawi Commencement of studies to dimension e-government user requirements (e-government implementation strategy) Passage of ICT Legislation in Parliament Cabinet endorsement of the national ICT policy and the civil service ICT policy Completion of ESMF and RPF reviews Issuance of environmental license Commencement of cable construction Completion of e-government user requirements formulation Completion of cable construction Commissioning of the VLP in Lilongwe Provisional acceptance of the regional network Completion of telecom backbone studies End of warranty period of the connectivity network Resolution of all items outstanding from the provisional acceptance procedures Final acceptance of the network Last payment for capacity purchase contract 13

14 REGIONAL COMMUNICATIONS INFRASTRUCTURE PROJECT RESTRUCTING PAPER A. SUMMARY 1. The Regional Communications Infrastructure Program Malawi Project (RCIPMW), Credit Number 4602-MAI, is part of Phase 3 of the IDA-financed Regional Communications Infrastructure Program (Series of Projects). RCIP3 comprises credits to Tanzania, Mozambique, and Malawi. The Financing Agreement for the Malawi project was signed in July, The current closing date is February 28, The project Development Objective of the RCIPMW Project is to support the Recipient s efforts to improve the quality, availability and affordability of broadband within its territory for both public and private users. 1 The approach to achieving the stated objective is implementation of two primary components. The first component finances advisory support to update the country s laws and policy framework and to build capacity among targeted government agencies. The second component finances affordable international connectivity for the purpose of reducing the price of wholesale internet in Malawi. 2. The proposed restructuring would be the first and would include (i) an extension of the closing date by sixteen months, from February 28, 2015 to June 30, 2016, (ii) a reallocation of credit proceeds between budget categories, and (iii) adjustments in the disbursement projections to account for the longer implementation period. The extension would allow for completion of the activities under the project and full achievement of the PDO. 3. The main component of the RCIPMW project, which represents approximately 50% of the project funds, is the provision of a competitive international capacity link to Malawi under a PPP arrangement. The bidding for this component closed on July 16, 2013 and since then a bidder has been selected. The implementation period for this contract extends beyond the current closing date of the project. In order to accommodate it, a sixteen month extension, from February 28, 2015 to June 30, 2016, would be required. This extension would allow for construction and operation of the requisite network up to its final acceptance and the submission of final payment to the winning bidder. 4. The extension of the closing date creates an opportunity to reallocate funds within the project s resource envelope of SDR 13.5 million. As activities are completed, new activities within the original component structure and proposed procurement plan can be introduced. Funding for these activities would be taken from residual budget items having excess funds. 5. The project development objective continues to be relevant and achievable. The proposed changes are consistent with the PDO, the RCIP Regional Program principles, and the project description as originally approved. The proposed changes are also consistent with the breakdown in regional/national IDA allocations; i.e., activities are still all eligible for regional funds, as they have not changed in nature. 1 Financing Agreement - Regional Communications Infrastructure Project; between the Republic of Malawi and International Development Association; July 17,

15 B. PROJECT STATUS 6. The RCIPMW project has achieved notable progress. The following description of project status according to each component covers the RCIPMW Project from its declaration of effectiveness in October 2009 to November Component 1: Enabling Environment (US$2 million) US$1.5 million Disbursed. This component comprises the various activities concerned with building capacity, formulating policies, drafting legislation, and providing other advisory services to beneficiary institutions. The progress of activities has been as follows: a) ICT Legislation US$309,000 Disbursed. This item comprises two major activities, both of them under contract to one legal firm, Gide Loyrette of France: the review of the Communications Act under the Malawi Communications Regulatory Authority (MACRA) and the drafting of the Electronic Transactions Management Bill under the e-government Department. The consultancy study for the two bills has been completed. What remains are administrative steps by the Ministry of Justice to finalise the text of the proposed drafts. Thereafter the policy would be taken to Cabinet before the bills are presented to the legislature for approval. The disbursement under this activity includes ancillary activities such as consultation meetings. b) Business Environment Strengthening US $ 185,000 Disbursed. Capacity building related to telecom policy and legislative activities as part of a collaborative effort under the Malawi Business Environment Strengthening of Technical Assistance Project (BESTAP). c) National ICT Policy US$23,000 Disbursed. This activity is jointly sponsored by the RCIPMW Project and the Government of Malawi. The original plan was for Government to hold four policy formulation workshops with the support of the RCIPMW Project. The meetings were aimed at finalising the national ICT policy which was then in draft form. So far the meeting phase of the policy formulation exercise has been completed. Additionally, the project supported a benchmarking visit to the Republic of Rwanda by the Government team responsible for preparing the policy. The project is awaiting endorsement of the policy by the Cabinet. d) Public Sector ICT Policy US$159,000 Disbursed. Originally, Government requested funding to carry out consultancy services for the drafting of a civil service ICT policy. The study was completed and Government accepted deliverables from the study. Nonetheless, Government is undertaking a review of the study reports in order to include the whole public sector (as opposed to just the mainstream civil service). The extension of the remit of the policy has meant changes to the original policy documentation. e) Cross Border Negotiations US$95,000 Disbursed. All visits originally planned to neighbouring countries to garner inter-governmental support for the regional telecommunications transaction have been carried out. The visits undertaken included both technical teams comprising MoI, MACRA and PPPC and ministerial visits. Going forward, an additional amount will likely need to be provided to cover further visits to support the network transit through Tanzania should the need arise. 15

