Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No. 3843-BD

STAFF APPRAISAL REPORT

BANGLADESH

SUGAR REHABILITATION AND INTENSIFICATION PROY.-

April 20, 1983

South Asia Projects DepartmentGeneral Agriculture

This document has a restricted distribution and mnay be used by recipients only in the performance oftheir official duties. Its contents may not otherwise be disclosed without World Bank authorizatior..

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CURRENCY EQUIVALENTS

US$1 = Tk 23.0Tk 1 = US$0.0435

Tk 1 million a US$43,500

WEIGHTS AND MEASURES

1 acre (ac) = 0.405 hectares (ha)1 bigha = 0.33 ac

1 mile (mi) = 1.609 kilometers (km)1 square mile

(sq mi) - 640 ac (259 ha)1 foot (ft) = 30.5 centimeters (cm)1 inch (in) = 2.5 centimeters (cm)1 maund (md) = 82.3 lbs (37.3 kg)I metric ton (ton) 26.8 md1 cubic foot per

seconcl (cusec) = D.0283 cu meters per second

PRINCIPAL ABBREVIATIONS AND ACRONYMS USED

ACDO Assistant Cane Development OfficerADP Annual Development PlanATI Agricultural Training InstituteBADC Bangladesh Agricultural Development CorporationBASIP Bangladesh Australian Sugar Industries ProjectBFAIC Bangladesh Food and Allied Industries CorporationBKB Bangladesh Krishi BankBSFIC Bangladesh Sugar and Food Industries CorporationBSMC Bangladesh Sugar Mills CorporationCDA Cane Development AssistantCDO Cane Development OfficerGOB Government of BangladeshICDS Intensive Cane I)evelopment SchemeIMP Irrigation Management Program (of IRDP)IRDP Integrated Rural Development ProgramMF Ministry of FoodMLGRD&C Ministry of Local Government, Rural Development and CooperativesMOA Ministry of Agri-cultureMOC Ministry of CommierceMOI Ministry of IndustriesMTFPP Medium Term Foodgrain Production PlanPP Project ProformaRJSM Rajshahi Sugar MillRSM Rangpur Sugar MillSB Sonali BankSFYP Second Five Year PlanSRTI Sugar Research and Training InstituteTCA Ton Cane per AcreTCD Ton Cane per DayTSM Thakurgaon Sugar Mill

FISCAL YEAR

July 1 - June 30

FOR OFFICIAL USE ONLY

BANGLADESH

SUGAR REHABILITATION AND INTENSIFICATION PROJECT

Table of Contents

Page No.

I. INTRODUCTION ............... 1................. v ........ I

II. BACKGROUND... 2

A. General. 2B. The Agricultural Sector. 2C. The Sugar Subsector. 3D. IDA Support and Strategy for the Agricultural Sector 8

III. THE PROJECT AREA. 8

A. Physical Features. 8B. Outgrowers ......................................... 11C. The Sugar Companies .13

IV. THE PROJECT .20

A. Objectives .20B. General Description .20C. Detailed Features .21

V. PROJECT COST AND FINANCING .. 29

A. Cost Estimate .29

B. Financing .. .30

C. Procurement ....................................... 31D. Disbursement ............... 32

E. Budgeting, Accounts and Audit . . .33

VI. PROJECT IMPLEMENTATION .. 33

A. Project Management ............................. 33B. Outgrowers Organization .34C. Implementation .35D. Monitoring, Evaluation and Reporting .36

This document has a restricted distribution and may be used by recipients only in the performance oftheir official duties. Its contents may not otherwise be disclosed without World Bank authorization.

Page No.

VII. PRODUCTION MARKETING AND FINANCIAL RESULTS .... ......... 36

A. Production and Yields .36B. Consumption Markets and Prices .37C. Financial Results .39

VIII. ECONOMIC BENEFITS AND JUSTIFICATION . .43

IX. RECOMMENDATIONS .. 47

ANNEXES

I. TECHNICAL ASSISTANCE

A. Draft Terms of Reference for Consultants'Services for Agricultural Program .49

B. Draft Terms of RefErence for Consultaats'Services for Supervision of Mill Rehabilitation 52

C. Draft Terms of Review for Consultants"Services for a Subsector Review of theSugar and Gur Industries .59

II. COST ESTIMATES

Table 1 - Summary of Project Cost ....................... 61

Table 2 - Detailed Cost Table - RJSM .................. 62Table 3 - Detailed Cost Table - RSM .- ................ 63

Table 4 - Detailed Cost Table - TSM ..... .............. 64

Table 5 - Cane Storage and Handling ..... .............. 65Table 6 - Technical Assistance ........................ 66Table 7 - Training - Mills ........ .................... 67

Table 8 - Training - SRTI ............................. 68

III. DISBURSEMENT

A. Detailed Disbursement Schedule ...... ................ 69B. Semi-Annual Disbursement Schedule ..... .............. 70

IV. PROPOSALS FOR REORGANIZATION OF THE CANE DEVELOPMENTAND RESEARCH DIRECTORATE ................................ 71

V. IMPLEMENTATION SCHEDULE ................................ 73

VI. PRODUCTION AND YIELD

Table 1 - RJSM ......................... 74Table 2 - RSM ........................ 75Table 3 - TSM ......... .................................. 76

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Page No.

VII. FINANCIAL STATEMENTS

Table I - Project Zones Farm Budgets .... ................ 77Table 2 - Project Mills Balance Sheets .... .............. 80Table 3 - Project Mills Income Statement .... ............ 83Table 4 - Project Mills Projected Income Statement ...... 86Table 5 - Project Mills Cash Flow Statement .... ......... 89Table 6 - Project Mills Projected Balance Sheet ......... 92Table 7 - Government Cash Flow .......................... 95Table 8 - Foreign Exchange Inflow and Outflow .... ....... 96

VIII. FINANCIAL AND ECONOMIC ANALYSIS

Table 1 - Financial and Economic Price Assumptions ..... 97Table 2 - Financial and Economic Costs of Production

per Acre for Cane TSM Zone .... ............... 98Table 3 - Financial and Economic Costs of Production

per Acre for Cane RSM Zone .... ............... 99Table 4 - Financial and Economic Costs of Production

per Acre for Cane RJSM Zone .... .............. 100Table 5 - Financial and Economic Costs of Production

per Acre for Cane TSM Mill Farm .............. 101Table 6 - Financial and Economic Costs of Production

per Acre for Cane RSM Mill Farm .... .......... 101Table 7 - Financial and Economic Variable Costs of

Processing Cane per ton - TSM Mill .... ....... 102Table 8 - Financial and Economic Variable Costs of

Processing Cane per ton - RSM Mill .... ....... 103Table 9 - Financial and Economic Variable Costs of

Processing Cane per ton - RJSM Mill .... ...... 104Table 10 - Financial and Economic Costs of Production

per Acre for Aus (paddy) - TSM .... ........... 105Table 11 - Financial and Economic Costs of Production

per Acre for Aus (paddy) - RSM ............... 106Table 12 - Financial and Economic Costs of Production

per Acre for Aus (paddy) - RJSM .............. 107Table 13 - Summary of Financial Costs and Benefits - TSM 108Table 14 - Summary of Financial Costs and Benefits - RSM 109Table 15 - Summary of Financial Costs and Benefits - RJSM 110Table 16 - Summary of Economic Costs and Benefits ....... 111Table 17 - Summary of Economic Costs and Benefits - TSM 112Table 18 - Summary of Economic Costs and Benefits - RSM 113Table 19 - Summary of Economic Costs and Benefits - RJSM 114

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Page No.

IX. SELECTED DOCUMENTS AND DATA AVAILABLE IN PROJECT FILE ... 115

CHARTS

Chart No. 23530 - BSFIC Organization ........................... 116

Chart No. 23531 - Existing Mi:Ll Organization . .............. 117Chart No. 23529 - Proposed Mi:Ll Organization, Agriculture

Department ................................... 118Chart No. 23528 - Proposed Mi:Ll Organization, Factory .... ...... 119

MAPS

Map No. 16137 - Location of Sugar Mills and Growing AreasMap No. 16138 - Project Area

BANGLADESH

SUGAR REHABILITATION AND INTENSIFICATION PROJECT

I. INTRODUCTION

1.01 The Government of Bangladesh (GOB) requested IDA financing toassist the development of the country-s sugar industry through: inten-sifying cane production in smallholder and mill farms through improvedextension and seed supplies; and improvements and expansion of existingplants. This development is justified on import substitution grounds andsubstantial sunk costs in existing plants. Without additional investmentsin the sugar industry, Bangladesh would continue to have domestic shortageof sugar, while at the same time a significant portion of its sugar fac-tory capacity would remain unused.

1.02 The Governnment-s Second Five Year Plan (SFYP) includes the

following development strategies for the sugar industry:

(i) a program for intensive cultivation of sugarcane;

(ii) replacement of worn-out mills to maintain output level andprotect cane growers' interest;

(iii) rationalization of crushing season to improve sugar recoverypercentage and quality;

(iv) expansion of production capacity of existing sugar mills to makethem economically viable;

(v) establishment of new sugar mills in promising sugarcane areas;

(vi) industrial utilization of by-products;

(vii) improvement in infrastructure, such as roads and strengtheningthe Sugar Research and Training Institute (SRTI); and

(viii) increasing management efficiency through training.

1.03 The proposed project identified by IDA was prepared by theBangladesh Sugar and Food Industries Corporation (BSFIC) 1/ with theassistance of FAO/IBRD Cooperative Program. This report is based on thefindings of an IDA mission which visited Bangladesh in September 1981consisting of K. Loganathan, E. Chobanian and G. Mukami (IDA), and H.Idehara and T. Sierevogel (Consultants).

1/ BSFIC Preparation Report - Rainfed Sugar Rehabilitation and Inten-sification Project - May 1981.

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II. BACKGROUND

A. General

2.01 Bangladesh, with a population of about 92.9 M and a total landarea of only 35 M ac, of which one fifth is flooded annually, presents acritical and complex development problem. The population is poor (percapita income about $90), overcrowded (1,600 per sq mi) and growing (2.7%per year), short lived (life expectancy at birth is well under 50 years),often unemployed (25-30%), and largely illiterate (about 75%).

2.02 Government has given priority to agricultural and rural develop-ment as the means to benefit the largest number of people. The majorobjective is to attain self-sufficiency in foodgrain production in theshortest possible time. These objectives are strongly endorsed by IDA.It is also the objective of t:he Government to encourage balanced economicgrowth by promoting the development of other sectors, particularly theindustrial sector and non-foodgrain agricultural crops. The proposedproject in the agro-industrial sector would be consistent with GOB'sobjectives, particularly through the freeing of cane land for food produc-tion, the saving of foreign exchange from reduced sugar imports andproviding employment in the rural areas.

B. The Agricultural Sector

2.03 Bangladesh-s economy continues to be predominantly agricultural.Agriculture accounts for 57% of GDP, 75% of all direct or indirect employ-ment and over 80% of the couritry's exports. Out of the total land area of35 M ac, about 22.5 M ac are under cultivation at a cropping intensityaveraging about 147%. Rice is by far the most important crop and accountsfor over 80% of the cultivated area; jute, the principal export andindustrial raw material crop, for 6%; and for tlhe balance a variety ofother crops, such as wheat, pulses, oilseeds, sugarcane, and vegetables.Although the standard of cultivation of Bangladesh farmers is high,agricultural productivity in Bangladesh is among the lowest in the world,the average paddy yield being about 0.5 ton per ac, because of a number ofnatural constraints.

2.04 Agricultural development in Bangladesh is constrained by thefollowing causes: (a) erratic monsoon weather conditions; (b) a long dryseason and lack of irrigation facilities--only :3.6 M ac are irrigatedduring the November-March dry season; (c) severe floods caused by exces-sive rains and overflowing rivers--over 2.5 M az are flooded up to 15 ftannually and cultivation cannot begin until aftesr the flooding subsides inNovember. On 5.5 M ac, annually flooded from 3 to 15 ft, only one cropper year of low-yielding long stalked or floating rice is possible; (d)small and fragmented farms (average 2 ac in 6 parcels). The farmer hasconsiderable risk aversion and very limited investment resources, yet

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institutional credit is still but poorly developed; (e) tenure arrange-ments: 30% of land is sharecropped and the typical rental arrangement is

for the tenant to provide all inputs and to take only half the output;this clearly reduces the incentive to increase productivity; and (f)transportation for moving farm inputs and produce is inadequate and expen-sive.

2.05 There is ample scope for growth in agricultural productionthrough resolution of many of the above constraints. The Government,concentrating on foodgrain production, has developed a Medium TermFoodgrain Production Plan (MTFPP). This places major emphasis on therapid expansion of irrigation and drainage and flood control backed byrapid increases and improvements in the supply of key inputs. The aim is

foodgrain self-sufficiency by 1985 and progress to date is reasonable.Reflecting this, and the country's chronic balance of payments problem,increasing attention is now directed at developing non-foodgrain com-modities with potential to earn or save foreign exchange. Sugar hasconsiderable such potential.

C. The Sugar Subsector

Production

2.06 Sugarcane is grown throughout Bangladesh but concentrated inthe west of the country. Annual acreage varies from 300,000 to 400,000ac, average yield is about 15 tons of cane per acre (TCA). Virtually allproduction is rainfed. About two-thirds of the cane goes to making"gur'--an unrefined rural sweetener--and the remaining to producing plan-tation white sugar by fourteen large mills owned by the Government andmanaged by BSFIC. About 40% of the national sugarcane acreage is locatedwithin the mill zones of irregular shape and these extend up to 30 mi

around the mills. The mills are required to purchase all cane offered bythe outgrowers in the mill zones. Five mills themselves grow sugarcane on

about 9,000 ac, but can only meet 5% of their cane requirement.

2.07 In 1947 there were five privately owned white sugar mills in

Bangladesh. Average annual production during that period was 2,500 tonsand imports of sugar were substantial. From 1951 to 1970, due to directGovernment investment through the Industrial Development Corporation, anadditional 10 public sector mills were constructed. During that periodproduction varied from a low point of around 80,000 tons in 1961 to a highof slightly more than 100,000 tons before liberation (1970).

2.08 The sub-sector suffered seriously with respect to plant andmanagement during the liberation war and production fell to 20,000 tons.Since then, the mills under the management of BSFIC have maintained asteady, but slow recovery. Current production from 14 operating mills,with a total capacity of 16,200 tons of cane per day (TCD), averages

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140,000 tons. Production however varies from year to year due to canesupplies, which depend largely on the weather. The milling season isnormally 120 days, short by world standards. However, in years of abun-dant cane supply it is prolonged, undesirably in terms of sugar recovery,to utilize cane supplies--production in 1981/82 reached 199,000 tons overa milling season of 150 days. Each mill has a vacuum sulfitation plantwith capacity ranging from 1,000-2,000 TCD. The mills operate at about90% capacity, but at relatively high cost. The causes for this situationare complex but include, low cane yields, inefficient collection, poorextraction and milling, and t:he short milling season.

Consumption

2.09 In Bangladesh consumption of sweeteners is in three forms:chewing cane, gur and sugar. Sixty percent of the cane produced in thecountry goes to making gur, 30% for sugar and the remaining for chewingand seed. Per capita consumption of sweeteners in Bangladesh, 13 lb (4.2lb sugar and 8.8 lb gur) in 1.979/80, is the lowest in South Asia. Con-sumption in other countries ranges from 28 lb (26 lb sugar and 2 lb gur)in Sri Lanka to 50 lb (20 lb sugar and 30 lb gur) in Pakistan. Per capitaconsumption of sugar at 4.8 lb in 1978/79 was at its peak. The decreasein 1979/80 was due to price increases (para 2.12). However due to theincrease in population the total sugar consumed stood unchanged at about170,000 tons.

Imports

2.10 The country-s sugar requirement is on:Ly met partly by the BSFICmills. Deficits are met from imports which averaged 30,000 tons in1979/80 and 1980/81. There were no imports in 1.978/79. Through 1979/80imports were permitted on licenses, but these were mainly taken up byBSFIC for distribution through the ration system; private sector importswere negligible because the controlled non-ration prices were below worldprices. Since 1980/81 imports have been freely permitted, but under thewage earners scheme. 1/ Recent increases in the controlled price have madeimportation profitable for the private sector; liberalization of importshas also helped to ensure that domestic prices will not be inflated rela-tive to world prices. With the exceptionally high production in 1981/82,the Government has recently suspended imports.

1/ A scheme managed by the Bangladesh Bank and the commercial banks,where foreign exchange earned and remitted by Bangladeshis overseas issold at exchange auctions.

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Markets

2.11 Gur is essentially used in local dishes and has preference in

the rural areas. Due to dietary patterns and lack of keeping quality ofgur (due to high molasses content), domestic demand for sugar is strong inthe urban market. Unlike sugar, there is no government control overproduction and distribution of gur. Prior to 1979/80, production of gurinside the mill zones was prohibited in order to assure the cane supply tothe mills. This prohibition has now been lifted and has not affected thecane supply to the mills. Seventy percent of the sugar produced is dis-tributed through the ration mechanism. The physical distribution of sugarthrough the ration system and to the armed services, hospitals and railwayemployees is the responsibility of MF. BSFIC is responsible for sales tothe industrial users, i.e., biscuit factories, bakeries and pharmaceuticalplants and to the public through "fair price shops."

Prices

2.12 Cane prices are not related to quality, but are set at a flat

rate per maund of cane supplied. The price of sugarcane delivered to themills was increased from Tk 10/md in 1978/79 to Tk 12.50/md in 1979/80,

and Tk 15/md in 1980/81. These price increases were necessary toencourage outgrowers to provide cane to the mill, to use modern productioninputs and to adopt better cultivation practices. The current cane priceis high compared to other cane producing countries, but appropriate forconditions in Bangladesh, provided it is maintained in real terms. Theex-mill price of sugar for sales other than through MF increased fromTk 360/md in 1978/79 to Tk 512/md in 1979/80 and Tk 560/md in 1980/81.Recently, with the exceptionally high production in 1981/82, the Govern-ment has reduced the ex-mill price to Tk 520/md. During this period,ex-mill price for sugar supplies to MF also increased from Tk 249 in1978/79 to Tk 320/md in 1979/80 and Tk 465/md in 1980/81. At the time ofappraisal (September 1981) Bangladesh sugar prices were in line with worldprices (para 7.06).

Institutions Servicing the Sugar Subsector

2.13 The Ministry of Industries (MOI) has overall responsibility forsugar industry development; it formulates and implements national policiesand programs. Its major instrument to carry out this mandate is the BSFICwhich acts, inter alia, as the managing agent for the sugar mill com-panies. The Government, as the sole owner of the shares in these com-panies, exercises management control and direction through its agent,BSFIC. MOI also determines, in consultation with the Ministry of Commerceand the Ministry of Food, the annual domestic production targets and thequantity of sugar to be imported. MOI is also responsible for determiningproducer and consumer prices and cane procurement price. The latter isdetermined in relation to the Government procurement price for rice.

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2.14 The Ministry of Food (MF) purchases sugar from BSFIC for dis-tribution through the ration mechanism and to the armed services, hospi-tals and railway employees. The Ministry of Local Government RuralDevelopment and Cooperatives (MLGRD&C) is the agency that runs localgovernments. The Deputy Commissioner is in charge of appointingwholesalers and retailers in each district and monitoring their pricing ofsugar to consumers. The Ministry of Commerce (K1OC) monitors the localsupply and demand situation alnd, along with MOI, determines retail pricesand the amount of sugar to be! imported. The Ministry of Agriculture (MOA)originally initiated the sugarcane research and extension program.Research is now the responsibility of SRTI which comes under the directsupervision of BSFIC. In the mill zones, extension to farmers is theresponsibility of BSFIC through the mills. MOA, however, retains theresponsibility for extension to farmers outside the mill zone.

2.15 Commercial banks play a significant role in Bangladesh's sugarindustry development, as they provide funds for the mill companies' work-ing capital and for the short-term production loan requirements of out-growers. In the project area, Sonali Bank (SB) is the primary commercialbanking institution.

2.16 Bangladesh Sugar and Food Industries Corporation (BSFIC).Bangladesh Sugar Mills Corporation (BSMC) and Bangladesh Food and AlliedIndustries Corporation (BFAIC) were established in 1972 under a Presiden-tial Order. BSMC was entrusted with the management of the 10 mills fromthe public sector and the 5 from the private sector, which were national-ized soon after liberation. Similarly BFAIC took over the management ofnationalized food manufacturing and processing industries. These twocorporations were merged in 1976 and operate und.er the name BSFIC. Theestablishment and development of new industrial units in the food andsugar sectors, as well as management and expansion of existing ones, arethe key responsibilities of BSFIC. In 1977, BSE'IC commissioned a new milland increased the number of mills under its management to 16. Of these,only 14 are operating at present. The Government has recently decided todisinvest some of the industries in the food sector. As there is noevidence at the present time of private sector interest in financing largesugar mills the Government is inclined to retain, the sugar sectorindustries, particularly the large mills, in thE! public sector.

2.17 A Board of Directors appointed by GOB manages BSFIC. The Chair-man of the Board is the chief executive. The other Board members are fiveoperational directors. Chart No. 23530 shows the present organizationalstructure which has 5 departments at headquarters with 550 support staffthat provide the central administration to the nills. BSFIC is a nonprofit making organization. 'Its operating costs are recovered from

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enterprises under its management. Overall operation of the sugar comrpanies under BSFIC management is financially profitable. The sugar comn-panies contribution to the national exchequer was Tk 90 M by way ofdividends in 1980/81; excise duty payments totalled Tk 170 M and incometax payments Tk 150 M. No funds were however retained for working capitaland reserves.

2.18 Sugar Research and Training Institute (SRTI). Sugarcane

research in Bangladesh started in 1951 with the establishment of the

Sugarcane Research Station at Ishurdi by the Government of the then EastPakistan. During the period from 1951 to 1972, the sugarcane research wasmainly concentrated on the breeding of new varieties. The station suf-fered severely from financial constraints even before the liberation warin 1971, which caused all activities to stop.

2.19 In 1973, BSFIC took control over the Research Station and

upgraded it to the present Research and Training Institute. The Instituteunder the direction of BSFIC carries out work in five major disciplines:cane breeding, agronomy, physiology and nutrition, entomology and pathol-ogy, and provides training for mid-level extension officers of the mills.SRTI has adaptive trial plots in all operational mill zones and proposessetting up two regional research stations. Under the Bangladesh AustraliaSugar Industry Project (BASIP), financed by Australian Government, SRTIhas been fully equipped with office, laboratory, residential buildings,and training facilities.

2.20 BASIP has been operational since 1979 and provides assistance toSRTI in the fields of: agronomy, crop protection, and agriculturalengineering; laboratory equipment and instrument maintenance; housing,workshop and research farm improvement; and expert services. Four resi-dent experts, plus visits by other specialists, are provided under thisproject. Considerable progress has been made, especially in achieving aconcentration of effort on practical problems. However, much stillremains to be done, and BASIP which was due to terminate in December 1982has been extended through June 1986.

2.21 In the past the most critical deficiency in the research effort

has been varietal development. The present varieties in use are poor.They have low yield potential, poor sugar content, are disease suscep-tible, and most flower prolifically. These varieties are degenerate dueto their long usage, and yields are low and declining. The current recom-mended cane varieties resulting from SRTI's efforts to select new linesfrom basic stocks are Co 1158, Co 975, Isd 1/3 and Isd 2/54. Newervarieties are in the pipeline, Latari-Jaba-C, Bo 70 and 1 112/67. SRTIreports that these new varieties have, with irrigation, yielded over 40TCA. These varieties are expected to be available for commercial cultiva-tion during the next two to three years following completion of thevariety trials in the different agro-ecological zones. To strengthen the

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variety development effort under BASIP, SRTI is directing its attention to

a Variety Assessment Program. This program consists of the selection of

high yielding varieties suitable for local conditions from imported com-

mercial and near commercial varieties.

D. IDA Support and Strategy for the Agricultural Sector

2.22 The focus of IDA assistance in recent years has been agricul-ture, particularly foodgrain production. In addition to assisting inpreparation of the MTFPP, IDA is involved in a major program of financingagricultural and rural development with emphasis on irrigation, drainageand flood control, improved seeds, extension and credit, storagefacilities, and fertilizer production and trans]nort. With the input-basedproduction strategy for foodgrains now bearing fruit, the Government isconcerned that some effort must now be directed to increasing productivityof non-foodgrains, particularly crops with potential to earn or saveforeign exchange. Targets are oil seeds, pulses, tea, sugar, jute andcotton. However, the technical base for the development of these crops,

except jute, tea and sugar, is not well developed, and increased researchis the first need which IDA could support. Meanwhile, the proposedproject, IDA's first operation in the sugar subSector, where the technicalbase is reasonably developed, would comprise a comprehensive effort to

improve performance of most aspects of the induistry--smallholder and millfarm cane production, cane handling and transport, and milling--researchwould be the exception which is well supported '3y Australiarl assistance.Such a comprehensive approach, though essential to optimize benefits,would be unique; prior efforts have focussed excessively on mill improve-ment. The proposed project, in a country which is a continuing netimporter of sugar, would be consistent with the Bank Group's criteria forfinancing sugar projects. 1/ Of the two major agricultural commoditiesexported by the country, jute has been the beneficiary of two IDA financedprojects--jute cultivation and mill rehabilitation. Development of thetea industry is being supported by the United Kiingdom.

III. THE PROJECT AREA

A. Physical Features

3.01 The principal sugarcane growing areas are concentrated in thewest of the country (Map No. 16137). About 52% of the total cane area isin the Rajshahi Division, another 25% is in the northern districts ofKhulna Division. The project area (Map No. 16138) would cover three

1/ The World Sugar Economy: Review and Outlook for Bank Group Lending

- February 1978.

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distinct locations in the Rajshahi Division, the mill zones of the Thakur-

gaon (TSM), Rangpur (RSM), and Rajshahi sugar mills (RJSM) in the dis-tricts of Dinajpur (TSM), Rangpur (RSM), and Rajshahi (RJSM). Sugarproduction in all areas is organized around mill zones; each zone comprisethe outgrower farms, mill farm (except in RJSM), and a sugar mill.

Climate

3.02 The climate in the sugarcane belt is monsoonal. In the Rajshahi

Division, rainfall varies from 55 to 105 in, averaging 71 in at RSM and

105 in at TSM. While the average rainfall at RJSM is 50 in, it varieswidely within the mill zone. The rainfall along the Ganges river, thearea where most of the cane is grown, is over 65 in. Almost 90% of therainfall occurs between May and October, however occasional showers occur

in March and April. Temperature in all zones remains below 80 degrees F

during the months of December to first half of March, the rest of the

year, including the growing season, is usually above 80 degrees F, whichis considered optimum for growth of sugarcane. Mean relative humidity ishigh throughout the year, ranging from about 60% in April to 90% duringthe rainy season. Flooding is not a major problem in the three zones,although some areas can be under water for up to three weeks. The depthof the water table varies at TSM from 13 to 30 ft, RSM from 10 to 70 ft,

and RJSM from 15 to 47 ft.

Water Resources

3.03 The scope of surface water irrigation is limited; perennial

rivers, streams, and ponds irrigate only 2% of the cultivated area. Scopefor groundwater irrigation is promising, but only 4%-5% of the cultivatedarea is irrigated by shallow and deep tubewells. Conservative estimatesare that 50% of the area can be irrigated by groundwater. Moreover, underthe current programs by Bangladesh Agricultural Development Corporation(BADC), Integrated Rural Development Program (IRDP) and Bangladesh KrishiBank (BKB) considerable development of groundwater is envisaged in thenear future (para 4.08).

