World Bank Documentdocuments.worldbank.org/curated/en/305491529285414765/pdf/Dis… · procurement method for rural pilot program. As has been indicated above, the project has encountered

The World BankMM: Telecommunications Sector Reform (P145534)

REPORT NO.: RES31823

RESTRUCTURING PAPER

ON A

PROPOSED PROJECT RESTRUCTURING

OF

MM: TELECOMMUNICATIONS SECTOR REFORM

APPROVED ON FEBRUARY 6, 2014

TO

MINISTRY OF PLANNING AND FINANCE

TRANSPORT & DIGITAL DEVELOPMENT

EAST ASIA AND PACIFIC

Regional Vice President: Victoria Kwakwa Country Director: Ellen A. Goldstein

Senior Global Practice Director: Jose Luis IrigoyenPractice Manager/Manager: Jane Lesley Treadwell

Task Team Leader: Rajendra Singh

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ABBREVIATIONS AND ACRONYMS

$ All dollars are in United States dollars unless otherwise indicatedITCSD Information Technology and Cyber Security Department of MoTCMoTC Ministry of Transport and CommunicationsMPT Myanmar Post and TelecommunicationPTD Post and Telecommunications Department of MoTCUSF Universal service fund


Note to Task Teams: The following sections are system generated and can only be edited online in the Portal.

BASIC DATA

Product Information

Project ID Financing Instrument

P145534 Investment Project Financing

Original EA Category Current EA Category

Partial Assessment (B) Partial Assessment (B)

Approval Date Current Closing Date

06-Feb-2014 31-Dec-2019

Organizations

Borrower Responsible Agency

Ministry of Planning and Finance Ministry of Transport and Communications

Project Development Objective (PDO)

Original PDOThe development objectives of the project are to: (a) improve the enabling environment for the telecommunications sector and extend coverage in selected remote pilot locations; and (b) establish priority eGovernment technological foundations and institutional capacity for Government to embark on its public sector reform program.OPS_TABLE_PDO_CURRENTPDOSummary Status of Financing

Ln/Cr/Tf Approval Signing Effectiveness ClosingNet

Commitment Disbursed Undisbursed

IDA-53530 06-Feb-2014 04-Apr-2014 27-May-2014 31-Dec-2019 31.50 12.37 16.72

Policy Waiver(s)

Does this restructuring trigger the need for any policy waiver(s)?No


I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING

The project implementation progresses slowly for the Myanmar Telecommunications Sector Reform. The current ISR rating for Implementation Progress is ‘Moderately Unsatisfactory’. Some activities are under implementation (Myanmar National Portal) and some are nearly completed (Spectrum Monitoring System, Universal Service Strategy). Regulatory work is progressing towards establishing the Myanmar Communications Regulatory Commission, and corporatization of the Myanmar Post and Telecommunications (MPT). Major work for the draft laws is completed, however, there is a time-intensive process for internal review and consultation before obtaining clearance from Attorney General’s office, submission to the Cabinet, and final approval of the parliament. The delays are beyond the control of the Project Implementation Unit, and it affects activities that will follow the establishment of the Myanmar Communications Regulatory Commission, and corporatization of MPT. The MCRC bill and MPT corporatization bill are finally to be approved by the Parliament. After approval by Parliament of the MCRC bill and MPT corporatization bill, the project will support both these agencies in setting up an independent telecom regulator and also a corporatized MPT.

Procurement implementation progress is rated Moderately Unsatisfactory. The overall capacity to manage procurement activities remain low, no staff are fully assigned to manage procurement activities but the Project has hired a procurement consultant on part time basis. Procurement process are ongoing for the following activities: eLeadership capacity building program; cybersecurity study; recruitment of a local safeguards consultant, a local eGovernment/ IT expert, and a local Financial Management consultant.

