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Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No.8189
PROJECT COMPLETION REPORT
BANGLADESH
CHITTAGONG UREA FERTILIZER PROJECT(CREDIT 1204-BD)
NOVEMBER 20, 1989
Industry, Trade and Finance DivisionTechnical DepartmentAsia Region
This document has a restricted distribution and may be used by recipients only in the perfonnance oftheir officiil duties. Its contents may not otherwise be disclosed without World Bank authorization.
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CURRENCY EQUIVALENTS
Currency Unit Bangladesh taka (Tk)Appraisal Year US$1 - Tk 16.0Investment Period US$1 - Tk 24.6-32.2Project Completion Year US$1 - Tk 32.2
ABBREVIATIONS AND ACRONYMS
ADB - Asian Development BankBADC - Bangladesh Agricultural Development CorporationBCIC - Bangladesh Chemical Industries CorporationCUFL - Chittagong Urea Fertilizer Ltd.GOB - Government of BangladeshMscft - Thousand standard cub4e feetMT - Metric TonTEC - Toyo rngineering Corporationtpd - Tons per daytpy - Tons per yearTSP - Triple superphosphateTSP Complex - Triple Superphosphate Complex, Ltd.
FISCAL YEAR
July 1 - June 30
FOR OMFCA4L USE ONLYTHE WORLD BANK
Washington. DC 20433USA.
Ofict oi 01fectGeCraiOpoatuw E[ah"llow
November 20, 19&9
MEKORANDIJM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT
SUBJECT: Project Completion Report on BangladeshChittagong Urea Fertilizer Project (Cr. 1204-BD)
Attached, for infonmation, is a copy of a repgrt entitled"Project Completion Report on Bangladesh - Chittagong Urea FertilizerProject (Cr. 1204-BD)" prepared by the Asia Regional Office. No audit ofthis project has been made by the Operations Evaluation Department at thistime.
Yves Rovanibv Ram K. Chopra
Attachment
This document has a restricted distribution and may be used by recipients only in the performancoof their official duties. Its contents may not otherwise be disclosd without World Bank authorintion.
FOR OFFICIL USE ONLY
PROJECT COMPLETION REPORT
BANGLADESH
CHITTAGONG UREA FERTILIZER PROJECT(CREDIT 1204-BD)
TABLE OF CONTENTS
Page No.
PREFACE .................................................... iBASIC DATA SHEET ..................................................... iiiEVALUATION SUMMARY ............ ................. ...................... v
I. INTRODUCTION . ................................................ 1
II. PROJECT BACKGROUND ........................................... 1
A. Project Identification, Preparation, Appraisal andCredit Effectiveness ................................... 1
B. Project Description and Objectives ....................... 2
III. PROJECT IMPLEMENTATION AND MANAGEMENT ........................ 2
A. Achievement of Project Objectives ........................ 2B. Ownership and Management ................................. 3C. Manpower Development and Training ............... ......... 3D. Performance of Consultants and Engineering Firms .... ..... 3E. Procurement and Performance of Suppliers . ................. 3F. Project Implementation ................................... 4G. Project Costs, Financing and Disbursements .... ........... 4
IV. OPERATING PERFO1MANCE ........................................ 7
A. Production ......... ........................... . 7B. Marketing ........................................ 8
V. FINANCIAL PERFORMANCE ....... ......................... ... ........ 9
VI. ECONOMIC PERFORMANCE ......................................... 10
A. Economic Rate of Return .................................. 10B. Capital Restructuring .................................... 11
VII. IDA ROLE ..................................................... 13
VIII. CONCLUSIONS AND LESSONS LEARNED .............................. 14
Leesons Learned ................ . ..... ..................... 14
This document has a restricted distribution and may be used by recipients only in the performanceof their official duties. Its contents may not otherwise be disclosed without World Bank authorization.
TABLE OF CONTENTS (cont'd.)
Page No.