Topography, Soil and Land Types

3.04 Topography in the sugar belt is characterized by a very gentle

slope to the southeast, with elevation up to 300 ft in the northwest anddown to 25 ft above mean sea level in the southeast. The land gradient isan average 2 ft per mile. In the middle of the northwest region there is

a prominent table known as the Barind Tract where the topography is flatto gentle undulations. The Teesta River flows through the northeastcorner of the region and the Ganges River crosses the centre of the canebelt. A number of small rivers cut across the entire cane belt.

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3.05 TSM is located on the Old Himalayan PLedmont Plain with soilsthat are acidic, sandy and sandy-loam, and have low nutrient content.Because of the soils' generally low water retaining capacities, cultiva-tion of traditional irrigated paddy is often costly. RSM is located onthe Teesta Flood Plains and the Barind Tract soLls which are sandy-loam orclay-loam of good water holding capacity. These soils are neutral and theBarind Tract is mostly a rice growing region. RJSM is located on theGanges Flood Plain where soils are predominently clay, calcareous darkgrey and rich in potassium and calcium, and are good for sugarcane produc-tion.

Farm Size and Land Tenure

3.06 The population of Rajshahi Division, which has a total area ofabout 13,000 sq mi, is about 23 M. Although rice is the dominant crop,about 3% of the cultivable land is under cane. The numbers of farmers inthe mill zones are 21,000 in TSM, 31,000 in RSM, and 35,500 in RJSM. Theaverage farm size in the project area is about 3 ac with a third undercane annually. This 1 ac is, however, fragmented into five to eightplots. The areas suitable for cane cultivation covered by each of thesemill zones are: TSM 37,000 ac; RSM 34,000 ac; and RJSM 64,000 ac. Areasunder commercial cane are only TSM 15,000 ac, RSM 12,000 ac, and RJSM25,000 ac. About 50% of the outgrowers are owner farmers while the restare either sharecroppers or tenant farmers.

Communications

3.07 The mills are served by poorly surfaced roads and the BangladeshRailways. Within the mill zones the purchase centres and farming areascan only be reached by unimproved brick-herringbone-surface roads and oxcart trails which largely become unusable during the monsoon. The roadswithin the mill zones are public properties, which should be maintainedby the District and Union Councils. However, due to inadequate resourceswith these Councils, GOB requires the mills to recover from sugar canegrowers a cess of Tk 0.12 per md of cane supplied to the mills. Thesefunds, which are administered by a committee headed by the Deputy Commis-sioner of the district, are used for maintenance of selected roads underthe supervision of the mills' Civil Engineers. BSFIC also recovers, ascontribution to a road development fund, Tk 10 per md from the proceeds ofsale of sugar by the mills. These funds, admini'stered by a separatecommittee headed by the District Commissioner, are utilized forrehabilitation and upgrading of roads under the supervision of the mills'Civil Engineers. Monies available in these funcls are inadequate to meetthe mills' requirements to rehabilitate the roads.

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B. Outgrowers

3.08 The mills, except RJSM, obtain about 90% of their cane require-

ment from outgrowers in the mill zone; RJSM obtains all its cane fromoutgrowers since it has no mill farm. Mill zone boundaries are declared

annually by the Government, they range up to 30 mi from the mill. Themills provide an integrated extension, supervised credit, and input supply

service to the outgrowers, including facilities for mechanized landpreparation on a rental basis, and procure the cane offered (para 3.17).The mills enter into a cane supply contract only with those who adopt theagricultural services and inputs package, these are known as supervisedgrowers. At present only about one half of outgrowers in the project areaare supervised growers. Details of outgrowers during the 1980/81 plantingseason are in the following table.

Table 3.1: OUTGROWER HOLDINGS IN PROJECT AREA

Mill Total No. of Average Area Total AreaZone Outgrowers Under Commercial Cane Under Commercial Cane

Acres

TSM 16,444 0.90 14,800RSM 15,187 0.80 12,150RJSM 20,500 1.00 20,500

Sugarcane in the Farming System

3.09 Sugarcane is generally grown as a 12-15 month crop on the higherlands in two year rotation with Aus paddy during the monsoon followed byoil seeds, wheat and vegetables during the dry months, grown on residualmoisture. However, when the price relation between cane and rice cultiva-tion is in favor of cane cultivation the farmer will plant cane even inthe low lands; these low lands are subject to long periods of water log-ging, resulting in poor cane stands and a high incidence of diseases.Drainage in the low lands is almost impossible. Generally ratooning isnot practiced (except in RJSM where less than 5% of the outgrowers ratoon)because of the severity of the dry season and the incidence of pests anddiseases which result in poor ratoon stands. Traditionally, cane isplanted after the harvest of the winter crops, i.e., February-March. Themills are, however, encouraging outgrowers to plant in October-December.The month of October, with temperatures of 80 degrees F and soils whichhave residual moisture is the most favorable planting period.

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3.10 Yields of the outgrowers in the three zones are low, due to soil

conditions, poor cane varieties, low and diseased plant populations, andinadequate weed control. The cane quality is eqlually poor with low pol(sucrose) and high fiber content. Details are in Table 3.2.

Table 3.2: OUTGROWER AVERAGE CANE YIELDS

Mill Cane Yield Pol % Fibre %Zone (ton/acre) Cane Cane

TSM 12.C 10.04 L5.82RSM 16.6 10.19 15.78RJSM 15.3 10.08 L7.00

3.11 The agricultural practices followed by the outgrower are: landpreparation, which consists of 5-10 passes with a bullock drawn countryplough to a depth of 4-6 in, followed by raking/harrowing with a bullockdrawn ladder harrow. Planting furrows when used are opened by hand andare shallow; extension workers recommend deep plowing and furrows 10-14 indeep, which is only possible with mechanized cultivation. Deep plowingand deep furrows are recommended: (i) to break the hard pan resultingfrom paddy cultivation to allow cane roots to penetrate and seek deepmoisture during the dry season; and (ii) to minimize waterlogging of thecane roots during the rainy season. Mechanized land preparationfacilities are provided by the mill's extension services (para 3.17).

3.12 Until recently outgrowers obtained seedcane from their ownfarms. This was normally ove!r-mature cane, infested with diseases andwith borers. Some 65% of the supervised outgroiwers have now acceptedcertified seedcane, not yet from heat treated stock, supplied under themills credit scheme. The certified cane is the first step in a programdeveloped by SRTI for the prc,duction of heat treated clean seed.Generally the outgrower will apply some filter press mud (a waste productof the sugar mill), cow manure, household ashes and water hyacinth compostto his fields. In addition, supervised outgrowers can obtain fertilizerunder the mills credit scheme. The fertilizer application rates arerecommended by the mills, but some outgrowers divert part of the fer-

tilizer to their other crops. The outgrower carries out 2-4 hand weedingsto keep the interrows clean, but these weedings are often inadequate innumber and quality of work. One or two physical pest control operationsare carried out: hand collecting of adult insects and egg masses andremoving damaged plants. Cane stools are often tied together to avoidlodging of the cane.

3.13 Outgrower Cane Harvesting Practices. Cane is generally cutgreen, hand-loaded on bullock carts and transported to purchase centres

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where it is weighed and offloaded. Cane is delivered to these purchasecentres on a "purjee" (permit) system. Under this system an outgrower,who has on average one acre of land under cane and about 15 tons of caneto supply, is issued permits to deliver one cartload (1 ton) of cane everyfour to seven days. To avoid the hiring of additional cane cutters, theoutgrower cuts this 1 ton using family labor over a period of two to threedays. Loading and transport to the purchase centre absorbs an extra day.Because of the flat rate per ton of sugarcane delivered to the mills (para2.20), and the purjee system which works on the basis of giving equalopportunity to all outgrowers to deliver their cane, there is noencouragement to the farmer to deliver high quality fresh cane. Harvest-ing of an outgrower's field is staggered over the crushing season andresults in delivery of cane of varying maturity.

Outgrower Organization

3.14 At present a loosely arranged outgrower organization is inexistence at each mill zone. These organizations have no executive orrepresentative power. Before the start of the harvest a general meetingis called by the mill management in which the farmer representatives ofeach purchase centre are informed of the cane purchase program.

C. The Sugar Companies

3.15 The three companies, TSM, RSM and RJSM, are public companiesregistered under the Companies Act, whose shares are fully owned by theGovernment, and which are managed by BSFIC. Each mill company provides anintegrated extension, input supply and cane procurement service to theoutgrowers and owns the the mill farm (except RJSM), the purchasingcentres, and the mill in the respective mill zone.

Management

3.16 Each mill has a board of directors, appointed by GOB; one of

them is a BSFIC director. The mill boards meet once a year to considerthe annual accounts. The full responsibility for supervision of the millsis with BSFIC. The mill's General Manager, appointed by BSFIC, is thechief executive of the mill. Chart No. 23531 shows the presentadministration which has 10 departments, each headed by a Deputy Chief. Amajor weakness of the existing organizational structure is the largenumber of department heads who report to the General Manager, diffusingresponsibility and control.

Services to Outgrowers

3.17 The integrated extension, input supply and cane procurementservices were introduced by BSFIC in the mill zones through a Government

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approved scheme--Intensive Cane Development Scheme (ICDS). Initial capi-tal cost and incremental staff salaries for the first three to five yearswere fully financed by grants from the Government. The operating cost isnow met by the mills. ICDS consists of the following major components:

(a) development of a cane extension service under each mill manage-ment supported by advisory staff from BSFIC head office;

(b) distribution of all production inputE on credit to cane growers;

(c) production and distribution of clean seed;

(d) administration of a supervised credit program;

(e) extension of mechanized cultivation facilities; and

(f) procurement of cane.

3.18 Under ICDS a mill zone is divided into four to five subzoneswhich are further divided inlto 20-25 purchase centres. Each purchasecentre, manned by a Centre-in-Charge (CIC), services 4-5 units of 100acres cane each. Each unit is in charge of a Cane Development Assistant(CDA), who is the field extension worker. Subzones are supervised byAssistant Cane Development Oifficers (ACDO), who are trained at the SRTIand also have responsibility for training of CDAs. The entire mill zoneis administered by a Deputy Chief Cane Development Officer (DCDO),assisted by two or more Cane Development Officers (CDO). Supportingprofessional staff for field trials, credit operation and crop protectionare also provided.

3.19 Recruitment of staff to man ICDS has been completed, but due toinadequate fund allocation and attempts to spread the funds to all themills, BSFIC has not been able to complete most of the infrastruc-ture--purchase centres, input: godowns and staff quarters--required.Within the mill zones accommodation for rent is scarce. As a result mostextension officers either accept accommodation from a local landlord orlive outside the mill zone. This has resulted in insufficient contactwith the outgrowers. BSFIC has also not been able to provide sufficienttransport for the extension officers. This has greatly reduced theirefficiency. Thus, though ICDS is adequately staffed, at present it onlyreaches 50% of outgrowers (para 3.08).

3.20 Production Credit under ICDS is provided in the iform of inputsincluding seed cane (para 3.30) and mechanized land preparationfacilities, the annual intere!st rate is 12%. Repayments are deducted whencane payment is made. The credit program is fully financed by SB and noservice charges are levied by the mills. Due to difficulties in dis-tributing the inputs, and insufficient contact between the extension staff

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and the outgrowers, only about 50% of the outgrowers are effectivelycovered by the production credit program. Since 1979/80 the mills havealso introduced a crop purchase-advance scheme against standing crop foroutgrowers with less than 1.66 ac of cane. Details of outgrowers whoreceived production credit and advances in 1980/81 planting season are inTable 3.3.

Table 3.3: OUTGROWERS PRODUCTION CREDIT

Area UnderTotal Area Supervised Mechanized Production Cropunder Cane Outgrowers Cultivation Credit Advance

Mill Acres Tk Million

TSM 14,800 12,000 2,600 13.3 0.75RSM 12,150 9,250 2,000 8.4 0.50RJSM 20,500 10,100 4,000 9.4 1.00

3.21 Purchase Centres and Cane Transportation. The mill companiesoperate cane purchasing centres and are responsible for transporting canefrom them to the mill. The centres, which are semi-permanent structures,consist of an office, and, in a few locations, rented input godowns andstaff quarters. They are located generally at roadheads and rail centres,with the exception of one at the mill gate. Transport of cane from thecentres to the mill is divided between the mill-owned tractor - trailers(85%) and rail (15%). Transport by rail takes as many as four to fivedays due to priority for passenger and foodgrain transport. The railroadsare owned and operated by the Government.

3.22 An equally difficult and costly problem is haulage by trac-tor-trailer from the purchasing centres. This takes as many as 7 to 8

hours. In general, vital link roads are narrow and badly maintained. Inwet conditions roads cannot be used. In dry conditions, giant pot holescause excessive delays in moving cane, resulting in loss of sucrose con-tent in the cane delivered to the mill.

3.23 Another costly problem is cane off-loading. Cane delivered bytrucks, trailers, railwagons and bullock carts is weighed upon enteringthe millyard and stored on the transport units until it is manuallyunloaded onto the cane carrier. Cane storage at the mills isnon-existent. Turnaround time for the transport vehicles is often six toseven hours.

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Mill Farms

3.24 Two of the mills--l'SM and RSM--produce sugarcane from their ownfarms. Cane produced on a major part of the farms (the commercial farms)goes to the mills for processing. Multiplication of promising newvarieties and foundation seed cane production are carried out on a smallersection called the research and seed multiplication farms. These are alsoused as demonstration plots for outgrowers.

3.25 TSM has three adjacent blocks totalling 2,500 ac. The soils intwo of these blocks (Mohan and Jamalpur) are sandy to sandy loam, low inorganic matter and of low fertility. The third block (Salander) is morefertile with clay to clay loam soil. In 80/81 the mill farm produced12,700 tons, 9% of TSM's intake. Details of acreage and yields are in thefollowing table.

Table 3.4: TSM -- MILL FARM

Total Area Suitable Area YieldArea for Cane under Cane Per Acre

Acres (Ton/Acre)

Salander 806 625 280 18.4Mohan 1,100 811 360 15.0Jamalpur 603 453 200 12.7

3.26 The mill farm in RSM is in one block of 1,690 ac. Of this1,350 ac are suitable for cane cultivation. About 600 acres are annuallyunder cane. The soil is red laterite and lacks nutrients. The averageyield is about 14 TCA. In 80/81 the mill farm produced 8,500 tons, 6%of RSM intake. RJSM has no mill farm, but a small research farm of 100acres.

3.27 Although the soil and climatic conditions in part explain thelow cane yields in TSM and RSM, major constraints to improved output havebeen poor farm management and poor farm development. Area under cane isless than 50% of the area sui:table due to inadequate fund allocation forfarm development. The farms are managed by resident managers who arerecently qualified agricultural graduates with no practical experience ortraining. At each farm, the managers are assisted by three plantationofficers, four overseers, and about 20 permanent workers. Casual labor ishired during the planting ancl harvesting seasons. Each farm also has afarm machinery section headed by an agricultural engineer, supported by aforeman, mechanics, and traclor drivers. The farms have adequate equip-ment to handle the area now under cane, but maintenance is poor. The

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research farms are under the supervision of an agronomist, supported byabout three field staff.

3.28 On the commercial farms, sugarcane is grown as a rainfed plantcrop only, in rotation with a green manure; there is no irrigation. Caneis generally planted on the higher land; even these areas are subject tooccasional flooding during the monsoon season, as no drainage or floodprotection has been installed. The lower areas of the farms are used forfood crops. Land preparation for the sugarcane crop is during the monthsof September-October, extending as necessary into November. Land prepara-

tion consists of: one or two passes with a 65 hp tractor and athree-bodied disc plough to a depth of 8-10 in; two passes with a discharrow; and furrowing with a two-bodied furrower. Before planting BHC orAldrin are applied (4 lb/ac) against soil insects. Applications at thisrelatively high rate may have some toxic effect and SRTI is testing otherchemicals. Planting is targeted for completion during October, but oftencarried over to December. Seed cane is obtained from certified seedplots; this cane is screened for varietal purity and cleanliness (diseasesand pests) but heat treatment is not practiced. Cane is cut in three tofive eye setts and planted as double setts. In general about 65 md (2.5tons) of seed are used per ac. Fertilizer nutrients are applied at theSRTI recommended rates of 110 lbs N: 110 lbs P: 110 lbs K in the form ofurea, triple super phosphate and potassium chloride. The basal dressingat planting consists of all the phosphate and 50% of the nitrogen andpotash, the balance is applied in May. These fertilizer rates appear highrelative to present low yields, however new recommendations must awaitfurther research by SRTI. The crop maintenance consists of three to fivehand weedings and one or two manual hilling up operations. Additionally,there are one or two pest control operations.

3.29 The cane is cut green, hand-loaded and transported by trac-tor-trailer to the factory within two to three hours of harvesting. Afterthe harvest the fields are completely cleared of the cane debris (oldroots and trash which are taken by villagers for fuel) and prepared forgrowing a green manure crop of legumes with the first rains in May. Thegreen manure is ploughed in with the land preparation for cane cultiva-tion.

Seed Cane

3.30 BASIP has recently started a heat treated clean seed program. A

three stage scheme (foundation, registered and certified seed) for theoutgrowers and a two stage scheme (foundation and certified seed) for themill farms are now in operation. All foundation seed and certified seedfor the mill farms are raised by the mill farms, the registered and cer-tified seed for the outgrowers is produced by contract outgrowers. Highquality commercial seed cane would be available for the 1982/83 plantingseason. A previous scheme provided inspected and certified, but not hot

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water treated, seed cane; about 65% of supervised outgrowers took thisseed cane annually on credit from the mills. Wit:h the demonstrated higheryields, it is anticipated that the outgrowers will respond well to the newsource of heat treated clean seed.

Project Factories

3.31 The mills of TSM and RSM are about 24 years old and RJSM isrelatively new, having been commissioned in 1965166. Expansion programswere carried out in 1966/67 to increase the capacity of TSM and RJSM to1,500 TCD. RSM was installed wvith a rated capacity of 1,500 TCD, but thecapacity was downgraded to 1,3030 TCD in 1980/81, due to bottlenecks in themanufacturing process. Major items of equipment at each mill requirereplacement. In addition cane yard facilities are needed at each mill toimprove mill performance and transport turnaround time. At present thereis no cane storage system. When supplies are heavy vehicles are keptwaiting, often for many hours, leading to significant inefficiency in thetransport system (para 3.35). When supplies are inadequate there are noreserve stocks to fall back on and production ceases temporarily. Cane isunloaded and transferred direct:ly to the cane carrier manually. This is alow cost system but it has two disadvantages: firstly the output of thelabor is uneven, commonly towards the end of a shift, particularly thenight shift, the rate of feed declines; secondly the loading of the canecarrier is uneven, leading to tailling inefficiency. A well developed caneyard with storage and mechanical unloading and feeding systems wouldovercome these problems.

3.32 Factory Organization. Chart No. 23531 shows the existing fac-tory organization. The factory is organized into (a) Engineering Depart-ment; (b) Production Department; and (c) Laboratory, each headed by aDepartment Head reporting to the General Manager. The Department Headsare supported by 2-3 assistant engineers/chemists with a basic degree .There are also about 200 perman,ent and about 300 *seasonal workers manningeach factory. Cane unloading atnd sugar bagging and handling is by con-tract labor. About 40 to 50 men per shift are usad for cane handling and25 to 30 men for sugar handling.

3.33 Factory Performance. Sugar production at the project millsvaries substantially from year to year depending on cane supplies, whichare erratic (para 2.08). The milling season required to handle the caneproduced in 1980/81 ranged from, a period of 98 days at TSM, 124 days atRSM to 131 days at RJSM. Capacity utilization was 93% for TSM, 100% forRJSM and 88% for RSM. Recovery expressed in terms of sugar manufacturedpercent cane ranges from 7.8% to 8.2%, substantiaLly below standardsachievable in the industry. This is a reflection not only of the poorquality of cane milled, but also of poor operational standards and limited

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maintenance. Optimizing factory sugar recovery requires continuous atten-tion to the details of processing and careful organization and coordina-tion of cane deliveries.

3.34 Sugar Manufacturing Process. The double sulfitation process isused to manufacture plantation white sugar. The mills are equipped withconventional sugar machinery and equipment which are typical of laborintensive industries. Only one grade of sugar is produced. There are nosugar quality standards in the country. However BSFIC quality targets of99.5% pol and 0,05% moisture are met by the project mills.

3.35 By-Products. The by-products of the mills are molasses,bagasse, filter cake and boiler ash. Molasses production ranges from 3.5%to 4% of cane supplies depending on the quality of cane. About 50% of thecurrent production is consumed locally for the production of ethanol andfor the preparation of tamak, a local tobacco, and for cattle feed; thebalance is exported at unrewarding prices. The problems in exportingmolasses are (a) transportation from the mills to port and (b) storagefacilities at the port. The North Bengal Paper Mill provides a market forsurplus bagasse generated at the mills. Filter cake is used as soilconditioner on the mill farm and smallholder farms. Boiler ash has noeconomic value. It is used around the mills as land fill material.

3.36 The main characteristics of each of the three companies aresummarized below for the financial year 1980/81:

TSM RSM RJSM

Area Under Commercial CaneMill farm (ac) 840 600 -Outgrowers (ac) 14,800 12,150 20,500

YieldsMill farm (TCA) 15.0 14.8 -Outgrowers (TCA) 12.0 16.6 15.3

Cane ProcuredFrom mill farm (tons) 12,717 8,480 -From outgrowers (tons) 123,749 133,304 197,378Total (tons) 136,466 141,784 197,289

Mill Rated Capacity (TCD) 1,500 1,300 1,500Total Milling Season (days) 98 124 131Recovery Rate (%) 8.14 7.8 8.2Sugar Production (tons) 11,112 11,077 16,185

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IV. THE PROJECT

A. Objectives

4.01 The project would increase sugar indusl:ry productivity andincrease cane and sugar production by: strengthening services to caneoutgrowers; developing mill farms; improving cane handling facilities; andrehabilitating three mills. This broad approach would differ from othersugar improvement programs that are limited basically to the improvementof mill facilities, or to research on cane growinig, and do not incorporatethe package of measures needed to improve small 'armer sugar cane hus-bandry productivity that are essential if Bangladlesh is to develop amodern, efficient industry. Sugar production zones around the mills wouldbe reduced and farm area released for other crops; and to feed new mills.Existing facilities would be used more fully and effectively, hence returnon existing investment increased.

B. General Description

4.02 The Project would, over five years, rehabilitate and develop thesugar companies at Thakurgaon, Rajshahi and Rangpur, including outgrowercane areas, housing and transportation infrastructure, the mill farms andthe mills. Components would be:

(i) strengthening servic,es to outgrowers;

(ii) improvement of cane procurement, transportation, handling andstorage of cane;

(iii) road improvement;

(iv) development of mill farms at TSM and RSM including irrigationfor about 2,000 acres;

(v) rehabilitation of three mills; and

(vi) technical assistance and training.

4.03 No investment (excepit for study visits by SRTI scientists) wouldbe made through the project for cane research as this is being supportedunder the Australian aid program (para 2.15). The project would beexecuted by BSFIC, the managing agents of the sugar companies.

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C. Detailed Features

Strengthening Services to Outgrowers

4.04 The key to the establishment of an efficient and profitablesugar industry in Bangladesh is to substantially improve the productivityof cane outgrowers. This will require widespread adoption of improvedtechnology, technology very different from today-s norm. A particularneed is adoption of irrigated cane production. In addition to improvingyields this will have two other key benefits, first it will permit theintroduction of ratooning, which will enable a significant saving inproduction costs; secondly it will enable the crushing season to belengthened, thus reducing processing costs. To help outgrowers make thesetechnology changes and productivity gains the project would strengthen themill extension services and extend the coverage to the entire mill zone.The extension services under the project would promote better landpreparation--including mechanization for outgrowers with one or more acresor groups of outgrowers who have consolidated their lands, use of goodquality seed cane, application of a balanced dose of fertilizer, earlyplanting and control of pests and diseases. They would also promote andguide the development of irrigated cane production (para 4.07 et seq).

4.05 Present staffing is adequate, but facilities are inadequate toallow staff to be fully effective (para 3.19). To improve facilities theproject would provide additional machinery for mechanized cultivation andequipment to upgrade workshops (US$775,000); vehicles (four wheel drivesfor DCDO, motorcycles for CDO and ACDO, and bicycles for CDA) for fieldofficers (US$113,000); and 56 purchasing centres comprising offices,godowns, and staff quarters (US$1.7 M) (para 4.10).

4.06 The operation of the mill supervised credit program is satisfac-tory. However, the program at present only reaches 50% of outgrowersbecause of the limitations discussed above. With facilities improvedunder the project, ICDS services would be made available to all growers.It is anticipated that 90% of growers would then take advantage of produc-tion credit, thus ensuring adequate input supply. The project wouldprovide the incremental production credit requirement (US$1 M).

4.07 Virtually all cane production at prestent is rain fed. Yieldsare low and, even with improved husbandry, the potential is low because ofthe protracted dry season. Irrigation is the key to significantlyincreasing yields, and farm budget analysis indicates that irrigated caneproduction would be profitable.

4.08 Development of minor irrigation, particularly through theinstallation of tubewells, is a key element of GOB's MTFPP, and is alreadytaking place on a significant and growing scale, particularly in thenorthwest. Aid donors are providing large scale assistance to this

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effort. IDA has the ongoing Northwest Region Tubewells (Cr. 341-BD),Shallow Tubewells (Cr. 724-BD), and Agricultura:L Credit Project (Cr.1147-BD); the Deep Tubewell (II) Project (Cr. 1287-BD); and further RuralDevelopment, Agricultural Credit and Deep Tubewell projects in the lendingprogram. The ADB is financing STW under its agricultural credit projects,has recently approved a project to rehabilitate and expand its DTW projectat Thakurgaon in the northwest, and has a project similar to IDA's DTW IIunder preparation, also for the northwest. Other donors, including IFADand the Kuwait Fund, are also financing irrigation on a lesser scale.

4.09 Given this level of support to irrigat:ion development it wouldbe neither necessary nor appropriate for this project to finance irriga-tion equipment. However, the extension service would work to encourageirrigation development within the mill zones. Initial efforts would bedirected at existing irrigation groups to develop management systems forthe tubewells and command areas which would: include cane in the croppingsystem; grow cane in consolidated blocks to permit mechanical landpreparation; and generally improve the irrigation groups management.Advantage would be taken of experience gained under IRDP's IrrigationManagement Program (IMP) which has clearly demonstrated the feasibility ofimproving irrigation group management leading to significant increases incommand areas once a proven system had been developed. In developing themanagement systems the extension service would collaborate closely with,and be assisted by, IRDP and BADC personnel. Staff would be trained(jointly with BADC and IRDP staff) under an ongoing program for irrigationmanagement training, which is assisted by UNDP/FAO, at the Bogra RuralDevelopment Academy. Once systems had hben developed and tested, theservice would promote the adoption of irrigatiorn among cane growers urgingthem to acquire tubewells under GOB's various programs. Based onexperience with IMP, targets for irrigation devElopment over the projectperiod have been established as follows:

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Mill Zone Year 1 /a 2 /b 3 4 5New Acres Under Irrigation /c

TSM - 600 1,150 2,650 6,150RSM - 600 1,150 2,650 4,150RJSM - 600 1,500 3,500 7,100

Total 1,800 3,800 8,800 17,400

/a Staff would be trained and systems would be developed.

/b Systems would be tested on a pilot basis involvingabout 10 DTW or equivalent per zone. There would bemodest expansion with system refinement in Year 3and full scale expansion from Year 4.

/c About 33% of the irrigated area would be in cane.