After designing and finalizing rural pilots following a long consultation process, they are ready for bidding. The Government considers this a high priority activity, and it is the only remaining large procurement package ($3 million) for which the bidding process has not begun. The Project has encountered two major procurement challenges: (a) restrictions on the eligibility of MPT’s participation for the bidding process under the current Procurement Guidelines, and (b) the procurement method this for this package, since the current Financing Agreement allows only the ICB, shopping, direct contracting and UN agency procurement methods.

At the time of project design several reforms were ongoing and were envisaged to be completed by the time the rural pilots would be undertaken. These reforms included the establishment of an independent regulator, issuance of more mobile licenses to operators and corporatization of MPT. To date, mobile licenses have been issued to four operators, which negates the use of open tendering for rural pilots although envisaged at project design. Limited tendering would be the most appropriate approach. Corporatization of MPT has not been completed and therefore its eligibility to participate in a tender process financed by the World Bank has emerged as a constraint. At the same time, MPT is the largest service provider and leaving it out from the tendering process would not be justified and impact on downstream government financed rural services on which this project aims to pilot.


The Government, in a letter to the World Bank (January 23, 2018) sought a waiver to allow for the participation of MPT. Noting that the participation of MPT is critical for achievement of project objectives, the Government requested the Bank, during January -February 2018 implementation support mission, for consideration to change the applicable procurement rules from Guidelines to Regulations, which provides flexibility in such cases to replace the waiver request.

Following its discussions with the Bank team during the January-February 2018 implementation support mission, the Government decided to reduce the budget for the rural pilots since some of them will be implemented through the USF that is expected to be set up in 2018. The released funding will be reallocated and used to accelerate or scale-up other activities supported by the Project. The Government requested a one-year no-cost extension of the Project’s closing date.

II. DESCRIPTION OF PROPOSED CHANGES

A Level II Restructuring (Country Director Approval) is proposed in response to the Government’s request. The implementation support mission (January-February 2018) discussed the details of Project Restructuring in a meeting with the Ministry of Planning and Finance (February 8, 2018).

The proposed changes are: (a) to apply paragraph 12(ii) of Section III the IPF Policy to the Project and provide Hands on Expanded Implementation Support (HEIS), (b) to reallocate budget (reducing rural pilots from $10 million to $3 million and scaling up or extending other relevant activities), (c) to apply the Procurement Regulations under the new Procurement Framework for all new procurements initiated after the effective date of the amendment, and modify the list of available procurement methods in line with the new procurement regulations, and (d) to extend the closing date of the Project by one year to allow delayed activities to be completed under the Project.

(a) Application of paragraph 12 (ii) of Section III the IPF Policy to the Project. The Government requested Bank’s close support in management of the rural pilot program procurement process. The rural connectivity pilot is a transformational activity that has high impact on the Project Development Objectives and downstream activities that the Government plans to deploy after the Project The project hired an international procurement consultant working part-time basis mostly from offsite. Therefore, the implementation capacity remains low, and it seems challenging to complete this critical rural pilot procurement package in a timely manner given the remaining time for the Project. Under these circumstance, the Bank considers applying for trigger paragraph 12 (ii) of the IPF Policy and providing Hands on Expanded Implementation Support (HEIS) to the implementation agency for the specific rural pilot package.

(b) Budget reallocation. The Government requested the funding for USF rural pilots to be reduced from $10 million to $3 million, as the Post and Telecommunications Department (PTD), the main implementation agency, will roll out the rural pilots using its funding collected from mobile operators (the obligation to pay two percent of the universal service levy of its relevant revenue into the Universal Service Fund under Telecom Laws and Rules). The $7 million balance will be reallocated to strengthen the Government’s implementation capacity and decision-making processes in the following key areas:


$3 million to scale-up the spectrum monitoring system. This is a scale-up activity to add cross-border monitoring systems in four locations. It will complement the spectrum monitoring and management systems implemented under sub-component 1(c);

$1.1 million to the enhanced cybersecurity Government Core Network Infrastructure (GCNI). In Myanmar, cyber security has been one of the highest priority topics for the Government. This will be a new additional activity under sub-component 3 (4) to develop the government’s secured network platform, which will include hardware/software installation and user training. The activity will support secured Government data transmission.