ANNEXES
1. Disbursement Schedule ........... ............................. 152. Balance Sheet for CUFL, 1986187-1987/88 ...................... 163-1. Assumptions for Economic Rate of Return ...................... 173-2. Cost and Benefit Stream for Economic Rate of Return .......... 184. Appraisal Estimates and Actual Project Cost . ................. 19S. IDA-financed Procurement of Foreign Goods and Services ....... 21
ATTACHMENTS
I. Asian Development Bank: Project Completion Report(Technical Report) ... . ......................................... 23
II. Comments Received from the Government ............ 11............ iIII. Comments Received from the Asian Development Bank ..... ....... 129
PROJECT COMPLETION REPORT
BANGLADESH
CHITTAGONG UREA FERTILIZER PROJECT(CREDIT 1204-BD)
PREFACE
1. IDA approved a credit of US$15.0 million equivalent for the Chitta-gong Urea Fertilizer Project on February 2, 1982, which became effective onJanuary 19, 1983. Negotiations were held at the Asian Development Bano(ADB) offices during September 29-October 1, 1981. The project was co-financed by a number of international financial institutions with ADB takingthe lead role. The Credit was closed, as scheduled, on December 31, 1986,and was fully disbursed.
2. Project identification and appraisal were carried out by ADBstarting in 1975, based on an engineering credit that ADB made to Bangladeshin 1976. The main objective of the project was to increase Bangladesh'sarea production capacity, both for domestic and export supply.
3. This Project Completion Report (PCR) is based on the findings of anASTIF mission to Bangladesh in October/November 1988 and the technical PCRprepared by ADB (Attachment I). Information was obtained from the Borrower,but a formal PCR was not prepared by them. ADB plans to prepare its finalPCR in late 1989. Comments received from the Government and from ADB on anearlier draft of this PCR have been incorporated into the final text of thePCR and are reproduced as Attachments II and III, respectively.
4. The project has been reviewed by OED but will not be subject to afull audit at this stage.
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PROJECT COMPLETION REPORT
BANGLADESH
CHITTAGONG UREA FERTILIZER PROJECT(CREDIT 1204-BD)
BASIC DATA SHEET
LOAN POSMON(Amounts In USS Millon)
As of Sept. 80 1989Original Dlubura.d Concelled Repnid Outatndina
Credit 1204-B0 16.0 15.0 0.0 0.0 16.0
CUMULATIVE ESTIMATED AND ACTUAL DIS8URSEMENTS(Amounts In US$ Millon)
FY88 FY84 FY85 FY86 FY87
Appraisal Estimat (US$ U) 8.0 18.0 16.0 15.0 16.0Actua l (USS U) - - - 10.8 16.0
Actual as U of Appralsl () 0.0 0.0 0.0 72.0 100.0Oate of Final Disbursement. June 22, 1987
PROJECT DATES
ApprisalEstimate Actual
Neotiations n.e. 10/01/81Board Approval na. 02/02/82Signing na. 02/10/82Effectivense n.. 01/19/68Credit Closlng 12/81/86 12/81/86Completion of Tests and Commissioning 11/6S 01/88Completlon Time (months) 6a 79Time Overrun (X) 49
(months) 26Date of Start-up of Operations 10/865 10/87Total Project Cost OUSn") 487.5 526.8Cost Overrun (USM) 67.8Economic Rate of Return (1) 19 6
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STAFF INPUTS(staff wko)
Pr_-Tosk FY79 FY79 FY60 FY81 FY82 FY68 FY84 FY85 FY89 FY87 FY88 FY89 Total
LOP 0.9 0.4 0.4 0.2 0.9 - - - - - - - 8.8LENP 1.9 31.4 13.7 8.3 1.1 - - - - - - - 61.9LENA - - - 0.1 0.1 - - - - - - - 0.2LENN - - - - 1.8 - - - - - - - 1.8SPN - - - - 6. 1.5 3.0 8.7 6.2 8.6 0.4 0.2 28.0PCR - - - - - - - - - - - 7.0 7.0PAD - - - - 1.7 _ - - 0.1 1.8
Total 2.6 81.8 14.1 4.1 17.1 1.6 8.0 8.7 6.2 8.6 0.4 7.2 99.6
MISSION DATA.