4.10 Sugarcane Purchasing Centres are a vital link to providing anorderly and continuous flow of cane to the mills. The project woulddevelop 56 centres which would also be used as communication and controlcentres for extension, seed distribution, procurement and to providetraining facilities (both for growers and CDA) in the mill zone. Addi-tional buildings and housing would be required at the mill zones to:accommodate the extension staff; provide godowns for inputs; and providedual purpose offices-cum-training facilities for outgrowers and fieldstaff. A design model for a purchasing centre and its associated build-ings has been agreed with BSFIC staff. All purchasing centre locationshave been identified based on high potential cane production areas. Theproject would provide a total of 62 small godowns at subzones, and pur-chasing centres, 16 offices-cum-training facilities at subzones, and smalloffices at 56 purchasing centres. In addition, about 310 housing units ofthree different standards are proposed for the project; these follow thePlanning Commission's recently issued specifications. The estimated costof civil works is US$1.7 M.

4.11 The development program for the outgrowers is summarized below:

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Area in Cane (Acres) l/ TSM RSM RJSM

Non-supervised 2,300 - 2,000

Supervised withoutmechanized cultivation 5,900 6,400 7,000

Supervised with 1/mechanized cultivation 4,600 3,300 5,400

Ratoon (Supervised) - - 2,500

12,800 9,700 16,900

1/ These figures reflect the rainfed situation on whichproject benefits are based. The target for irrigationdevelopment would be:

TSM RSM RJSM

Irrigated cane area (acs) 3,500 2,900 4,200Ratooning resulting from

irrigation (acs) 2/ 1,200 1,000 1,400

2/ Outgrowers normally grow paddy after a sugarcane plantcrop. The introduction of irrigation would enableratooning to be practiced and this would be attractivebecause of the savings in planting costs.

Cane Procurement, Transport, Handling and Storage

4.12 The project would finance the installation at the three mills ofmechanical cane unloading and feeding systems ard storage facilities.These would include two bridge cranes, mounted cn a common gantry, tounload cane from transport units either to storage facilities or a feedertable. The mechanical handling system would improve the uniformity ofcane feed and maintain cane feed rate. The storage facility would improvethe turnaround time of the transport vehicles and their effective use.The estimated cost of these investments is US$570,000 per mill.

4.13 Detailed design and specifications for the cane yard improve-ments would be prepared by consultants engaged under IDA Technical Assis-tance Credit (Cr. 1124-BD). These consultants would also carry out astudy of the millyard handling and storage procErdures. Based on the studythe consultants would be required to confirm the benefits of the proposedmechanical handling system and the storage facility, as against thepresent manual system.

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4.14 The consultants engaged to carry out a subsector review of thesugar and gur industries (para 4.25) would examine all aspects of thepurchasing operation from the allocation of "purjees" to the weighing anddischarge of the cane at the purchase centres and the receipt of paymentby the growers. It would pay special attention to factors which allow thedelivery of stale, dirty or otherwise unsatisfactory cane, and wouldconsider systems whereby the delivery of cane of improved quality would beencouraged through bonus payments. It would investigate the possibilityof sampling the bulked deliveries from purchasing centres with a view topaying bonuses.

4.15 Transport vehicles at the project mills are more than adequate.No investments other than replacements would be required. Many of theexisting trailers are equipped with hydraulic cylinders for side dumpingbut they have never been used. Under the project, trials would be con-ducted to evaluate trailer modifications which may be necessary to utilize

the dumping feature.

Roads

4.16 Sections of the road network within the mill zones would beimproved. This would include about 12 mi in TSM, 8 mi in RSM and 8 mi inRJSM; all selected roads would be important links between the mills andpurchase centres. The construction would be of standard design, consist-ing of 12 ft pavement on a 22 to 30 ft earthen embankment. Typically thepavement would consist of 3 in brick soling, followed by a 5 in layer ofconsolidated brick or stone chips covered by 1 1/2 to 2 in bituminouscarpeting. Road works would cost about US$80,000 per mile. Rehabilita-tion under the project would cover only the most important links, abouta third of the requirements within the mill zones; two other projectsproposed for financing by IDA--Secondary Feeder Roads Project and RuralRoads and Marketing Project--would meet a part of the balance require-ments.

Development of Mill Farms

4.17 The mill farms at TSM and RSM would take the lead in introducingimproved cane husbandry, irrigation and drainage, and commercial extensionof varieties recommended by SRTI, and would serve as demonstrations tooutgrowers. The farms would be responsible for the production of heattreated foundation seed for the cane seed program and would also have thecapacity to rapidly multiply seed of newly released varieties. The farmswould also comprise a reserve of cane to maintain supplies to the millsif, for any reason, there were short term interruptions in outgrowersupplies.

4.18 Cane production on the mills farms would be increased throughimproved husbandry on existing lands and development of new lands.

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Irrigation would be provided on 1,215 ac in TSM and 850 ac in RSM from 2cusec deep tubewells, 15 al: TSM and 13 at RSM. Because of the poroussoils and uneven topography the project was prepared on the basis ofsprinkler irrigation. Given the high capital and operating costs ofsprinkler irrigation, and the heavier management burden which it imposesrelative to surface irrigal:ion which is virtually all that is used inBangladesh, a detailed cost/benefit comparison should have been madebetween sprinkler and surface systems. This was not done and could not bedone at appraisal for want of data, in particular topographic maps. Sincedevelopment using the sprinkler system gives satisfactory returns (para8.03), this was taken as the basis for appraisal. However, the consult-ants to be hired under the project (para 4.23) would compare alternativeirrigation systems and implementation would be based on the most advan-tageous. To strengthen the clean seed program at RJSM, irrigation from asingle deep tubewell would be installed at tha 100 ac research farm.Though cane on the mill farms is planted on the higher areas to avoidflooding and waterlogging problems, minor drainage and flood control workswould be constructed for further protection.

4.19 The mill farms would be provided wi:h additional equipment tocarry out the required mechanized agriculturaL operations on the expandedcane area and to transport their own cane to 1:he mills. The farmworkshops would be upgraded through provision of additional equipment.Key farm officers would be provided with vehicles--l four-wheel drivevehicle for each farm, 1 minibus, 4 motorcycles and 37 bicycles. Inaddition housing would be provided for key staff.

4.20 The development program for the mil:L farms is summarized below:

TSM RSMAcres

Improved husbandry 375 600Development of new land 840 250Total 1,215 850

Mill Rehabilitation

4.21 The project would undertake major rehabilitation works. In TSMthe continuous sulfitation unit, A/B batch centrifugal station, and con-tinuous centrifugal station, would be replaced. In RSM the boiler andevaporator units would be replaced. In RJSM the boiler, injection waterpump, continuous sulfitation unit evaporator, vacuum pan, and crystal-lizer, would be replaced. In all mills condensate storage tanks would bepurchased. Minor modifications and replacements would also be carried outto eliminate bottlenecks in the existing process, improve efficiency and

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performance and provide control measures for environmental protection.The estimated cost of equipment for rehabilitation including the cost ofspares required over the project period is US$9.8 M. The operationalreliability of the mills would be maintained by continuing the existingprogram of routine maintenance and replacement.

4.22 Engineering consultants funded under IDA's Technical AssistanceCredit (Cr. 1124-BD) would complete detailed engineering designs andequipment specifications for the project mill items begun at projectpreparation. The consultants have been engaged and the engineering workis sufficiently advanced to allow tendering to begin soon after Boardapproval. The project would also provide consultants to supervise therehabilitation works (para 4.24).

Technical Assistance

4.23 Consultants would be engaged to supervise the agriculturaloutgrowers and mill farms program. This would require about 75 manmonthscosting US$837,000 at an average man-month cost, including salary, socialcosts, fees, international travel, and subsistence of about US$11,100.They would have three main functions:

(a) the supervision of the development and rehabilitation of millfarms, the supervision of the implementation of the new techni-ques in the outgrower areas;

(b) the preparation of detailed mill farm development plans based oncost/benefit comparison of alternative irrigation systems,followed by the preparation of specifications for the agricul-tural machinery and irrigation equipment and works and assistingin the evaluation of tenders; and subsequently,

(c) staff training to ensure that the new techniques become estab-lished operating routine.

The draft TOR for the consultants (Annex I) has been agreed at nego-tiations. Engagement of the consultants would be a condition of effec-tiveness.

4.24 Mill rehabilitation would be supervised by consultants engagedunder the project. This would require about 69 manmonths of consultants-services and have an estimated cost of US$300,000, at an average manmonthcost of US$4,500. The consultants engaged for the preliminary design workhave been selected to undertake the supervision.

4.25 Subsector Review The project would provide 10 manmonths ofconsultants to carry out a subsector review of the sugar and gur

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industries. Average manmonth cost would be US$7,800. The primary objec-tives of this review would be to: (i) review the current and projectedproduction and consumption of sugar and gur; (ii) analyze policy andinvestment implications; (iii) identify development constraints; and (iv)

develop strategies and priority programs for sugar and gur. The review,-which would include, inter alia, such issues as cane yields, mechaniza-tion, pricing policies for cane and sugar, extension and research, rolesof the public and private sector, would form t:he basis for future donor

assisted programs. The review would also examine all aspects of the canepurchasing operation (para 4.14). The draft terms of reference, which would

be agreed during the first year of the project, are in Annex 1.

Training

4.26 Agricultural Staff. The project would strengthen the training

of CDA by SRTI trained ACDO by providing three mobile training units toSRTI, and overhead projectors to CDA training centres which would be

constructed under the project (para 4.10). BSFIC had proposed the estab-lishment of a training institute to meet the :Long term training needs of

CDA who are college graduates with no formal training in agriculture.Government has however decided that the national Agricultural TrainingInstitutes (ATI) should cater to these needs. Assurance has been obtainedthat the long term training needs of CDA would be met by training coursesin sugarcane agronomy and extension, leading 1:O a diploma, at ATI. BSFICwill require training for about 150 CDA each year until 1985 and there-after 180 CDA until 1990.

4.27 Included in the project are three months overseas study courses

in sugarcane agronomy for 15 CDO and Field Agronomists at reputed sugar-cane training institutes.

4.28 SRTI scientists, although qualified, are inexperienced. Study

visits to research institutes overseas are essential to learn of researchdevelopments in other countries. The project would provide 4 study visitsfor the SRTI Director and 11 for the senior staff.

4.29 Mill Staff. Six senior mill personnel--two mechanicalengineers, one electrical engineer and one chemist--would be assigned fulltime as counterpart staff to the consultants engaged to prepare designsand specifications and later to the project (riill rehabilitation) supervi-sion consultants. The consultants would provi'de intensive on-the-jobtraining throughout the various stages of the project. The trainingprogram would include six study visits overseas of 1-1/2 months duration

each to other sugar industries (Annex I-A).

4.30 The objective of the training program would be to develop a

small team of highly qualified engineers, who would be organized, afterthe project, into a small unit at BSFIC to provide centralized engineering

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services to carry out future upgrading and development work for the sugarindustry. The counterpart chemist on completion of the rehabilitationprogram would be reassigned to the staff of SRTI to set up a nucleus sugartechnology unit. He would organize a training program for engineers andchemists in the industry and advise and assist the sugar mills in produc-tion matters and problems. The project would also provide, for threeelectrical engineers, a total of nine manmonths of overseas training ininstrumentation.

V. PROJECT COST AND FINANCING

A. Cost Estimate

5.01 Total costs are estimated at US$25.65 M equivalent of which

US$17.69 M or 69% would be foreign exchange cost and US$0.55 M would beduties and taxes. Cost estimates are detailed in Tables 1 to 8 of AnnexII and summarized below:

Table 5.1 SUMMARY OF PROJECT COST

Local Foreign Total Local Foreign Total Foreign----- (Tk Thousand) ----- ---- (US$ Thousand) --- Exchange

Strengthening ExtensionServices to Outgrowers 45255.0 96104.2 141359.2 1967.6 4178.4 6146.0 67.9

Cane Storage and Handling 7045.8 32343.2 39389.0 306.3 1406.2 1712.5 82.1Roads 43010.3 8173.0 51183.3 1870.0 355.3 2225.3 15.9Farm Development 12829.4 37047.0 49876.4 557.8 1610.7 2168.5 74.2Mill Rehabilitation 30945.7 136407.8 167353.5 1345.5 5930.8 7276.3 81.5Technical Assistance 4747.2 22810.6 27557.8 206.4 991.8 1198.2 82.7Training 1853.4 8653.5 10506.9 80.6 376.3 456.9 82.3

Base Cost 145686.8 341539.3 487226.1 6334.2 14849.5 21183.7 70.0Physical Contingencies 7286.7 15947.9 23234.6 316.8 693.4 1010.2 68.6Price Contingencies 30120.3 49438.2 79558.5 1309.6 2149.5 3459.1 62.1

Total Cost 183093.8 406925.4 590019.2 7960.6 17692.4 25653.0 68.9

5.02 Base cost estimates are expressed in mid-1983 prices. Physicalcontingencies of 10% on mill equipment, 15% on erection and installationand 5% on all other items except agricultural machinery and training areprovided. A total price contingency of 16% is included, based on thefollowing expected price escalation.

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1983/84 1984/85 1985/86 1986/87 1987/88

Foreign Cost 8% 7.5% 6% 6% 6%Civil Construction Costs 1'5% 13% 12% 11% 11%Local Cost 12% 11% 10% 9% 8%

5.03 The major element in project costs are equipment and vehiclesfor agricultural development (US$3.3 M) and mill rehabilitation includingspares (US$14.1 M); civil works--roads (US$2.8 M) and other infrastructure(US$2.3 M); and technical assistance and overseas training (US$2.0 M); andincremental production credit (US$1.1 M)

B. Financing Arrangement

5.04 The proposed credit would amount to US$20 M, or 80% of totalproject cost excluding duties and taxes; i.e. all of the foreign cost andabout 31% of local cost exclucing duties and taxes. IDA would make theproposed credit to GOB. For strengthening services to outgrowers (exceptcredit) and mill farm development GOB would onlend IDA funds, totallingUS$5.3 M, to the sugar companies at 12% per annum for 20 years including afive year grace period; the balance cost totalling US$1.08 M would befinanced by the sugar companies from cash which the companies are expectedto generate as the result of the proposed capital restructuring anddividend policies (para 7.18). For mill rehabilitation, GOB would makeloans to individual sugar companies totalling US$11.0 M at 14.0% interestper annum for 15 years including a five year graze period. Individualmills would finance the other US$2.7 M of their project cost includingduties and taxes from their own resources. For 3SFIC (for roadsUS$2.23 M, technical assistance! for strengthening services to outgrowersand mill farm development US$1.02 M, and training US$0.4 M), and SRTI (fortraining US$0.05 M) GOB would transfer IDA's contributions of US$3.7 M asa grant, the balance cost of these components amounting to US$0.74 M wouldalso be met by GOB as a grant. Incremental production credit (US$1.12 M)would be financed by SB with a. 12% interest rate as at present. Theproposed onlending rates would be in line with interests presently chargedby commercial banks in other sectors and 2% to 4% above the projectedinflation rate of 10%. The financing plan is sunmarized in Table 5.2.

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Table 5.2: FINANCING PLAN(US$ Million)

IDA Mills SB GOB Total

Outgrowers and Mill FarmsMill Farm Development 1.94 0.50 - - 2.44Strengthening Services to 3.36 0.58 1.12 - 5.06Outgrowers

Technical Assistance 1.02 - - 0.12 1.14

Training 0.31 - - 0.05 0.36

6.63 1.08 1.12 0.17 9.00MillRehabilitation 9.22 2.31 - - 11.53Cane Storage and Hlandling 1.47 0.39 - - 1.86Technical Assistance 0.31 0.01 - - 0.32Training 0.09 - - 0.01 0.10

11.09 2.71 - 0.01 13.81

Roads Improvement 2.23 - - 0.55 2.78SRTI - Training 0.05 - - 0.01 0.06

20.00 3.79 1.12 0.74 25.65

Financing of Maintenance

5.05 The project would provide for the spares for mills maintenance(US$2.6 M) to be imported over a five year period. Road maintenance wouldbe done by the district and union councils, using the road maintenance anddevelopment funds administered by the Deputy Commissioner of the district(para 3.07). The levy on the incremental cane and sugar production underthis project would be adequate to meet the maintenance costs of the roads.Assurance has been obtained that adequate funds would be allocated for themaintenance of roads constructed under the project.

C. Procurement

5.06 Procurement on behalf of the mill companies would be centralizedand handled by BSFIC's Marketing Department. Purchase of similar equip-ment for agriculture (US$3 M including contingencies) and mill rehabilita-tion (US$14 M including contingencies) would be bulked under single con-tracts whenever possible. All contracts above US$50,000, exceptproprietary items, would be by international competitive bidding (ICB)following IDA guidelines. For proprietary items, contracts would beallotted after negotiations or competitive bidding among licensed manufac-turers. Other equipment purchases for relatively minor items would be in

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accordance with BSFIC's procurement procedures, which are satisfactoryto IDA and only after quotations are received from three suppliers,provided that such contracts would not exceed, in the aggregate, theequivalent of US$500,000. Procurement for vehicles would be in accordancewith local procedures as orders would not: exceed US$200,000.

5.07 Civil works would not be suitable for ICB because they wouldinclude relatively small simple structures. Civil works for millsrehabilitation would be done on force account by the mills, with assis-tance of subcontractors. All other civil works, including roads, would bethrough contracts let under local competitive bidding procedures satisfac-tory to IDA. Documents for all bidding packages estimated to cost overUS$100,000 would be subject to IDA's prior review, resulting in a coverageof 90% of the total estimated value of contracts. The balance of con-tracts would be subject to random ex-post review by IDA after contractaward.

5.08 Consulting services, including expatriate and local experts,would be selected in accordance with IDA guidelines.

D. Disbursement

5.09 Funds from the proposed credit would be disbursed over a periodof five years as follows:

(a) 100% of the foreign expenditures for directly imported equipmentand materials, 100% of local ex-factory expenditures for locallymanufactured equipment and materials, and 70% of expendituresfor other equipment and materials procured locally (US$12.5 M);

(b) 80% of civil works e!xpenditures (US$4.0 M)

(c) 100% of expenditures for consulting services, technical assis-tance and training (US$1.5 M);

(d) unallocated (US$2.0 M).

Full documentation for all expenditures would be submitted to IDA insupport of withdrawal applications, except for force account where astatement of work performed, certified by the miLl manager and the con-sultants, would be forwarded to IDA. Documents for force account expendi-ture would be retained by the mills for review by IDA missions. Alldocuments would have been checked and certified by BSFIC. Annex IIIpresents a detailed disbursement schedule and an estimated semi-annualdisbursement schedule. Since mill rehabilitation, the major projectinvestment, would be completed by the milling season of the third year,about 70% of the disbursements under the credit would be made by year 3of the project. Prompt starting of project implementation would be

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ensured by the appointment of agricultural consultants before credit

effectiveness (para 4.22). Consultants now engaged in preparing the mill

rehabilitation program would also be responsible for supervision duringimplementation. The projected rate of disbursement is therefore fasterthan the historic pattern reflected in the agriculture disbursement

profile for Bangladesh.

E. Budgeting, Accounts and Audit

5.10 Following government requirements for formal project approval,

BSFIC would prepare the Project Proforma (PP). Approval by GOB of thePP, satisfactory to IDA, would be a condition of effectiveness. Separateaccounts geared to producing cost control and management informationrelated to all of their operations are kept by the mill companies.

BSFIC's accounts division, which is responsible for internal audit, car-ries out a continuous audit. For the purpose of disbursements againststatements of expenditure, BSFIC's and the mill companies institutionaland staffing capabilities, as well as budgeting, accounting, internalcontrol and auditing are adequate and satisfactory. Annual accounts ofthe Companies are audited by private auditors. Annual accounts are cur-rent and their audits are up-to-date.

5.11 Assurance has been obtained that all agencies participating inthe project would maintain adequate records to identify physical and

financial progress of the project. Overall project accounts would beconsolidated annually by BSFIC from project accounts prepared by the

participating agencies. Assurance has been obtained that the private

auditors to BSFIC would audit these accounts and that the audited accountstogether with the auditor's report would be submitted to IDA within sixmonths of the close of each financial year. In addition the mill com-panies' unaudited accounts within four months and audited accounts within

six months of the close of their fiscal year would be submitted to IDA.

VI. PROJECT IMPLEMENTATION

A. Project Management

6.01 The General Mlanagers of the mill companies would be responsiblefor project implementation in their respective zones. Each mill company's

general management and administration would be strengthened by restructur-ing the management at the mill zone and by the appointment of two key

managers--Agricultural and Factory Managers. The appointment of theseManagers would be a condition of effectiveness. No additional middle

management and extension staff would be required under the proposed reor-ganization (Charts No. 23528 and 23529). The resident agricultural con-

sultant at each mill, in addition to being responsible for development ofthe mill farm, and extension of mechanized cultivation to outgrowers,

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would act in an advisory capacity to the Agricultural Manager in coor-dinating the activities of the various divisions--cane development (out-growers), plantation (mill farm), agronomy (field trials, seed caneproduction and inspection) and garages and workshops (mechanized cultiva-tion and cane transport).

6.02 BSFIC would, as at present, be responsible for overall supervi-sion and coordination and provide common support, including procurementand technical services. The responsibility for mill farms, outgrowers,

and research would be with the Director, Cane Development arid Research andthat for the mills with the Director, Production. To strengthen projectcoordination, a Project Coordination Unit would be established, headed bythe BSFIC Director, Planning. The establishmen: of the Unit would be acondition of effectiveness. The members of the Unit would be the GeneralManagers of the mills and BSFIC-s departmental managers responsible forproject implementation. The Project Coordination Unit would reportdirectly to the Chairman, BSFIC.

6.03 At appraisal it was found that the scope of duties of thevarious agricultural departments (SRTI, Subject Matter Specialists, CaneDevelopment Department, Agronomy Department, and Seed Inspection Depart-ment) under the Director Cane Development and Research required clarifica-tion and reform. In particular duplication of effort by the SRTI and theAgronomy Department needed to be eliminated. Subsequently the changeswere made; key features are that SRTI would be fully responsible for fieldevaluation of its experiment station results, including field varietytrials in as many zones as possible, and that the Agronomy Departmentwould ensure that the research findings, which had been validated at thefield level, would be included in the cane development program. Detailsare in Annex IV.

B. Outgrowers Organization

6.04 In each mill zone the mill company would have overall respon-sibility for planning and coordination of production. Outgrowers would beregistered with the mill and, in addition, would be required to enter intoa cane supply contract, if the outgrower receives agricultural servicesand inputs from the mill under the credit program. BSFIC has proposalsfor the development of cane growers associations at the purchase centre,with representatives from each assocation on a central coordinating com-mittee, chaired by the mill's manager, at the mill level. CDA wouldorganize the formation of associations of outgrcwers around each purchasecentre. The associations would represent members interest vis-a-vis themills. Each mill would inform the associations through the repre-sentatives on the central committee, of all matters pertaining to out-grower cane production and procurement in the zone and establish a closeworking relationship with them. The associations would organize the

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members to become contract cane growers, facilitate the delivery of serv-ices by the mill and assist the contracting parties in meeting their

respective obligations.

6.05 It is Government policy to promote irrigation development mainly

through the sale of pumping equipment to TCCA/KSS 1/ cooperatives.Irrigation development under the project would therefore focus onTCCA/KSS. So too would the promotion of mechanised land preparation sincethis, like irrigation, needs to be organised on a group basis. Close

coordination would be maintained between mill staff, cane growers associa-tions, and TCCA/KSS and IRDP staff within the mill zones.

C. Implementation

6.06 The project would be implemented over a five year period; a

detailed implementation schedule is at Annex V. The agricultural program,which would be initiated the first year, would continue over the entirefive year period; procurement of irrigation equipment and vehicles wouldbe initiated during the second half of the first year and installation ofirrigation facilities would be completed during the third year of theproject. Other agricultural equipment for land preparation would beprocured during the fourth and fifth year of the project, as the presentequipment would be adequate during the early years of the project. CDAtraining in irrigation management procedures would begin in the first yearof the project, then, in the first two years of the project there would bean investigative phase to develop systems for cane production underirrigation. From year 3 extension staff would strongly promote irrigationdevelopment by which time higher yielding varieties are expected to bereleased (para 2.17). Construction of roads and other infrastructurewould be spread over the first three years of the project. The mill andcane handling and storage equipment would be procured during the firstyear of the project and would be installed and commissioned by the begin-ning of the milling season of the third year. The proposed subsectorstudy would be completed during year 2 of the project.

6.07 Specifications and tenders for the mill rehabilitation are beingprepared by consultants engaged under IDA's technical assistance opera-tions; engineering work is sufficiently advanced to allow tendering tobegin soon after Board presentation. Implementation of the agriculturaland mill rehabilitation components would be supervised by consultantsappointed by BSFIC. The mill companies would be responsible within theirrespective zones for all agricultural development, all civil works, millrehabilitation, and training. The civil works division of the mills would

1/ Two tier cooperative system--the Thana Central Cooperative Association(TCCA)/Krishi Samabaya Samity (KSS)--promoted by IRDP.

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be responsible for road construction under the supervision of mill zonedevelopment committees headed by the District Commissioner of the dis-trict. BSFIC would be the executing agency for the required studies andfor staff overseas training.

D. Monitoring, Evaluation and Reporting

6.08 Based on reports from the mills, SRTI and the District Roads

Maintenance and Development Committees, BSFIC would prepare quarterlyreports, both physical and financial, covering all aspects of the project.

The present reporting system iin BSFIC's various agencies are adequate.The quarterly reports which would be on a format mutually acceptable toBSFIC and IDA would be submitted within two months after the end of eachreporting quarter. Particular emphasis would be given to assessing theimpact of the project on the outgrowers. Socio-economic data from thepreparation report, updated by BSFIC, would be the benchmark. Evaluationwould be conducted twice by BSFIC--at the midpoint and at the end ofproject implementation. BSFIC would also be responsible for preparing,not later than six months after the closing of the project, a projectcompletion report.

VII. PRODUCTION, MARKETING AND FINANCIAL RESULTS

A. Production and Yields

7.01 In this section, in order to present a complete picture ofdevelopments in the project area, in addition to discussing projectimpact, reference is made to the impact of irrigation development and to

new cane varieties. The latter would result from non-project investmentsand benefits from them have not been included in financial and economicanalyses.

7.02 Outgrowers cane yield without irrigation would increase from13-20 to 16-28 TCA. With irrigation and the introduction of new canevarieties by SRTI the outgrower cane yield would increase further to 30-32TCA. The projected yields are about 60% of the yields achievzed undercontrolled conditions in the SRTI farms. The outgrower's cane area insidethe mill zones would be reduced by 17% of the present 47,400 ac, but, dueto the increase in yields, total cane supplied to the mills would increasefrom 416,000 tons to 508,000 tons without irrigation. With irrigation the

total cane supply would further increase to about 550,000 tonIs. In themill farms, cane production would increase from 21,300 tons to 54,300 tonsor from 8% to 17% of the millsE total cane requirement due to increase inyields from 14-15 to 32-35 TCA and the additional 625 ac brotught undercane cultivation.

7.03 The project would sustain the capacity of TSM at 1,500 TCD andrestore RSM capacity from 1,300 TCD to its originial level of 1,500 TCD.

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In RJSM, the capacity would be increased by 33% to 2,000 TCD. Initiallythe crushing season would be confined to 110 milling days within a 120 daycrushing season (the basis for analysis); later the season would belengthened commensurate with irrigated cane supplies. Ultimately theseason could extend to at least 150 days, the limit being transport dif-ficulties during the monsoon. Sugar recovery rate would increase from7.75%-8.0% to 8.0%-8.2%, representing a gain of 2.5%-3.1%. Overallprocessing cost would be reduced by 5% to 6% and the incremental sugarproduction from the project would be 8,480 tons, an increase of 25% overthe present production of 33,920 tons. Details of project impact are atAnnex VI.