$0.9 million to extend and strengthen the project management support to the Information Technology and Cyber Security Department (ITCSD) of the Ministry of Transport and Communications (MoTC). This will be implemented through a contract extension of the current project management consultant in order to strengthen the implementation of sub-component 3(c), and to continue providing support for the Myanmar National Portal post-launch activities and local capacity building. Those are critical for a long-term sustainability.

The balance of $2 million will be utilized to further strengthening enable environment for connectivity and eGovernment foundations.

Please note that the only GCNI additional activity requires an amendment to the Financing Agreement (FA), while the other two scaled-up or extended activities fit within the broad description of project activities in the FA.

(c) Application of Procurement Regulations under the new Procurement Framework, and change of procurement method for rural pilot program. As has been indicated above, the project has encountered major challenges in the procurement approach for the universal fund rural pilot program component due to the restrictions on telecommunication provision in Myanmar’s regulatory framework (only four operators including MPT have been issued licenses for mobile services) vis-a-vis the rigid restrictions on procurement eligibility imposed in the Bank’s procurement guidelines which currently apply to the project along with the limited list of procurement methods allowed in the current Financing Agreement. The package for this component alone was originally estimated at $10 million and contributes substantially to achieving the project development objectives. Only four telecom/mobile operators exist in the market, and the incumbent (MPT) has the highest market share, but is still part of MoTC, the main counterpart of the Project. To overcome this shortcoming in the project design, the Borrower has requested to instead apply the new World Bank Procurement Framework, part of whose core principles, among others is underpinned by a fit for purpose approach and under which certain flexibilities could be considered on case by case basis. The team has reviewed this request by conducting a quick market analysis and find the request to switch to the Procurement Framework reasonable. The proposed restructuring would, specifically, allow MPT to participate in a limited tendering along with the other Myanmar licensed mobile operators. Since MPT is under the supervision of MoTC, the Bank has agreed with Government measures to mitigate conflict of interest that will be elaborated in the procurement plan and bidding documents.


(d) One-year extension of the Project’s closing date, the closing date will be changed from December 31, 2019, to December 31, 2020.

The proposed restructuring will allow the Project’s components to be streamlined to better focus on achieving the PDO, and to demonstrate more tangible and comprehensive impacts. PTD has already successfully completed installation and commissioning of seven spectrum monitoring stations in Yangon, Mandalay, and NPT. This experience will expedite the process of installing additional four spectrum monitoring stations at border areas to minimize cross-border interference. Specific sites of monitoring stations will be finalized in conflict- free areas and to the extent possible in existing government owned buildings in consultation with the CMU. Rapid implementation and deployment of additional spectrum monitoring stations as well as the simplification of the rural pilots procurement process and changeover to the new procurement framework will help in improving the project implementation progress rating to MS.

With the proposed restructuring, and the revised Results Framework, the PDO remains achievable and is unchanged. Also, the restructuring paper confirms that the project is compliant with legal covenants. There are no outstanding audits or IFRs

A. Financing and Disbursement

As of June 2018, the rate of disbursement is 43 percent of the total project amount.

The Restructuring proposes reallocating by expense category, by transferring $7 million from Category (2) Subsidy Payment for subprojects under Part 2(b) of the Project, to Category (1) Goods, Works, Nonconsulting Services, Consultants’ Services, Training and Operating Costs for all Parts of the Project, except Part 2(b) of the Project. The total envelope remains unchanged. Details by components are provided below and in the data sheet. This is reflected in a proposed modification to the Financing Agreement. The closing date of the project is extended by 12 months to 31 December 2020.