No. of No. of Staff Date ofMonthiYear Weks Persons Weeks Report
Prepration 05/79 1.4 2 2.8 06/79Supervision I 03/82 1.2 1 1.2 04/82Supervision i 05/86 1.7 3 6.1 07/&6COmptetion 11/88 1.0 2 2.0 0/89
OTHER PROJECT DATA
Borrower People's Republic of BangladeshBeneficiary: Chittagong Urea Fertilizer Ltd. (CUFL)
*Appralsal and supervision were handlied primarily by ADB.
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PROJECT COMPLETION REPORT
BANGLADESH
CHITTAGONG UREA FERTILIZER PROJECT(CREDIT 1204-BD)
EVALUATION SUMMARY
Introduction
1. The project aimed at increasing the domestic supply of ureafertilizer, based on the country's comparative advantage of low-cost naturalgas reserves. Project identification, preparation and appraisal were carriedout by ADB during 1976-81. Also, ADB was the lead financial institution forthe project, with IDA one of seven co-f. inciers. The IDA credit, whichcontributed 4% of the foreign exchange cost of the project, was administeredby ADB. This arrangement worked well and lessened the complexity ofprocurement under multiple sources of financing (paras. 1.1, 2.1, 2.2). TheChittagong Urea Fertilizer Limited (CUFL) company, the project sponsor, is awholly government-owned company operating under the management of BangladeshChemical Industrial Corporation (BCIC).
Objectives
2. The project consisted of a green field integrated ammonia-ureaplant with a capacity of 560,000 tons a year of urea, based on indigenousnatural gas as feedstock and fuel. The project would achieve self-sufficiencyin nitrogen fertilizer in the country and export the surplus urea (para. 2.3).
Implementation Experience
3. Project execution was delayed 26 months due to time required tosign the initial contracts with the general contractor. The difficulty incoordinating seven external co-financiers also contributed to the longimplementation period. The project also experienced a net 12.4% cost overrun,primarily as a result of changes in currency values and over design by thecontractor (paras. 3.6-3.8).
Results
4. The project, which started commercial operation on July 1, 1988,is technically a success, and operated at about 70% capacity during July 1988-May 1989 (including 2 months of no production). Substantially all of thisoutput was exported (paras. 4.1, 5.2). However, in economic terms the projectdid not achieve satisfactory results. The realized economic rate of return isabout 6% compared to the appraisal estimate of 19%. This difference is due tolower than forecast urea prices and the high capital costs (para. 6.1).
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Overall AssAssment and Lessons
5. The project cost of about US$525 million compares with currentquotations of about US$350-375 million for the same capacity. Furthermore,the company is undercapitalized, has experienced losses, and is in need offinancial restructuring (paras. 6.2, 6.3). At current projected world prices,the project cannot be viewed as successful, albeit in part for reasons thatcould not have been fereseen (para. 8.1).
6. IDA played an important role in ensuring the supply of gas for theproject under the Bakhrabad Gas Development Project (Credit 1091-BD). Bothprojects have been implemented in a coordinated manner, once impediments tosigning the initial contracts were overcome (para. 7.1).
7. The project experience reveals that project preparation wasinadequate, capital costs were consistently high, urea price projections werenot realized, greater competition in contractor selection would probably haveresulted in lower capital costs, and multiplicity of co-financiers contributedto project delay (paras. 8.3-8.5).
