Sri Lanka - Tea Rehabilitation and Diversification Project

Document f The World Bank FOR OFFICIAL USE ONLY Report No. 9256 PROJECT COMPLETION REPORT SRI LANKA TEA REHABILITATION AND DIVERSIFICATION PROJECT (CREDIT 1240-CE) DECEMBER 28, 1990 Agriculture Operations Division Country Department I Asia Region This document has a restricted distribution and may be used by recipients on'v in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENT (Rs per US$) Year Rupees 1981 (Appraisal) 19.16 1/ 1986 (Completion) 28.81 1/ 1/ Based on average loan disbursement conversion rates. FISCAL YEAR Ja"uary 1 - December 31 WEIGHTS AND MEASURES Metric System ABBREVIATIONS AND ACRONYMS BOC Bank of Ceylon ERR Economic Rate of Return GOSL Government of Sri Lanka IRR Internal Rate of Return JEDB Janatha Estates Development Board MIS Management Information System MJED Ministry of Janatha Estates Development MPI Ministry of Plantation Industries MTIP Medium-Term Investment Programme NIPM National Institute of Plantation Management PCC Project Coordinating Committee PCR Project Completion Report PY Project Year SAR Staff Appraisal Report SDR Special Drawing Rights SPC State Plantation Corporation TA Technical Assistance TSDHA Tea Smallholder Development Authority  OR OFFICL USE ONLY THE WORLD BANK Washington, D.C. 20433 U.S.A. Offce of Dioctgr-Ceneral OpevatEman Eakiatin December 28, 1990 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Report on Sri Lanka Tea Rehabilitation and Diversification Prolect (Credit 1240-CE) Attached, for information, is a copy of a report entitled "Project Completion Report on Sri Lanka: Tea Rehabilitation and Diversification Project (Credit 1240-CE)" prepared by the Asia Regional Office with Part II contributed by the Borrower. No audit of this project has been made by the Operations Evaluation Department at this time. Attachment 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.  PROJECT COMPLETION REPORT FOR OFFICLAL USE ONLY SRI LANKA TEA REHABILITATION AND DIVERSIFICATION PROJECT (Cr.1240-CE) CONTENTS PREFACE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .i EVALUATION SUMMARY .... . . . . . . . . . . . . . . . iii PART I - PROJECT REVIEW FROM BANK'S PERSPECTIVE . . . . . . . . . . . . . 1 A. Project Identity . . . . . . . . . . . . . . . . . . . . . . . . . . 1 B. Background .1... . . . . . . . . . . . . . . . . . . . . . . . . . C. Project Objectives and Description ... . . . . . . . . . . . . . . 2 D. Project Design and Organization . . . . . . . . . . . . . . . . . . 3 E. Project Implementation . . . . . . . . . . . . . . . . . . . . . . . 4 F. Project Results . . . . . . . . . . . . . . . . . . . . . . . . . . 5 G. Project Sustainability .................... . -. 10 H. Bank Performance. 11 I. Borrower Performance .11 J. Project Relationship . . . . . . . . . . . . . . . . . . . . . . . . 12 K. Consulting Services and Contractors . . . . . . . . . . . . . . . . . 12 L. Project Documentation .12 PART II - PROJECT REVIEW FROM BORROWER'S PERSPECTIVE .*.. . . . . . . . . 15 PART III - STATISTICAL INFORMATION ... . . . . . . . . . . . . . . . . 17 1. Related Bank Credits .... . . . . . . . . .. ..... . . . . . 17 2. Project Timetable .... . . . . . . . . . . ...... . . . . . . 17 3. Credit Disbursements .... . . . . . . . . . ...... . . . . . 17 4. Project Implementation . . . . . . . . . . . . . . . . . . . . . . . 18 5. Project Cost and Financing ..20 A. Project Cost .20 B. Project Financing .21 6. Project Results ..21 A. Direct Benefits . . . . . . . . . . . . . . . . . . . . . 21 B. Economic Impact .21 C. Financial Impact .21 D. Studies .21 7. Status of Covenants ..22 8. Use of Bank Resources . . . . . . . . . . . . . . . . . . . . . . . . 23 A. Staff Inputs . . . . . . . . . . . . . . . . . . . . . . 23 B. Missions .23 TABLES 1. Tea Rehabilitation Component ... . . . . . . . . . . . . . . . . . 24 2. Diversification Component .... . . . . . . . . . . . . . . . . . . 26 MAPS IBRD 15659R, IBRD 15660R, IBRD 15661R, IBRD 15910 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.  - i - PROJECT COMPLETION REPORT SRI LANKA TEA REHABILITATION AND DIVERSIFICATION PROJECT (Credit 1240-CE) PREFACE This is the Project Completion Report (PCR) of the Tea Rehabilitation and Diversification Project for which a credit of US$20 million (SDR17.8 million) was approved on May 4, 1982. The Credit closed on September 30, 1986 with the final disbursement made on April 22, 1987. The undisbursed balance of US$6.5 million (SDR5.4 million) was cancelled. This report was prepared by an FAO/World Bank Cooperative Programme mission / which visited Sri Lanka in April/May I990.21 It is based, inter alia, on the Staff Appraisal Report, the Development Credit Agreement, supervision reports, correspondence between the Bank and the Borrower, the draft Project Completion Report prepared on behalf of GOSL by a local consultant and discussions with staff of the various implementing agencies. 1/ Messrs. H. Trupke (Economist, Mission Leader) and K.K. Aw Yong (Agronomist). 2/ FAO/CP's report was reviewed by ASlAG and, apart from some minor corrections, remains as submitted.  iii SRI LANKA TEA REHABILITATION AND DIVERSIFICATION PROJECT (Credit 1240-CE) PROJECT COMPLETION REPORT EVALUATION SUMHARY Obiectives 1. The main objective of the project was to reduce tea production costs while improving tea quality. This was to be achieved through the rehabilitation and diversification of public estates and the rehabilitation of tea factories managed by the two major Government-owned corporations, the State Plantation Corporation (SPC) and the Janatha Estate Development Board (JEDB). The project was to replant and in-fill tea on 5,600 ha, rehabilitate soil conservation structures on 5,300 ha and diversify 8,200 ha of unprofit- able low-yielding tea lands into spices and fuelvood. In addition, 62 Government estate and 22 private tea factories were to be rehabilitated, the management and fina.cial control of SPC and JEDB were to be strengthened, and the social infrastructure for estate labour improved. In addition, the scope and modified financial procedures for a smallholder replanting programme were to be tested on a pilot basis. Implementation Experience 2. The project was planned to be implemented over a period of four years, starting in January 1981 (with retroactive financing) and ending December 1984. Allowing time for unforeseen delays, the project was expected to be completed by September 1985 with final disbursements made by September 1986. Total costs were estimated at Rs695 million (US$33.1 million). An IDA credit ot SDR17.8 million (US$20 million) was made available. 3. Tea replanting on estate land progressed satisfactorily and 1,513 ha, 86Z of the SAR estimate, were replanted by the end of the project. In- filling, however, fell short by about 252 of the appraisal target with about 2,915 ha actually covered. This was due to unsatisfactory financial arrangements and agronomic problems (see para 19). Generally, replanting, in- filling and subsequent maintenance was carried out in a satisfactory manner. Soil conservation structures on 4,935 ha (922 of the appraisal target) were rehabilitated. 4. The diversification component of the project was planned to be implemented during a three-year period, beginning in PY2. Insufficient time for start-up was allowed and tea estate personnel did not have the required technical knowledge in the cultivation of spices and fuelwood. These problems were compounded by a lack of planting m;.-; {al, especially in the case of  iv pepper and fuelwood, as well as deteriorating prices for cardamoms. Subsequently, project targets were revised downwards but even the revised targets could not be fully achieved. At project completion, a total of 5,397 ha, 711 of the appraisal estimate, were diversified (see paras 21 and 22). Based on a more detailed assessment during implementation, the tea factory rehabilitatio-n programme was scaled downward. A total of 58 estate factories and 16 private factories were rehabilitated, against the appraisal target of 62 and 22 respectively. Although the programme initially suffered from some delays and encountered problems in the quality of locally supplied equipment (see paras 24 and 25), it can be considered successful since both tea quality and factory labour efficiency has improved (see para 26). 