Original Amount of the Financing Allocated

Proposed Reallocation in Project Restructuring

CategoryUSD SDR USD SDR

Percentage of Expenditures

to be Financed(inclusive of

Taxes)

(1) Goods, works, non-consulting services, consultants’ services, Training and Operating Costs for all

21,500,000 14,060,000 28,500,000 18,860,000

100%


Parts of the Project except Part 2(b) of the Project

(2) Subsidy Payments for Sub-projects under Part 2(b) of the Project

10,000,000 6,540,000 3,000,000 1,740,000

100% of amounts payable for Outputs delivered under the respective Service Agreement

TOTAL AMOUNT 31.500,000 20,600,000 31.500,000 20,600,000

B. Results Framework

The PDO remains unchanged and is still achievable. Some minor edits were made to the result indicators. The remaining indicators are revised to show the target date 31 December 2020, which is consistent with the proposed closing date for the Project.

C. Changes to Allocation by Component

See the revised summary budget below.

The main changes by component are:

Component 1: Creating an Enabling Environment for connectivity

(a) Cross-border Spectrum Monitoring Systems, $3 million is added.

(b) $1 will be added to further strengthening enabling environment for connectivity.

Component 2: Extending Connectivity to Rural Areas

(a) Rural pilots will be reduced, and the budget is revised from $10 million to $3 million.

Component 3: Enabling eGovernment Foundations

(a) Enhanced cybersecurity Government Core Network Infrastructure, $1.1 million is added.(b) Extension and strengthening of project management support to ITCSD, $.9 million is added.(c) $1 will be added to further strengthening enabling environment for eGovernment foundations.


Component 4: Project Management

No change

Contingency and provision for exchange rate losses

N/A

Other Changes

Following the recommendations for social inclusion, the project will set up an accessible and functioning GRM.

III. SUMMARY OF CHANGES

Changed Not Changed

Change in Results Framework ✔

Change in Components and Cost ✔

Change in Loan Closing Date(s) ✔

Reallocation between Disbursement Categories ✔

Change in Disbursement Estimates ✔

Change in Procurement ✔

Change in Implementation Schedule ✔

Other Change(s) ✔

Change in Implementing Agency ✔

Change in DDO Status ✔

Change in Project's Development Objectives ✔

Cancellations Proposed ✔

Change in Disbursements Arrangements ✔

Change in Overall Risk Rating ✔

Change in Safeguard Policies Triggered ✔

Change of EA category ✔

Change in Legal Covenants ✔


Change in Institutional Arrangements ✔

Change in Financial Management ✔

Change in APA Reliance ✔

Change in Economic and Financial Analysis ✔

Change in Technical Analysis ✔

Change in Social Analysis ✔

Change in Environmental Analysis ✔

IV. DETAILED CHANGE(S)

OPS_DETAILEDCHANGES_RESULTS_TABLE

RESULTS FRAMEWORK

Project Development Objective Indicators PDO_IND_TABLE

Direct project beneficiariesUnit of Measure: TextIndicator Type: Custom

Baseline Actual (Current) End Target Action

Value 0 12 million 10 million Revised

Date 02-Dec-2013 06-Feb-2018 31-Dec-2020

Female beneficiariesUnit of Measure: PercentageIndicator Type: Custom Supplement


Value 0.00 20.00 50.00 Revised

Myanmar Communications Regulatory Commission Established as an Independent InstitutionUnit of Measure: Yes/NoIndicator Type: Custom


Value No No Yes Revised

Date 02-Dec-2013 06-Feb-2018 31-Dec-2020


Access to Telephone Services (fixed mainlines plus cellular phones per 100 people)Unit of Measure: PercentageIndicator Type: Custom


Value 10.00 108.00 70.00 Revised

Date 02-Dec-2013 06-Feb-2018 31-Dec-2020

Percentage of Spectrum Assignments Made within 30 days of ApplicationUnit of Measure: PercentageIndicator Type: Custom


Value 10.00 50.00 70.00 Revised

Date 02-Dec-2013 06-Feb-2018 31-Dec-2020

Access to Internet Services (number of subscribers per 100 people)Unit of Measure: PercentageIndicator Type: Custom