PROJECT COMPLETION REPORT
BANGLADESH
CHITTAGONG UREA FEPTILIZER PROJECT(CREDIT 1204-BD)
I. INTRODUCTION
1.1 Agriculture has remained the mainstay of Bangladesh's economy,accounting for about 50% of the gross domestic product and providingemployment to about 60% of the work force. The Government of Bangladesh (GOB)gives high priority to increasing agricultural production to achieve food-grain self-sufficiency. Fertilizer use began to increase significantly in themiddle of the 1970s, and since then total use has increased at an annualgrowth rate of over 9%. In 1987/88, total use reached 1.5 million metric tons(MT), with urea corstituting 68% of total products, triple superphosphate(TSP) accounting for 26%, and muriate of potash amounting to 6%. With thesuccessful discovery of natural gas supplies, domestic fertilizer productionwas begun in 1961 with the Fenchuganj Urea Factory, followed by Gharasal(1970), Ashuganj (1984), Pol&sh (1986), and just recently the Chittagong Urea(1988). In addition, Chittagong TSP came into production in 1974. Thesefactories, owned by Bangladesh Chemical Industries Corporation (BCIC), have acombined production iapacity of about 1.8 million tons. Domestic productionhas doubled in the last five years, mainly through additional urea capacitiesat Ashunganj and Polash and through improvements in output from existingfactories attributable to the completion of the Rehabilitation Projectfinanced by IDA (Credit 1023-BD). Total production of fertilizers in 1987/88was about 1.4 million tons, with 1.3 million tons of urea and 0.1 million tonsof TSP. 3angladesh has historically had a fertilizer supply gap and has hadto rely on imports for a substantial share of total fertilizer consumption.When the Chittagong urea facility is fully operational, domestic ureaproduction will be expected to exceed 1.32 million MT. Since this increasehas resulted in urea production in excess of demand, Bangladesh has thecapacity for substantial urea exports. In 1987/88, urea exports were223,000 NT (17% of production) and earned about US$24 million in foreignexchange.
II. PROJECT BACKGROUND
A. Pro1ect Identification. Preparation. Appraisal and Credit Effectiveness
2.1 Project identification, preparation and appraisal were conducted byADB. In November 1976, ADB provided Bangladesh with an engineering loan ofUS$2.5 million equivalent to carry out the feasibility study and detailedengineering for (a) the development of the Bakhrabad gas field andtransmission line to supply gas to end-users in Chittagong, and (b) anammonia-urea complex that would use part of the gas from the gas field.
Following completion of the feasibility study prepared by UNICO, a Japaneseconsulting firm, in late 1979; the Government requested IDA to considerfinancing and mobilizing and coordinating other donor assistance for the gasdevelopment and transmission project and also ADB to perform a similar rolefor the ammonia-urea complex (the project). IDA approved the Bakhrabad GasDevelopment project in December 1980 (Credit 1091-BD) with cofinancing fromOPEC and OECF.
2.2 As the lead financial institution in promoting and supervising theproject, ADB conducted the project appraisal in October 1981. On February 2,1982, based on ADB's appraisal, IDA approved a credit of SDR 12.8 million(equivalent to US$15 million) to the People's Republic of Bangladesh (GOB).IDA was one of seven co-financiers that participated in financing the foreigncurrency cost of the project of US$290 million equivalent estimated at thetime of appraisal. The proceeds of the IDA credit were to be relent by GOB toCUFL for 15 years including 5 years of grace at 12% p.a. interest with theforeign exchange risk to be borne by CUFL. The credit became effective onJanuary 19, 1983, 11 months after IDA Board approval.
B. Project DescriRtion and Objectives
2.3 The project consisted of an integrated ammonia/urea fertilizer plantwith a design capacity of 1,700 tpd of prilled urea, based on indigenousnatural gas as feedstock and fuel. On the basis of 330 on-stream days peryear, the rated annual production capacity of the plant is 561,000 tons ofurea. The objectives of the project were to produce urea fertilizer usingindigenous natural gas to enable the country to achieve self-sufficiency innitroger. fertilizer and to export the surplus urea. The net result would beforeign exchange savings and earnings through import substitution and exportof surplus urea.