6. The pilot programme to replant 100 ha of smallholder tea was a failure, as only 13 ha were replanted. The main problems were delays in obtaining credit and the csimbersome linkage between subsidy payment and credit recovery. An already cxisting programme was less complicated and thus preferred by farmers. As planned, the Tea Smallholder Development Authority (TSHDA) was strengthened through the recruitment of 21 additional extension officers (see para 31). 7. Following the consultant's findings, the social infrastructure component was scaled down from appraisal estimates and nearly all revised targets were achieved. The facilities for local training of JEDB and SPC staff and estate managers were established. Howev;., due to delays in the construction of facilities and appointment of local consultants as trainers, only a few training courses were conducted during the project period. Generally, the technical assistance (TA) provided was considered useful. Only the TA to improve the management information system (MIS) did not fulfil expectations, as the procedures and formats prepared by the consultants proved to be unsuitable for estate management purposes (see para 30). 8. Total prGject costs were re-estimated at US$20.9 million. At the time of credit closing in September 1986, a balance of US$6.5 (SDR5.4 million) remained undisbursed and was cancelled. This shortfall in disbursement was mainly due to the depreciation of the Sri Lankan rupee against the US dollar (para 12) and the reduction of the diversification component. Results 9. At appraisal, it was estimated that without the project the production of 'made tea' would decline from 24,904 tons to 17,709 tons by the year 2010. As a result of the project, this decline was expected to be arrested and a total output of 31,874 tons was expected to be reached by year 2010. However, due mainly to a shortfall of 25? under the in-filling programme, the PCR mission estimates 2010 production slightly lower at 30,649 tons. 10. The economic rate of return (ERR) at appraisal was estimated at 29Z for the project as a whole. The re-estimated ERR of the project is 40X. The increase is due mainly to the substantial increase in the economic price of 'made tea'. The re-estimated financial rate of return (IRR) for the project  v as a whole is 132, considerably below the SAR estimate of 21Z. This reduction can mainly be attributed to the steep increases in daily labour rates, fertilizer prices and cost of fuel and power which would not fully compensated by the increase in tea prices. Sustainability 11. Generally, field activities and facilities initiated or established under the project continue to be well maintained. Both the estate and private factories rehabilitated with project funds are kept in operating order. The further deterioration of world market prices, especially for cardamom and cloves, constitutes a risk for the financial viability and sustainability of the diversification component. It can, however, be assumed that the project will maintain an acceptable level of net benefits throughout its economic life. Findings and Lessons Learned 12. Although the project can be considered a success, some subcomponents, especially the diversification programme, suffered design flaws. The implemention experience suggests a number of specific lessons to be learned (see paras 39 and 41). More attention should have been paid to the level of technical knowledge of staff in charge of the diversification component, to the supply and quality control of planting material and the capacity and capability of local machinery producers.  - 1 - PROJECT COMPLETION REPORT SRI LANKA TEA REHABILITATION AND DIVERSIFICATION PROJECT ( Cr.1240-CE) PART I - PROJECT REVIEW FROM BANK'S PERSPECTIVE A. Prolect Identity Project Name : Tea Rehabi'litation and Diversification Project Credit No. s 1240-CE RVP Unit : Asia Region Country Sri Lanka Sector : Agriculture Sub-sector : Tree Crops B. Background 1. Recognizing the pivotal role of agriculture in stimulating economic growth and rural development, the Government of Sri Lanka's (GOSL) development plans and programmes have persistently focused on: (a) increasing agricultural employment, as well as improving income levels; (b) increasing self-sufficiency in basic food items; and (c) expanding export earnings both from traditional agricultural exports, (i.e. mainly tea, rubber and coconut) and 'non-traditional' items such as coffee, cocoa and spices. 2. The Government's strategy for achieving these objectives has emphasized better utilization of the existing potential through institutional and policy improvement and rehabilitation of the production base, including stepped-up programmes for rehabilitation of plantation tree crops. The tree crop sector is second only in importance to the food crop sector within Sri Lanka's agricultural economy. Over the last decade tree crops accounted for over 70? of total export earnings and provided some 45? of all agricultural employment. Tea, the most important export crop, was responsible for about one-third of total export earnings. The total area under tea in 1978 was estimated at about 240,000 ha, two thirds of which was grown on State-owned estates. However, the tea sub-sector remained neglected due to uncertainties of ownership rights prior to nationalisation in 1975. This resulted in a lack of attention to stand maintenance, replanting, and in-filling and factory modernization.  3. In an effort to improve the above situation, GOSL had requested IDA aasistance. The first tree crop project (Tree Crop Rehabilitation Project: Cr.818-CE) supported the rehabilitation of high-country tea areas, while the sabsequent Tree Crops Diversification (Tea) Project (Cr.819-CE) was to assist the division of u-'rofitable mid-country tea estates into small units to be planted with various crops such as pepper, cardamom, cloves and fuelwood. This latter project was approved in 1978, but cancelled in 1980 due mainly to the opposition of labour unions to the division of estates and the resulting conversion of their membership to independent farmers. The project under review, which did not involve the division of the estates, was therefore launched to support the development of the tea sub-sector. C. Project Objectives and Description 4. Objectives. The major objective of the project wae to reduce tea production costs while, at the same time, improving tea quality. This was to be achieved by: (a) increasing the productivity of existing tea lands in potential areas of the low and high country; (b) rehabilitating factories; (c) improving leaf transport; and (d) diversifying out of tea, in unprofitable low-yielding lands in the mid-country, into minor export crops and fuelwood. In addition, the project aimed to: (a) strengthen the management and financial control of the two major Government-ownel tea producing corporations; (b) stabilize tea producing lands through soil conservation practices; and (c) improve the welfare of estate workers. 5. Components. The project included the fc__owing main components: (a) Field Programme: continuing tea replanting (1,762 ha); and expanding in-filling programmes in high and low country areas (3,896 ha); renovation of soil conservation works (5,345 ha) and diversifying non-viable tea and abandoned tea areas into minor export crops (2,526 ha) and fuelwood plantations (5,683 ha); (b) Processing and Storage Facilities: expanding and rehabilitating 84 tea factories (62 State and 22 private) and providing 18 cardamom drying barns; (c) Providing field and nursery equipment; (d) Providing additional vehicles for green leaf transport; (e) Constructing 390 new labour houses, rehabilitating 3,744 line houses (including the renovation of 1,935 line rooms) and improving water supplies for estate labour; (f) Improving project area medical facilities; (g) Providing local and overseas training and strengthening local training facilities to improve skills in management and technical fields;  - 3 - (h) Providing technical assistance for the housing, medical and factory components, and ior improving financial management; (i) Providing extension support for smallholders in a pilot area; (j) Providing staff, equi, lent and vehicles to improve 3dministration; and (k) Providing funds for future project preparation. 