Announcement of Liberia Receives Twelve Million Dollars Loan for Oil Palm Project on November 1, 1979

· FOR IMMEDIATE \ELEASE •World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A.• Telephone: (202) 477-1234 BANK NEWS RELEASE NO. 80/19 November 1, 1979 LIBERIA RECEIVES $12 MoLLION LOAN FOR OIL PALM PROJECT The World Bank has approved a $12 million loan to the Republic of Liberia for a project to increase the production of palm oil. Over a seven-year period, 1980-87, the project will include the establishment and operation of a 5,000-hectare (ha) oil palm nucleus estate leased by the government to the Decoris Oil Palm Company, provision of exten- sion services and credit facilities to develop 2,500 ha of smallholder farms in seven villages, and training for company staff and smallholders. In addition, a palm oil mill will be constructed with a total capacity of 30 tons of fresh fruit bunches per hour by late 1987. A system of fruit collection and grading will be set up. Roads will be constructed and rehabilitated to • ensure efficient transport of estate and farm products and the distribution of farm inputs. Storage and other facilities at the port of Harper, located about 25 kilometers from the oil mill site, will be improved to handle increased export of oil palm products. Provision is also being made under the project for technical assist- ance and consultants to design and supervise the construction of the palm oil mill, roads, and port facilities; to conduct an organizational study of suitable institutional arrangements for the oil palm subsector; to prepare a follow-up oil palm project; and to develop a suitable pricing formula for smaliholder fresh fruit bunches. Technical assistance wil be used to strengthen the monitoring and evaluation unit in the Ministry of Agriculture. The project is expected to yield an additional annual production of 24,000 tons of palm oil and 4,300 tons of palm kernel. This project will help the government to diversify the country's economy and reduce Liberia's present heavy dependence on iron ore. About $11 million in net foreign exchange earnings (in 1979 constant dollars) is expected to be realized from the additional palm oil production. Permanent employment will be provided for about 1,000 persons in the Decoris area, and for about 1,200 people during the development phase. Cash incomes of 1,000 farm families are expected to increase from $100 a year at present to $950 a year at full development. Improved roads and bridges will give about 30,000 people in the nearby villages greater access to health, educational, and market facilities. • NOTE: Money figures are expressed fn I I (: V • ..i • dollar equivalents. • •• I  - 2 - In additjon to the $12 mill ion Bank loan, financing for the $48.8 mill ion total project cost is being provided by the African Development Bank ($8 mill ion loan), the Commonwealth Development Corporation ($15 mill ion loan), the European Economic Community's (EEC) Special Action Account ($2 • mil lion credit), and the Government of Liberia ($11.8 mil lion). The World Bank loan of $12 mil 1 ion is for 20 years, including 5 years of grace, with 7.95% interest per year. The EEC Special Action Account credit of $2 million is for a 50-year term, including 10 years of grace. It is interest free, except for a service charge of 3/4 of 1% to meet administrative costs. • • FORM NO. 1121 (5-76) T E C HN I CAL DA TA • PROJECT: COUNTRY: Oil Palm Liberia TOTAL COST: $48.8 million BANK FINANCING: $12 million, for a 20-year term, including 5 years of grace, at 7.95% interest per year. OTHER FINANCING: Government of Liberia, $11.8 million; African Development Bank, $8 million; Commonwealth Development Corporation (CDC} $15 mill ion; European Economic Community's Special Action Account, $2 mill ion IMPLEMENTING ORGANIZATION: Decoris Oil Palm Company c/o Ministry of Agriculture Monrovia, Liberia PROJECT DESCRIPTION: It will, over a seven-year development period 1980/81 - 1986/87, include: estab1 ishment and operation of a 5,000 • hectare (ha) oil palm nucleus estate, provision of extension services and credit facil i- ties to develop 2,500 ha of smallholder farms, of training staff of the Decoris Oil Palm Company and smallholders, construction of an oil mill, establishment of a fruit collection system, construction of roads, constructio11 and installation of storage and port facilities, and provision of technical assistance and consultant services. PROCU.REMENT: Contracts of $100,000 or r,1ore (estimated at about $5.2 mil 1 ion in the aggregate) to be financed under the Bank and CDC loans for farm inputs, heavy equipment and vehicles, and barge and port facilities at Harper will be let through international competitive bidding in accordance with Bank guidelines. Contracts for these items and contracts for civil works (other than buildings housing the palm oil mil 1), between $20,000 and $100,000 (estimated to total $1 .5 million) wil 1 be procured under local competitive bidding procedures acceptable to the Bank. Contracts of less than $20,000 (not to exceed $800,000) wil 1 be handled by direct competitive shopping. In evaluating bids domestically manufactured goods wil 1 be allowed a 15% preference over the c. i.f. price, or the applicable duty, whichever is lower. The turnkey contract for the mlll estimated at $17 mil lion, of which $4.9 mill ion will be financed by the Bank, will be awarded under 1 imited international tendering procedures acceptable to the Bank. CONSULTANTS: Consultant services (90 man-month&) will be required to prepare preliminary designs for the palm oil mill, prepare tender documents, analyze tenders,and supervise mil 1 construction; design and supervise construc- tion of port facilities at Harper; design and supervise access and feeder roads, conduct • an organizational study to help determine the most suitable institutional arrangements for the oil palm subsector; prepare a follow-up palm project; and help the government to develop a suitable pricing formula for smallholder fresh fruit bunches. In addition, three •.. I  - 2 - man-years of technical assistance will be needed to help strengthen the monitoring and. evaluatjon unit of the Ministry of Agriculture. ECONOMIC RATE OF RETURN: 12% ESTIMATED COMPLETION DATE: 1987 • •