Announcement of Tanzania Receives Sixty Million Dollars for Pulp and Paper Mill on January 8, 1979

. . \ FOR IMMEDIATE RE[EASE -World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A.• Telephone: (202) 477-1234 BANK NEWS RELEASE NO. 79/42 IDA NEWS RELEASE NO. 79/40 January 8, 1979 TANZANIA RECEIVES $60 MILLION FOR PULP AND PAPER MILL The World Bank and IDA are each providing $30 million to Tanzania to help finance the establishment of an integrated pulp and paper mill in the Sao Hill forest area, 15 kilometers south of Mufindi in south-central Tanzania, and about S90 kilometers from its major market of Dar es Salaam. Tanzania consumes approximately 23,000 tons of paper a year at the present time, nearly all of which is imported at a cost of $15 million. The major consumers include newspapers, textbook publishers, and the packaging industry. The proposed mill will provide Tanzania with a dependable supply of a broad range of paper products at stable and reasonable prices. Its annual • production capacity will initially be 60,000 tons of paper and board, and 1,400 tons of pulp for sale outside the mill. The facilities that will be provided under this mill project include: logging roads and equipment, a chemical pulp mill with a bleach plant, a mechanical pulp mill, two paper machines with associated stock preparation and paper fiAishing equipment, steam and power generation equipment, a chlorine and caustic soda plant, related pollution abatement equipment, and some supporting infrastructure. The capacity of the pulp and paper mill can be expanded to 75,000 tons of paper and board at a minimal additional cost. This project has been given a high priority by the Tanzanian Govern- ment as a central element in its Basic Industrial Strategy, which was adopted in 1974 and places its main emphasis on the use of domestic resources for domestic needs. The project will result in significant net foreign exchange savings, estimated at $30 million per year at fu11 production. The mill will provide direct employment for about 800 people, of whom 40 will be highly skilled, 160 skilled, and 140 semi-skilled. The wood-harvesting operations are expected to employ about 440 skilled and 110 unskilled workers when the paper mill is in full operation. Another 140 salaried people will be employed in the wood supply division of the Southern Paper Mills Company. This wholly owned subsidiary of Tanzania's National Development Corporation (NDC) will build and operate the mill project. The World Bank advised the NDC at various stages in the feasibility • study of this project and provided a $7 million loan in July 1976 to develop the raw material base at Sao Hill. ..J NOTE: Money figures are expressed in approximate U.S. dollar equivalents.  • - 2 - A total of $140 million, or 56%, of the project's total cost of $251.7 million is being provided by six other bilateral or multilateral donor agencies. The Government of Tanzania, NDC, and local banks are financing 20% of the project cost, and the World Bank and IDA 12% each. The World Bank loan of $30 million is repayable in 20 years, includ- ing 5 years of grace, at an int3rest rate of 7.35% per year. The IDA credit of $30 million is for 50 years, including 10 years of grace, with no interest but a 3/4 of 1% service charge per annum for administrative expenses. The entire Bank loan and $9.9 million of the IDA credit will be re-lent to the Southern Paper Mills Company for 16 years, including 5 years of grace, at an annual interest of 10%, while $20. l million of the !DA credit will be provided as equity to the Company. - 0 - • • FORM NO. 1121 (5-76) T E C HN I CA L DA T A • PROjECT: COUNTRY: Mufindi Pulp and Paper United Republic of Tanzania TOTAL COST: $251 . 7 mi 11 ion BANK FINANCING: $30 million for a term of 20 years, including 5 years of grace, at 7.35% interest per annum. IDA FINANCING: $30 million, standard IDA terms. OTHER FINANCING: Government of Tanzania~ National Development Corporation, and local banks, $51 .7 million; Commonwealth Development Corporation (CDC), $20 million loan; Kreditanstalt f~r Wiederaufbau (KfW) ~ $34 million grant; Kuwait Fund (KF), $18 million loan; Nordic Investment Bank (NIB), $12.5 million loan; OPEC Special Fund (OPECSF), $10.5 million of which $5 million as a credit and $5.5 millfon as a grant in counterpart funds from their previous operations in Tanzania; and Swedish International Development Authority (SIDA), $45 million grant. IMPLEMENTING ORGANIZATION: National Development Corporation P.O. Box 2669 Cable: NATDEV Oar es Salaam, Tanzania Telex: 41068 • PROJECT DESCRIPTION: The project will establish an integrated pulp and paper mill with an initial annual production capacity of 60,000 tons of paper and board, as well as 1,400 tons of pulp for sale outside the mill. The facilities being provided for this project include: logging roads and equipment, a chemical pulp mill with a bleach plant, a mechanical pulp mill, two paper machines with associated stock preparation and paper finishing equipment, steam and power generation equipment, a chlorine and caustic soda plant, reiated pollution abatement equipment, and some supporting infrastructure. PROCUREMENT: With the exception of items costing less than $100,000, all machinery, equipment, materials, and minor civil works financed by the Bank, IDA, KfW, and SIDA (estimated to total over $150 million) will be procured on the basis of international competitive bidding (ICB) consistent with Bank guidelines. The recovery boiler package, financed by NIB, will be pro- cured on the basis of competitive bidding within the Nordic countries. The major ctvil works contract will be financed by KF and OPECSF and will be procured on the basis of ICB consistent with KF guidelines. With regard to the equipment packages to be financed by CDC, SIDA, KfW, World Bank, and IDA, a 15% margin of preference of the c.i .f. cost or the actual tariff on equivalent imported goods, whichever is lower, will be accorded to qualified local manufacturers for purposes of bid evalua- tion; qualified local civil works contractors will be granted a preference of 7t% for the minor civil works to be financed by these agencies. Individual items cost- ing less than $100,000 and totaling not more than $5 million, could be purchased internationally on the basis of their suitability, availability, and price . • ECONOMIC RATE OF RETURN: ESTIMATED COMPLETION DATE: 11 . 3% 1983 - 0 -