6. The project was expected to be implemented over a period of four years at a total cost of US$33.1 million. The project area consisted of three geographically distinct tea growing regions. The public estate rehabilitation and diversification components, including the factory rehabilitation, accounted for over 972 of total costs and were to be implemented by the two public sector corporations: Janatha Estates Development Board (JEDB) and State Plantations Corporation (SPC) which then controlled 602 of tea lands and 70? of tea production. Besides the support from the project, the corporations were also to receive funds from the Tea Cess for tea and spice planting programmes, some factory development and 'made tea' production. D. Project Design and Organization 7. Design. The concept of the project was consistent with the Government's development strategy which emphasized restoring productivity of the export oriented tree crop sector. The project concept was not particularly innovative since it was the third project in support of the tea sub-sector. However, it was the first attempt to diversify unprofitable tea and abandoned lands into better suited crops under estate management. 8. The project was prepared by JEDB and SPC with the Ministry of Finance and Planning acting as coordinator. Since the rehabiliation and diversification components were designed and appraised by two separate missions, the project lacked an integrated approach and, due to time constraints, no study on land utilisation or adequate pre-planning of the various facets of the project activities was carried out. These shortcomings required numerous adjustments throughout the life of the project. Also, the pilot smallholder replanting programme suffered from a cumbersome design of the financing procedures (see para 31). 9. Generally, the project had too many components and covered too much area for easy implementation and supervision, and staff lacked proper training to administer such a large and complex project. The provision of social infrastructure, with its many facets, overloaded the project effort, and the coverage of 84 widely dispersed estates gave rise to numerous logistical problems. In designing the project, it was erroneously assumed that the tea estate staff would have the required technical know-how in the cultivation of spices and fuelwood, and the three-year period allowed for the implementation of the diversification component was too short. In designing the tea factory rehabilitation component, more emphasis should have been given to technical innovation rather than to the replacement of old machinery with similar type  -4- of equipment (para 25). The timing of the project, however, was most appropriate as it came in the wake of the then recent liberalization of the national economic policy. 10. Organization. The project was to be implemented mainly by five individual Regional Boards (JEDB I - Hatton; JEDB II - Kandy; JEDB IV - Nawalapitiya; SPC I -Matale and SPC IV - Galle) and the Ministry of Janatha Estates Development (MJED). The three JEDB Regional Boards were to implement the project in the high and mid-country, whereas the two SPC Regional Boards were responsible for implementing the project in the low country. Each implementing body designated an existing Director or Chairman as Project Director. The Tea Smallholder Development Authority (TSHDA) was responsible for the pilot tea smallholder support component. A Project Coordinating Committee (PCC) was set up, with the Secretary of the Ministry of Janatha Estates Development as Chairman, to coordinate and monitor progress of the project and remove bottlenecks in implementation. 11. Loans for private factories and smallholders (about US$1 million) were to be provided through the Bank of Ceylon (BOC). The roles and responsibilities of the institutions and agencies responsi' v for project implementaticn were clearly defined at appraisal and understood by all parties. The fact that project implementation rested with existing agencies and institutions, whose roles were already well defined, helped considerably in achieving most of the project objectives. Moreover, it was mostly the project's focus on tea replanting, in-filling and factory rehabilitation at the estate level which contributed to the project's success. E. ProJect Implementation 12. Critical Variances in ProJect Implementation. The project was planned to be implemented over a period of four years, starting in January 1981 (with retroactive financing) and ending December 1984. Allowing time for unforeseen delays, the *) 3ject was expected to be completed by September 1985 and disbursements by September 1986. It was expected to become effective in September 1982 but, because of the delay in signing of the Subsidiary Loan Agreement between the Government of Sri Lanka (GOSL) and BOC and the delay in transfer of all project estates to the JEDB and SPC, it became effective only on November 18, 1982. An IDA credit of SDR17.8 millior (US$20 million equivalent) was made available. At the time of credit closing in September 1986, a balance of SDR5.4 million remained unspent. This shortfall in disbursement was due mainly to the depreciation of the Sri Lankan Rupee against the US dollar from 19.2 Rupees per US$ in 1981 to about 29.4 Rupees per USS in 1987; and the downward revision of the diversification component and other appraisal targets. 13. About 872 of the area earmarked at appraisal for rehabilitation and 712 of the area to be diversified were actually covered, and the performance of the smallholder rehabilitation component fell considetably short of expectation. In addition, the social infrastructure sub-component was substantially scaled down during implementation (see para 28). However, allocations for technical assistance and provision for administative support were overspent, as indicated in paras 30 and 32 respectively.  14. A more careful preparation of the diversification componenit could have resulted in a smaller variance between planned and actual implementation. Since the tea estate corporations had little or no experience with spice and fuelwood production, it was unduly optimistic to assume that a target of over 8,200 ha could be achieved over a 3-year period. Only 13 ha of smallholder tea were replanted, against 100 ha estimated at appraisal, which can also partly be attributed to a shortcoming in the design of this component (see paras 8 and 31). The lack of detailed background information on the calculation and breakdown of project costs was a disadvantage to project implementing staff. As a result, the necessary rapid start-up of the project was not possible. Over-expenditure on certain allocations and the need for subsequent reallocation of project funds could also be attributed to insufficient information on SAR cost calculations. 15. Project Risks. The main project risks, the l'mited experience of the Corporations in spice cultivation and processing, weaknesses in management and limited participation by smallholders, were correctly identified. However, the project provided only the support to strengthen management, while insufficient provision and care in design and formulation was made to minimise the other risks. 