III. PROJECT IMPLEMENTATION AND MANAGEMENT
A. Achievement of Project Obiectives
3.1 The project was placed in commercial production on July 1, 1988.During the first 11 months of commercial operation (July 1988-May 1989), theplant operated at an average capacity utilization of about 70% (including 2months of no production) and has demonstrated that it is capable of sustainedproduction at 90% capacity utilization. Because of low demand of urea in thelocal market and increased supply of urea from existing plants, a substantialquantity of urea output is being exported. About US$20 million of foreignexchange was earned in the fiscal year 1987/88. The project has, therefore,attained the physical objective of the country's achieving self-sufficiency inurea and export of the surplus to earn foreign exchange. The basic objectiveof an economically viable project was not achieved due to time and costoverruns and a lower international urea price than anticipated.
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B. Ownershin and Managemnt
3.2 The CUFL, a fully government-owned company, was established inNovember 1980 to implement and subsequently operate the project. CUFL hasbeen functioning as a separate company since it was established. The Board ofCUFL consists of the chairman of BCIC, as Chairman, and the Engineering andCommercial Directors of BCIC and representatives of the Ministries ofIndustries, Finance, Planning Commission and the Managing Director of CUFL.TEC of Japan as the General Contractor was responsible for overall projectimplementation including engineering, equipment and material procurement,construction and commissioning mana,4 ement and training for CUFL staff. TEC isalso providing services to assist CUFL in the proper management and operationof the plant for the initial period of at least three years after completionof plant construction.
C. Manpower Development and Training
3.3 CUFL employed about 880 persons as of April 1988 and will increaseits total staff by mid-1989 to 1,008, including 48 managerial officers, 223supervisory officer, 351 supporting staff and 386 operators and skilledworkers. The total staffing compares well with the project appraisal estimateof 1,300. The key personnel were drawn mainly from BCIC enterprises,particularly from the existing fertilizer plants, and other govermentorganizations. Recognizing the limited technical base in Bangladesh, theproject preparation had placed considerable emphasis on training. Acomprehensive training program was prepared by CUFL in close cooperation withTEC. A total of 74 personnel, administrative officers, engineers andtechnical staff, were given training in the office of TEC in Japan and thesimilar operating plant in Indonesia for 75 man-months and 150 man-months,respectively. A total of 583 CUFL personnel were given on-the-job, in-planttraining in the operating fertilizer plants in Bangladesh of comparable size.
D. Performance of Consultants and Engineering Firms
3.4 The initial project preparation work was carried out by UNICO, aJapanese consulting firm, under ADB's engineering loan. UNICO also providedtechnical advisory services as Technical Advisor to assist CUFL/BCIC for theimplementation of the project. The consultants carried out their taskeffectively and worked closely with the CUFL/BCIC technical manager. TEC wasresponsible for overall engineering services, except for some detailedengineering which was provided by package contractors under the supervision ofTEC. The ammonia/urea process and the offsite facilities were designed andengineered by TEC based on the M.W. Kellogg ammonia process technology and theMitsui-Toatsu urea process. Both processes are efficient, well-provendesigns.
E. Procurement and Performance of Suppliers
3.5 The overall responsibility for project procurement rested with TEC.The technical bid documents prepared by TEC were reviewId and accepted byCUFL's Technical Advisor before dispatch to the respective cofinanciers forfinal approval. All the IDA-financed supplies and services were procured
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under management of the ADB following contracting and procurement proceduresacceptable IDA. The performance of all suppliers was satisfactory.
F. Project Implementation
3.6 The plant was mechanically completed in October 1987 and followingsuccessful commissioning the plant was accepted by CUFL in February 1988. Theproject implementation during the preparation stage was 26 months behind theoriginal schedule envisaged at the time of the appraisal. But the generalcontract was not signed between CUFL and TEC until November 1984. The projectwas completed in 37 months, a month ahead of the contractual schedule, butwith a net delay of 27 months due primarily to the unexpected time required tocomplete contractual arrangements. The multiplicitv of co-financiers alsocontributed to the lengthy implementation period. The original schedule wasfar too optimistic, but these delays could not have been foreseen at the timeof appraisal.