Date 02-Dec-2013 06-Feb-2018 31-Dec-2020

Myanmar National Portal OperationalUnit of Measure: Yes/NoIndicator Type: Custom



Date 02-Dec-2013 01-May-2017 31-Dec-2018

Intermediate IndicatorsIO_IND_TABLE

Number of Licensed Telecommunications OperatorsUnit of Measure: NumberIndicator Type: Custom


Value 1.00 140.00 10.00 Revised


Date 02-Dec-2013 06-Feb-2018 31-Dec-2020

Spectrum Management and Monitoring System EstablishedUnit of Measure: Yes/NoIndicator Type: Custom



Date 02-Dec-2013 06-Feb-2018 31-Dec-2020

Myanmar Post and Telecommunications CorporatizedUnit of Measure: Yes/NoIndicator Type: Custom



Date 02-Dec-2013 06-Feb-2018 31-Dec-2020

Unversal Service Strategy AdoptedUnit of Measure: Yes/NoIndicator Type: Custom



Date 02-Dec-2013 06-Feb-2018 31-Dec-2020

Number of Rural Telecom Pilots ImplementedUnit of Measure: NumberIndicator Type: Custom



Date 02-Dec-2013 06-Feb-2018 31-Dec-2020

Number of Applications Available on the National PortalUnit of Measure: NumberIndicator Type: Custom



Date 02-Dec-2013 06-Feb-2018 31-Dec-2020


Number of eGovernment Visioning and Capacity Building Training Conducted with (1) Senior Government Officials, and (2) line level project executivesUnit of Measure: TextIndicator Type: Custom


Value 0 0 total 6, (1) 3 and (2) 3 Revised

Date 02-Dec-2013 06-Feb-2018 31-Dec-2020

OPS_DETAILEDCHANGES_COMPONENTS_TABLE

COMPONENTS

Current Component Name

Current Cost

(US$M)Action Proposed

Component NameProposed

Cost (US$M)

Creating an enabling environment for connectivity 14.00 Revised Creating an enabling

environment for connectivity 18.00

Extending connectivity to rural areas 10.65 Revised Extending connectivity to rural

areas 3.65

Enabling eGovernment Foundations 4.79 Revised Enabling eGovernment

Foundations 7.79

Project Implementation Support 2.06 No Change Project Implementation Support 2.06

TOTAL 31.50 31.50

OPS_DETAILEDCHANGES_LOANCLOSING_TABLE

LOAN CLOSING DATE(S)

Ln/Cr/Tf StatusOriginal Closing

Revised Closing(s)

Proposed Closing

Proposed Deadline for Withdrawal

Applications

IDA-53530 Effective 31-Dec-2019 31-Dec-2020 30-Apr-2021

OPS_DETAILEDCHANGES_REALLOCATION _TABLE

REALLOCATION BETWEEN DISBURSEMENT CATEGORIES

Current Allocation Actuals + Committed Proposed Allocation Financing %(Type Total)

Current Proposed

IDA-53530-001 | Currency: XDR


iLap Category Sequence No: 1 Current Expenditure Category: GDS,WO,NON-CS,CS-TR,OC EXCEPT PT.2B

14,060,000.00 8,109,804.67 18,860,000.00 100.00 100

iLap Category Sequence No: 2 Current Expenditure Category: SUBSIDIARY PMTS FOR SUB-PROJ PT.2B

6,540,000.00 0.00 1,740,000.00 100.00 100

Total 20,600,000.00 8,109,804.67 20,600,000.00

OPS_DETAILEDCHANGES_DISBURSEMENT_TABLE

DISBURSEMENT ESTIMATES

Change in Disbursement EstimatesYes

Year Current Proposed

2014 0.00 0.00

2015 954,885.25 954,885.25

2016 2,719,267.94 2,719,267.94

2017 4,486,210.50 4,486,210.50

2018 6,700,000.00 4,100,000.00

2019 10,000,000.00 10,000,000.00

2020 4,860,332.19 9,239,636.31

Documents

World Bank Documentdocuments.worldbank.org/curated/en/305491529285414765/pdf/Dis… · procurement method for rural pilot program. As has been indicated above, the project has encountered