16. Unforeseen Factors Affecting Proiect Implementation. The severe drought in 1983 hqd resulted in high casualty rates, especially in spices. In many areas the planting of crops, especially peppers, was suspended to allow the establishment of more shade. Partly as a result of this delay, original project targets had to be revised and project implementaticn had to continue well into 1986 to achieve even these downward adjusted targets. F. Project Results 17. General. The project as a whole can be considered a success, as it has met all of its main objectives, namely to reduce tea production costs while improving the tea quality, to strengthen management and financial control of the major tea producing Corporations, to stabilize tea producing lands through soil conservation and to improve the welfare of estate workers. The success of the project formed the basis for the formulation of the Fourth Tree Crop Project (Cr.1562-CE), which was approved by the World Bank Group in 1985. 18. Field Programme. At appraisal, it was estimated that a total area of 11.620 ha would benefit from the rehabilitation component of the project. The comparison between appraisal targets, revised targets and final achievements is summarized below: Category SAR Revised Final Estimte Etimate Achlvem_nt (ha) Replanting tea 1,762 1,618 1,518 In-filling too 8,696 2,916 2,916 Soil conservation 5,846 4,936 4,985 Fuelwood planting 617 992 992 Total 11,620 10,65 10,855  19. The most notable variance between appraisal estimates and final achievements is the shortfall of 25Z under the in-filling programme. The main reason for this lower level of achievement was the lack of replanting incentives. The Tea Commissioner was not prepared to pay Tea Cess grants on teas in-filled during the second year of pruning, which applied mainly for JEDB I. In addition, in some areas patch in-filling suffered from a high casualty rate at the patch edges, due to competition for moisture from Eragrostus. Generally, however, replanting and in-filling, as well as subsequent maintenance, was carried out in a satisfactory manner. 20. At appraisal, it was estimated that without the project, the production of 'made tea' would decline from 24,904 tons to 17,709 tons by the year 2010. As a result of the project, this decline was expected to be arrested and a total output of 31,874 tons would be reached by 2010. Due mainly to the reduced in-filling programme, a slight downward adjustment of the long-term production forecast seems necessary as shown below: Incremental Production of Made Tea 1990 2000 2010 ----------'000 kg ------------ SAR 6,119 11,244 14,165 PCR 8,009 11,175 12,940 21. The diversification component comprised the establishment of pepper, cardamom, cloves and fuelwood to replace non-viable mid-country tea. In addition, fuelwood was planted on abandoned tea lands to supply factories, to provide shelter belts and to aid soil conservation. A crop-wise comparison between SAR targets, revised targets and final achievements is given below: Crop SAR Revised Final Estimate Estimate Achievement ------------ ---------(ha) ---------------- Pepper 1,071 713 603 Cardamom 1,105 949 905 Cloves 350 294 301 Sub-total 2,526 1,956 1,809 Fuelwood 5,066 3,872 3,588 Total 7,592 5,828 5,397 22. The reduction in the area under pepper was mainly a response to the drought conditions, the lack of planting material in the early stages of the project and casualties after planting, since shade trees were not planted in  advance. The lower than anticipated cardamom plt.ntings were mainly a reflection of the considerably deteriorating prices for cardamom in the world market and subsequent low returns. This is also reflected in the reduced programme for construction of cardamom drying barns. In addition, the whole spice programme suffered from difficulties in obtaining high quality planting material in adequate quantities. During a reassessment of the estate land, it was found that a number of areas were above the considered economically viable minimum yield of 700 kg of made tea per :;ectare and were therefore not diversified into spices and fuelwood. As a result of this finding, most of the fuelwood planting (about 2,400 ha) took place on abandoned tea land and only 1,188 ha of non-viable mid-country tea was replaced by fuelwood, against the SAR estimate of 2,481 ha. The fuelwood programme also suffered from a lack of planting material and mixed varieties. Another factor that influenced the downward revision of the diversification targets was the objection of labour unions, fearing that rapid diversification would result in labour displacement. 23. Factory Rehabilitation. Tea factory rehabilitation was envisaged to take place in 32 JEDB, 30 SPC and 22 private factories processing their own and smallholder leaf, totalling 84 factories in all. Subsequent to an asEessment by the factory rehabilitation consultants, this target was reduced slightly and 29 JEDB factories, 29 SPC factories and 16 private factories, totalling 74, were renovated. Factory rehabilitation also progressed slower than anticipated, as it generally suffered from late delivery of equipment and delayed commissioning. 24. Most of the private tea factories were heavily indebted, with mortgages on all fixed assets. It was only after the agreement of BOC to consider the new factory equipment, to be provided under the project, as movable assets and suitable for collateral, that loan disbursement could commence. A total of Rsl9.8 million were disbursed against SAR estimates of Rs24.6 million. In spite of these start-up problems, the implementation of the component as per the revised target was completed on time for credit closing. All rehabilitated factories are reported to be operating at improved performance levels. Repayment of the private factory rehabilitation loans is reported by BOC to be progressing satisfactorily. 25. Poor quality of the new factory equipment supplied, especially of furnaces and driers, constituted the main problem in implementing this component (see para 43). This problem should have been rectified at an early stage. In addition more emphasis should have been given to innovation rather than to the replacement of factory equipment. For instance, provisions should have been made for colour separators to expedite tea cleaning and larger factories should have been provided with standby power to avoid production losses during extensive power failure. The related green leaf transport sub- component, consisting mainly of the purchase of vehicles, was implemented without any major deviation and has speeded up the transport of tea leaves from the fields to the factories. 26. No detailed figures were available to evaluate the impact of the factory rehabilitation component. However, based on a sample survey of ten factories carried out by a local consultant on behalf of MJED, the average net  sales price of 'made tea' is estimated to be about 62 higher than without project intervention. Also, the share of main grades has increased by 2.45Z on the aveLage through project intervention. Further, the average output per factory worker has increased by 7.14 kg of 'made tea' per day. 27. Field and Nursery Equipment. The main variance under the rehabilitation component was that 1,841 knapsack sprayers were bought against an appraisal estimate of only 933. Under the diversification component, less water pumps were purchased but sprinkler systems increased. Cardamom drying barns were reduced from 18 to 10 (see para 6.6) and also only 8 pepper drying floors were constructed, due to the scaling down of the pepper planting programme. 28. Social Infrastructure. The investment included the upgrading of labour housing on tea estates and the improvement of medical facilities. The implementation performance of selected main sub-components is st'mmarized below: C.o"nent SAR Revised Final Estimat Estimat Achievmont ----------(units)---------- Renovation of lIin; rooms 1,936 1,627 1,160 Construction of twin cottages 890 824 86e Improvwe_nt of dispensaries 107 6S 41 Construction of now 7 7 6 dispensaries Procurement of ambulance* go 28 25 The main divergence occurred in the renovation of line rooms where 602 of the SAR target (762 of the revised target) was achieved due to a lack of skilled construction workers, materials and alternative accommodations during the construction period. Also, the targets under the medical sub-component were not reached. However, only indicative provision was made at appraisal, with details to be prepared by the medical consultant provided under technical assistance. As a result of that review, most of the physical and financial targets were adjusted downwards. 