16 16 f) Capacity Building US$745,000 Disbursed. The project provided for capacity building activities amongst five institutions, namely the PPPC, MoI, MoF, the e- Government Department and MACRA. Almost all the planned and approved activities under this item have been carried out. 8. Component 2: (US$14.5 million) US$2.2 million Disbursed. The regional connectivity transaction has been divided into stages as follows: the first step was a detailed feasibility study, the second is the procurement of the private sector party, and the third and final will be network implementation and service provision. The bid and selection processes have been completed and the Bank s no objection to the selected bidder was issued on August 13, Contract closing discussions with the selected bidder, SimbaNET, which offered a contract price of US$10 million, were completed on October 29, Completion of the tendering process took longer than anticipated at the time of project design due to longer than expected time to prepare network feasibility studies and routing plans and extensive consultations with the Bank s Regional Procurement Management, given the unique nature of the tender. The progress update of other elements of the connectivity component is as follows: a) Detailed Feasibility Study US$262,000 Disbursed. A detailed feasibility study for the regional connectivity was completed in August The study found that the RCIPMW connectivity transaction was legally, technically and financially viable from the point of view of Government as well as potential investors. Thereafter permission was sought and granted from the Ministry of Finance to implement the transaction in line with findings of the study. b) Transactional Advisory Services US$418,000 Disbursed. A transaction advisor was appointed to manage the procurement process for the private sector party. It is the task of the advisor to draft all the required procurement and other transaction documentation. There is still over US $ 500,000 to be disbursed under this activity. c) Counterpart Advisory Services US$87,000 Disbursed. This item moves in tandem with the detailed feasibility study and transaction advisory services. The counterpart advisor complements the capacity of the Public-Private Partnership Committee (PPPC) for reviewing various internal and external reports on the regional connectivity transaction and other matters. d) Last Mile Initiative US$1.4 million Disbursed. The target set in the PAD Technical Annex was to connect 100 public institutions in the country. However, the Project will exceed this target by connecting 145 sites within the public sector. The initiative is currently divided into three phases as follows: Phase I 15 Teacher Development Centres and Technical Colleges within MoEST, Phase II 30 District Information Offices within MoI, and Phase III 100 secondary schools within MoEST. This sub-component includes interim arrangements, pending the commissioning of the RCIPMW connectivity network, for the provision of commodity internet to GWAN. e) Telecom Backbone Prefeasibility Study US$70,000. The telecom backbone prefeasibility study is nearing completion. Interim findings of the study show that a national backbone is a prerequisite for the development of the ICT sector. The prefeasibility study estimates that it would cost approximately US$20 million to roll out a competitive, private-sector led nationwide telecom backbone to all the districts in Malawi. 9. Component 3: Project Management (US$2 million) US$2.8 million Disbursed. The Project Management component finances consultants for the project s management, operation

17 and maintenance of the project s office and equipment, rent, vehicle costs, travel and training of the project team. At the time of the MTR (June 2012), it was noted that project management costs were too high, and several strict measures were put in place to contain the rising costs. Specifically, the MTR mission requested the project team to restructure the overall project management cost and propose a new budget that would bring the project s management costs closer to standard ranges. Utilizing the project contingency amount of US$1.5 million, the total budget allocation for Component 3 was revised from US$2.0 million to US$3.5 million during the Midterm Review. 10. The project has consistently exceeded all performance requirements relating to procurement. A demonstration of such performance was the result of the April 2011 procurement audit conducted by SGS on behalf of the Malawi Government. The audit identified the PPPC procurement processes as amongst the best in the country in terms of abiding by applicable regulations and procedures. This position has also been reflected several times by the World Bank Country Office in its procurement audits to the project. For these and other reasons, the RCIPMW Project Financial Management and Procurement systems have been rated satisfactory. C. PROPOSED CHANGES 11. The proposed reallocations of credit proceeds are detailed in Table 2 below. Component 1, Enabling Environment, would decrease by 5% from US$2.0 million to US$1.895 million to reflect lower costs to perform the planned activities. The most significant reallocation is in Component 3, Project Management, which results in a doubling of the original budgeted amount from US$2.0 million to US$3.88 million. A project contingency amount (US$1.5 million) was allocated to this Component as a result of the Midterm Review (MTR) as well as a strict set of measures put in place to further contain the high costs. At the MTR in June 2012 a new expenditure level was agreed for Project Management costs. The expenditure limit was set at US$3.5 million, translating into an average monthly expenditure rate of about US$40,000 through the current closing date of February 28, With the extension of the closing date to June 30, 2016, an extra US$0.388 million is being proposed for Project Management at an average expenditure rate of US$24,250 per month. The new monthly rate is therefore is about 40% less than the agreed target set in June Results Framework. The project s Results Framework is stipulated in the PAD Technical Annex of 2009 and is shown in Table 3. There has been some positive news in terms of relative growth of international bandwidth, internet penetration and price reduction for internet services. Actually the nation has exceeded most of the original results targets set in the Technical Annex. However, the affordability of the services in question is still low in relation to the per capita income of Malawi, which is less than US$400 per year. The E1 price (or the equivalent of approximately 1.5 Mbps) of US$4,500 per month is still at least ten times higher than in some neighbouring countries such as Mozambique, Tanzania and Rwanda. Thus the need to proceed with the RCIPMW Transaction which is expected to significantly reduce bandwidth prices in Malawi. 13. Closing date: The closing date for the credit is proposed to be extended by an additional 16 months, from February 28, 2015 to June 30, The project meets the OP/BP requirements for closing date extension. Project objectives continue to achievable provided that the closing date is extended. The performance of the implementing agency is satisfactory; the Bank and the borrower agree on actions that will be undertaken by the borrower to complete the project; neither the credit nor the country are under suspension of disbursements; and there are no audit reports outstanding or not satisfactory to the Bank. 17