B. Consumption, Markets and Prices

7.04 With an annual growth of 1-1/2% in per capita consumption after1981 and a projected population of 108.5 M in 1987, total sugar consump-tion including industrial usage would reach 224,000 tons by 1987. Theproduction of established mills, without the proposed project but includ-ing production from projects almost completed 1/ and planned 2/would amount to 186,000 tons, thus creating a domestic deficit of 38,000tons in 1987. The project would meet part of the deficit (8,500 tons),thus reducing the domestic deficit to 29,500 tons. Free imports underthe wage earners scheme would make up the difference until productioncould be increased further, as a result of irrigation development andpossibly from the proposed mini mills. To assure that project viabilitywould not be jeopardized by future developments assurance has beenobtained that (a) the projected production and consumption of sugar wouldbe kept under continuous review and that IDA would be furnished annuallywith the results of the review and (b) installation of new millingcapacity would be based on recommendations, satisfactory to IDA, of afeasibility study to ascertain the technical and economic viability ofsuch incremental milling facilities.

7.05 Sugar distribution is controlled by the Government (para 2.19).

Seventy percent of the sugar produced is distributed through the rationmechanism at prices below the non-ration price. The Government has begunphasing out the rationing and intends to remove it fully by the end of theSFYP period. Assurance has been obtained that the rationing system wouldbe phased out by October 1, 1986. Additional sugar released fornon-ration sales would be sold through BSFIC's outlets and wholesalersand retailers appointed by MLGRD&C (Para 2.10). The international price

1/ Rehabilitation of two mills under Australian Aid and the constructionof a 1,500 TCD mill in Serabanj under Indian Aid.

2/ A 1,500 TCD mill in Natore under Pakistan Aid.

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of refined sugar, expressed in January 1982 constant dollars, is projectedat US$0.18/lb for 1983 and US$0.25/lb for 1985, refined U.K. or Amsterdamports, compared to US$0.24/lb for 1981 and US$0.28/lb for late 1980. Theaverage import price of refined sugar in the first eight months in 1981was US$0.33/lb transported to Dacca. There were no imports in 1982. Theprojected price for 1983 and 1984 is US$0.20/lb and thereafter US$0.28/lbexpressed in 1982 constant dollar. The evaluation of the project is basedon these import substitution prices.

7.06 The Government is responsible for setting producer and consumerprices (para 2.20). The present price levels, excise duty and taxes areadequate so that producers supply enough cane tco ensure adequate capacityutilization; the mills can make reasonable profits after tax assumingefficient operation; and prices are in line with projected world pricesafter 1984 indicating a reasonable level of industry efficiency. At thepresent cane price of Tk 15/md, the mills' cost of production of sugar,including depreciation and overhead expenditure was Tk 343.12/md(US$0.23/lb) for the 1980/81 milling season. After adding excise duty atTk 51.43 /md, road development cess at Tk 10/md, the total cost to themill was Tk 414.85/md (US$0.28/lb). As against this the ex-mill price isTk 464.75/md (US$0.31/lb) for ration and Tk 560/md (US$0.37/lb) fornon-ration sales. The cost to the importer, who is required to sell theimported sugar at the non-ration price is Tk 461/md (US$0.31/lb) at theOctober 1981 spot prices calculated at the wage earners scheme exchangerate of Tk 21 to a dollar and after adding import duty of Tk 29.85/md.The free imports allowed under the wage earners scheme ensure that domes-tic prices will not be inflated relative to world prices. Assurance hasbeen obtained that the free imports which were suspended in 1981/82 wouldbe restored.

7.07 The Government policy is not to provice subsidies to the domes-tic sugar industry. Cane prices to outgrowers and sugar prices areusually reviewed by BSFIC and approved by the Government before the mill-ing season to maintain them at adequate levels to provide incentives tocane growers and to maintain the financial viability of the sugar mills.Assurance has been obtained that this policy would be maintained. It wasalso agreed that in setting sugar prices (i) the financial viability ofBSFIC's sugar mills would be considered as a grc,up, assuming efficientoperation and a normal milling season of 120 days and (ii) an appropriatecost of importing sugar would be used as a benchmark.

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C. Financial Results

Farmer Benefits

7.08 The project is based on a gradual increase in cane productivity

on the mill farms and at outgrowers farms in close proximity to the mills,and a corresponding decrease in outgrower production area in the outskirtsof the present mill zones. The rationale is to lower the cost of cane andto ensure the supply of fresh cane to the mills by reducing the distancecane is hauled; and to release cane area mainly for foodgrain production.

7.09 Under the project yield increases on outgrower farms wouldresult from improved land preparation, including mechanization, use ofquality seed cane, and improved cane husbandry promoted by the mill'sextension staff. Outgrowers would also be assured of input supply,

including seed cane and mechanized land preparation services, under themills credit program strengthened under the project. Purchase centreswith input godowns would greatly facilitate the distribution of inputs andserve as a vital meeting place for the farmers and the outgrowers. Withimproved facilities provided in the form of housing, vehicles and teachingequipment the extension workers would be more productive and efficient.

7.10 To assess the impact of the improved extension services on theoutgrowers, farm budgets under rainfed condition have been prepared (AnnexVII) corresponding to the expected cropping pattern for the three millzones. The budgets show that farmers income would increase byTk 1,171/ac or 69% in TSM, Tk 1,039/ac or 49% in RJSM and Tk 1140/ac or55% in RSM. Outgrowers- income risk would be minimal by not requiring anycash contributions from them, and rescheduling of repayment of credit inthe event of crop failures. With the introduction of irrigation, farmerswould be protected from crop failures due to drought. Calculations alsoindicate that the farmers- incomes would substantially increase and sugar-cane cultivation, with existing varieties, would be competitive withfoodgrain production under irrigation.

7.11 Due to the increase in cane productivity about 8,000 ac, cover-ing about 10,000 outgrowers, would be released from the mill zones. Ofthese about 40% of the outgrowers would continue to produce cane and sellit to alternative cane markets--gur manufacturers, mini mills and adjoin-ing BSFIC mills. The remainder would take up food production, and theytoo would benefit from the irrigation development expected to occur overthe next several years (para 4.08).

BSFIC's Finances

7.12 BSFIC and the sugar mills are separate financial entities. GOB

owns all the share capital of the sugar mills and of BSFIC. As the super-visory and coordinating agency of the Government, BSFIC charges its

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administrative expenses to the! mills to recover its operating costs. Theshare that each mill has to pay depends on its total sales and its capitalexpenditure. In FY80 BSFIC's operating costs amounted to TK 14.5 M andthe cost to each mill was 1% cof its capital expenditure plus 1.6% of itssales. BSFIC-s operating costs, which include expenditures of head-quarters, have been reasonable and no increase in expenditure isanticipated due to the project.

7.13 BSFIC had, in view of the mills financial losses, providedworking capital to the mills from subsidies and loans obtained from theGovernment. With the proposecl capital restructuring (para 7.16) andanticipated profits, the need for subsidies would be eliminated, andBSFIC's role in allocating Government funds would become redundant.

Consolidated Mill Finances

7.14 Through FY79, the sugar mills accumulated losses wereTk 119.0 M. Sales prices fully covered raw material and conversion cost,but depreciation, administrative expenses, and interest charges were onlypartially recovered. With the increase in sale prices in FY80 and FY81,the sugar mills recorded profits, a low Tk 174.0 M in the first year dueto the decline in production as the result of poor cane crops and a recordTk 335 M in the second year when production reached 142,000 tons against93,000 tons in FY80. A total Tk 91.0 M was paid to the national exchequeras dividends from the sugar companies for the FY81. (Present Governmentpolicy is to transfer all surpluses to the national exchequer and thenallocate funds for capital expenditure through the Government AnnualDevelopment Plan (ADP)).

Project Mills Finances

7.15 Financial performance varied among the 14 operating mills,including the three project miLlls, under BSFIC's management. ThroughFY79, TSM and RSM accumulated losses, which amounted to Tk 8.2 M and 0.50M respectively. Despite low sugar prices RJSM, with its adequate canesupply from the outgrowers, made profits as the mill operated at levelsover its rated capacity. Accumulated profit through FY79 was Tk 2.4 M.In FY80, despite increases in sugar prices RSM suffered the most due tocrop failure. RSM-s capacity utilization was only 38% and incurred a lossof Tk 3.2 M, while the other two mills made marginal profits: RJSMTk 5.3 M and TSM Tk 9.7 M. In common with the other mills, the threeproject mills recorded substantial profits in FY81: RJSM Tk 40.6 M, RSMTk 31.7 M and TSM Tk 28.1 M. (TSM due to its poor soil conditions wasslow in recovering from the previous year's drought.) Comparative incomestatements for FY80 and FY81 are in Annex VII. According to the draftaccounts the project mills have maintained their high profits in FY82.

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Capital Restructuring of Sugar Mills

7.16 BSFIC's sugar mills total assets in FY80 were Tk 1,574 M, whilelong term debt and current liabilities accounted for Tk 1,360 M (86% ofthe total assets, implying a debt equity ratio of 86:14 caused by thelosses prior to FY80. Financial assistance by GOB and bank borrowinghave kept the mills liquid during the past years; 46% of the total debitwas to GOB, while borrowings from the banks amounted to 30%. BSFIC is nowproposing to establish for each mill a debt equity ratio of 60:40 byconversion of GOB loans into equity. Assurance has been obtained that thiswould be completed for the project mills by FY84.

7.17 The balance sheets of the project sugar mills are in Annex VIIand their financial position is summarized below:

Table 7.1: SUMMARY OF FINANCIAL POSITION(TK Million)

RJSM RSM TSMFY79 FY80 FY81 FY79 FY80 FY80 FY79 FY80 FY81

Current Assets 68.2 88.7 112.2 44.0 50.0 102.80 57.60 83.4 134.5Fixed Assets 33.0 34.7 33.7 12.0 12.7 13.50 20.30 20.9 20.3Debt 42.8 45.6 58.2 2.1 13.5 12.20 11.30 24.7 23.0Current Liability 42.3 59.6 61.5 27.8 25.3 68.60 59.30 64.3 111.8Equity 16.1 18.2 26.2 27.0 23.9 35.50 7.30 15.3 20.0Current Ratio 1.61 1.94 1.82 1.58 1.98 1.49 0.97 1.29 1.2Debt/Equity Ratio 73:27 71:29 69:31 7:93 36:64 26:74 61:39 62:38 53.67

Projected Financial Performance of the Project Mills

7.18 The financial projections for the mills are in Annex VII. Theprojections assume FY82 as the base year, and are based on draft accountsand allow for the proposed progressive increase in ration prices to fullmarket level by FY87. In general, the projected income statements show adistinct trend of profitability from FY86 onwards, after an initialdecline through FY85, during which period the major rehabilitation workwould be undertaken. Cash flows show similar trends and would permitdistribution to the Government of from 50% to 100% of the profits, afterproviding for income tax at 50%, project investment, and debt servicing.To ensure that the mills retain internally generated funds for futurerehabilitation (para 4.25) and working capital needs, assurances have beenobtained that (i) a ratio of current assets to current liabilities of notless than 1.25 would be maintained until FY85 and not less than 1.5 at alltimes thereafter; (ii) a debt equity ratio of 60:40 would be achievedby June 30, 1984 and maintained thereafter; and (iii) dividends would bedeclared only after the current and debt equity ratios have been met.

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These measures would enable the mills to provide 50% of their workingcapital requirements from their own resources anad eliminate the need forthe Government allocating funds through its ADP for capital expenditure.

Financial Rate of Return

7.19 Financial benefits from the proposed project accrLe from (i)profits on additional production due to the increase in the mills' crush-ing capacity and capacity utilization, and (ii) lowering of conversioncost due to the rehabilitation. The financial rates of return in constant1982 Taka are estimated at 14% for TSM; 19% for RSM and 36% for RJSM.Sensitivity analysis summarized in Table 7.2 indicates that the returnsare most sensitive to changes in domestic sugar prices. The risk mostlikely to affect the mills' financial viability is the Government's policyon the marketing of sugar. With a satisfactory understanding with theGovernment that the ration scheme would be phased out and that the caneand sugar prices would be reviewed annually, this risk is consideredacceptable. With the proposed phasing out of the ration, distributionthrough BSFIC's outlets and retailers appointed by MLGRD&C would increase.Thereafter, non-ration prices are, however, likely to fall to compensatefor the additional quantity available for sale. With the total removal ofthe ration in FY87, it is expected that the non-ration price would fall by5% of the 1980/81 price, but would be 7% over the 1980/81 average ofnon-ration and ration prices.

Table 7.2: SENSITIVITY ANALYSIS SWITCHING VALUE(at 12% Discount Rate)

TSM RSM RJSM

Total Benefits - Sugar Production or Prices -13 -23 -31Strengthening of Extension Services Cost 74 230 962Mill Farm Development Cost 38 264 -Mill Rehabilitation Cost 28 94 260Total Operating Cost (including cost of cane) 53 79 61

Government Budget and Foreign Exchange

7.20 The Government would receive Tk 474 M (US$20 M) from projectrelated revenues and Tk 459 M (US$19 M) in debt service payments from thecompanies. The total cash inflow, including disbursements under theproposed credit, would be US$59 M. Total cash outflow would amount toTk 510 M (US$22 M), producing a net surplus for the Government budget ofTk 851 M (US$37 M), over a 10 year project life. A detailed cash flow isin Annex VII. The inflow of foreign exchange as external credit isestimated at US$20 M; molasses export over the five year development

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period would yield another US$1 M. The foreign exchange content ofproject investments and operations would be US$14 M. However, the valueof foreign exchange savings through import substitution of sugar producedunder the project would be US$14 M, resulting in a positive effect on thecountry's foreign exchange balance of US$3 M for the five year developmentperiod. Thereafter, annual foreign exchange savings, including debtservice payments, would be about US$8 M commencing year 6, expressed in1987/88 constant prices.

VIII. ECONOMIC BENEFITS AND JUSTIFICATION

8.01 It is increasingly recognised--most recently in the economicreport 1/ now under preparation--that, with foodgrain production programswell underway, a start must be made on a more diversified program toimprove agriculture sector performance. This project in the sugar subsec-tor would be a first step. A study 2/ conducted by the Boston Universityindicates that Bangladesh has a comparative advantage in producing sugar.Unlike ongoing sugar industry programs, which have a narrow focus, theproject would comprise a comprehensive effort to improve performance ofall aspects of the industry--small holder and mill farm cane production,cane handling and transport, and milling--leading to major gains inindustry productivity. The primary direct benefits of the project wouldbe: (a) the release of about 17% of the present 47,400 ac cane area inthe mill zones for alternative use, (b) increased sugar production--about8,500 tons or an increase of 25% over present production and a reductionin sugar imports, (c) a lower unit cost of production of sugar in generalfor all mill operations from Tk 339/md in 1980-81 to Tk 294/md in 1988-89due to the yield improvements in the outgrower farms and mill farms, themill rehabilitation, the reduction in cane transport costs, and the supplyof fresher cane to the mills through faster transport and the smallerzones. The project beneficiaries would be primarily about 50,000 out-growers whose income would improve by about 57%, the mill companies, andthe existing mill company personnel, whose employment and living condi-tions would be improved.

Economic Analysis

8.02 The economic analysis has been carried out for the project as a

whole and for the individual mill zones. The project economic rate of

1/ Bank draft report on Bangladesh Recent Economic Developments andSelected Development Issues.

2/ Shadow Price, Comparative Advantage and Trade Policy for BangladeshIndustry - Center for Asian Development Studies, Boston University,August 1980.

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return is estimated to be 37% over a 20 year period, including a five yearimplementation period. This is, as can be expected from a rehabilitationproject, well above the 17% estimated return from investment in a newreplacement mill. The rates of return for the individual mill zones are18% for TSM, 25% for RSM and 58% for RJSM. The relatively high rates ofreturn for RSM and RJSM are due to increases in milling capacities whichcan be achieved at low cost.

8.03 Rates of return for individual projecl; components have also beenworked out; they range between 13% and 102% and are satisfactory (Table8.1). Because of the high capital and operating costs of sprinklerirrigation (para 4.18), the returns for mill farm development, althoughadequate, are lower than for the outgrower components. However, thedevelopment of the mill farms is justified for the reasons outlined atparagraph 4.17. Furthermore, it is expected that when detailed farmplanning is completed by consultants (para 4.18) the rate of return frommill farms would be well above present projected levels.

Table 8.1: ECONOMIC RATE OF RETURN(percent)

Components ERR Investment Cost

TSMOutgrowers 31 5.5Mill Farm 13 10.3Mill Rehabilitation 16 14.5Total Zone 18 30.3

RSMOutgrowers 48 8.6Mill Farm 21 6.3Mill Rehabilitation 21 21.0Total Zone 25 35.9

RJSMOutgrowers 102 7.6Mill Rehabilitation 37 26.2Total Zone 58 33.8

Total Project 37 100.0

The following main assumptions were made in the analysis:

(a) Benefits. Only direct benefits from the project have beenincluded. These benefits include incremental cane from the mill farms

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under irrigation and outgrower fields under rainfed conditions, sugar,molasses, and bagasse production; savings in transport costs due to road

rehabilitation and the reduction of mill zones; and the net value of foodcrops and sugar cane, under rainfed conditions, on the lands released from

the mill zones. No increase in yield and sucrose content of cane due toimproved varieties have been assumed or credited to the project, as thesebenefits would be as a direct result of the BASIP program. Withoutproject yield projections assume growth in yields under rainfed condition

and improved management on the mill farms and under the clean seed programon the outgrower fields.

(b) Costs. All project costs have been included. Of the road

costs 70% have been assumed to benefit economic sectors other than thesugar sector. All hired labor for factory operations has been fully

costed at the market wage rates adjusted by the standard conversion factor(SCF) 0.83. In addition to the SCF the financial cost of farm labor,

Tk 15 per man-day, has been adjusted by a factor of 0.68 to reflect theprevailing degrees of un- and under-employment. The foreign cost has been

converted at the official exchange rate of Tk 23.0 to US$1. Duties andtaxes were removed from the project costs and local costs have beenadjusted by the SCF. Price contingencies were removed to bring valuesto 1982 constant prices.

(c) Prices. The value of the project's incremental sugar outputis based on import parity prices as it would primarily substitute forsugar imports. The import parity price is consistent with the Bank'scommodity price forecast, adjusted for ocean freight, port handling char-ges, and quality difference. Molasses has been valued on the basis of

export parity. Excess bagasse has been valued at the local market priceadjusted by the SCF. For component rate of return calculations, incremen-

tal cane production has been valued, as a non traded commodity, at thelocal economic cane price. Financial and economic price assumptions, andcosts of production and processing of sugar and foodgrains are summarizedin Annex VIII.

Sensitivity Analysis

8.04 Sensitivity analyses, summarized in Table 8.2, indicate no high

sensitivity to changes in most values. Returns are more sensitive tochanges in world sugar prices and cane yield, than to changes in cost.However, to reduce the net present value of the project to zero at 12%opportunity cost of capital (switching value), the import parity price ofsugar would have to decline to US$0.09 per lb, which is highly unlikely tohappen. A substantial reduction in cane production is also unlikely asthe record crop failure in recent years was a 30% shortfall on theestimates for 1979-80 due to the adverse weather conditions. Even facedwith a combination of adverse circumstances, and for all expected extreme

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changes in the variables, the project maintains an economic rate of returnwell above the opportunity cost of capital of 12%.

Table 8.2: SENSITIVITY ANALYSIS SWITCHING VALUE(at 12% Discount Rate)

Total benefits - Sugar Production or Prices -67Strengthening of extension services cost 1,803Mill farm development cost 1,757Mill rehabilitation cost 384Total investment and operating cost 203

Employment Impact

8.05 The impact of the project on wage earners would be as follows:

Outgrower einployment opportunities would increase by106,000 mandays for casual labor. The main increa,sewould result from the bigger cane harvest. The intro-duction of some mechanized cultivations is notexpected to significantly reduce labor requirements.

Mill farm jobs would increase by 45,000 mandays.

Cane yard jobs would decrease by 12,500 mandays.

The overall impact would be a net increase of 1318,500 mandays. In addi-tion other employment opportunities--a total of about 1.25 M mandays forcasual labor--would result from road improvement: and other civil works,and the overall employment picture in the sugar mills for labor andsalaried staff would be maintained.

Environmental Aspects

8.06 Sugar factories generate solid, liquict and gaseous wasteproducts. Hazardous or toxic products are not found in waste productsfrom sugar manufacturing. Air and water borne pollutants require controlmeasures and management. Fly ash from the boilers and effluents from thefactory are potential pollutants. However fly ash is not a problem in thethree mills. Problems have appeared with effluents at RSM and RJSM.Adequate control measures, including the following, would be introduced tolimit factory effluent:

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(a) install a storage pond for the spent caustic solution and dis-charge by diluting with clean spray pond overflows;

(b) consolidate waste water ditches and spray pond overflow so thatonly one ditch emerges from the factory to carry effluents;

(c) install screens and oil traps in waste water ditches;

(d) prevent leakages of process and other materials; and

(e) install a program for cleaning the mill by sweeping and scrapinginstead of using only the present practice of washing materialsinto waste water ditches.

Project Risk

8.07 The risk most likely to affect the project's economic rate ofreturn is uncertainty concerning the production and consumption of sugar,hence the assurance at para 7.04. With such an assurance this risk isconsidered acceptable. Cane supply could be less than expected on accountof problems in mill-outgrower relations and shortfalls in yields due toadverse weather conditions. The strengthening of outgrower organizationsis proposed to reduce the risk of conflicts arising between the mills andthe outgrowers. Cane yields have been estimated conservatively and, underBASIP, research activities are being strengthened to improve the technicalpackage of inputs, husbandry, and cane varieties available to outgrowers.To ensure continuing research development GOB has obtained extension ofBASIP beyond December 1982 (para 2.20). Furthermore, with the expectedexpansion of irrigated cane production (para 4.09), cane supply would beless dependent on climate. Another source of risk could be the lack of acontinuing mill maintenance and rehabilitation program. Unless the millsundertake such a program, a serious deterioration of equipment would againbecome a major problem, causing high unit costs and breakdowns of criticalmill equipment. It is expected that the increasing volume of millsearnings in future years will enable them to undertake such a program(para 7.18). Given the project's design, the assurances to be sought, andthe complementary programs underway which will ensure the development ofirrigated cane production, the project would not face any unacceptablerisk.

IX. RECOMMENDATIONS AND ASSURANCES

9.01 The following assurances were obtained:

(a) Long-term training needs of sugarcane extension officers wouldbe met.

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(b) Adequate funds would be provided for the maintenance of theroads constructed under the project (para 5.05).

(c) All project agencies would maintain adequate records to identifyphysical and financial progress of the project (para 5.11).

(d) P-roject accounts, together with the mill companies annualaccounts, audited by private auditors would be submitted to IDAwithin six months of the close of each fiscal year. In addi-tion, the mill companies' annual draft accounts would be sub-mitted within four maonths of the close of their fiscal year(para 5.11).

(e) (i) The projected production and consumption of sugar would bekept under continuous review and IDA would be furnished annuallywith the results of the review and (ii) installation of newmilling capacity would be based on recommendations, satisfactoryto IDA, of a feasibility study to ascertain the technical andeconomic viability of such incremental milling facilities (para7.04).

(f) Sugar rationing system would be phased out by October 1, 1986(para 7.04).

(g) Free sugar imports policy would be retained (para 7.06).

(h) Cane and sugar prices would be maintained at adequate levelsto provide incentives to cane growers and to maintain the finan-cial viability of BSFIC's sugar mills, and in setting sugarprices an approprialte cost of importing sugar would be used as abenchmark.

(i) The proposed capita:l restructuring would be completed by FY84(para 7.16).

(j) The mills would (i) maintain a ratio cf current assets toliabilities of not 'Less than 1.25 until FY85 and not less than1.5 at all times thereafter, (ii) achieve a debt equity ratio of60:40 by June 38, 1984 and maintain thereafter, and (iii)declare dividends only after the current and debt equity ratioshave been met (para 7.18).

9.02 Conditions of credit effectiveness would be that:

(a) Consultants for agr.iculture had been appointed (para 4.22);

(b) PP satisfactory to IDA had been approved (para 5.10);

(c) Agricultural and factory managers had been appointed (para6.01); and

(d) Project Coordination Unit had been established (para 6.02).

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ANNEX I-APage 1

BANGLADESH

SUGAR REHABILITATION AND INTENSIFICATION PROJECT

Draft Terms of Reference for Agricultural Program

Background and Project Objectives

1. The Bangladesh Sugar and Food Industries Corporation (BSFIC) isundertaking a project to intensify cane production in three mills andsmallholder farms, financed by the International Development Association(IDA).

2. The three mill zones selected for development are in the follow-ing table:

Mill SmallholderMill Zone Farm Farm

Acres

Thakurgaon (TSM) 1,215 12,800Rangpur (RSM) 850 9,700Rajshahi (RJSM) - 16,900

3. The objectives of the project are to develop, including provi-sion of sprinkler irrigation, the mill farms and to strengthen extensionservices, including mechanized land preparation facilities and credit tosmallholders.

4. The consulting firm selected will be responsible for:

(a) The preparation of detailed mill farm development plans based oncost/benefit comparison of alternative irrigation systems fol-lowed by the preparation of specifications for the agriculturalmachinery and irrigation equipment and works, and assisting inthe evaluation of tenders;

(b) The supervision of the development and rehabilitation of millfarms, and the supervision of the implementation of the newtechniques in the outgrower areas; and

(c) Staff training to ensure that the new techniques become estab-lished operating routines.

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ANNEX I-A,Page 2

Scope of the Work

5. The general scope of work shall inclade the following for eachmill zone:

(a) The preparation of outline designs and specifications in suffi-cient detail to invite tenders for the design and supply ofoverhead irrigation equipment (at TSM and RSM mill farms);

(b) The preparation of specifications for agricultural machinery insufficient detail to invite tenders Eor the supp:Ly of thismachinery;

(c) Assist in selecting a short list of suppliers who would beinvited to tender and, finally, assist in the evaluation of thetenders;

(d) The supervision of the installation and operation of irrigationequipment (at TSM and RSM mill farms');

(e) The supervision of the installation and operation of drainageworks (at TSM and RSM, mill farms);

(f) The supervision of the selection of those outgrowers' farmswhich will receive assistance with mechanical land preparation;

(g) The introduction and supervision of iimproved cultural and otheragricultural techniques;

(h) The introduction and supervision of any improved harvesting andtransport practices that may be ident:ified, (separate consult-ants would be retained for this purpose) as well as the supervi-sion of routine harvesting and transport operations;

(i) The training of senior supervisors who will take over the super-vision of all oper.ations;

(j) The preparation of detailed operations manuals and recordingsystems applying to each group of activities, and the trainingof senior supervisors in their use; and

(k) Giving assistance to the senior agricultural staff in thepreparation of budgets, and in operating budgetary controltechniques.

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ANNEX I-APage 3

Time Schedule for the Project

6. The project will be implemented over a five year period and theconsultants' services would be required over a four year period from July1983. It is estimated that approximately 75 manmonths of consultantservices will be required to carry out the project implementation work,including preparation of specifications and tender documents for agricul-tural equipment.

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ANNEX I-BPage 1

BANGLADESH

SUGAR REHABILII'ATION AND INTENSIFICATION PROJECT

Draft Terms of Reference for Project Implementation - Mill Rehabilitation

Background and Project Objectives

1. The Bangladesh Sugar and Food Industries Corporation (BSFIC) isundertaking a project to rehabilitate three sugar mills, financed by theInternational Development Association (IDA). ]3SFIC desires to retain aconsulting firm for project implementation.