29. Staff Development and Training. As planned at appraisal, a staff development and training coordinating capability was established within the National Institute of Plantation Management (NIPM) of the MPI, with the objective of improving management and technical skills of the JEDB and SPC Boards, as well as estate managers. However, due to delays in the allocation of adequate buildings to NIPH and administrative difficulties in the appointment of local training consultants, only a few training courses were organized during the project period. The overseas training course programme was disrupted due to the civil disturbances, and only 76 man-months of the 95 man-months allocated were utilized. No records were kept of the placement of  people trained, although it was reported that not more than 50Z of the staff trained continuei with the respective organizations. 30. Technical Assistance. Twenty-nine man-months of local expertise and 16 man-months of international assistance were provided, mainly to improve the management information system (MIS) and management procedures within the JEDB and SPC. These consultancies were fully utilised, but the MIS formats prepared were unsatisfactory for estate management purposes and did not provide the Regional Boards with adequate information to monitor estate management. Technical assistance (TA) was also provided for the housing programme (42 man-months), the medical programme (8 man-months) and for factory rationalization (8 man-months). In addition, a 7 man-month consultancy was allocated to the TSHDA to carry out an evaluation of each proposal for private factory rehabilitation; and 3 man-months of cor.sultancy time was approved for the computerization of the corporations. All the consultancies were fully utilized and, except for the MIS, considered beneficial in supporting project activities. 31. Tea Smallholder Assistance. Under this pilot programme, a total of 100 ha of smallholder tea was to be replanted. New financial arrangements were developed, whereby farmers had to obtain a commercial loan for the purchase of clonal planting material, with recovery being made by TSHDA from the Government replanting cess. Only 13 ha were replanted, and the shortfall can be attributed mainly to delays in obtaining credit and the cumbersome linkage between replanting payments and credit recovery which required farmers to deal with two different agencies. The already existing Tea Cess replanting grant programme of TSHDA required farmers only to deal with one agency and was thus preferred by them. 32. Administrative Support. Under this component, provision was made for office improvement, purchase of equipment and vehicles for estate personnel transport and trucks for the collection of spices and transport of fuelwood. The financial allocation for the component was considerably overspent, due mainly to the additional procurement of 18 trucks, 38 tractors and 16 trailers, as well as equipment for soil analysis. 33. Prolect Preparr ion. As a basis for future project preparation, funds were allocated by ! project to SPC and JEDB to prepare a Medium-Term Investment Program (MT!k, based on a field-by-field classification of estates. However, additional consultancy funds were required to complete the investment plan, which were charged against the TA allocation. The Fourth Tree Crop Project (Cr.1562-CE) was formulated taking into account the findings of the MTIP study. 34. Economic Rate R aeturn. At tpraisal, the economic rate of return (ERR) was estimated at 29Z for the project f' a whole and at 30? and 26Z for the rehabilitation and diversification compo..ants respectively. Using 1990 constant prices, the re-estimated ERR amounts to 402 for the project as a whole, 472 and 26Z for its two cotpoltiiL;S respEetively. The higher re- evaluated ERR is mainly due to a substantial increase in the economic price of 'made tea'.  - 10 - 35. Financial Performance. The main financial benefits were to come from a reduction in tea operating costs, a more effective use of fertilizers and agro-chemicals and savings of fuel and power due to the use of more efficie.it factory machinery. Cost data available to the mission were not sufficiently detailed to allow verification of attained cost savings. The financial rate of return (IRR) for the project as a whole was estimated, at appraisal, at about 21Z, 19? for the rehabilitation component and 242 for the diversification component. The recalculated IRRs amount to 13?, 12X and 162 for the project as a whole and its two components respectively. The reducti3n can partly be attributed to the steep increase in daily labour rates from Rs11.69 in 1981 to Rs4l.96 in 1989 for female labour and frem Rsl4.04 to Rs4l.96 for male labour. Fertilizer, fuel, and power costs increased from Rsl7.0/kg of made tea in 1981 to Rs49.93/kg of made tea in 1989. These increased cost components were not fully reflected by increasing tea prices. In the case of the diversification comp-nent, increasing labour costs were compounded by a decrease in the commodity prices. For instance, pepper prices decreased from Rs101.88/kg in 1987 to Rs69.09 in 1989. The recalculated rate of return for the diversification component is further depressed due to the reduction in the area actually covered. 36. Project Impact. Through the improvement of the production base, the project had a significant impact on the tea sector, halting the previously encountered trend of declining production and productivity of the tea estates in the project area. In particular, the in-filling and the rehabilitation of soil conservation structures and drains, as well as the fuelwood planting programme, had a positive influence on the physical environment, halting gully erosion and top soil losses on over 12,000 ha. Through factory rehabilita- tion, more efficient and cost effective technology was introduced. The conversion of driers from oil to wood from rubber trees resulted in reduced foreign exchange requirements for energy. 37. The social environment was ameliorated through the improvement of estate labour housing and medical infrastructure aud services. The institutions involved in project implementation benefitted considerably from the project, as their staff capabilities were upgraded and/or increased. Their managerial, financial and operational capacities were also improved. G. Project Sustainability 38. Generally, field activities and facilities initiated/established under the project, continue to be well maintained and both the estate and private factories rehabilitated with project funds are kept in operating order. The further deterioration of world market prices, especially for cardamom and cloves, constitutes a risk for the financial viability and sustainability of the diversification component. Generally, however, it can be assumed that the project will maintain an acceptable level of net benefits throughout its economic life.  - 11 - H. Bank Performance 39. The Bank performed well from identification through project appraisal. A total of six supervision missions were fielded between August 1982 and September 19L6, generally with about 8-month intervals. Only the last supervision mission took place over 14 months after the previous mission (see Part III/8). Main lessons learned from project implementation that may be relevant to other Bank-financed projects are: (a) Where large-scale introduction of new crops on existing estates is envisaged, prior assessment of the technical capability of staff to carry out such a programme would be required. Alternatively a pilot project approach could be undertaken (see para 14). (b) Before launching any large-scale planting programme, the availability of adequate planting material would have to be assured (see para 22). (c) When local procurement of large quantities of highly specialized factory equipment is envisaged, the capability of the local producers to deliver quality products in a timely manner has to be ensured (see paras 25 and 43). (d) When launching a major factory rehabilitation programme, besides renovation, emphasis should be given to innovation to modernize the industry and enhance productivity (see para 25). (e) If new loan disbursement procedures for smallholder programmes are developed for project purposes, care must be taken that they do not become obstacles to project implementation but rather provide incentives for participation (see para 31). (f) The experience of this project shows that it is feasible to have a successful project run by public sector enterprises if they are financially and managerially strengthened. I. Borrower Performance 40. The Borrower performed well throughout the whole project. The project coordinator, project managers at regional level, and their staff showed dedication to their duties. The Project Coordinating Committee, besides playing a vital role in coordinating the numerous activities, ensured that procurement procedures, disbursement procedures and progress reporting requirements were adhered to. The Planning Units established in the Head Offices of both Corporations also performed their tasks well. 41. The Borrower adopted all the agreed covenants (see Part III/7), except for those requiring regular submission of audited accounts, which were submitted with considerable delays. The draft PCR preparation was one year behind schedule. The main experiences gained by the borrower were: (a) Tenders for complex technical installations including civil works, equipment and auxiliary supplies should be issued on a package basis,  - 12 - rather than by single components ensuring proper coordination of deliveries and avoiding unnecessary delays (see para 43). (b) Adequate staff allocation should be made to ensure timely auditing, in compliance with the respective covenants. (c) Care should be taken in selecting suitably qualified consultants to develop monitoring and evaluation systems (see para 30). J. Project Relationship 42. The Bank-Borrower relationship was satisfactory throughout the project period. A fruitful dialogue was maintained between GOSL, implementing agencies and the Bank. All ministries and agencies collaborated fully with the World Bank missions at the preparation and appraisal stages. The constructive approach to supervision adopted by both the Bank and the Borrower, including the willingness to make adjustments when the need became evident, more than compensated for any oversights (or judgements based on insufficient information) at preparation/appraisal. K. Consulting Services and Contractors 43. The function and performance of consultants has already been described in para 30. Contractors and suppliers played a major role in the project. At appraisal, approximately 22Z of total project costs were estimated to be incurred for factory rehabilitation consisting of civil works but mainly the supply of machinery and equipment. Civil works for factories were generally carried out in a satisfactory manner. Serious problems arose with factory equipment, especially furnaces, driers and rollers due to poor casting and/or finishing. Furthermore, due to inadequate back-up service from manufacturers, delays were encountered during commissioning. The manufacturers stated that most of these problems were due to cash flow problems and difficulties in retaining qualified staff. In some cases serious delays occurred due to a lack of coordination between civil works, installation of machinery and auxiliary works required (such as the provision of switch gear for power supply), as separate tenders were issued for each individual activity. The standard of civil works of the estate labour housing programme was not always satisfactory which can be partly attributed to the use of low quality material and unskilled labour. L. Project Documentation 44. The main documents governing project implementation were the Staff Appraisal Report, the Development Credit Agreement, a Project Agreement between IDA, SPC and JEDB and a Subsidiary Loan Agreement between GOSL and BOC. All documents were t nerally well prepared and adhered to. However, due mainly to the numerous subsequent changes required, their usefulness to the Bank and the Borrower in monitoring the achievement of physical and financial targets throughout the project implementation period was limited. 45. On behalf of GOSL, a locally recruited consultant had prepared a draft project completion report containing valuable data and information which  - 13 - has oeen drawn upon heavily in preparing the current document. Due to the considerable time gap between project completion and the preparation of this PCR by the CP, a still on-going reorganization of the State Sector, and changes in the plantation management system, most additional data were not readily available. Durir- the short stay of the PCR mission in the country, field visits were made only to two out of a total of 84 tea estates to evaluate the perforwance of low-country tea. No visit could be arranged to tea estates in the high-country, owing to difficulties caused by the restructuring process. It was not, therefore, possible to collect andlor generate all the data required for a thorough financial and economic analysis and, where data were not available, the results presented are based on mission estimates. This clearly reinforces the need to start PCR preparation soon after credit closing date.  - 15 - PART II - PROJECT REVIEW FROM BORROWER'S PERSPECTIVE 46. The draft PCR was reviewed by senior Government officials and the factual information was found to be adequate and accurate. 47. The performance of the Bank was in general satisfactory. In particular, the regular supervision missions helped to solve implementation problems and make necessary adjustments promptly. Also, the establishment of a Special Dollar Account during the latter part of the project period proved most useful. However, consideration could have been given to the following aspects: (a) In the formulation of a new project such as diversifying tea into minor export crops, there must be assurance that staff have the required technical know-how, soils are suitable and that the supply of planting material would be adequate. In addition, detailed market research and cost benefit analyses should be carried out. (b) Sufficient time should be given to the Borrower in the planning and preparation of any proposed project. (c) In the case of disbursements, the Borrower should be advised for each transaction on the currency of expenditure, as well as the US dollar and SDR equivalent, to facilitate comparison between actually incurred cost and SAR estimates. (d) The Borrower should be given sufficient notice on mission arrivals and requirements to enable timely preparation of relevant information. 48. The performance of the Borrower is appropriately reflected in paras 40 and 41. Additional lessons learned are as follows: (a) All staff involved in project implementation should be fully briefed on the project's concept and objectives, as well as their respective duties and responsibilities, at the onset of the project. (b) Systematic compilation of data in tabulated form by individual estates would facilitate the monitoring and evaluation of requirements, performance and compilation of data at regional and headquarters level. (c) Effective monitoring would provide better control of financial allocations, expenditure and savings. 49. The relationship between the Bank and the Borrower during the evolution and implementation of the project was satisfactory (see para 42).  - 17 - PART III 1. Related Bank Credits creitl Purpe DoeW.l sXtus c t Title Tree Crop Reheb. To improve economic efficiency of 1978 Cospleted Estate i sproveaent has been a (Te) Project tea industry and to improve toa succeese II private teo (Cr.818-CE) quality, factory and saml holder cc.