Announcement of IDA Provides Fourteen Million Dollars Credit to Tanzania for a Tea Consolidation Project on June 5, 1980

FOR IMME~IA (, '. TE RELEASE World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A.• Telephone: (202) 477-1234 IDA NEWS RELEASE NO. 80/90 June 5, 1980 IDA PROVIDES $14 MILLION CREDIT TO TANZANIA FOR A TEA CONSOLIDATION PROJECT The International Development Association (IDA), the World Bank's affiliate for concessionary lending, has approved a $14 million credit to Tanzania for a project that will help to consolidate the operations of the Tanzania Tea Authority, the agency responsible for smallholder tea production. An earlier IDA credit of $10.8 million in March 1972 had assi~ted a smallholder tea development project in Tanzania. Over a five-year period, the new project will help to improve and strengthen the operations of the Tanzania Tea Authority and provide additional tea-processing facilities. The construction of one new factory, completion of another, and the re- equipment and rehabilitation of four factories will be financed. Transport facilities, s~are parts, and workshop tools will be provided. About 200 hectares (ha) will be planted to tea, and gaps totaling 630 ha in • existing planted areas will be filled. In addition, fuelwood plantations of eucalyptus will be established near each of four tea factories to supply firewood and help reduce fue 1 costs. About 176 kilometers of tea roads will be constructed and maintained in the lringa, Mbeya, Tanga, and West Lake regions. The Norwegian Agency for International Development will provide $1.6 million toward the cost of road construction. The Tanzania Tea Authority will receive technical assistance to help improve its technical management and operations. The project is expected to result in additional foreign exchange earni 19s from made tea exports estimated at $22.3 million net in current prices over the ;1ex~: ·ve years. The quality of tea processed in the existing four factories will be impn;".'.~d. Transport and handling costs will be reduced because of improved efficiency and better roads. Additional employment will resuJt from the tea factory ~xpansion and the estab- lishment of fuelwood plantations. The smallholder tea growers will benefit by being assured of a reliable processing outlet for their tea plantings. The $14 million IDA credit to Tanzania is for 50 years, including 10 years of grace. It is interest free but will carry a 3/4 of 1% service charge a year to cover IDA's administrative costs. NOTE: Money figures are expressed in U.S. doll~r equivalents. FORM NO. 1121 (5-76) T EC HN I CA L DA T A PROJECT: COUNTRY: TOTAL COST: Smallholder Tea Consolidation Tanzania $20 million • IDA FINANCING: $14 million, standard IDA terms OTHER FINANCING: Norwegian Agency for International Development $1.6 million; Government of Tanzania, $4.4 million IMPLEMENTING ORGANIZATION: Tanzania Tea Authority (TTA) P.O. Box 2663 Dar es Salaam, Tanzania ~able: TANTEA, Dar es Salaam Te 1ex No. 41130 PROJECT DESCRIPTION: It will finance construction of one new factory, the comple- tion of another, and rehabilitation of four factories; transport facilities; spare parts; workshop tools; establishment of fuelwood plantations; planting of 200 ha and filling gaps totaling 630 ha in existing areas planted with tea; construction and maintenance of 176 km of tea roads; and incremental staff and technical assistance for TTA. PROCUREMENT: Procurement of tea-processing machinery and equipment, vehicles, road equipment, and associdted spare parts ($8.2• million) will be bulked as far as possible and let on the basis of international competi- tive bidding in accordance with Bank/lDA guidelines. In bid evaluation, domestic manufac- turers will be accorded a 15% preference over the c. i .f. price or the existing rate of duty, which~ver is lower. Machinery, equipment, vehicles and spare parts which cannot be bulked in packages of $100,000 or more will be procured, up to an aggregate of $300,000, in accordance with the borrower's competitive bidding procedures which are acceptable to IDA. Almost all cc:·,tracts for civil works ($4.2 million) will be too small and scattered to attract international interest. They will be let by contracts following locally advertised competitive bidding in which foreign firms will be allowed to partici- pate. The establishment of fuelwood plantations and tea nurseries ($1.5 million), and road construction and maintenance work will be carried out by force account through TTA and the regional administrations, respectively, in accordance with procedures satisfactory to IDA. CONSULTANTS: Six internationally recruited experts (a Chief Engineer, two Resident Engineers, a Factory Superintendent, a Road Construction Engineer, and a Mechanical Engineer), for a total of about 252 man-months, as well as short-term consultants (6 man-months) will be needed. ECONOMIC RATE OF RETURN: ESTIMATED COMPLETION DATE: 21% 1986 - 0 - •