2. The three factories selected for rehab:ilitation are listed in thefollowing table. Existing factory equipment are shown in Attachment 1.

PROJECT FACTORIES AND RELATED CAPACITIES

(Tons Cane/Day)

Factory Present ProposedCapacity Capacity

Thakurgaon (TSM) 1,500 1,500Rangpur (RSM) 1,300 1,500Rajshahi (RJSM) 1,500 2,000

2. The scope of the proposed rehabilitation work has been defined byconsultants retained for detailed engineering and preparation of tenderdocuments.

3. The objectives of the project are the f'ollowing:

(a) Maintain the production capacity and operational reliabilityof TSM at 1,500 TCD;

(b) Restore the pro,duction capacity and operational reliability of

RSM at 1,500 TCD;

(c) Expand the capacity of RJSM from 1,500 TCD to 2,000 TCD;

(d) Improve sugar recovery and mill performance;

(e) Efficiently and economically utilize bagasse to make available

surplus bagasse for paper manufacture; and

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ANNEX I-BPage 2

(f) training to upgrade counterpart staff.

4. The consulting firm selected for implementation will be responsible for

procurement, constructing, and commissioning of the project work. The projectwork is outlined in Attachment 2 and has been defined by consultants retained

for detailed engineering.

Scope of Work

5. The general scope of work for project implementation shall includethe following for each factory:

(a) Review project preparation work;

(b) Issue tender documents for procurement in accordance with IDAguidelines;

(c) Clarify any questions from tenders;

(d) Evaluate tenders and prepare detailed reports of bid com-parisons with recommendations for awards;

(e) Advise and assist BSFIC in contract negotiations;

(f) Coordinate and expedite equipment manufacture and delivery;

(g) Review suppliers' approval drawings;

(h) Design engineering and preparation of construction drawingsfor all project work;

(i) Assess the requirements of each project work item to evaluate

the construction effort necessary for erection and installa-tion;

(j) Plan and schedule the project work for each factory;

(k) Confirm with each factory manager, construction work which

will be accomplished by factory personnel and the work to be

contracted;

(1) Prepare specifications and tender documents for work to be

contracted to local contractors;

(m) Supervise and coordinate all project work;

(n) Inspect construction to plans and specifications;

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ANNEX I-BPage 3

(o) Supervise no-load tests and comm,issioning of equipment;

(p) Prepare and implement training programs for new equipment forfactory staff and operating personnel;

(q) Assess all factory operations and assist factory staff inimplementing improvements to increase sugar recovery andimprove factor,y performance;

(r) Certify payments for suppliers and contractors; and

(s) Train counterp,art staff.

Training

6. Training of counterpart staff is one cf the objectives of thetechnical assistance to be provided by the consultants. Six senior per-sonnel from BSFIC, consisting of four mechanical engineers, one electricalengineer, and one sugar technologist will be assigned to work with theconsultant-s project team. The experience of sugar industry personnel hasbeen limited mainly to the operation and maintenance of existing sugarfactories. The objective oi the training program is to train local staffin detailed engineering and project management work to carry out futuremill rehabilitation and sugar industry development projects.

7. Study visits by the counterpart staff to other sugar industriesare included in the training program. It is envisioned that the proposedvisits would be scheduled in August/September 1982 during the tenderingperiod for major equipment. A time period of 1.5 months for 6 persons hasbeen allocated for the study visits. The consaltant shall recommend anitinerary, make all arrangements for the study visits, and provide anexperienced engineer to lead the group.

8. Training in instrumentation and control systems for the electricalengineers at the project factories is included in the training program.Three months of overseas training are allocated for three engineers. Theconsultant shall recommend appropriate training courses and make allarrangements for attendance.

9. A proposed training program for counterpart staff will be includedin the consultant's proposal.

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ANNEX I-BPage 4

Time Schedule for Project

10. The project will be implemented over a 2-1/2 year period from July

1, 1983 through December 1985. The consultant's team must be available tostart the field work in July 1983. Procurement and engineering designwork for construction will be undertaken during the first year.

11. The milling season generally extends over a four month period from

mid-November through mid-March. It is envisioned that initial construc-tion work at the factories would start in March 1984 immediately after the1983-84 milling season. The smaller work items would be completed byNovember 1984 for commissioning during the 1984-85 milling season. Thelarge work items would be completed by November 1985 for commissioningduring the 1985/86 milling season.

12. Major construction work such as boilers will be carried out by

local contractors. Small work items would be handled by the factoryworkforce. The consultant will supervise and coordinate all work.

13. It is estimated that approximately 69 manmonths of consultantservices will be required to carry out the project implementation workincluding training of counterpart personnel.

Attachment

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ANNEX I-BPage 5

ATTACHEPNT

MACHINERY AND EQUIPMENT PROPOSED

FOR REHABILITATION OF TSM

1. Cane Preparation and MiLling Station

(a) Modify existing knife set to reverse knifing;(b) Minor modifications to handle prepared cane from reverse knifiLng;(c) Imbibition water flow meter; and(d) Repair mill turbine governor.

2. Juice Treatment and Evaporation

(a) Mixed juice flow control;(b) Continuous sulfitation unit;(c) PRV station for process steam and vapor;(d) Replace evaporal:or tubes; and(e) Replace drum of rotary vacuum filter.

3. Centrifugal Station

(a) New "A" Station;(b) New "B" Station; and(c) New "C" Station.

4. Laboratory

(a) Replace and upgrade selected equipment.

5. Steam and Power Generation

(a) Condensate storage tank;(b) Boiler instruments;(c) Deaerator;(d) Bagasse system modification; and(e) Replace selected. switchgear.

6. Ancillary Work

(a) Effluent control; and(b) Miscellaneous pumps.

7. Millyard

(a) Mechanical cane handling system subject to further studies.

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ANNEX I-BPage 6

ATTACHMENT

MACHINERY AND EQUIPMENT PROPOSED

FOR REHABILITATION OF RSM

1. Cane Preparation and Milling Station

(a) Modify existing second knife set to reverse knifing;(b) Minor modifications to handle prepared cane from reverse knifing;(c) Imbibition water flow meter; and(d) Replace mill pinions; and(e) Replace mill headstocks.

2. Juice Treatment and Evaporation

(a) Mixed juice flow control;(b) Repair existing mixed juice scale;(c) New Evaporator; and(d) PRV Station for process steam and vapor.

3. Centrifugal Station

(a) Replace electric motors of "A" centrifugals; and(b) Replace electric motors of "C" centrifugals;

4. Laboratory

(a) Replace and upgrade selected equipment.

5. Steam and Power Generation

(a) Confirm new boiler;(b) Condensate storage tank;(c) Boiler instruments;(d) Deaerator;(e) Bagasse system modification;(f) Replace boiler tubes; and(e) Replace exciter of turbogenerator.

6. Ancillary Work

(a) Deep tubewell;(b) Effluent control; and(c) Miscellaneous pumps.

7. Millyard

(a) Mechanical cane handling system subject to further studies.

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ANNEX I-BPage 7

ATTACHMENT

MACHINERY AND EQUIPMENT PROPOSED

FOR REHABILITATION OF RJSM

1. Cane Preparation and Milling Station

(a) Modify existing second knife set to reverse knifing;(b) Minor modifications to handle prepared cane from reverse knifing;(c) Imbibition water flow meter;(d) Replace mill turbine rotor assembly;(e) Replace mill pinions;

2. Juice Treatment and Evaporation

(a) Mixed juice flow control;(b) PRV station for process steam and vapor;(c) New Evaporator;(d) Replace evaporator tubes; and(e) Replace drum of rotary vacuum filter.

3. Centrifugal Station

(a) Replace electric motors of "C" centrifugals;

4. Laboratory

(a) Replace and upgrade selected equipment.

5. Steam and Power Generation

(a) New boiler;(b) Condensate storage tank;(c) Boiler instruments;(d) Deaerator;(e) Bagasse system modifications;(f) Replace exciter of turbogenerator;(g) Replace selected switchgear; and(h) Replace boiler tubes.

6. Ancillary Work

(a) Effluent control; and(b) Injector water pump.

7. Millyard

(a) Mechanical cane handling system subject to further studies.

-59-ANNEX I-CPage 1

BANGLADESH

SUGAR REHABILITATION AND INTENSIFICATION PROJECT

Terms of Reference for a Subsector Study of the Sugar and Gur Industry

Project Background

Gur and sugar are the basic sweeteners for the Bangladeshiconsumer. The Government of Bangladesh (GOB) is contemplating additionalinvestments for sugar cane processing. However development priorities andstrategies for sugar and gur have not been adequately identified. Thepurpose of the proposed study is to identify such priorities and develop-ment programs.

Project Objectives

The objectives of the proposed subsector study would be to:

(i) review the current cane, gur and sugar production situation;

(ii) assess longer-term supply and demand of gur and sugar;

(iii) analyze policy and investment implications of production of canein relation to foodgrains; and the implications of investmentsin gur and sugar for the country;

(iv) identify development constraints; and

(v) develop strategies and priority programs in the gur and sugarindustry.

Implications

It is anticipated that the resulting review would form the basisupon which GOB would establish future policies within which financialdonors would assist the Government of Bangladesh.

A number of important topics would be covered by the review,including:

(a) Government organization for gur and sugar development;

(b) Extension, particularly assistance for small farmers outside themill zones;

-60-

ANNEX I-CPage 2

(c) Role of agricultural. credit;

(d) Sugarcane research;

(e) Training requirements;

(f) Gur and sugar technology and appropriate size of mills;

(g) Rainfed and irrigation practices for cane;

(h) Impact of mechanizaton of farm operations; impact of consolidat-

ing land for mechanization;

(i) Role of cane growers associations and possible amalgamation withTCCA/KSS;

(j) GOB-s policies on sugar and cane pricing, subsidies, taxes andcesses;

(k) Role of the public and private sector in the gur and sugarindustry;

(1) Magnitude of external assistance;

(m) Identification of preinvestment and feasibility studiesrequired.

Requirement for the Review

Three international consultants would be needed: an,agri-business economist; a cane agriculturalist; and a sugar mill tech-nologist. The team would also include a rural sociologist from a univer-sity in Bangladesh, familiar with local conditions. The team. would useexisting data, inter alia, from the Bangladesh Australian Sugar IndustriesProject, the Dutch gur study, source materials from the Sugar Research andTraining Institute, and the Ba:ngladesh Sugar and Food Industries Corpora-tion.

About 10 manmonths would be required for the review: the

sociologist (3 months); the agri-business economist (3 months); the caneagriculturalist (2 months); and the sugar mill technologist (3 months).

The review would beg:in in October 1984 and finish in January 1985.

-61-

ANNEX IITable 1

BANGLADESHSUGAR REHABILITATION AND INTENSIFICATION PROJECT

Project Comeponent bs Time(TK '000)

Base Costs Total

83/84 84/85 85/86 86/87 87/88 TK (US$ '000)

A. THAKURGAON SUGAR MILL

STRENGTHENING EXTENSION SERVICE 8S205.1 16,244+8 6,222.6 4,833.1 4,123.5 39,629.2 1,723.0ROADS 4,387,3 B8774.6 4,387.3 - - 176549.3 763*0MILL FARM DEV. 8s051.4 13Q236.1 9,171.1 9.2 - 30,467.8 1r324.7MILL REHAB. 10,539.6 18,234.8 10,491.8 - - 39,266.2 1,707.2

Sub-Total THAKURGAON SUGAR MILL 31,183.4 56,490.4 30,272.8 4,842.3 4,123.5 126,912.5 5,517.9B. RANGFUR SUGAR MILL

STRENGTHENING EXTENSION SERVICE ?9412.1 17,863.9 6,768.9 8,404.9 6,371.0 48,820+8 2,122.6ROUIADS 3,911.4 7,822.8 3,911.4 - - 15,645.6 680.2MILL FARM DEV. 9,614.3 9,736.4 48.7 9.2 - 19,408.6 843.9MILL REHAB. 15,907.1 25,069.7 16,054.2 - - 57,031.1 2,479.6

Sub-Total RANGPUR SUGAR MILL 38v844.9 60,492,8 26,783.2 8,414,1 6,371,0 140,906.1 6,126.4C. RAJSHAHI SUGAR MILL

STRENGTHENING EXTENSION SERVICE 10,825.9 18,649.8 8,665.7 9,645.5 5,122.3 52,909.1 2,300,4ROADS 5,014.4 7,959.8 5,014.4 - - 17,988.5 782.1MILL REHAB, 19t406,1 32,243.4 19,406.7 - - 71Y056.2 3,089.4

Sub-Total RAJSHAHI SUGAR MILL 35,246.4 58S853,0 33,086.7 ?Y645.5 5,122,3 141,953,9 6,171.9D. TECH. ASSIST.

PROJECT IMPLEMENTATION 3,213.8 1,884.1 1,397+3 - - 6,495.3 282.4INDIVIDUAL MILLS 2r316.3 5,646.0 5,646.0 5,646.0 - 19?254.1 837.1SUBSECTOR STUDY 1,808.3 -- - 1,808.3 78.6

Sub-Total TECH. ASSIST. 71338.5 7,530.1 7,043.3 5,646.0 - 27,557.8 ll?892E. TRAINING - MILLS 3,303.4 4,030.6 2,026.8 - - 9,360.8 407.0F. TRAINING - SRTI 144.8 470.5 530.8 - - 1,146.1 49.8G. CANE STORAGE AND HANDLING - 39,389.1 - - - 39,389.1 1,712*6

Total BASELINE COSTS 116,061.3 227,256,6 99,743.6 28,547.9 15,616,7 487,226.1 21,183.7Phs;sical Continger,cies 6,360.5 10Y515.7 6,076.1 282.3 - 23t234.6 1,010.2Price Contingericies 6,078.0 340758.9 25S163.7 8,105.5 5,452.4 79t558.5 3,459.1

Total PROJECT COSTS 128,499.8 272,531.1 130,983.4 361935.7 21,069.1 590.019.2 25,653.0

Ta,es 3,461.9 4,936.1 2,339.6 1,246.6 660.4 12,644.6 549,8Forei4n Ex;hanse 81827.5 183.112.3 89,930.1 32,276.2 19,779.3 406f925,4 17,692.4

-62-

ANNEX IITable 2

BANSLBDESHSUGAR REHABtLITATION MD INTENSIFICATION PROJECT

RAJSHAHI SUGAR MILLDetailed Cost Table

Base Costs Totals Ircl,dins Cont.rUeoc,es

83/14 84/81 81/S6 86/87 8/388 Total 83/84 84/85 81/86 eb/E- 87/a8 Total

1. lNVESTSENT COSTS

A. STRENSTHENING EXTENSION SEREICE

0. E3LIP9ENI Ahe 9A60INER6

TRACTORS - - - 3,467.8 - 3,467.8 - - -444. 4,484.0P11WS - IS4.9 601.1 554. - 1,340,9 - 209.2 729.2 227.4 - 1,65.6HARRONS - 46,2 - 46.2 - 9- s.8 - s9.BRI0ER'S - - 46.2 46.2 - ?2. 56.1 59.8 - 115.9SUBSDISERS 92.5 61.6 7.1 77.0 - 08.2 96.5 89,7 S3.- ss.6 - 359.3LANI PLANE 10.9 21,1 10.9 38.2 - 165.6 53.1 28.8 61.6 99.3 - 91.2KNAPSACK SPRAYER8 91.7 91.7 - - - 183.4 95.7 183.6 - - - i99.3DEEP TUBENELL AND SPRINKLERS 1,310.7 - - - - 1,310.7 1,307.2 - - - 1,367.2TOOL SETS 46.4 46.4 23.2 - - 125.9 48.4 52.4 28 - - 128.9WELDINO SETS 50.9 - - - - Q119 53.1 - - - 53.1BLACKSNITh SOILS 286.6 286.6 299.0

6o-Tstola 530UIFENT RND AtHINERS 1,929,7 410.0 798.5 4,200.3 - 7,368.7 2,01.G 460.15 96S.7 5,470,1 - 8,915.3- VEHICLES

4-UHEEL DRIVE 491,3 - - - - 491.8 52i.1 - - - Sil.53. BUIL,CiNGS SUBZCNE

CDh, 0UT6RCHER BILDING. 292.5 292.5 - - - 184,9 328.4 371.0 - - - b99.4hCDO, 2`C, CDh OFFICE1 32. 2.0 - - - 649.9 364.9 812.2 - - - 777.iINPUT OD0N 341. 341.3 - - - 82.6 383.2 4132,9 - 816.2ACDD QUARTERS 288.4 - - - - 288.7 324.3 - - - 324.7FURNISHING AND EOUIPENT1 20.1 2.1 - 48.1 20.8 22.7 - - - 43.6

SO-Tot2l BIULIINGS SUBZONE 1,287.o 978,8 - - - 2,246.4 1,4221.8 l,38.8 - - - 2,660.64. PURCHASE CENTER

CGA,CIC OFFICES 346.7 693.5 046.7 - - 1,386.9 389.3 il79.7 490.9 - - 1,760.0INPUT 3ODOWN 346.7 693.5 346.7 - - 1,386.3 389.3 i179.7 490.9 - - ,760.1CDI QUARTERS 433.3 B66.6 433.3 - - ,733.1 486.1 i,29'.2 613.5 - - 2,199.2CDA GUARTERS 1,083.2 3,249.6 574.9 - - 5,307.6 1,216.3 4,122.1 1,380.3 - - 6,-18.7FURNISHING AND EDUIPNENT 22.3 44.6 22.3 - 892 23.3 10.4 27.0 -i0o.

Sub-Total PURCHASE CENTER 2,232.2 1,547.6 2,123.9 - - 9,903.8 2,504.7 7,G31.1 3,002.7 - *12,538.s. PRODUCTION CREDOIT 4,346.3 4,346.3 - - - 8,692.5 4,547.6 4,553.8 - - 9,501.4

Sub-Total STRENGTHENING EXTENSION SERVICE 10.267.7 11,282.8 2,922.4 4,230.3 28,703.2 10,998.6 13,687.2 3,970.4 5,470.1 34,127.3

B. R0AD8

HKRIAN-KATAKSH - 217.8 653.4 217.8 - - 1,088.9 244.5 828.8 308.4 - - 1,381.7SARDh CENTER - MAIN C3P 223.1 446.3 223.1 - - 892.5 210.5 566.1 315.9 - - 1,132.5HA818N HATGODAGNI1 4,573.1 6,860.2 4,573.5 16,007.1 5,13515 8,702.2 6,475 5 20,313.2

Sub-Total R0ADS 5,014.4 7,959.8 5,014.4 - - 17,98B.5 5,6301 18,097.2 7,099.8 - - 22,827.4C. HILL REHA8IBIlATION

.E0UIPHENT ARD MACHINERY

BDILER 9,904.6 17,828.51 11,8115.3 - - 39,618.4 11,365.2 22,163.6 15,86D.0 - - 49,388.9CONDENSATE sTORA0 E TANK 470.0 470.0 - - - 940.0 5139.3 534.3 - - - 1,123.6INJECTION WATER P3UHP 928.6 928.6 - - - 1,857.1 1,065.5 1,154.3 - - - 2,219.8CONTI9UDUS SULFITATION UNIT 568.4 373.2 - - - 933.7 643.1 464.0 - - - 1,107.0E9APCRATCR 1,196.0 3.989. 2,S03.4 - - 7,97B, 1,831.4 4,939.4 1,193.8 - - 9,9e4.sVACUUM PAN 1,618.9 4,046.7 2,427.7 - - 8,093.3 1,857.7 51,00.6 3,239.7 - - 10,128.0CRYSTALLIZER 298.1 741 4415.8 -- 1,489,0 342.0 926.3 594.9 - - 1,863.2B01LER INs8RTUKENTS 0,019.0 608,8 - - 1,627 1,169.0 716.9 - - - 1,926.2LABORATORY EOUIPMENT 66.2 66.2 - 132.5 76.0 82.3 - 158.3EFFLUENT CONTROL 179.6 179.6 - 359.2 206.1 2!3.3 - - - 429.4REHA81LITATE ESTEDN EQUIPMENT 2,255.8 3,007.3 2.254.5 - - 7,517.6 2,588.5 3.70.58S 3,008.5 - - 9,335.5

Sob-Total E'UIPHENT AND HACH1NERY 18,897.2 32,243.4 19,406.7 - - 70,547.3 21,684.0 40,3E3.6 25,896.8 - - 87,664.42. BUILDING8

U3GRA8IN GUEST 3UARTERS 508.9 - - - 508.9 571.5 - - - - 571.5

Sub-Totl MILL REA9BILITATION 19,406.1 32,243.4 19,406.7 - - 71,056.2 22,255.5 40,0E3.6 25,896.8 - - 88,235.9

Total INVESTMENT COSTS 34,688.1 511,486.0 27,343.5 4,230.3 - 117,748.0 38,884.6 63,837.9 36,968.0 5,470.1 - 145,190.6

II. RECURRENT COSTS

A. NELL SPARES 558,2 7,3630. 5,74.3 4. 415,5.0 1122. 3 241205.9 588.6 8,254.7 6,868.0 6,864.1 6.8825 29,449.9

Total RECURRENT COSTS 551.2 7,367.0 5,743.3 5,415.1 5,122.3 24,205.9 580.6 3,214.7 6,868.0 6,864.1 6.882.5 29,449.9

Total BASELINE C3STS 351246.4 58,853.0 33, ft5,7 9,645.5 5,122.3 141,953.9 39,465.2 72,122.6 43,836.0 12,334.2 6,BM2.5 174,640.4

-603-ANNEX 75tablo 3

_320U7R SUGAR 9/ILL

eta,ied Cost ToteRITK '3351

8As Costs Totals ttuOno -t-t..:o

t3184 04/85 85/Ec 00/87 02208 Total 33/94 04/85 OTt /02067 tI//U>

I. 2VESTONET COSTS

A, 3TRE2TK6NING EXTENIONISER30VICE

TRAC/ITORS- 3.85331 2,331.0 0,130.0 --- 0,0 2,3.j ,o to.

L II,:,,~~~~~~~- b. 90.C 373:,9 18.7 BoO -E 210.2 232. A 480,9 252.0 1,30t.zRI000 - 0R. 4 - 0. - 9. - 253 - 50,8 338152:3RS 432 002 35.0 002 3. 720 0 2.3 474 5. .A Oo /

P88LANES 3. 302 - 255 - 030 90, 0 - 3.

.30/ACK S9R0IER0 91.? - 0.7 1 83.8 957 - :1.s /

7/E/77 0i ET0.09 00 32 25.9 409 24 0-

.7032163003 559 - - - - 5 3 7 0 1 3.~--- ---- ----- ----- ----- ---0607xS42T0 '3C3 0 ---- -- -- --- - -- --- -- -- -0--- - ------

i.,-Total 786338807 AND MA001NE83 292.o 303.2 230.7 4,702.0 2.528.6 7,705,0 375.2 415.3 200.3 3,021I. 2.40,

4-00DRIVE23 903,7 ---- 03. 212'`_-0371/70013 7002~--- - - -- - -- -- - -- - - -- - - -- --- - .7- -- - -- -- - - - - - - - -- - --- - -- -

3. 0:201206 Su8Z3oE

CD35.13339ROWER33U01803 202.5 292.5 5--400 9 3/0,4 223- -ACE32,27 020 OFFICES 3225,0 325.,1 - lt.? 304.0 022

sF67 373300/ 143.3 ~~~~~30. --- 0203 7.2 03SI00100/36 2,3 033 4- - -54O.o E,.S 1FUR3330 08H 5 AND 219060E 22.0 0.1 7.9 - 33. Ž90.2

b/-TOOL 63.2283 0/0334 2,028. ------ 4----, ---I ----.-----2. . 7,-02 -3---. -------------1--

220 122l BUFIDNS 033OE ,471.22. 033.0 - 24,70t/ ,200 l

248:7c 6230043 423.4 ,3, 4Ž2.4 ,0. 0. ,34 00.3.237U 3606W380 411,0 I211o.5 1300.o - .50074 038.3l l"1.

00 002:,11

230 3/007660 ~ ~ ~ ~ ~ ,1382270. 50.-5990.8'.2 0. .8

00043600460 27.9 73~~~~~~~.1127,0 133.7 293 0 '1. /3 0

5. 3032623374206337 1,221.0 3.725,0 - - ---2412 ---2, --- ------0, ---..--- 4-----

P. 03033

M 4003, A31-OT7E6 I3A09KA30037 3.011.407.822,9 3.011,4 115,64561,0 0.100 0,921.3 2,3.ST. -1 , 5 ,

7.n. EQUIMEN ANDo000H94ER

In0010 3303- 0.3 32.2 2

30AND 0* 25.1 … … … …… Is2-l6

FERTILIZER APPLICATORS7.-3 223 - 3.NA C00 S39A8ERS 2404.12.

AIR1493ER3 o,`33, 0.33 . - -2 2206.1 6.306,6 0.89-, 13,2640

2. 0E007.06~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~..

8-*.ISEOC ERIO038 - 0. 531.5 5325

4243-826 - 0~~~~~~43.1 - - - 471 - 5 502.

MOTORCYCLES - - 9305 - 39.5 - 47.24.EiCY7LES 1630, I"2 02 - 35.0 - 393 13 4 23Ž 3.

S-ot.<sl VEHICLES6 401.0 063.7 01.7 9.2 - 01.335 513.5 5210 5 886 12.3 3,12.3'1. 301IL0I403

8783 03ARTE83 S31o, 358.3 4 74,9 355.5 286.8 - - 5563.3

058 0OU6TERS 052.5 071.0 - ,534,17230,3 3.112.0 - ,450.1

Sto-Ttota 83IL11,303 974,2 1,C334.0 - - - 2.009.0 1,093.0 1,312.8 - - 3,430.6

Sot-Totl1 4IL, FoOlo 80600384047 9.010,1 9,73o.4 08.7 3.72 19,400.6 32. 365.3 21,242.7 58.0 12.1 213,3130.03. M3LL 0E3A0ILIT0733N

3. E03104647 ARE3481030083

CINDER007083080E 7ANK 030.0 323.31 -- 940.0 730.8 32.II - 1.32,BOILR 9,904.3 317,828.5 10.885,3 - 39,o1E.4 11.365,2 22130 156 81 - 9 40,88E300808T18 1,273I,2 3.1084.313,914.8 6 8372,5 3,463,.0 3,950. 62554,37 .92,4,9SEE

0730EW60L 3913 308.9 352.0 110.2I07,4 - 4 26.7

3068O 888IL7E930 30.R INST- 1,234.3 32:', ,823,31 033.31 1 ,430.0

3043007307080130608 00~.;1700 -- - - 7.3 22.3 42- - 58.306363085 CDNRTO 379. 07.86 - 354.2 200. 223. - - 42460HA83033070 EX3372NG E331I90E4T 2,254.5 3,0084. 2,234.5 7 ,517,o 2,537.2 3,743.1

3,0 tB. -- 9.