- pgneiite wore a fa ilure. Tres Crop Divereifice- Division of unprofitabl cid-country 1978 Cancelled Opposition of labour union to tion 0..) Project toa eatatee into mm1I unite to be in 19o the breakdown of estat pre- (Cr .819-CE) planted to a divereity of crops vented full project implemen- including spiceas, ruit trees and tation. fuelIood. Fourth Tree Crop To increase production of two, rubber 1986 On-going The physical progres of the Project (Cr.1562-CE) and coconuts by rehabilitating produc- project io *ntie actory. tion facilit',s and improving the perforeance of JEWO and SPC. 2. Project Timetable Ite Date Planned Date Actual Identification November 1979 Preparation July 1980 Appraisal Mission February 1981 October 1981 Credit Negotiations July 1981 March 1982 Board Approval September 1981 May 1982 Credit Signature June 1982 Credit Effectiveness September 1982 Ncoember 1982 Projct Completion December 1984 1/ September 1986 Credit Closing September 1986 September 1986 2/ Credit Completion March 1987 April 1987 1/ With a provision for a slippage, due to unforeseon delays, (up to September 1986). 2/ With an informal extension of six months to Uarch 30, 1987. 3. Credit Disbursements Cumulative Estimated and Actual Disbureemente In SDR IlIlon and US$ million World Bank Fiscal Year 1962/O3 1983/84 1984/86 1986/8S 1966/87 Appraisal Estimate (USS) 1.0 8.1 8.1 18.1 20.0 Actual (US$) 0.2 2.4 6.2 11.8 1386 Actual as X of Estimate (USS) 0.2 77.4 78.6 62.4 67.5 Dote of Final Disbursemnt: April 22, 1987  - 18 - 4. Project Implementatioll Key Indleators - Physical Pr"gs Unit SAR Revisd Actual Target Taret REHABILUTATION COMPONENT Field Development Replanting ha 1,762 1,518 1,618 In-fiIling he 8,896 2,916 2,916 Soil Conservation ha 5,B46 4,936 4,936 Fuclwood Production he 617 992 992 Field and Nursery Equipumnt Mist blowers no. 890 818 818 Power winders no. 8 6 6 Hand winders no. 20 22 22 Knapsack sprayers no. 938 1,746 1,841 Weighing scales no. 530 612 812 Green Leaf Transport Tractors no. 106 106 106 Trailers no. 210 210 210 Trucks no. 73 78 76 Fuel browsers no. 6 6 12 Link roads km 14 - - Hiousing Renovation of lines no. 1,935 1,627 1,160 Community bathing facilities no. 281 127 67 Renewal of water pumps no. 4,208 - - Water tanks no. 210 187 104 Renovation of roofs and drains no. 1,809 2,079 2,126 Water pumps no. 50 5 18 New twin cottag9e no. 390 824 888 Staff quarters no. - - 89 Melcal Services Ronovation of dispensaries no. 2 n.r. 6 Upgrading of dispensarios no. 49 n.r. 20 Now dispensaries no. 7 n.r. 6 Ambulances no. if n.r. 12 Motorcycloe no. 58 88 26 Dispensary equipment no. 58 n.r. 19 Adhinltrativo Support Estate office equipment no. 74 -- Project headquarters equipment to. 8 - - Microcomputers no. 3 3 2 Jeeps no. 51 57 64 Motorcycles no. 91 89 88 Saloon cars no. 26 10 18 Mini bus no. 1 1 1 Field equipment no. - 1 DIVERSIFICATION COMPONENT Field Programs Pepper ha 1,071 718 608  - 19 - Cloeves he 860 294 801 Cardaomm he 1,105 949 905 Fuelwood he 5,066 8,072 8,563 FI,eld tquipmet and Civil Works Water PUmr q no. 74 29 1i Sprinklero no. 74 182 114 Knapsack p prayers no. 125 124 Spring balance scale. no. 46 48 48 Winnwreoes no. 44 27 6 Cardamom barns no. 16181 Mist blowers no. 2 20 Popper dryingo floors o. 26 28 B Platform scales no. 45 66 7 Mechanical bush cutters no. - 16 16 Soil Injectors no. - 20 20 Admiaistrativ. Support and Wobblies Project office oquipmnt no. 74 76 19 Project headquarters equipment no. 8 2 1 Extension - project office no. 1 n.r. 1 Jeeps no. 17 44 45 Motorcycles no. 44 61 61 Saloon care no. 26 1 I Tractores no. - 8S 83 Trailers no. - 45 60 8-ton trucks no. 2 2 2 2-ton trucks no. - 16 16 MedCal Se~rvices Upgrading dispensaries no. 56 14 16 Ambulances no. 15 18 18 Motorcycles no. so 85 26 Dispensary equipment no. 47 - -  5. Project Costs and FinancingA A. Proec t Cost Appraisal Estmtaec Acteal 1/ Local Foreign Tot"l F.E. Local Foreign 2/ Total --- (USSOC0O) ---------- -------- -(US$VOCO)- -- F7-ld RehabilItation 8,848 851 4,299 is 3,896 087 4,53 Field Diversif cation 2,792 871 8,163 12 1,749 238 1,987 Factory Equipment 4,409 2,979 7,448 40 4,219 2,812 7,031 Processing and Storage 172 6a 286 27 - - n.a. 3/ Field A Nursery Equipment 862 241 603 40 290 193 483 Green Leaf Transport 296 1,282 1,668 81 328 1,378 1,701 Support (Vehicles) for Diversification 122 198 820 62 S1l 883 1,344 4/ Housing 1,S08 SW8 2,094 28 1,822 514 1,836 kedical 210 848 653 62 102 l16 268 Training 884 444 778 57 129 171 800 Technical Assistance 114 106 220 48 185 171 368 Project Preparation 48 2 48 c - - n.a. S/ Adminietrative Support 394 444 838 53 497 Sol 1,058 Total _Ba Coa* 14,487 7,690 22,152 J4 - Physical Contingency 879 885 1,274 81 - Price Contingency 8,871 2,806 9.077 29 - TOTAL COSTS 22,217 10,J91 $8,100 83 1,228 7,724 20,947 1/ Figures in USE *wre derivwd from actual rurse figures as provided by MJED. Small discrepancies are due to conversion and rounding. 2/ The foreign exchange component is basd on appraisal estimates. 8/ Included In Support (Vehicles) for diversification. 4/ Includes a lso administrative support to Diversification as well as processing and storage. S/ Included In Techical Assistance.  - 21 - S. Project Financing S0Urce Planned Final USS1imlIIon (B) USS million (S) IDA (Total) 20.0 60.4 18.5 64.6 1. Civil works and 2.7 3.8 materials 2. Equipmnt and vehicles 18.8 9.8 8. Consultants' services 1.6 0.4 and training 4. Unallocated 2.0 - OSL and Agencies 13.0 39.8 7.4 36.4 Smallholdern 0.1 0.8 negligible negligible TOTAL 83.1 100.0 20.9 100.0 6. Project Results A. Direct SBnfits Apr i_al r;tiin- at Estim_ at Et to Closing Do" Ful I Oelqemnt 1 Incremental too production ('000 kg 14,165 12.940 12.940 ado te, - yeOe 2010) 2. Pepper production (mtric tons) 1,607 906 906 3. Clove production (metric tons) 105 111 120 4. Cerdamm production (m_tric tone) 166 v 77 S. Fuslwood production (m) 151.980 4B7.000 487,000 NB. For pic.., and fuwlwood. the coparieon between appraisal end aeng dte *tiat -e is based on 1993 .etivetes. Although the SAR anticipate. that wood harvesting would continue boyond 10QS, ctrrent practicee indicate that all firewood planted during the project would have to be entirely replanted thereafter. B. Ecomoml#- apnact Artprsal Estimto PCR Esanosic at. eof eturn,. Project as a whole 2V 40t Rehabilitation component WSO 47# Diversification component 26X 26V Ihdrlying Asumptione: Increoental tea production 14.1bS 12.940 ('000 ke ends tea - year 2010) Benefits from iaproved tea quality Include' Included Benefit, from reduced production coat Include, Included Benefits from spice and fuolwood prodiCtion Include. Included Period of analysis 30 years 30 years Cnto: Th, re-evaluation use carried out in constant 1990 pricee usir.il World Bank Commodity Price Forecasts for 1995. On this basie. the economic price for tea wa, satiented at R*62.35/kg. Financial roat, have been converted into border price by using conversion factors estimated during the appraisal of the Fourth Tree Crops Vlrcect as follows: Field Development 0.59 Field and Nursery Equipment 0.82 Factory Rehabilitation' 0.75 Housing 0.75 Vehiclca 0.78 Medical/Support Component 0.73 Standard Conversion Factor 0.65 Economic prices for wood and popper were deore,' from the financial pricee by using a CF of 1.10. while those foe cloves using a CF of 1.06 and a CF of 1.05 for cardamom. C. Financial Impact SAR Estiate Actual Financial ratee of retu : (a) For the projoet as a whole 21X 13X (b) For the -ehabilitation component 191 12X (e) For the Jivorsification component 24X 16X D. Studies stud l4oro *- Defaine at mraimel Stw_ Medium-Term Inweotment Programme To undertake a field-by-field claea.fication of aestas Draft completed to draw up a medium-teor invnetoent programs a, a basis for futur projoect preparation.  - 22 - 7. Status of Covenants Covenant Subject Status Cred. 3.01C & Borrower shall relend $17.5 million to Complied D SPC & JEDB and $1 million to BOC. Cred. 4.02 Projected and actual tea profit levels Complied to be revised by 5/31/83 and by each May 31 thereafter. Cred. 6.01A Project agreements ratified. Complied Cred. 6.01B Subsidiary loan agreements with JEDB Complied and SPC executed. Cred. 6.01C Subsidiary loan agreement with Bank of Complied Ceylon executed. Cred. 6.01D Management consultants appointed. Complied Cred. 6.01E Project lands transferred to JEDB and SPC. Complied Insure imported goods financed out of Complied Proj. 2.03A & credit up to delivery at site. B Proj. 2.04A SPC and JEDB to use all goods and Complied services financed out of the Credit exclusively for projects. SPC and JEDB to furnish IDA plans, specifications, reports, contract documents, etc. Proj. 2.04B Maintain adequate records and procedures to Complied record Lad monitor progress of project; provide access to facilities and construc- tion sites. Proj. 2.04D Prepare prcject completion report. Started with over one year delay Proj. 2.06 SPC and JEDB shall appoint project Complied directors. Proj. 3.04A Review recommendations of management Complied consultants. Proj. 3.04B Begin implementation of recommendations. Complied Proj. 4.02B Furnish financial statements within four Were submitted months of FY end and audit report within with eight months. substantial delays Proj. 4.03A Maintain long-term debt/equity ratio of not Complied more than 70:30. Proj. 4.03B Maint&in current ratios of at least 1:3:1 Complied Proj. 4.04 SPC and JEDB will select fields for Complied replanting according to satisfactory criteria.  8. Use of Bank Resources A. Staff Inputs (staff weeks) Took Pr.- FY78 FY79 FW0 FY81 FM82 FY83 FY4 FYt85 F FM7 FY8 FY FYq0 Total FY78 LENP - - - 1.6 17.1 - - - - - - - - - 18.7 LENA - - - - 85.5 43.5 - - - - - - - - 129.0 LENN - - - - - -.7 - - - - - 5.7 LOP - - - - 1.7 5.5 - - - - - - - - 7.2 SPN - - - - - 1.6 13.9 8.6 5.7 2.5 3.6 - - - 35.9 PCR - - - - - - - - - - - - - 0.1 0.1 PIR - - - - - - - - - 0.2 - - - - 0.2 PAD - - - - - - 0.1 - - - - - - - 0.1 Totel - - - 1.6 104.3 86.a 14.0 6.6 5.7 2. 8.6 - - 0.1 1"6. LENP - Activities prier to Appraisal LcENA - Act iitiea related to Appraisal. LENN - egoti tian activiti s. LOP - Pre-appaial sind Appraisal work by Country Departcont. SPN - Supervision tis. PCR - PCR preparation ties. PIR - Project ispleention rev.aw. PAD Project adaini,tration work during Supervisien stage. B. Missions Stag of Project C'Ycla Mntb/Yaar 1/ Ml. of Parons 2/ 0y in Field Speicl ;ation Rtsrcssntd Pformcc Illte ; 4/ Types o1 Problmm S/ 3/ Pre-idsentificstion 11/79 1 10 A Pro-appraisal Mis ion 7/80 2 a 20 A.E Appraisal Miaaion 1 2/81 4 30 FA.A,E,E Appraisal Mission 2 10/81 4 27 A.A,E,T Supervision 1 8/82 1 9 FA 1 F." Supervision 2 4/83 2 a 7 FA,A 1 F,M Supervision 3 12/83 1 7 E 1 T Supervision 4 8/64 1 5 A I n Superv;sion S 3/88 2 8 A,AC 1 H Supervision 6 7/86 3 a 5 E,TC.FA 1 M Closing Mission 6/ 1/87 3 a 10 E,A.AC 1/ Date of return to hsadquarters. 2 Multiple purpose sieions lsrked (e). 3/ A* Agriculturalist; AC - Accountancy; E a Econosist FA a Financial Analyst; T Training Specialist; TC . Tree Crops Specialist. 4/ 1 * Problom-free or minor proble. 2 * Modorate probiem. 3 * Major problem. 5/ F a Financil. 11 a Managerial. T * Technical. 6/ Mission to reviee status of withdrawal applications and status of PCR preparation. Cests: The project sac prepared in two stages: i.e. the preparation report. for rehabilitation wara completd by the implementing agency in Jsnuary 1981 and appraised during February 1981 by a Bank sesion. During this appraieal. some of the area proposed for frhabilitation was found to be more -,itable for diveraification. An agrea nt was reached to prepare a diversification component. The preparation report for this was proesnted in June 19U1 and the component was appraised during September/October 1981.  SRI tANRA Yea RehabIlltation Component 000 Rs. Year 1981 1982 1913 1984 1985 1986 198? 1988 1989 I190 1991 1992 13 1994 I99S Tea ProdctImi (000 kg.) With Project 25016 27016 25403 28888 29291 28363 26963 28275 29265 29852 33224 30569 30649 30649 30649 Without Project 24904 25S34 26047 2s793 2S263 24702 2312S 23120 22448 21843 21606 21369 21132 20898 20659 lrRentel T Pc. 112 1482 .644 3073 4028 3661 3238 SISS 6817 8009 8618 9200 9817 9784 9990 Fire dpro c.(000u3) 0 0 0 0 0 0 0 0 0 0 18 47 212 86 0 1Te Re ea - with 4202 632730 IOW 4 1314359 976192 862996 1060657 1177426 1461171 1490510 IS09084 1526310 1530305 153030S 1530305 - without 423639 594648 1027459 1165994 834494 743326 914692 950474 1099688 1067894 1073394 1059942 1044568 1030246 1016031 F1r00 0 0 4OOO500 21750 53W0 2180O 0 lnccetel SiW iz dy 1788 4336 6032 8413 5339 7079 14336 19227 6747 0 Total IrCxi. Rewe 3648 42418 -12383 156778 147037 126749 160301 246179 368230 402616 440190 478118 838737 521SS9 514274 s Incr. Ielies adjusted by deflators 6968 76777 -17955 180298 199970 177449 198773 288488 368230 402616 440199 478118 538737 S21559 514274 OPEMTING COSTS (Rs.000) With Project 375467 877363 696071 923384 1012089 96918S 1004717 1218404 1328349 1422271 1432676 1443060 1453845 1453848 1403845 Withut Project 373408 541181 704246 830976 882828 859164 904326 1020651 1039215 1053740 1044119 1034498 1024877 1015286 lOS834 Total I1cre. Owr. costs 2059 36182 -.17s 92408 129231 109993 100391 1977S3 28613 368531 388857 408882 42898 43869 448211 INNSINET COSTS RWo.wO) Field fthabilitatio' 11369 25133 34711 33442 310 0 Fcwtory deWl1111tetioo 0 422 1867 13037 78459 8184 13137 0 Field a kurtery Equtpmet 0 SO09 745 1791 943 1377 0 6re Loatf ranssort 0 0 9403 29607 2967 864 1m 0 bisng 0 722 10284 8816 9548 16929 2172 0 Nedical 0 0 1507 834 423 375 SO0 0 Trairnig 0 0 413 18M6 1405 1111 2437 0 Technical Assistance 0 0 3495 2970 1365 770 565 0 Adalnistrative Support 0 0 563 16766 2603 2189 5929 0 Total I nVt. Costs 11319 31336 62988 109149 9823 110799 28969 0 0 0 0 0 0 0 0 Total PrQject Coatt (tea 13428 6S1 54783 20s5 227284 22092 126360 1977S3 286134 368531 388857 408582 42896M 438589 448211 Total Cott adjsted by deflators 28647 122208 79435 231791 309068 309109 186686 207641 286134 366531 388557 406582 428968 438889 448211 1Ic . 3.t eeits (Te) -18680 -4S431 -97391 .51496 .109098 -131660 42087 80847 82096 34085 51633 69836 109769 270 66063  SRI tANKA le$ Rehabilitation Comsonet 000 Rs. Y'r 11996 1991 1m 199 2000 2001 2002 2003 20W 2005 2005 2007 2008 2009 2010 In Prouctin (000 kg.) ath PreJoct 30649 30649 30649 30649 30649 30649 30649 30649 30649 30649 30649 309 30649 30649 30649 Ith"t PVOeJt 20422 20185 19948 19711 19474 19033 18592 185SO 17709 1)709 17709 11709 11109 17709 17709 Iinyt&l Tt Prlht. 10227 10464 10701 10938 11175 11616 12057 12499 12940 12940 12940 12940 12940 12940 12940 Firsw d P e. (000 *3) tNa llm 1Wth 1530305 1530305 153030 1530M 1530306 1530305 153030S 153305 1530305 1530305 1530305 r j30S 1530305 1530305 1530306 *ithost 1001826 987680 973594 959s66 945598 921808 898129 874511 851052 848842 846631 842210 839999 837719 835578 Pilged Omatasidw laewgutl Sissiy T@tel 1mevi. IN ee 528479 542625 556711 170739 S54707 608497 632176 6S5794 679253 681463 6M3674 688095 0306 692516 64727 lea. bI adJnted by dfltw 528479 542625 ,56111 570739 s84707 60497 632176 655794 679253 681463 683674 63095 690306 692516 694727 OPtMlM COSTS {R.000) WIth Poject 1453845 1453845 1453845 1453845 1453845 1453845 1453845 1453845 1453845 1453845 1453145 1453845 143845 1453845 1453845 l Wltheut Oject 996013 986392 976771 967150 957529 940541 923554 906567 889579 889519 889579 8857 e89s79 B979 S79 1 total 1ear.. Oper. costs 457832 467453 47'074 48669S 496316 61334 530291 547218 564266 4266 564266 564266 564266 564266 564266 Field fgImablitation facter/ 11lembilitatla" Field a f1iseup Equ1pmut Cn LW transport Trastugta1"S r Techiwical Asaitat.,c Adnisfutrative Support Total lIut. Cots 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Total Project CoMts (teoo 457832 467453 4770)4 486695 496316 513304 53029 S47278 564266 564266 564 4266 564266 642 564266 Total costs adjuted by deflators 457832 467453 477074 486695 496316 513304 530291 547218 564266 564266 554266 sum 5642 564266 564266 564266 Incues. Met Beeits (Tea) 70167 75172 796S7 84044 m8 95193 10185 108516 114967 117197 11940 129 126040 128250 130461 I-.F  -26- ~~~~~~~TABLE 2 ur l"'IE I I I I '*X' liii I 1 1 i *!t' liii ii * i~ "II *It lE r~ ~ ~~- - . r mln 3l C .... -e. -ov I o ..... E 3 **e* e.e. _ C 0 3 *e ft ft N E!. CCC** *