18 14. The Recipient has in place an action plan to complete the project (see Table 1 below). According to the plan, implementation of all contracts/works should be completed by June 2015, followed by final testing and acceptance of the network and final payment in June Implementation schedule: The proposed implementation plan is as follows: Table 1 : Proposed Implementation Schedule Timeline Priority activities Contract finalization with preferred bidder Project extension to June 2016 effected Contract signing with preferred bidder Issuance of telecom license to the preferred bidder Q2 FY 14 Oct Dec 2013 Q4 FY14 Apr Jun 2014 Q4 FY15 Apr Jun 2015 Q4 FY16 Apr Jun 2016 Commencement of ESMF and RPF activities Commencement of land acquisition activities Commencement of activities to design technical, financial and legal aspects of a telecom backbone in Malawi Commencement of studies to dimension e-government user requirements (e-government implementation strategy) Passage of ICT Legislation in Parliament Cabinet endorsement of the national ICT policy and the civil service ICT policy Completion of ESMF and RPF reviews Issuance of environmental license Commencement of cable construction Completion of e-government user requirements formulation Completion of cable construction Commissioning of the VLP in Lilongwe Provisional acceptance of the regional network Completion of telecom backbone studies End of warranty period of the connectivity network Resolution of all items outstanding from the provisional acceptance procedures Final acceptance of the network Last payment for capacity purchase contract 18

19 Table 2: Proposed Fund Allocation for the RCIPMW Project Project Cost By Component and/or Activity Total US $ Million Original Allocation (2009) Total US $ Million Current Allocation (2012) Total US $ Million Disbursed Amount (June 2013) Total US $ Million Proposed Revised Allocation (2013) Allocation Variance Amount Remaining for Activities COMPONENT 1 - ENABLING ENVIRONMENT (0.105) Subcomponent 1 Capacity Building and advisory support to sector agencies (PPPC, MACRA, MoI and MoF) (0.230) BESTAP Subcomponent 2 Implementation of the ESMF and RPF (0.125) Subcomponent 3 Communications COMPONENT 2 -CONNECTIVITY Subcomponent 1 Subcomponent 2 Subcomponent 3 Detailed Feasibility Study, Financial Analysis, Tender Design and Advisory Support (0.100) Purchase of Internet Enabling the Establishment of Virtual Landing Point (0.500) - Provision of Broadband to Public Institutions

20 COMPONENT 3 - PROJECT MANAGEMENT Subcomponent 1 Core PPP Unit Technical Project Management (0.240) Subcomponent 2 Project Support Team Subcomponent 3 Project Implementation Subcomponent 4 Other Operating Costs TOTAL BASELINE COST Contingency TOTAL PROJECT COST (US $ ) TOTAL PROJECT COST (SDR as at 17 JULY 2013)

21 Table 3: Status of Results Indicators ITEM 1 DESCRIPTION International Bandwidth (Mbps) duplex PAD BASELINE (2009) PAD YR 4 TARGET (2013) Actual values Mar-10 Jul-11 Jun-12 Jun Internet User Penetration (%) 0.70% 1.50% 1.50% 2.26% 4.95% 5.94% 3 4 Total Teledensity (Both Fixed and Mobile) (%) Price of Wholesale International E1 Capacity ( US $) 12.00% 18% 18% 24.30% 30.01% 34.6% 21, , , , ,500 4, Average Price of Mobile Calls (US $ per minute) Number of Players Accessing Capacity on submarine Cables (off net) 0.34 for on net 0.40 for off net On net 0.25 peak hrs 0.12 off peak hrs Off net 0.45 peak hrs 0.26 off peak hrs On net 0.18 peak hrs 0.09 off peak hrs Off net 0.24 peak hrs 0.14 off peak hrs Retail Price of Internet Access (US $ per month) 128/256 kbps US$400/570 US$400/570 US$400/570 US$400/570 8 Number of Operational ISPs Number of PIAPs