3S.-

Sob-Itota 63U194803 AND 8,A103NE8Y 15,393.2 25,3060,2 1,05.342 - 56.522.1 32,884.3 31,185.0 23,423.32 73,257.02. BUILD3NGS

3388803461IE8T8G8R00076So 509 - -- - 338.9 571.5 - -- - 573,5

Sos-Total 430L 860001637083 05,937.3 23,20.7 10,050.12 - - 57,033.3 38,240.5 33,165.0 230423.2 - - '0,829.3

Totl. I04S00ENT t0S3S 38,0451.7 04,910.9 122.475,4 4,352.2 2.320,0 122.720,8 42.408,0 67.263.o 36,444.4 38628.2 3,483./ 049,283.4

33. 901U807N3 130T3

A. M3LL SPAR80 392.3 ,5255.9 4.307,8 4,062,3 3,842.0 130,180.3 072.4 8,247.8 5.158,4 5,108.9 5,162,7 21,300.2

Ttotl RECURRENT 73330 392.2 5,525.9 4.307,2 4,062.0 3,842.4 38,380.3 037,9 n,247,8 5,251.0 5,148.9 5,002,2 27. 338,2

Iosa3 800003NE 77130 38,844.4 600.0418 28,783.1 8,434.3 o,371.0 340,908.0 42,872.0 73,535.4 35,598.2 33,778.0 8,682.7 171.404,3

-64- ANA9.X IITable 4

8ANINADE8HR" EMI848LIT4TI85 AN8 I4T8460FI04TION PR04CT

10682RG6AON SUGAR KILL0Dt.il.5 Cost 78b0.

Sa t. Cots(talA 0nIw.1Or Co.Sinnoi,

81/84 84/80 85/86 86/97 87ING Total 83/94 84/85 80/86 86/87 57/E8 Total

I. 0K6E'T4(9T CUATS

A, AT8E85T8E41148 EXTESUION SERICE

1.8E0U84ENT MD0 8AD408ERY

FLOS 670,1 739.8 - - - 417.0 707.4 8SU, - 1.543,5WARNS4 - 92.5 92.05 - 104.5 1 04,5RIOEREA 10.4 61.6 - - - 77.1 106.0 69.7 - 58.78608801.58 138.7 10.9 2 40.4 144,7 121.9 - - - 266.4LIWLFLES 92.5 77,0 - 169.5 96,5 87. I 182.498499,4K 098YERS 107.0 10T.0 214.0 111.6 120,9 - - - 232.57TOM SETS 139.1 1370 610.9 - - 394,1 140,1 157 2 148.6 - - 442,98EL0814 SET8 001,6 - - - 01.6 106.0 - - -- 106.0

S.o-ToASl E00IP548 AND 850418R4 1.272.0 1,024.9 105.9 - - 2,710.3 11,127.4 1,497,4 140.6 - - 2.965,42. VEHICLES

4 *NSEL 0426 - - 490.8 - 490.8 6 621.4 - 623.4857049R.Y8- ES 236.9 206.9 470.8 - 00.0 316.3 610.4BICYCLES - - 40.4 44.2 36.6 5-54 4, .49 619 l.0

888-7otal VEHICLES0 - 770.1 281.1 1.052.2 - 80".1080.,2 1,060,02. 001108483 008008

00M/8UT1DARS BUILD2NG 195.2 9195.1 -3-999.2213,4 2471 - - - 466.08801, 000, C14 OFFICES 216.6 210, -6 403.3 240.3 274 A - 516.10IN8UT00884 227.1 .22'. - -5 405.1 251.0 288. - - - 544.1A009.0G85ER8 208.9 2831.9 - - - 577.7 024.0 000 4 - 90.8F794054046 - 2 . 7 - - - 26.7 - 3182 - 0.7

SoS-Total OUOLDIOS SO 0808E 926.2 906.7 - - - 1,662.7 1,142.01,0207 4 2,249.4

054. 200 OFFICES 144.7 677,0 346.7 - - 1,086.9 189.0 079 7 490.9 - - 176.24987 Gomm4 346.7 697,5 046.7 - - 1004.7 169.0 079 7 490.9 - - 1,760.1C1C 068TE0S 910.0 86.1.6 431,.-3 1,700.1 486.5 1,099 02 611.15 2,199.2000 QARTERS 1,080.2 3,247.6 649.9 - - 4,982.7 1,206.1 4,122 1 9423.2 - 6- 62268F104NI40HI8 22.1 44,6 22.1 S 9.2 21.1 so 4A 27,0 - - 00.7

38Total 9080468E 004709 2,212.0 5,54',, 1,793.9 - - 9,576.8 2,504.7 7,0310,1 2,592.6 - - 12,076,90. 99R06(724 240007 0,725,4 1,7Ž7.4 - - - 7,450.7 3.897,9 4,046.0 - - ,144,0

18b-Total S74E46'408148 007048104 SERVIC0 S,156.0 10.0557. 1,914,9 771.1I 280.1 22.677.6 8,772.1 11.482 1 2,643.2 '8001 3160. 24,796.56. RD850

900.0018 B 740.48 3,129.7I.,227.0 31,22.7 - 2,518.7 0,514.3 7,9141. 4,411.3 - - 15,885.5885640E0 -8EY57 1,257.6 2,511.1 1,207.6 5 - 0010.6 1,412.2 3,910 7 0,780.7 - - 6,183.3

886-0ota0 80000 4.3B7,1 8,77.7.6 4,37A7. - 7,549.1 4,924.4 11,0130,7 6,202.0 - - 22,269.1C. MI,lL FARM 0E0ELOP8ENT

1. 800098E41 440 460072NE6

9s880m 8146.2 - 4.2 48..2 - - 48.2'LMDPLAINES 38.2 - -- - 8.2 19.9 - - 1.FERTILIZER A99L0CAT04S 610.8 6110.6 627.0 - - 637.006N8PS0009863868 45.9 - - 40.9 47. - - 47.60409 TToI4LLS -30,421i.0 2,282.0 5 ,703.1 -30,860.3 2,766.4 - - 6,616.4A98085L09 5,046.0 9,1541.4 8,103.2 - 20,144.1 5,105.5 01,346 3 7401.9 - - 23,055.0TO4L SES ? 69.5…… …… … 2.5 7

19000858080 081.1 1 8.3 19.… …… 1.£08085001E 152.5 - - - - 125 109.0 - 59.2

S888-Total 0410I4647 AND 85014R8 8,067.2 12,571.9 8,38530 - - 27,000.5 6,309.2 14,214.8 1002. 0,716.32. oROICLES

4 DRIVE06 491.8 - - - 490.0 01.1.5 51.MD7040Y7E0 - - 18.4 - 18.4 1 41.6 - - 14.B1070LES 14.7 9 .2 9.2 - 30.2 10.4 1 1.4 12.32 09.1

SLb6-T9tIl VEHICLES 506.6 - 127.7 9.2 6 40.5 527.20 151.5 12.3 692.33. 88IL0IN6S

058D 8608 241.7 - -2- - 43.7 271.6 2000 MAT008 16.2 658.2 858.2 - - 1495 7.0 6.4 0.9 - - 2,300.

864888 / 808080 579.6 ~~~~~---- ----- ---- ---- -- 75.6-- 648.4-- ----- ----- ---- ---- -- 46.4-

8o4-Totl BU8101NGS 0.477,5 658.2 608.2 - - 2.793.6 1.659.0 619.8 931.9 - - 3,425.3

88- Total HILL F889 0440109484 8,010.4 03,016.1 4,071.0 9.0 08,467.6 8,015.2 15,049.7 10,257.7 02,0 3 4,814.40. FILL REHABILITATION

1. E061IP(8T 868 MAC40NE4Y

CD87TI600 80 T178808 UN07 108.4 45.4II - -- 789.3 065.4 06. 20.74/8 84904 CENTRIFUGAL 6788104 2,719.4 .79;1. 4,378..5 II-11,54. 0.20I,5 845,9 5,14425- 700.021188526010k 7185 206.W,100142. - 00,430. 2.822.0 7,10,6 .7, B- 1.0.

88000 048 T0AT4T 1,00.01: 609.0 - -1, 624.1 4,1 1,06.3 792.1 -- 7 92 .

LAS 0E6098(41 66.9 62 - 112.0 76, 02.3 - 58109910E47 CONTROL 179.6 1796 3 59.2 206.0 220.3 - - 42.0850640S1 01OR4GE TAW 470.0 471. - - - 40.0 519.0 504.0 ~1 - 1 02 .oR8EIAOLITATE EXISTING 03809468 2,471.6 1, 94. 62,084.4 - - 9, 984.6 0,409.9 4,408,7 3,962.4 I 2,501.1)

886-1T8,100619847T A58 MACHINERY 10,030.7018.234.8 10.491.8 3B 1,797.3 11,509.9 22,688.8 04,000.05 40,079.22. BU0181853

798540E0G0E7T185709 588.9 ? - 5086.9 571.5 - - - 571.7

886-Totl MILL REHABILITATION 10,524.8 186234.810,491.8 - - 34,266.2 12,081.4 22,6688.8 84,000.5 B 48,750.7

Tota1 1444ST466T COSTS 00,038.4 51,798.2 22,960.1 780.3 221.1 109,961.0 34,290.1 62,831.1 34,152.4 992.3 381.2 112,602.'

II. 40E1680T7COSTS

A. K011 SPARES 47,0I4,892.1 4.307,8 4,162.8 0,842.4 '16.921,3 4a.9 5,227.8 0,050.4 5,148.9 5.062,7 23.769,1i

ToA.1 RECURREN7 00078 47.0 4.655,1 4,3057.8 4,002.8 3,042.4 06.951,1 48.9 5,287.3 5,151.4 5,148.9 5.162.7 20,769.1,

Total BASELINE 00T18 11085.9 56,491.4 30,272.8 4,840.1 4,122.0 026,902.5 14,344.0 68,588.7 39,304.0 6,141.0 5,544.0 153,420,1!

-65-

ANNEX IITable 5

BANGLADESHSUGAR REHABILITATION AND INTENSIFICATION PROJECT

CANE STORAGE AN]D HANDLINGDetailed Cost Table

(TK '000)

Base Costs Totals Includins Contingencies

83/84 84/85 85/86 86/87 87/88 Total 83/84 84/85 85/86 86/87 87/88 Total

I. INVESTMENT COSTS

MECHANICAL HANDLING EQUIPMENT - 39,389.1 - - - 39,389.1 - 446515.3 - - - 44,515.3

Total INVESTMENT COSTS 39,389.1 - - - 39?389.1 - 446515.3 - - - 44,515.3

Total BASELiNE COSTS - 39,389.1 - - - 39.389.1 - 446515.3 - - - 44,515.3

BANGLADESHSUGAR REHABILITATION AND INTENSIFICATION PROJECT

TECHNICAL ASSISTANCEDIetailed Cost Tahble

.Th 'Or.i

Base Costs Totals Includmqn. Cor;tinter;cies

83/84 84/85 85/86 86187 87/88 Total .°3/84 84/85 S5!8u B6/87 87/88 Total

I. INVESTMENT COSTS

A. PROJECT IMPLEMENTATION

PRfl QErT IiiP LE'eIT&TTMIT7 TrA- 286.7 -,507.0 il24i.1 - - C5!4+u y I q 1!708A4 1Y581'- - 6L470M11 AM Jl"~.flmiluI1ILMiFI G!~O.I~V, J,u ~ i,u.

SOIL ENGINEER 64.6 64.6 - - - 29.2 70.8 76.7 - - - 147.4SUPFPORT SERVICE 312.5 312.5 156.3 - _ 78i.3 342.3 370,9 199.1 - - 912.2

SCub-Total PROJECT IMPLEMENTATION 37213.8 18.84.1 1,397.3 - 6-495.3 3r520.2 22235.9 1,750.0 - - 7,536.B. INDIVIDUAL MILLS

A'GRICULTURE MANAGEMENT TSM 760.0 27026,8 2,026.8 2026.8 - 67840.3 832.8 2t407.5 2,585.9 2.758.1 - 8,584.3AGRICULTURE MANAGEMENT RSM 760.0 2,026.8 2,026.8 2,026.8 - 6,840.3 B32.8 20407.5 2,585.9 2i758.1 - E,584,3AGRICULTURE MANAGEMENT RJSM 794b2 15992t4 1i 592. l:;A 2I - 55573A6 7-A 1, .6 21Qi.i.8 .iu7 -L A

Sub-Total INDIVIDUAL MILLS 2,316.3 5y646.0 5y646.0 5,646.0 - 19i254.1 2,538.0 67706.5 7s203.7 7,683.4 - 24,131.6C. SUBSECTOR STUDY

LOCAL 190.5 - - - - 190Q5 0-8.7 - - - 208.7FOREIGN 1,617,8 - - - - li7 .8 1:772.7 - -- - l772.7

Sub-Total SUBSECTOR STUDY 1,808.3 - - - - 1r808.3 1981.4 - - - - 1r981,4

Total INVESTMENT COSTS 7,338.5 7,530.1 7,O43.3 5646b0 - 2755 7.8 8,039.6 80942.4 87983,8 7,683.4 - 33r649."

Total BASELINE COSTS 7,338.5 7t530.1 7Y043.3 5,646.0 - 27,557. 88039.6 8,942,4 8,983+8 7,683+4 - 33r649.2 D = =

-67-

ANNEX IITable 7

BANGLADESHSUGAR REHABILITATION AND INTENSIFICATION PROJECT

TRAINING - MILLSDetailed Cost Table

(TK '000)

Base Costs Totals Including Contingencies

83/84 84/85 85/86 86/87 87/88 Total 83/84 84185 85/86 86/87 87/88 Total

I. INVESTMENT COSTS

MOBILE UNIT - 2.003.9 - - - 2,003.9 - 2,380.3 - - - 2,380.3OVERHEAD PROJECTOR 46.1 - - - - 46.1 50.5 - - - - 50.5ENGINEERING STUDY VISIT 651.5 - - - - 651.5 713.8 - - - - 713.8AIR FARES 579.1 - - - - 579.1 634.5 - - - - 634.5INSTRUMENTATION TRAINING 651.5 - - - - 651.5 713,8 - - - - 713.8AIR FARES 217.2 - - - 217.2 2379.9 - 237.9COURSE FEE 144.8 - - - - 144.8 158.6 - - - - 158.6AGRICULTURE SHORT COURSES 651.5 1,302.9 i,302.9 - - 3,257.3 713.8 1,547.7 1.662.4 - - 3,923.9AIR FARES 217.2 434.3 434.3 - - 1,085,8 237,9 515.9 554.1 - - 1,308.0COURSE FEE 144.8 289.5 289q5 - - 723.8 158.6 343.9 369.4 - - S72,0

Total INVESTMENT COSTS 3,303.4 4,030.6 2,026.8 - - 9,360.8 3.619.5 4.787.8 2,585.9 - - lO993.2

Total BASELINE COSTS 3,303.4 47030.6 2,026.8 - - 9,360.8 3.619.5 4,797.8 2,585.9 - - 10,993.2

-68-

ANNEX IITable 8

BANGLADESHSUGAR REHAIBILITATION AND INTENSIFICATI:ON PROJECT

TRAINING - SRTIDetailed Cost Table

(TK '000)

Base Costs Totals Including Contingencies

83/84 84/85 85/86 86/87 87188 'otal 83/84 84/85 85/86 86/87 87/88 Total

I. INVESTMENT COSTS

A. STUDY VISIT, DIRECTOR

INDIA 36.2 36.2 - - - 72.4 39.7 43.0 - - - 82.6AIR FARES 12.1 12,1 - - - 24.1 13.2 14.3 - - - 27.5MAURITIUS - 36.2 - - - 36.2 - 43.0 - - - 43.0AIR FARES - 72.4 - - - 72.4 - 86.0 - - - 86.0INDONESIA, PAPUA NEW GUINEA - - 48.3 - - 48.3 - - 61.6 - - 61,6AIR FARES - - 60.3 - - 60.3 - - 77.0 - - 77.0

Sub-Total STUDY VISIT, DIRECTOR 48.3 156.8 108.6 - - 313.7 52,9 196.3 138.5 - - 377.7B. STUDY VISITS, OTHER SCIENTISTS

INDIA 72+4 72.4 72.4 - - 217.2 79,3 86.0 92.4 - - 257.6AIRFARES 24.1 24.1 24.1 - - 72.4 26.4 28.7 30.8 - - 85.9MAURITIUS - 72.4 - - - 72.4 - 86.0 - - - 86.0AIR FARES - 144.8 - - - 144.8 - 172.0 - - - 172.0INDONESIAF PAPUA NEW GUINEA - - 144.8 - - 144.8 - - 184.7 - - 184.7AIR FARES - - 181.0 - - 181.0 - - 230.9 - - 230.9

Sub-Total STUDY VISITS, OTHER SCIENTISTS 96.5 313.7 422.2 - - 832.4 105.7 372.6 538.7 - - 1,017.1

Total INVESTMENT COSTS 144.8 470.5 530.8 - - 1,146.1 158,6 558.9 677.3 - - 1.394.8

Total BASELINE COSTS 144.8 470.5 530.8 - - 1,146.1 158.6 558.9 677,3 - - },394.8

BANGLADESH

SUGAR REHABILITATION AND INTENSIFICATION PROJECT

Detailed Disbursement Schedule

Disbursement CategoriesTechnical

Equipment Assistance ProductionComponent and Vehicles Civil Works & Training 2/ Credit Unallocated Total

Mill Rehabilitation (TkOOO) 277,439 1,714 279,153Farm Development (Tk000) 50,321 5,832 56,153Strengthening ExtensionServices (Tk-000) 25,536 46,884 25,789 98,209

Cane Storage & Handling (TkO000) 44,515 44,515Roads 65,952 65,952Training 5,496 6,892 12,388Technical Assistance (Tk'OOO) 33,649 _33,649

(Tk'OOO) 403,307 120,382 40,541 25,789 590,019

Total Cost (US$ Million) 17.53 5.23 1.76 1.13 25.65

Disbursement Rate (%) 76 1/ 80 95Amount (US$ M) 13.47 4.19 1.67 0.68Less: 10% transferred to unalllocated 0.67 0.20 0.08 0.95

12.80 3.98 1.59 1.63Less: adjustment for rounding off 0.30 (0.02) 0.09 0.37

12.50 4.00 1.50 2.00 20.00

1/ Equivalent to 100% of foreign and 20% of local expenses.2/ Includes cost of counterpart staff for consultancy services.3/ Equivalent to 100% of consultancy services and overseas training.

-70-

ANNEX III-B

BANGLADESH

SUGAR REHABILITATION AND INTENSIFICATION PROJECT

DiSbursement Schedule

(US$ Million)

Fiscal Year Half Year DisbursementsHalf Year Cumulative

1983-84 First Half-Year 1/ -

Second Half-Year 1.75 1.75

1984-85 First Half-Year 2.00 3.75Second Half-Year 3.75 7.50

1985-86 First Half-Year 3.50 11.00Second Half-Year 2.50 13.50

1986-87 First Half-Year 2.00 15.50Second Half-Year 1.50 17.00

1987-88 First Half-Year 1.00 18.00Second Half-Year 1.00 19.00

1988-89 First Quarter 2/ 1.00 20.00

1/ Credit effectiveness about July 1983.2/ Closing date December 8, 1988.

-71-

ANNEX IVPage 1

BANGLADESH

SUGAR REHABILITATION AND INTENSIFICATION PROJECT

Draft Proposals for Reorganization of the Cane Development and Research

Directorate, Bangladesh Sugar and Food Industries Corporation

The Directorate of Cane Development and Research is responsiblefor supervising production of cane. The two key functional divisions arethe cane development and the plantation departments responsible for caneproduction in outgrowers farms and mill farms, respectively. The SugarResearch and Training Institute (SRTI), the Agronomy Department, andsubject matter specialists provide common services to the two functionaldepartments. Creation of a seed cane inspection department and expansionof the agronomy department have been proposed, but not consideredappropriate for the size of the sugar industry in Bangladesh, whose annualproduction has not exceeded 150,000 tons per annum. However, the industryrequirements would be met by reorganizing the existing divisions andredefining their scope of duties, which are greatly overlapping atpresent.

(a) Cane Development Department

Objective: To extend improved methods of cane cultivation tofarmers and to provide the support needed for increased productivity.

Scope of Work: (a) dissemination of information to farmers,including training and demonstration; (b) provision and monitoring ofinputs to increase production; and (c) production and distribution ofcertified seeds.

(b) Plantation Department

Objective: To increase productivity on mill farms.

Scope of Work: Management of Mill Farms.

(c) SRTI

Objective: To develop and test methods for increasing sugar caneproductivity.

-72-

ANNEX I]VPage 2

Scope of Work: (a) basic research into new and innovative techni-ques in agronomy, pathology, breeding, entomology, soils and physiology;(b) applied research to adapt new methods in the solutions of fieldproblems; and (c) testing, evaluation, and promotion of research findings;under field conditions on mill farms and outgrowers fields, whereverpossible. SRTI would be fully responsible for field evaluation of theirresults, including a proper variety assessment in as many zones as pos-sible.

(d) Agronomy Department and Subject Matter Specialists

Objective: To lia:Lse between research and extension departmentsand to service growers and industry enquiries.

Scope of Work: (a) to-ensure that research findings, which havebeen validated at the farm level are incorporated into the cane develop-ment program; (b) provision of technical back up data and informationrequired by the directorate; respond to technical queries or pressuresfrom the industry; and (c) provide technical field advisory services.

(e) Seed Inspection

This would be the responsibility of a cell at BSFIC headquarters,headed by a Seed Inspection Officer reporting directly to the DirectorCane Development and Research, with assignments distributed as follows:

Nucleus and Foundation Seed: Inspection by zonal SeedInspection Officers attachedto the Seed Inspection Cell.

Registered Seed: Inspe,ztion by the MillAgronomy Department.

Certified Seed: Inspection by sub-zoneAssistant Cane Development

Officers attached to the MillsOutgrowers DepartEment.

BANG LADESHSUGAR REHABILITATION AND INTENSIFICATION PROJECT

Project Implementation Schedule

Pre Effectiveness |FYO FYi1 FY2 FY3 FY4 FY5

1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4

Mill Rehabilitation

Appoint Consultants

Issue, Negotiate and Approve Tenders

Prepare Construction Drawings

Manufacture and Deliver Equipment to Site

Erection and Installation . _ _ _

Commission Plant

Mill Farm Development and Extension Serviceto Outgrowers

Appoint Consultants

Prepare Specifications for Equipment

Issue Negotiate and Approve Tenders

Manufacture and Deliver Equipment

Erection and Installation (Irrigation)

Consultants Supervision

Procurement of Tractors and Vehicles _

Infrastructure

Mill Farm

Mill Zone

World Bank - 23610

-74-

ANNEX VITable 1

BANGLADESH

SUGAR REHABILIETATION AND INTENSIFICATION PROJECT

RJ_M - PRODUCTION AND YIELD

(Assume: 110 grinding days; 1,500 TCD-2,000 TCD in Year 3)

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6-20

OutgrowersArea

Plants (non sup.) 7,750 8,000 9,500 5,500 2,500 2,000Plants (sup.) 8,000 7,500 6,500 6,000 6,500 7,000Plants (mech. cult.) 1,500 1,500 4,000 5,400 5,400 5,400Ratoon (non sup.) 3,000 2,000 1,000 - -

Ratoon (sup.) 200 500 1,000 2,000 2,500 2,500Yield

Plants (non sup.) 14.0 14.0 14.0 14.0 14.5 14.5Plants (sup.) 16.8 18.0 20.0 22.0 24.4 24.4Plants (mech. cult.) 20.0 21.0 23.0 25.0 28.6 28.6Ratoon (non sup.) 5.0 5.0 5.D - -

Ratoon (sup.) 12.0 12.0 12.0 13.0 13.0 14.0Production

Plants (non sup.) 108,500 112,000 133,000 77,000 36,250 29,000Plants (sup.) 134,400 135,000 130,000) 132,000 158,600 170,800Plants (mech. cult.) 30,000 52,500 92,000) 135,000 154,000 154,000Ratoon (non sup.) 15,000 10,000 5,000 - -

Ratoon (sup.) 2,400 6,000 12,000 26,000 32,500 35,000

Total 290,300 315,500 372,000 370,000 381,750 389,200Lost to Gur, etc. 125,000 150,000 150,00) 150,000 160,000 160,000

Total for Crushing 165,300 165,500 222,000 220,000 221,700 229,200

MillSugar Recovery Rate (x) 8.0 8.0 8.2 8.2 8.2 8.2Sugar Production (tons) 13,224 13,240 18,204 18,040 18,179 18,794Incremental Sugar

Production (tons) (40) 45 5,000 4,592 4,931 5,546

-75-

ANNEX VITable 2

BANGLADESH

SUGAR REHABILITATION AND INTENSIFICATION PROJECT

RSM - PRODUCTION AND YIELD(Assume: 110 grinding days; 1,300 TCD - 1,500 TDC capacity in Year 3)

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8-20

Mill farm

Plants (no irr.) acre 600 400 - - - - - -Plants (irr.) acre - 200 400 400 400 400 400 400Ratoons 260 450 450 450 450 450

Yield Plants (no irr.) tc/acre 14 15 - - - - - -

Yield Plants (irr.) tc/acre - 17.6 20.8 24.2 27.6 31.0 33.0 35.0Yield Ratoons tc/acre - 15 17.2 19.4 21.6 21.6 21.6

Production Plants (no irr.) tc 8,400 o,080 - - - - - -Production Plants (irr.) tc - 3,520 8,320 9,680 11,040 12,400 13,200 14,000Production Ratoons tc - - 3,900 7,740 8,730 9,720 9,720 9,720

Total tc 8,400 9,520 12,200 17,420 19,770 22,120 22,920 23,720

Outgrowers

(A) Plants (no sup.) acre 2,650 2,250 1,300 300 - - - -(B) Plants (sup.) acre 9,000 8,000 7,000 7,000 6,400 6,400 6,400 6,400(C) Plants (mech. cult.) acre 500 1,000 2,000 2,800 3,300 3,300 3,300 3,300

Yield (A) tc/acre 13 13 13 13 - - - -

Yield (B) tc/acre 18 19 20 21 22 22 22 22Yield (C) tc/acre 19 21 23 25.5 25.5 25.5 25.5 25.5

Production (A) te 34,450 29,250 16,900 3,900 - - - -Production (B) tc 162,000 152,000 114,000 147,000 114,000 114,000 114,000 114,000Production (C) tc 9,500 21,000 46,000 71,400 84,150 84,150 84,150 84,150

Total 205,950 202,250 202,900 223,000 224,950 224,950 224,950 224,950

Lost to Gur, Chewing 71,400 68,840 72,200 75,080 77,730 80,080 80,880 81,680Total for Crushing 134,550 133,410 130,680 147,920 147,220 144,870 144,070 143,270

Grand Total 142,950 142,930 142,900 165,340 166,990 166,990 166,990 166,990

MillsSugar Recovery Rate (%) 7.75 7.8 8.0 8.0 8.0 8.0 8.0 8.0Sugar Production (tons) 11,079 11,148 11,432 13,227 13,359 13,359 13,359 13,359Incremental Sugar

Production (tons) 114 139 398 2,205 2,360 2,360 Z,360 2,360

-76-

ANNEX VITable 3

BANGLADESH

SUGAR REHABILITATION AND INTENSIFICATION PROJECT

I'SM - PRODUCTION AND YIELD

(Assume: 110 grinding days; 1,500 TCD capacity)

Year 1 Year 2 Year 3 Year 4 Ye!ar 5 Year 6 Year 7 Year 8 Year 9-20

Mill farmsArea in Cane (acres)

Plants 840 840 480 245 - - - - -Plants (Irr.) - - 24U 355 5/5 )/5 5/5 5/5 5/5Ratoons - - - 270 415 64U o4U b40 640

Yields (tc/acre)Plants 15.4 18.5 19.0 20.0 - - - - -Plants (Irr.) - - 26.5 27.0 27.0 27.0 29.0 30.0 32.0Ratoons - - - 16.0 18.0 19.0 19.0 19.0 19.0

Production (tc)Plants 12,936 15,540 9,120 4,900 - - - - -Plants (Irr.) - - 6,360 9,585 15,525 15,525 15,525 17,250 18,400Ratoons - - - 4,320 7,470 12,160 12,160 12,160 12,160

Total (A) 12,936 15,540 15,480 18,805 23,995 27,685 27,685 29,410 30,560

OutgrowersArea in Cane (acre)

Plants (Non Sup.) 4,500 5,000 5,000 4,200 3,500 3,000 2,600 2,300 2,300Plants (Sup.) 10,200 10,200 9,500 7,900 7,000 6,250 5,800 5,900 5,900Plants (Mech. Cult.) 100 300 1,500 2,600 3,200 4,000 4,600 4,600 4,600

Yields (tc/acre)Plants (Non Sup.) 12 12 12 1Z 12.5 12.5 13 14 14Plants (Sup.) 13 13.5 14.5 15.5 16.2 16.2 16.2 16.2 16.2Plants (Mech. Cult.) 15 15 1/ 18.6 18.6 18.6 18.6 18.6 18.6

Production (tc)Plants (Non Sup.) 54,000 60,000 60,000 50,400 43,750 37,500 33,800 32,200 32,200Plants (Sup.) 132,600 137,700 137,750 122,450 113,400 101,250 93,960 95,580 95,580Plants (Mech. Cult.) 1500 4,500 25,500 48,360 59,520 74,400 85,560 85,560 _85,560

Total (B) 188,100 202,200 223,250 221,210 216,670 213,150 213,320 213,320 213,320Lost to Gur, etc. 71,640 72,500 73,300 74,500 75,000 75,000 76,150 76,705 77,855

Total for Mills (B) 116,460 129,700 149,950 146,710 141,670 138,150 137,170 136,615 135,465

A + B (tc) 129,396 145,240 165,430 165,515 165,665 165,835 L66,005 166,025 166,025

MillsSugar Recovery Rate (%) 8.0 8.0 8.2 8.2 8.2 8.2 8.2 8.2 8.2Sugar Production (tons) 10,352 11,619 13,565 13,572 13,585 13,598 13,612 13,614 13,614Incremental Sugar

Production (tons) 581 2,058 1/ 474 545 558 572 574 574

1/ Inclusion of new outgrower area in place of existing area released to adjoining mills assumeda year ahead with project.

