Announcement of Tanzania Receives Forty-Five Million Dollars for Textile Production from World Bank and IDA on June 30, 1978

FOR ltyiMEDIATE RELEASE •World Bank 1818 H Street, N.W. 1 Washington, D.C. 20433! U.S.A. • Telephone: (202) 393-6360 BANK NEWS RELEASE NO. 78/126 June 30, 1978 IDA NEWS RELEASE NO. 78/95 TANZANIA RECEIVES $45 MILLION FOR TEXTILE PRODUCTION FROM WORLD BANK AND IDA Over four thousand jobs will be created by a textile mill project in Tanzania to be assisted by a loan and a credit totalling $45 million from the World Bank and its affiliate, the International Development Association (IDA). The World Bank~-.:??? ?~iid $25 mi 1 i ion and IDA wi 11 provide $20 mi 11 ion for the Morogoro Textile Project. The project consists of an integrated textile mill located at Morogoro, with spinning, weaving, and processing facilities to produce about 21.5 million square meters of blended fabrics as well as 650 tons of polyester/rayon yarn. Morogoro is about 200 kilometers west of Dar-es-Salaam, the major Tanzanian port. The mill will use locally grown cotton and imported polyester and rayon, and the output from the factory will represent about 11% of Tanzania's projected • total fabric production in the mid-1980s . The main objective of the project is to help Tanzani~ rreet the growing but largely unsatisfied demand for blended fabrics. The projecL is part of the Government's program t~ expand the domestic production of textiles with the aim of reducing imports of essential consumer items. Since the project is basically directed at import substitution, no significant quantities of the fabrics produced are expected to be available for export. The textile mill will be owned and operated by the Morogoro Polyester Textiles Limited, a new company established in February 1978, under the sponsorship of the National Textile Corporation of Tanzania (TEXCO). Both the company and TEXCO will receive technical assistance under the project for staff training. A special training center will be established at Morogoro for operators, maintenance personnel and craftsmen required at the mill. Because of its location in Morogoro, the project will help reduce the population pressure on Dar-es-Salaam, thus assisting the Government's effort to promote a more balanced regional development in Tanzania. The $25 million World Bank loan and the $20 m;llion IDA credit will together finance about 42% of the total project cost, estimated at about $106.9 million. The remaining project costs will be financed by the Tanzanian Government's own resources and borrowings from other sources. The World Bank loan will be repayable in 20 years, including 5 years of grace, at 7.5% interest per annum. The IDA credit will be on standard terms of • 50 years, including 10 years of grace. It bears no interest but carries a charge of 3/4 of 1 percent per annum for administrative expenses. NOTE: Money figures are expressed in U.S. dollar equivalents. FORM NO. 1121 (5-76) T E C HN I CA L DA T A PROJECT: COUNTRY: TOTAL COST: Morogoro Textile Tanzania $ 106 . 9 mi 11 ion • BANK FINANCING: $25 million IDA FINANCING: $20 mi 11 ion OTHER FINANCING: Government of Tanzania, $32.6 million Tanzanian Investment Bank {TIB), $10 million Supplier credits, $20 million IMPLEMENTING ORGANIZATION: National Textile Corporation (TEXCO) Dar-es-Salaam Tanzania PROJECT DESCRIPTION: The project consists of an integrated textile mill with spinning, weaving and processing facilities to produce about 21.5 million square meters of blended fabrics as well as 650 tons of polyester/ rayon yarn. The mill will use locally grown cotton and imported polyester and rayon, and the project output will represent about 11% of Tanzania's projected total fabric • production in the mid-1980s. The project includes provision of financing for technical assistance to the National Textile Corporation, and a training component. PROCUREMENT: Goods and services (except consultants) financed by the Bank/lDA will be procured through international competitive bidding in accordance with the Bank's guidelines except: (a) items costing less than $l00,000 but not exceeding the aggregate amount of $2 million may be purchased through international shopping on the basis of suitability, availability and price considerations; and (b) proprietary items and items in limited supply critical to the timely completion of the project whose aggregate cost is estimated not to exceed $1 million may be procured follow- ing bidding from a 1 ist of qualified suppliers acceptable to the Bank/I DA. Contracting for civil works to be financed with Bank/lDA funds (about 58%) will be by international competitive bidding in accordance with the Bank's guidelines, with local contractors being given a 7.5% preference. CONSULTANTS: A management agency firm will be appointed six months before mechanical completion of the project to operate the mill for at least the initial three years of plant operations, under terms and conditions satis- factory to the Bank. ECONOMIC RATE OF RETURN: 19% ESTIMATED COMPLETION DATE: 1984 - 0 - •