-77-

ANNEX VIITable la

BANGLADESH

SUGAR REHABILITATION AND INTENSIFICATION PROJECT

PROJECT ZONES FARM BUDGET

ONE ACRE - THREE YEAR CROP CYCLE - TSM

Sugar-Aus-Mustard-Aus Cropping Pattern

Without WithProject Project

Yield per acreSugar cane 12 tons 17 tonsAus 1/ 32 mds 32 mds

Mustard 5 mds 5 mds

Value (Tk)Sugar cane 4,824 6,834Aus 3,360 3,360Mustard 2/ 1,000 1,000

Total 9,184 11,194

Costs (Tk) 3/Sugar cane

Land preparation 4/ 550 739 5/Field maintenance 4/ 1,092 1,320Fertilizers 810 840Seed 750 750Seed and soil treatment 175 232Harvest and transport 4/ 804 1,139Sub-total 4,181 5,020

Aus 2,925 2,925Mustard 384 384

Total Cost 7,490 8,329

Net return to farmer (Tk) 1,694 2,865

Incremental net income - 1,171

1/ Two harvests.2/ Price Tk 200 per md.31 Includes cost of credit on production inputs.2i Hired labor and animal power.

5/ Includes cost of mechanization.

-78-

ANNEX VIITable lb

BANGLADESH

SUGAR REHABILITATION AND INTENSIF]:CATION PROJECT

PROJECT ZONES FARM BUDGET

ONE ACRE - THREE YEAR CROP CYCLE - RSM

Sugar-Aus-Mustard-Aus Cropping Pattern

Without WithProject Project

Yield per acreSugar cane 15 tons 20 tonsAus 1/ 34 mds 34 mds

Mustard 6 mds 6 mds

Value (Tk)

Sugar cane 6,030 8,040Aus 3,570 3,570Mustard 2/ 1,200 1,200

Total 10,800 12,810

Costs (Tk) 3/Sugar cane

Land preparation 4/ 575 826 5/

Field maintenance 4/ 1,296 1,560

Fertilizers 810 840Seed 750 750

Seed and soil treatment: 175 232

Harvest and transport 4/ 1,072 1,340Sub-total 4,678 5,542

Aus 3,684 3,684Mustard 384 384

Total Cost 8,746 9,616

Net return to farmer (Tk) 2,054 3,194

Incremental net income (Tk) - 1,140

1/ Two harvests.2/ Price Tk 200 per md.

3/ Includes cost of credit on production inputs.4/ Hired labor and animal power.

5/ Includes cost of mechanization.

-79-

ANNEX VIITable lc

BANGLADESH

SUGAR REHABILITATION AND INTENSIFICATION PROJECT

PROJECT ZONES FARM BUDGET

ONE ACRE - THREE YEAR CROP CYCLE - RJSM

Sugar-Aus-Mustard-Aus Cropping Pattern

Without WithProject Project

Yield per acreSugar cane 17 tons 22 tonsAus 1/ 39 mds 40 mdsMustard 8 mds 8 mds

Value (Tk)

Sugar cane 6,834 8,844Aus 4,095 4,200Mustard 2/ 1,600 1,600

Total 12,529 14,644

Costs (Tk) 3/Sugar cane

Land preparation 4/ 575 907 5/Field maintenance 4/ 1,272 1,524Fertilizers 810 840Seed 750 750Seed and soil treatment 175 235Harvest and transport 4/ 1,139 1,541Sub-total 4,721 5,797

Aus 5,282 5,282Mustard 384 384

Total Cost 10,387 11,463

Net return to farmer (Tk) 2,142 3,181

Incremental net income (Tk) - 1,039

1/ Two harvests.2/ Price Tk 200 per md.3/ Includes cost of credit on production inputs.4/ Hired labor and animal power.5/ Includes cost of mechanization.

-80-ANNEX VIITable 2a

BANGLADESH

SUGAR REHABILITATION AND INTENSIFICATION PROJECT

TSM - Balance Sheet(Tk Million)

FY79 FY80 FY81

Current AssetsCash at Bank/Hand 0.6 0.4 2.7Raw Materials and Finishedl Goods 25.0 44.3 54.6Stores and Spares 12.5 17.4 21.6Debtors and Prepayment 19.2 20.9 55.1Others 0.2 0.2 0.5

57.5 83.2 134.5

Fixed Assets 20.3 20.9 20.3

Total Assets 77.8 104.1 154.8

Financed as Follows:Share Capital 15.2 15.2 15.2Reserves 0.2 0.3 4.8Accumulated Profits ( 8.1) -- -

Long-Term Debt 11.3 24.7 23.0Bank Overdraft 41.6 43.6 67.0Other Current Liabilities 17.6 20.3 44.8

77.8 104.1 154.8

-81-

ANNEX VIITable 2b

BANGLADESH

SUGAR REHABILITATION AND INTENSIFICATION PROJECT

RJSM - Balance Sheet

(Tk Million)

FY79 FY80 FY81

Current AssetsCash at Bank/Hand 5.4 2.9 3.4Raw Materials and Finished Goods 31.9 43.5 46.7Stores and Spares 15.0 15.2 16.2Debtors and Prepayment 15.7 26.8 45.6Others - - 0.3

68.0 88.4 112.2

Fixed Assets 33.0 34.7 33.7

Total Assets 101.0 123.1 145.9

Financed as Follows:Share Capital 13.0 13.0 13.0Reserves 3.0 5.1 13.2Long-Term Debt 42.8 59.6 58.2Bank Overdraft 11.8 32.3 37.0Other Current Liabilities 30.4 13.1 24.5

101.0 123.1 145.9

-82- ANNEX VII

Table 2c

BANGLADESH

SUGAR REHABILITATION AND INTENSIFICATION PROJECT

RSM - Balance Sheet

(Tk Million)

FY79 FY80 FY81

Current AssetsCash at Bank/Hand 0.2 0.3 1.5Raw Materials and Finished Goods 19.2 10.2 44.0Stores and Spares. 13.1 15.4 19.5Debtors and Prepayment 11.5 23.9 36.4Others 0.1 0.1 1.4

44.1 493.9 102.8

Fixed Assets 12.7 12.7 13.5

Total Assets 56.8 6'2.6 116.3

Financed as Follows:Share Capital 27.0 27.0 27.0Reserves 0.5 0.5 8.5Accumulated Profits (0.5) (:3.6) -Long-Term Debt 2.0 13.5 12.2Bank Overdraft 12.9 17.5 32.2Other Current Liabilities _14.4 7.7 36.4

56.8 62.6 116.3

BANGLADESH

SUGAR REHABILITATION AND INTENSIFICATION PROJECT

INCOME STATEMENT - TSM

(TK million)

-FY 80 FY 81

Unit Cost/Price Unit Cost/PriceTk M Tk/Md. Tk M Tk/Md.

Income

Sales of Sugar 79.1 316 122.9 473Sales of Molasses 3.0 27 6.3 49Other Income 2.9 1.2

Total 85.0 130.4

Expenditure

Variable Costs 51.3 195.9 71.6 240.6Fixed Expenses 24.1 92.0 28.0 94.2Other Chargesi! - 15.5 59.3 19.5 65.5

Total 90.9 347.2 119.1 400.3

Stock Adj. (15.6) (16.8)

Profit 9.7 28.1

-/Excise Duty, Distribution Charges and Road Development Cess.

(A >1

I_iNG(LADESHI

SUGAR REHABILITATION AND INTENSIFTCATION PROJECT

INCOME STATEMENT - RSM

(TK million)

FY 80 FY 81

Unit Cost/Price Unit Cost/Price

Tk M. Tk/Md. Tk M. Tk/Md.

Income

Sales of Sugar 69.2 326.4 139.4 501.6Sales of Molasses 4.0 47.9 1.5 10.0Other Income (0.3) 0.8

Total 72.9 141.7

Expenditure

Variable Costs 34.9 223.2 72.7 244.8Fixed Costs 1 15.3 98.0 22.4 75.4Other Charges- 13.0 71.7 19.2 71.7

Total 63.2 393.4 114.3 391.9

Stock Adj. 12.8 (4.3)

Profit (3.2) 31.7

l/Excise Duty, Distribution Charges and Road Development Cess.

(:r F4

BANGTLADESH

SUGAR REHABILITATION AND INTENSIFITCATION PROJECT

INCOME STATEMENT - RJSM

(TK million)

FY 80 - FY 81

Unit Cost/Price Unit Cost/Price

Tk M. Tk/Md. Tk M. Tk/Md.

Income

Sales of Sugar 98.8 319.4 175.1 477.4

Sales of Molasses 4.1 30.1 8.1 41.7

Other Income 2.9 3.9

Total 105.8 187.1

Expenditure

Variable Costs 57.9 211.3 101.8 234.6

26.4 96.4 35.3 81.4

Other Charges / 19.1 66.7 23.8 71.7

Total 103.0 374.4 160.9 387.7

Stock Adjustment (2.5) (14.4)

Profit 5.3 40.6

-/Excise Duty, Distribution Charges and Road Development Cess.

i HH

BANGLADESH

SUGAR REHABILITATION AND INTENSIFICATION PROJECT

Projected Income Statement - TSM 1/

(Tk Million)

1981/82 2/ 82/83 83/84 84/85 85/86 86/87 87/88 88/89 89/90 90/91 91/92

INCOME

Sugar Sales 181.5 156.0 194.0 248.0 2730 3 302.0 302.0 302. 302.0 302.0 302.0Other Income 4.2 9.0 12.0 14.0 15.0 17.0 17.0 17.0 17.0 17.0 17.0

Total 185.7 165.0 206.0 262.0 288.0 319.0 319.0 319.0 319.0 319.0 319.0

EXPENDITUREco~

Variable Costs 113.7 93.0 114.0 142.0 155.0 167.0 166.0 165.0 165.0 164.0 164.0Fixed Costs 31.7 40.4 59.1 65.4 65.6 65.7 64.3 62.0 59.7 57.8 55.9

Total 145.4 133.4 173.1 207.4 220.6 232.7 230.3 227.0 224.7 221.8 219.9

PROFIT BEFORE TAX 40.3 31.6 32.9 54.6 67.4 86.3 88.7 92.0 94.3 97.2 99.1

1/ In current prices through 1986/87, thereafter in 1986/87 constant prices.

2/ Per draft accounts.

PH

F-I

BANGLADESH

SUGAR REHABILITATION AND INTENSIFICATION PROJECT

Projected Income Statement - RSM I/

(Tk Million)

1981/82 2/ 82/83 83/84 84/85 85/86 86/87 87/88 88/89 89/90 90/91 91/92

INCOME

Sugar Sales 140.0 152.0 169.0 206.0 261.0 291.0 291.0 291.0 291.0 291.0 291.0Other Income 3.8 11.0 13.0 13.0 17.0 18.0 18.0 18.0 18.0 18.0 18.0

Total 143.8 163.0 182.0 219.0 278.0 309.0 309.0 309.0 309.0 309.0 309.0

EXPENDITURE

Variable Costs 85.1 97.0 106.0 115.0 145.0 160.0 158.0 158.0 157.0 157.0 157.0Fixed Costs 27.5 37.3 55.5 60.7 61.1 60.9 59.3 56.7 54.2 51.9 49.8

Total 112.6 134.3 161.5 175.7 206.1 220.9 217.3 214.7 211.2 208.9 206.8

PROFIT BEFORE TAX 31.2 28.7 20.5 43.3 71.9 88.1 91.7 94.3 97.8 100.1 102.2

1/ In current prices through 1986/87, thereafter in 1986/87 constant prices.

2/ Per draft accounts

rt <

H

BANGLADESH

SUGAR REHABILITATION AND INTENSIFICATION PROJECT

Projected Income Statement - RJSM I/

(Tk Million)

1981/82 2/ 82/83 83/84 84/85 85/86 86/87 87/88 88/89 89/90 90/91 91/92

INCOME

Sugar Sales 226.0 185.0 204.0 333.0 364.0 403zn 416.0 416.0 416.0 416.0 416.0

Other Income 8.4 13.0 14.0 19.0 21.0 23.0 25.0 25.0 25.0 25.0 25.0

Total 234.4 198.0 218.0 352.0 385.0 426.0 441.0 441.0 441.0 441.0 441.0

EXPENDITURE

Variable Costs 143.8 122.0 135.0 198.0 216.0 238.0 246.0 246.0 246.0 246.0 246.0Fixed Costs 39.2 52.4 68.4 76.0 77.7 79.3 78.8 75.3 73.1 70.9 69.0

Total 183.0 174.4 203.4 274.0 293.7 317.3 324.8 321.3 319.1 316.9 315.0

PROFIT BEFORE TAX 51.4 23.6 14.6 78.0 91.3 108.7 116.2 119.7 121.9 124.1 126.0

1/ In current prices through 1986/87, thereafter in 1986/87 constant prices.

2/ Per draft accounts.

C) ZX >c

4-

BANGLADESH

SUGAR REHABILITATION AND INTENSIFICATION PROJECT

Cash Flow Projections - TSM 1/

(Tk Million)

1981/82 2/ 82/83 83/84 84/85 85/86 86/87 87/88 88/89 89/90 90/91 91/92

Net Income Before Tax 40.3 31.6 32.9 54.6 67.4 86.3 88.7 92.0 94.3 97.2 99.1

Depreciation 2.6 3.1 4.3 12.2 13.7 12.0 10.2 8.7 7.2 6.2 5.3

Total Income fromOperations 42.9 34.7 37.2 66.8 81.1 98.3 98.9 100.7 101.5 103.4 104.4

Capital Investment - - 30.4 63.8 29.9 3.1 0.3 - - - -

Taxes 20.1 15.8 16.4 27.3 33.7 43.1 44.3 46.0 47.1 48.6 49.5

Total Outflow 20.1 15.8 46.8 91.1 63.6 46.2 44.6 46.0 47.1 48.6 49.5

Cash Flow Before X

Financing 22.8 18.9 ( 9.6) ( 24.3) 17.5 52.1 54.3 54.7 54.4 54.8 54.9

Financing - - 26.9 56.5 26.3 2.8 0.2 - - - -

Loan Repayment - - - - - - 9.6 9.6 9.6 9.6 9.6

Surplus 22.8 18.9 17.3 32.2 43.8 54.9 44.9 45.1 44.8 45.2 45.3

Stock 83.5 74.0 93.0 118.0 130.0 143.0 143.0 143.0 143.0 143.0 143.0

Own Funds to FinanceStocks 3/ - 7.4 11.2 16.8 29.6 6.5 - - - - -

Cash Surplus 22.8 11.5 6.1 15.4 27.0 48.4 44.9 45.1 44.8 45.2 45.3

Dividend 14.0 12.1 9.5 - - 40.2 25.8 40.0 40.0 40.0 40.0

Cash Balance 8.8 8.2 4.8 20.2 47.2 55.4 74.5 79.6 84.4 89.6 94.9

1/ In current prices through 1986/87, thereafter in 1986/87 constant prices.

2/ Per draft accounts.3/ 10%, 20%, 30%, and 50% of stocks financed by own resources in years 1982/83, 83/84, 84/85 and thereafter

respectively.

D- H

BANGLADESH

SUGAR REHABILITATION AND INTENSIFICATION PROJECT

Cash Flow Projections - RSM 1/

(Tk Million)

1981/82 2/ 82/83 83/84 84/85 85/86 86/87 87/88 88/89 89/90 90/91 91/92

Net Income Before Tax 31.2 28.7 20.5 43.3 71.9 88.1 91.7 94.3 97.8 100.1 102.2Depreciation 3.2 3.0 7.2 15.0 13.2 12.0 10.5 8.9 7.6 6.4 5.4Total Income fromOperations 34.4 31.7 27.7 58.3 84.1 100.1 101.2 103.2 104.4 106.5 107.6

dapLdta. investmernt - - 42.) 82.9 30.4 5.6 3.4 - - - -

Taxes 15.6 14.3 10.2 21.6 35.9 44.0 45.8 47.1 48.9 50.0 51.1

Total Outflow 15.6 14.3 52.7 103.5 66.3 49.6 49.2 47.1 48.9 50.0 51.1Cash Flow BeforeFinancing 18.8 17.4 ( 25.0) ( 45.2) 17.8 50.5 52.0 56.1 55.5 56.5 56.5

Financing - - 33.2 64.8 23.8 4.4 - - - - -Loan Repayment - - - - - - 2.6 11.4 11.4 11.4 11.4

Surplus 18.8 17.4 18.2 19.6 41.6 54.9 54.6 44.7 44.1 45.1 45.1Stocks 41.7 47.2 52.7 63.5 80.6 89.6 89.6 89.6 89.6 89.6 89.6Own Funds to Finance

Stocks 3/ - 4.7 5.8 8.5 21.3 4.5 - - - - -Cash Surplus 18.8 12.7 9.4 11.1 20.3 50.4 54.6 44.7 44.1 45.1 45.1Dividend 9.5 9.4 8.6 6.1 13.0 40.0 40.0 40.0 45.0 45.0 45.0Cash Balance 9.3 12.6 13.4 18.4 25.7 36.1 50.7 55.4 54.5 54.6 54.7

1/ In current prices through 1986/87, thereafter in 1986/87 constant prices.2/ Per draft accounts.3/ 10%, 20%, 30%, and 50% of stocks financed by own resources in years 1982/83, 83/84, 84/85 and thereafter

respectively.

P3

(D Z

en

H'F-

BANGLADESH

SUGAR REHABILITATION AND INTENSIFICATION PROJECT

Cash Flow Projections - RJSM I/

(Tk Million)

1981/82 2/ 82/83 83/84 84/85 85/86 86/87 87/88 88/89 89/90 90/91 91/92

Net Income Before Tax 51.4 23.6 14.6 78.0 91.3 108.7 116.2 119.7 121.9 124.1 126.0

Depreciation 5.5 4.9 16.4 18.4 17.1 15.4 14.9 12.6 11.6 10.6 9.9

Total Income fromOperations 56.9 28.5 31.0 96.4 108.4 124.1 131.1 132.3 133.5 134.7 135.9

Capital Investment - - 38.9 79.5 36.9 5.5 - - - - -

Taxes 25.7 11.8 7.3 39.0 45.6 54.3 58.1 59.8 60.9 62.0 63.0

Total Outflow 25.7 11.8 46.2 118.5 82.5 59.8 58.1 59.8 60.9 62.0 63.0

Cash Flow BeforeFinancing 31.2 16.7 ( 15.2) ( 22.1) 25.9 64.3 73.0 72.5 72.6 72.7 72.9

Financing - - 31.1 63.6 29.5 4.6 - - - - -

Loan Repayment - - - - - - - 12.3 12.3 12.3 12.3

Surplus 31.2 16.7 15.9 41.5 55.4 68.9 73.0 60.2 60.3 60.4 60.6

Stocks 42.0 36.0 39.0 63.0 69.0 77.0 79.0 79.0 79.0 79.0 79.0

Own Funds to FinanceStocks 3/ - 3.6 4.2 11.1 15.6 4.0 1.0 - - - -

Cash Surplus 31.2 13.1 11.7 30.4 39.8 64.9 72.0 60.2 60.3 60.4 60.6

Dividend 12.2 5.4 - - 20.0 50.0 50.0 50.0 60.0 60.0 60.0

Cash Balance 19.0 26.7 38.4 68.8 88.6 103.5 125.5 135.7 140.0 140.8 141.4

1/ In current prices through 1986/87, thereafter in 1986/87 constant prices.

2/ Per draft accounts.3/ 10%, 20%, 30%, and 50% of stocks financed by own resources in years 1982/83, 83/84, 84/85 and thereafter

respectively.

Y1m

C) H-H-

BANGLADESH

SUGAR REHABILITATION AND INTENSIFICATION PROJECT

Projected Balance Sheet - TSM 1/

(Tk Million)

1981/82 2/ 82/83 83/84 84/85 85/86 86/87 87/88 88/89 89/90 90/91 91/92

Current Assets 98.7 109.0 103.4 141.6 172.2 201.1 213.5 239.5 246.6 255.2 264.7Fixed Assets 15.1 12.0 38.1 89.7 105.9 97.0 87.1 78.4 71.2 65.0 59.7

TOTAL ASSETS 113.8 121.0 141.5 231.3 278.1 298.1 300.6 317.9 317.8 320.2 324.4

Current Liabilities 74.2 77.7 71.7 77.7 77.7 92.7 88.3 107.2 109.6 113.0 117.3Debt 3/ 18.0 18.0 37.6 94.1 120.4 123.2 123.4 113.8 104.2 94.6 85.0Equity 21.6 25.3 32.2 59.5 80.0 82.2 88.9 96.9 104.0 112.6 122.1

TOTAL LIABILITIES 113.8 121.0 141.5 231.3 278.1 298.1 300.6 317.9 317.8 320.2 324.4

Current Ratio 1.23 1.40 1.44 1.82 2.21 2.18 2.49 2.23 2.25 2.25 2.27Debt/Equity Ratio 45:55 41:59 53:47 61.39 60:40 60:40 56:44 54:46 50:50 45:55 41:59

1/ In current prices through 1986/87, thereafter in 1986/87 constant prices.2/ Per draft accounts.3/ Assumes conversion of GOB long-term debt into equity by FY 84. H

PH t1

(D

H

BANGLADESH

SUGAR REHABILITATION AND INTENSIFICATION PROJECT

Projected Balance Sheet - RSM I/

(Tk Million)

1981/82 2/ 82/83 83/84 84/85 85/86 86/87 87/88 88/89 89/90 90/91 91/92

Current Assets 130.0 160.0 174.2 185.0 190.0 200.5 205.0 208.0 211.0 220.4 221.1

Fixed Assets 9.2 6.2 41.5 109.4 126.6 120.2 113.1 104.2 96.6 90.2 84.8

TOTAL ASSETS 139.2 166.2 215.7 294.4 316.6 320.7 318.1 312.2 307.6 310.6 305.9

Current Liabilities 85.3 107.7 130.8 130.3 106.7 102.4 92.3 90.8 93.6 103.0 103.7

Debt 3/ 13.5 13.5 38.3 103.1 126.9 131.3 133.8 122.4 111.0 99.6 88.2Equity 40.4 45.0 46.6 61.0 83.0 87.0 92.0 99.0 103.0 108.0 114.0

TOTAL LIABILITIES 139.2 125.0 215.7 294.4 316.6 320.7 318.1 312.2 307.6 310.6 305.9

Current Ratio 1.52 1.48 1.33 1.42 1.78 1.96 2.22 2.31 2.26 2.13 2.14Debt/Equity Ratio 32:68 22:18 45:55 62:38 60:40 60:40 59:39 58:42 52:48 47:53 43:57

1/ In current prices through 1986/87, thereafter in 1986/87 constant prices.2/ Per draft accounts.3/ Assumes conversion of GOB debt into equity by FY 84.

% <

BANGLADESH

SUGAR REHABILITATION AND INTENSIFICATION PROJECT

Projected Balance Sheet - RJSM 1/

(Tk Million)

1981/82 2/ 82/83 83/84 84/85 85/86 86/87 87/88 88/89 89/90 90/91 91/92

Current Assets 190.2 193.1 203.0 230.0 270.0 290.0 315.0 320.0 325.0 337.0 345.0

Fixed Assets 25.1 22.0 44.5 105.6 125.4 115.0 100.6 88.0 76.4 65.8 55.9

TOTAL ASSETS 215.3 215.1 247.5 335.6 395.4 405.0 415.6 408.0 401.4 402.8 400.9

Current Liabilities 118.1 111.9 114.0 99.0 104.9 106.9 109.4 111.0 111.6 124.3 133.9

Debt 3/ 58.2 58.2 81.4 145.6 174.5 179.1 179.1 166.9 154.6 142.3 130.0

Equity 39.0 45.0 52.1 91.0 116.0 119.0 127.1 130.1 135.2 136.2 137.0

TOTAL LIABILITIES 215.3 215.1 247.5 335.6 395.4 405.0 415.6 408.0 401.4 402.8 400.9

Current Ratio 1.61 1.73 1.78 2.32 2.34 2.71 2.87 2.88 2.91 2.72 2.57

Debt/Equity Ratio 59:41 56:44 60:40 61:39 60:40 60:40 58:42 56:44 53:47 51:49 48:52

1/ In current prices through 1986/87, thereafter in 1986/87 constant prices.

2/ Per draft accounts.3/ Assumes conversion of GOB debt into equity by FY 84.

,-3§f)H

BANGLADESH

SUGAR REHABILITATION AND INTENSIFICATION PROJECT

GOB Incremental Cash Flow 1/

(Tk 000)

1983/84 84/85 85/86 86/87 87/88 88/89 89/90 90/91 91/92

CASH INFLOWIDA Disbursement 40,250.0 132,250.0 138,000.0 80,500.0 46,000.0 2,300.0 - - -Sugar Excise Duty 281.1 1,054.2 10,274.4 10,019.4 10,798.0 11,663.4 11,682.7 11,685.4 11,685.4Duties and Taxes 3,461.9 4,936.1 2,339.6 1,246.6 660.4 - - - -

Income Tax (37,300.0) 9,900.0 29,200.0 46,900.0 53,700.0 58,400.0 62,400.0 66,100.0 69,100.0Dividends (40,100.0) (57,600.0) (30,400.0) 43,900.0 39,500.0 52,700.0 77,700.0 67,700.0 67,700.0Interest 10,434.4 32,625.9 42,226.1 44,181.5 44,561.3 44,561.3 40,104.8 47,860.8 31,216.8Loan Repayments - - - - - 33,300.0 33,300.0 33,300.0 33,300.0

TOTAL INFLOW ( 22,972.6) 123,166.2 191,640.0 226,747.5 195,219.7 223,624.7 225,187.5 226,646.2 213,002.2

CASH OUTFLOWTSM 26,900.0 56,500.0 26,300.0 2,800.0 200.0 - - - -

RSM 33,200.0 64,800.0 23,800.0 4,400.0 2,600.0 - - - -

RJSM 31,100.0 63,600.0 29,500.0 4,600.0 - -

Others 26,763.6 46,702.7 31,096.9 7,683.4 - - - - -IDA Service Charge 2,399.0 2,558.0 3,075.0 3,277.0 3,450.0 3,450.0 3,450.0 3,450.0 3,450.0

TOTAL OUTFLOW 120,362.6 234,160.7 113,771.9 22,760.4 6,250.0 3,450.0 3,450.0 3,450.0 3,450.0

CASH FLOW (143,335.2) (110,994.5) 77,868.1 203,987.1 188,969.7 220,174.7 221,737.5 223,196.2 209,552.2

1/ In current prices through 1986/87, thereafter in 1986/87 constant prices. aI--4'-4

BANGLADESH

SUGAR REHABILITATION AND INTENSIFICATION PROJECT

Foreign Exchange Inflow and Outflow - GOB 1/

(Tk '000)

1983/84 84/85 85/86 86/87 87/88 88/89 89/90 90/91 91/92

INFLOWS

IDA Disbursements 40,250.0 132,250.0 138,000.0 80,500.0 46,000.0 23,000.0 - - -Foreign Exchange Sugar 2/ 2,238.5 9,273.5 133,942.8 148,758.8 176,350.1 190,484.0 190,843.5 190,843.5 190,843.5Molasses Exports 3/ 6.1 249-7 6,935 6 7,381-1 9,243.8 10,430.1 10,456.4 10,461.1 10,461.1

Total Inflow 42,494.6 141,769.2 278,878.4 236,639.9 231,593.9 223,914.1 201,299.9 201,304.6 201,304.6

OUTFLOWS

TSM 18,830.0 39,500.0 18,410.0 1,960.0 140.0 - - - -

RSM 23,240.0 45,360.0 16,660.0 3,0800 1,820.0 - - -

RJSM 21,770.0 44,520.0 20,650.0 3,220.0 - - - - -

Others 18,734.5 32,691.8 21,767.8 5,378.0 - - - - -

Operating Cost 4/ ( 1,680.0) ( 707.9 ( 3,033.2) 13,920.0 693.7 171.4 80.0 13.0 ( 451.0)IDA Service Charges 5/ 2,399.0 2,558.0 3,075.0 3,277.0 3,450.0 3,450.0 3,450.0 3,450.0 3,450.0

Total Outflow 84,805.5 163,921.9 77,529.6 18,307.0 6,103.7 3,621.4 3,530.0 3,463.0 3,404.9

CASH FLOW (42,310.9) ( 22,152.7) 201,348.8 218,332.9 225,490.2 220,292.7 197,769.9 197,841.6 197,899.7

1/ Expressed in current prices for years 83/84 through 87/88, thereafter in 1987/88 constant prices.2/ Based on foreign exchange element of import substitution of Tk 10,534/ton for 1983/84 and 84/85, thereafter at Tk 14,609/ton.3/ Based on export price of molasses F.O.B. Chittagong of Tk 2,864/ton.4/ 11% of incremental operating cost is estimated to be foreign cost.5/ 0.75% of amount disbursed and outstanding, and 0.5% of undisbursed amount. X

0 H

-97-

ANNEX VIIITable 1

BANGLADESH

SUGAR REHABILITATION AND INTENSIFICATION PROJECT

Financial and Economic Price Assumptions

(Tk/md)

1982 Constant Prices

Financial Prices Economic Prices

Product/Input

Aus/boro 116 123

Sugar Cane 15 33

Sugar 464.25 - 530 545

Molasses 60.0 106.3

Baggase 0.56 0.46 /a

Animal power(per day) 25 20.8 /a

Hired labor (per day) 15 8.5 /b

Urea 148 241

TSP 115 296

MP 110 227

Pesticides 3,444 2,858 /a

/a Adjusted by SCF 0.83.

/b Economic wage of farm labor at varying levels of un and underemployment inagriculture. Calculated by IBRD at 68% o the nominal rate and adjusted bySCF = 0.83.

-98-

ANNEX VrI:IITable 2

BANGLADESH

SUGAR REHABILITATION AND INTENSIFICATION PROJECT

Financial and Economic Costs of ProductionPer Acre (Cane) TSM

(Tk)

1982 Constant PricesFinancial Economic

Land preparationAnimal power and labor - 22 mandays 550 457.6Field maintenance - 91 mandays 1,365 773.5

MaterialsUrea 3 mds 444 723.0MP 3 mds 345 888.0TSP 3 mds 330 681.0Seed cane 50 maunds 750 1,650.0Seed and soil treatment 175 136.5

Total 1/ 3,95' 5,309.6

Other Cost per Mds Cane TSM

Financial Economic

Harvesting (lab) 0.6 0.34Transport (bullock cart) 2 . 1.67Total 2.6 2.01

1/ Adjustments have been made in the analysis for yield increases with projectfrom 12 to 17.3 tons/acre and without project from 12 to 14.5 tons/acre.

-99-

ANNEX VIIITable 3

BANGLADESH

SUGAR REHABILITATION AND INTENSIFICATION PROJECT

Financial and Economic Costs of ProductionPer Acre (Cane) RSM

(Tk)

1982 Constant PricesFinancial Economic

Land preparationAnimal power and labor - 23 mandays 575 478.4

Field Maintenance - 108 mandays 1,620 918.0MaterialsUrea 3 mds 444 723.0MP 3 mds 345 888.0BP 3 mds 330 681.0Seed cane 50 mds 750 1,650.0Seed and soil treatment 175 136.5

Total 1/ 4,239 5,474.9

Other Cost per MDS Cane RSM

Financial Economic

Harvesting 0.6 0.34Transport (Bullock cart) 2 1.67Total 2.6 2.01

1/ Adjustments have been made in the analysis for yield increases withproject from 17 to 23 tons/acre without project from 16.5 to 19 tons/acre.

-100-

ANNEX VIIITable 4

BANGLADESH

SUGAR REHABILITATION AND INTENSIFICATION PROJECT

Financial and Economic Costs of Productionper Acre (Cane) RJSM

(Tk)

Financial Economic

Land preparationAnimal power and labor (23 man/days) 575.0 478.4Field maintenance (106 man/days) 1,590.0 901.0

MaterialsUrea - 3 mds 444.0 723.0MP - 3 mds 345.0 888.0TSP - 3 mds 330.0 681.0

Seed cane - 50 mds 750.0 1,650.0Seed and soil treatment 175.0 136.5

Total 1/ 4,209.0 5,457.9

Other Cost per MDS Cane RJSM

Financial Economic

Harvesting 0.6 0.34Transport (Bullock Cart) 2.0 1.67Total 2.6 2.01

1/ Adjustments have been made in the analysis for yield ncreases with projectfrom 16.8 to 25.2 tons/azre without project. from 16.8 to 18 tons/acre.

-101-

ANNEX VIIITable 5 and 6

BANGLADESH

SUGAR REHABILITATION AND INTENSIFICATION PROJECT

Financial and Economic Costs of Production per Acre

TSM and RSM Mill Farms a/ - 1982 Constant Prices

(Tk)

Financial Economic b/

Plant crop 3,877 5,057

Irrigated 4,132 5,234

Ratoon 2,593 3,285

a/ Adjustments for yield increases have been made in the analysis TSM withproject from 15 to 22 tons/acre without project from 15 to 17.5 tons/acre,RSM with project from 14 to 35 tons/acre without project from 14 to 16tons/acre.

b/ Adjusted by average CF for farm operations = 1.3. Harvesting cost of7.5 Tk/ton cane in addition.

-102-

ANNEX VIIITable 7

BANGLADESH

SUGAR REHABILITATION AND INTENSIFICATION PROJECT

Financial and Economic Variable Costs of Processing Cane per Ton

TSM Mill - 1982 Constant Prices

(Tk)

Financial Economic

Cane transport 49.9 45.8 a/

Production materials 28.3 21.9 b/

Factory wages '29.2 24.2 c/

Fuel and power 24.4 22.4 a/

Repair and maintenance :27.0 21.0 b/

Distribution charges 23.0 19.1 c/

Road repair :22.2 18.4 c/

Excise duty 1:15.0

Total cost d/ 3:19.0 172.8

a/ Adjusted by Petroleum CF = 0.92.b/ Adjusted by Manufactured Commodities CF 0.78,c/ Adjusted by SCF = 0.83d/ Adjustments have been made in the analysis, with project for reduction

in cane transport cost, without project for increase in number ofcrushing days from 110 to 120 due to progressive decrease in ratedcapacity from 1500 to 1300 TCD by 1987-88.

-103-

ANNEX VIIITable 8

BANGLADESH

SUGAR REHABILITATION AND INTENSIFICATION PROJECT

Financial and Economic Variable Costs of Processing Cane per Ton

RSM Mill - 1982 Constant Prices

(Tk)

Financial Economic

Cane transport 11.6 10.67 a/

Production materials 26.0 20.28 b/

Factory wages 35.9 29.80 c/

Fuel and power 22.8 20.98 a/

Repair and maintenance 26.0 20.26 b/

Distribution charges 21.2 17.60 c/

Road repair 20.6 17.10 c/

Excise duty 106.1 -

Total cost d/ 270.2 136.69

a/ Adjusted by Petroleum CF = 0.92.b/ Adjusted by Manufactured Commodities CF 0.78.c/ Adjusted by SCF = 0.83d/ Processing costs have been adjusted to 257.5 and 125.2 for increase in

number of crushing days from 110-120 due to reduction in rated capacityfrom 1500 to 1300 TCD in 1981/82.

-104-

ANNEX VIIITable 9

BANGLADESH

SUGAR REHABILITATION AND INTENSIFICATION PROJECT

Financial and Economic Variable Costs of Processing Cane per Ton

RJSM Mill - 1982 Constant Prices

(Tk)

I'inancial Economic

Cane transport 56.8 52.25 a/

Production materials 23.9 18.64 b/

Factory wages 31.9 26.48 c/

Fuel and power 26.2 24.09 a/

Repair and maintenance 24.0 18.72 b/

Distribution charges 23.0 19.09 c/

Road repair 22.2 18.43 c/

Excise duty 115.0

Total cost d/ 323.0 177.70

a/ Adjusted by Petroleum CF = 0.92.b/ Adjusted by Manufactured Commodities CF 0.78.c/ Adjusted by SCF = 0.83d/ Adjustments have been made in the analysis, with project for reduction

in cane transport cost, without project for increase in number ofcrushing days from 110 to 120 due to progressive decrease! in ratedcapacity from 1500 to 1300 TCD by 1987-88.

-105-

ANNEX VIIITable 10

BANGLADESH

SUGAR REHABILITATION AND INTENSIFICATION PROJECT

Financial and Economic Costs of ProductionPer Acre for Aus (Paddy) TSM

(Tk)

1982 Constant PricesFinancial Economic a/

Land preparation

Animal power - 24.5 Bullock days 612.5 509.6

Other lab. - 34 mandays 510.0 289.0

Materials

Fertilizer 344.0 470.8

Seed 248.0 368.0

Pesticide 0 _

Total 1,714.5 1,637.4

a/ Adjusted by economic prices Annex IX, Table 1.

-106-

ANNEX VIIITable 11

BANGLADESH

SUGAR REHABILITATION AND INTENSIFICATION PROJECT

Financial and Economic Costs of ProductionPer Acre for Aus (Paddy) RSM

(Tk)

1982 Constant PricesFinancial Economic a/

Land preparation

Animal power - 22.0 Bullock days 550.0 457.6

Other lab. - 71 mandays 1,065.0 602.7

Materials

Fertilizer 284.0 357.3

Seed 262.0 389.2

Pesticides 18.0 14.9

Total 2,179.0 1,852.4

a/ Adjusted by economic prices Annex IX, Table 1.

-107-

ANNEX VIIITable 12

BANGLADESH

SUGAR REHABILITATION AND INTENSIFICATION PROJECT

Financial and Economic Costs of ProductionPer Acre for Aus (Paddy) RJSM

(Tk)

1981 Constant PricesFinancial Economic a/

Land preparation

Animal power - 23.5 Bullock days 587.5 488.8

Other lab. - 166.3 mandays 1,395.6 790.8

Materials

Fertilizer 311.0 694.6

Seed 342.0 508.1

Pesticides 5.0 4.1

Total 2,641.1 2,486.4

a/ Adjusted by economic prices Annex IX, Table 1.

BANGLADESH

SUGAR REHABILITATION AND INTENSIFICATION PROJECT

Summary of Financial Costs and Benefits - TSM

(Tk'000)

Mill Strengthening Operating Total Total

Year Rehabilitation 2/ Mill Extension Cane Training Costs Costs Benefits 1/

Farm Service Handling

1 11,255 8,088.0 4,544 - - - 22,763 1,782

2 18,893 13,302.0 8,004 13,129 701 2,771 56,141 8,392

3 11,084 9,213.0 2,003 - - 12,505 34,317 32,112

4 - 7.5 771 - - ( 3,145) ( 2,365) 6,904

5 - 281 - - ( 4,514) ( 4,233) 8,057

6 - - - - ( 5,416) ( 5,416) 8,269

7 - - - - ( 5,750) ( 5,750) 8,497

8 - - - - ( 5,960) ( 5,960) 8,530

9 - - - - ( 6,408) ( 6,408) 8,530

10 - - - - ( 6,408) ( 6,408) 8,530

11-20 - - - - ( 6,408) ( 6,408) 8,530

Note: Rate of Return 14%.

1/ Sugar valued at weighted average price of Tk 13,400, Tk 13,668 and Tk 13,936 per ton for 1983/84, 1984/85 -

and 1985/86 and Tk 14,204 per ton thereafter; Molasses at Tk 1,980 per ton; and Bagasse Tk 15 per ton.

2/ Including technical assistance,

BANGLADESH

SUGAR REHABILITATION AND INTENSIFICATION PROJECT

Summary of Financial Costs and Benefits - RSM

(TkO000)

Mill Strengthening Operating Total Total

Year Rehabilitation 2/ Mill Extension Cane Training Costs Costs Benefits 1/

Farm Service Handling

1 17,190 9,656 6,490 - - ( 103) 32,109 1,544

2 24,178 9,778 8,972 13,129 701 ( 640) 57,259 1,621

3 16,702 48 2,522 - - ( 1,619) 17,165 5,249

4 - 9 4,342 - - 12,078 16,429 33,752

5 - - 2,528 - - 12,433 14,961 36,892

6 - - - - - 11,421 11,421 36,892

7 - - - 11,081 11,081 36,892

8-20 - - - - 10,730 10,730 36,892

Note: Rate of Return 19%.

1/ Sugar valued at weighted average price of Tk 13,400, Tk 13,668 and Tk 13,936 per ton for 1983/84, 1984/85 x

and 1985/86 and Tk 14,204 per ton thereafter; Molasses at Tk 1,980 per ton; and Bagasse Tk 15 per ton.

2/ Including technical assistance. 4 H

BANGLADESH

SUGAR REHABILITATION AND INTENSIFICATION PROJECT

Summary of Financial Costs and Benefits - RJSM

(TkO000)

Mill Strengthening Operating Total TotalYear Rehabilitation 2/ Extension Cane Training Costs Costs Benefits 1/

Service Handling

1 20,724 6,097 - - ( 332) 25,365 ( 593)

2 33,224 7,262 13,129 701 84 53,741 656

3 20,088 2,922 - - 41,519 64,041 78,761

4 - 4,230 - - 37,376 41,606 72,139

5 - - - 40,085 40,085 79,038

6 - - - - 45,202 45,202 89,022 C

7 - - - 45,202 45,202 89,022

8-20 - - - 45,202 45,202 89,022

Note: Rate of Return 37%0.

1/ Sugar valued at weighted average price of Tk 13,400, Tk 13,668 and Tk 13,936 per ton for 1983/84, 1984/85and 1985/86 and Tk 14,204 per ton thereafter; Molasses at Tk 1,980 per ton; and Bagasse Tk 15 per ton.

2/ Including technical assistance.

Ln|Hh-4

BANGLADESH

SUGAR REIABILITATION AND INTENSIFICATION PROJECT

Summary of Economic Costs and Benefits

(Tk -O00)

Mill Mill Strengthening Oane Technical Operating Total Incremental Paddy Total

Year Rehabili- Farm Extension Handling 'Roads 1/ Training Assistance Cost Cost Benefits 2/ and Cane Benefits

tation Service Benefits

1 47,385 15,647 11,693 - 3,152 3,363 7,482 1,373 87,348 2,137 - 2,173

2 78,850 21,167 17,656 37,374 5,758 4,104 7,674 5,728 166,885 6,992 ( 1,491) 5,501

3 47,961 8,543 6,517 - 3,152 2,064 7,176 12,408 87,821 107,433 ( 3,858) 1(03,575

4 - 16 8,475 - - - 5,148 11,544 25,783 112,182 139 112,321

5 - - 2,570 - - - - 9,(10 11,580 121,678 448 1'2,126

6 - - - 4,368 4,368 166,457 27,199 193,656

7 - - - - - - - 3,457 3,457 166,589 27,128 193,717

8 - - - - - - 3,252 3,252 166,683 27,176 193,859

9-20 - - - - - 2,937 ',937 166,683 27,176 193,859

Note: Rate of Retirni 38%.

1/ 30% of the cost attributable to this project.

2/ Representing value of sugar priced at Tk 10,538 per ton in 1983 and 1984 and Tk 14,609 per ton thereafter;

Molasses at Tk 2,850 per ton and Bagasse at Tk 12.3 per ton. c

BANGLADESH

SUGAR REHABILITATION AND INTENSIFICATION PROJECT

Summary of Economic Costs and Benefits - TSM

(Tk'OOO)

Year Mill Strengthening Technical Operating Total Total

Rehabi- Mill Extension Cane Roads 1/ Training Assistance Cost Costs Benefitslitation Farm Service Handling

1 10,843 7,028 3,535 - 966 1,121 2,494 - 25,987 1,396

2 19,032 12,418 6,052 12,458 1,922 1,368 2,558 ( 252) 55,556 5,346

3 10,950 8,513 1,437 - 966 688 2,392 (5,125) 19,821 28,234

4 - 8 -342 - - 1,916 (6,597) ( 4,331) 6,293 r

5 - - 171 - _ _ - (8,274) ( 8,103) 7,666

6 - - - - - - - (9,242) ( 9,242) 8,271

7 - - - - - - - (9,488) ( 9,488) 8,403

8 - - - - - - - (9,640) ( 9,640) 8,497

9-20 - - - - - - - (9,955) ( 9,955) 8,497

Note: Rate of Return - 18%.

1/ 30% road cost. <

aTD

C

BANGLADESH

SUGAR REHABILITATION AND INTENSIFICATION PROJECT

Summary of Economic Costs and Benefits - RSM

(Tk-OOO)

Year Mill Strenghtening Operating Technical Total TotalRehabi- Mill Extension Cane Roads 1/ Training Cost Assistance Costs Benefitslitation Farm Service Handling

1 16,445 8,619 3,574 - 958 1,121 (1,158) 2,494 32,053 1,265

2 26,165 8,749 6,405 12,458 1,916 1,368 (2,724) 2,558 56,895 1.082

3 16,756 30 1,871 - 958 688 (4,409) 2,392 18,286 4,599

4 - 8 4,120 - - - 2,749 1,916 8,793 34,097

5 - - 2,399 - - - 1,892 - 4,291 36,851

6 - - - - - - 357 - 357 37,048

7 - - - - - - 130 - 130 37,048

8-20 - - - - - - ( 77) - ( 77) 37,048

Note: Rate of Return 36%

1/ 30% of road cost.

00 | H

BANGLADESH

SUGAR REHABILITATION AND INTENSIFICATION PROJECT

Summary of Economic Costs and Benefits - RJSM

(Tk'000)

Mill Strengthening Technical Operating Total TotalYear Rehabi- Extension Cane Roads 1/ Training Assistance Costs Costs Benefits

litation Service Handling

1 20,097 4,584 - 1,228 1,121 2,494 ( 215) 29,508 ( 488)

2 33,653 5,199 12,458 1,950 1,368 2,558 ( 2,752) 54,434 564

3 20,255 2,323 - 1,228 688 2,392 21,942 48,828 74,600

4 - 4,013 - - - 1,916 15,392 21,321 71,792

5 - - 13,253 18,253 77,161

6-20 - - - - - 12,815 12,815 121,138

Note: Rate of Return 55%.

1/ 30% of road cost.

-115-

ANNEX IX

BANGLADESH

SUGAR REHABILITATION AND INTENSIFICATION PROJECT

Selected Documents and Data Available in Project File

Document 1. Agricultural Aspects

Document 2. Mills

Document 3. Cost Estimates

Table 1. Summary of Project Cost - RJSMTable 2. Summary of Project Cost - RSMTable 3. Summary of Project Cost - TSM

Document 4. Financial Statements

Table 1. BSFIC - Balance SheetTable 2. BSFIC Mills Consolidated Income StatementTable 3. BSFIC Mills Consolidated Balance Sheet

Document 5. Gur vs. Sugar

ORGANIZATION OF BANGLADESH SUGAR FOOD INDUSTRIES CORPORATION

(AS IN OCTOBER 1981)

BOAFRD Ccarmnc

DIRECTORS

1 Director Director r Directr,

Director Director I~~~~~~~~~~~~~~~~~~~~~~~~Plannina acd (Production and (Cane Developament

(Fln ,ncel IMarketing) ~~~~~~~~~~~~~~~ ~~~~~~Dacela nmTeotl Engineering) and Resiearch)

|Controller of |fn Che Sertr .Ii X H

| Accounts Deecprt ChmI I

lf i _ f II I I

. I ( -

Wmreiid BaIk 23530

BANGLADESH SUGAR REHABILITATION AND INTENSIFICATION PROJECT

MILLS

EXISTING ORGANIZATION

DCMEL/ DC!- OCMD/M o.81 DCAtI-/ DCA'4

-/

S| AG"r 1 A

Am-t./ A-i.w/l 31 ChCntiD 0 2 D Afuof. AncreA-CheAg-

Asest. Much AneH r]gn---;rOs;t;;thSef.vl A t

AC CD04nier h/A C9 .AC1/A . 9 Ag,.c. A . -' Arc

F eldisra Sl- S

1/ Depoty Chief Cone Develop-ent Officer 9/ Ass/stunt Medical Officer2t Cane De-lopten Officer It Deputy Chief Administrat-e Officer

31 Cane Procurement Officer I1 Seeinr Administration Officer4/ ASsistant Cane Developmen Officer 12/ Assistnr Administrutice Officer

5/ Assistant Can- Procurement Officer 13_ Send Inspection Officer

6/ Cane Devnlr. meef Assistant 14/ Deputy Controller Acciunts7/ Deputy Chief Mechanical Engineer 15/ Assistant Accounts Officer8I Deputy Chief Medical Officer 16/ Assistant Plantation Office9a Assistant Medical Office-10/ DOputy Chief Adm

*New Department establshed in 1980 World flak 235

BANGLADESH SUGAR REHABILITATION AND INTENSIFICATION PROJECTMILLS

PROPOSED AGRICULTURAL DEPARTMENT ORGANIZATION

General Manager

Agricultural Manager

|Outgrower Manager | | Farm Manager l

Workshop Manager Agronomist ar

l | ~~~~~~~~~~~ACDO Credit l

. .~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~-

Storekeeper Workshop Foreman Asst. AgronomistSpare Parts osopWorkshop Foreman]

Mechanic CCIC and DA Farm F Mechanic/WelderElectrician | DA Agronomy CDA CDA Irrigation Electrician

Artisans B

World Bank - 23529

-119-

BANGLADESH SUGAR REHABILITATION AND INTENSIFICATION PROJECTMI LLS

PROPOSED FACTORY ORGANIZATION

General Manager

Factory Manager

Engineering Department Production Department Laboratory

Chief Engineer Chief Chemist Chemist

Mechanical Engineer _

Shift Engineer Shif C :mi Liboratory Analyst

Mill House Juice Station f Laboratory Chemist

_E~Boiling House _ Pan Station Records Chemist

Boiler Centrifugal Station

_ Workshop | _ Bagging Station

Electrical Engineer NOTES:

A. Added Factory ManagerB. Engineering Department

Asstl Eect. !gn ~r 1 . Asst. Mech. Engineers designated Shift Engineers.g Asst. Elect. Engineer r 2. Electrical Engineer responsible for maintenance of instruments.

C. Production Department1. Deleted Chemist.

Povver Generation 2. Asst. Chemists designated Shift Chemists.Power Generation r D. Laboratory

1. Deleted Asst. Chemist.

Elect. Workshop

World Bank - 23528

=819. 96. t \ r IBRD 16137/\t > <890 90° BANGLADESH 92° DECEMBER 1981

Panchogarh\ UGAR REHABILITATION AND INTENSIFICATION PROJECTLocation of Sugar Mills and Growing Area

Q ,<1 {4 ; \ t , \ St1 SUGAR MILLS:

26-i'l N~~r. k Existing 26-

0 Under Construction

Concentration of Sugar Growing Area® g6 Sugar Research Institute

Setobganj Dm1 U RoadsRailwaysRivers-- AirportsDistrict BoundariesInternational Boundaries

25- Jiuha ~w n ~ j .~Chhatak

K Ra:shohi TangreaiI

24'oydebpur 0 At Md.''ur

Brahmanbaria ~~~~~~~~24--

Meherp >9 a<2u&4J ;2

Dorsanas MDaro Chrt Daud*kan

L.3 , S;. 'W> 'K Fe' 2

LAD \S- 4- A COX'S Bazarr . j

1NDiA .< : - X tz . o ~ ~~ ~ ~ ~ ~~ 25 50 7L; Miles I

.. p 0 21°0 80 120 Kilomeiers Co

. 0t dP Tdmn/his map has been prepared br the World BJankc s staff esc!os;rely for the convenience 2°-i. of thre readers of the report to Which itiS attached. The dese,noations osad and the

\~~~~~~~~~~~~~~~~~~bo riarhirses alshge We on thismo dor not tsOif,on the part of the World Bank and its

S \RI LANKA .. aceptancOeofsuch bOloudariest. o of an te/tr or .5noseet

_ .1 93C 9P° 92°

IBRD 1613888° 89° BANGLADESH 90° DECEMBER 1981

This map has been prepard by theWorld Bank's staff e,nclrsely for SUGAR REHABILITATION AND INTENSIFICATION PROJECTthe con venlene of the readers of jE the report to whrch It ;s attached. rojeCt AreaThe den-mmat,ons used and the r Areabo,ndo,ne sho,,,n us this map J Sugo Mill Rehabilitation SOIL TYPES.do sot imply, on the pa,t of the 4 ______World Bank and Its affiliates,any 0 Existing Sugar MlIls O ld Piedmont Himalayan (TSM)judgment on the legal statos of (® Sugar Mill Research Institute Barind Tract (ParN of RSM)any terr,tory or any endorsement r Z : 2 t flood lgo a ... pt-a of-uhburais _( f 9 \ Prolect Zones :::ITista Flood Picin (RSMI

OrS a.unetance of neck baundaries. Roads @ G anges Flood Plain (RJSM)Railways District Boundaries

< %Risers Internationil Boundaries

[26s * Niphomar\L; 260-

G bndha, ..

T 0 20 40 60 80

89'ow sb -90, ......N \<i449 > < \Sirogizeijyy (~~~~~~.. ... ...

t z 4:; (0AN-AL~~~~~~~~~~~~~~~........

, ~~~~~~~~~~~~~~~~~~~.. 0.... 89 9.°