Appraisalestimate Actual Delay
( (Months) -------------
Bid preparation, bidding forgeneral contract and mobil-ization of general contractor 15 42 27
Completion of project 38 37 .1
Total 53 79 26
G. Project Costs. Financing and Disbursements
3.7 Proiect Costs. According to ADB, the actual cost of the project asof September 1989 was US$525.3 million equivalent comprising a foreignexchange cost of US$343.7 million equivalent and a local currency cost ofUS$181.6 million equivalent. The comparison of the project cost estimates atthe time of appraisal and reappraisal and the actual project cost aresummarized below. Due to a wide fluctuation of exchange rates, particularlyappreciation of the Japanese yen, during the two-year delay in the start ofthe project and subsequent years of project implementation, ADB reappraisedthe project cost in October 1986. At the time of reappraisal, the costoverrun and the decline in international urea prices were already known.However, virtually all contracts had been committed. The main purpose ofreappraisal was to confirm that the project should proceed and to provide thebasis for additional financing required. During this time, IDA declined toprovide additional financing.
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Summary of Progect Cost(US$ million)
Appraisal Reappraisalestimate estimate Actual Cost I
(Nov. 1981) (Oct. 1986) cost overrun increase(A) (B) (C) (C-A) [(C-A)/A]
Foreign cost 289.98 354.13 343.71 53.73 18.5
Local cost 177.56 223.69 181.63 4.07 2.2
Total cost 467.54 577.82 525.35 57.81 12.4
US$ cost as given by ADB in September 1989
(Tk million)
Foreign cost 4,640 10,751 11,363 6,723 144.9
Local cost 2,841 6,791 4,222 1,381 48.6
Total cost 7.481/a 17.542/b 15.585/c 8.104 108.3
Taka costs are CUFL data as of July 1988
La Exchange rate of US$1 - Tk 16 is used to convert the project costestimate at appraisal into taka equivalent.
jb Exchange rate of US$1 - Tk 30.36 as of May 1986 is used to convertproject cost estimate at reappraisal into taka equivalent.
NOTE: Discrepancy of the total project cost, US$29 million, between ADB'sestimate and the official figure of the Government is due to difference in theway exchange rate calculations were made and different time of estimates.
There was a foreign exchange cost overrun of USF53.7 million (18.5%) ascompared with the cost estimate at the time of appraisal. Most dominantfactor to the cost overrun is the appreciation of currencies, particularly theJapanese yen, in which about 71% of contracts awarded were denominated.l/According to ADB's analysis, with foreign exchange rates prevailing during the
./ Average exchange rate of Japanese yen for the US dollar was V 239 (1983),V 237 (1984), Y 240 (1985), V 169 (1986), V 145 (1987), and V 126 (up toJune 1988).
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time of bid opening (1985) of most of the contracts for equipment, materialsand services, the foreign exchange cost would have been approximately$259 million which is within the original cost estimates. Despite aconsiderable local cost overrun in terms of local currency reachingTk 1.4 billion (49%), local currency devaluation throughout the implementationperiod of the project resulted only in a local cost overrun in terms of USdollars equivalent of US$4.1 million (2.2%). Consequently, overall costoverrun of the project was about US$57.8 million (12.4%) as compared with thecost estimate at the time of appraisal. In July 1988, the Government finallyapproved the revised project cost of Tk 15,585 million (US$496 millionequivalent) including foreign exchange cost of Tk 11,363 million (US$362 mil-lion equivalent) and local cost of Tk 4,222 million (US$134 millionequivalent).
3.8 Financing Plan. The actual foreign exchange cost incurred by theseven co-financiers and GOB is summarized below.
Foreign Exchange Financing Plan
Amount Appraisal Reappraisal Actualcommitted Nov 1981 Oct 1986 cost(million) ---- (US$ million equivalent) ----
ADB $72.00 72.00 98.00 Lf 88.38SFD La SR 283.50 85.00 73.31 73.34ADFAED /b DH 85.00 25.00 23.15 23.10IsDB La ID 12.76 16.00 16.28 17.10OECF /d M 13,250.00 60.ts 105.98 Lg 108.15CIDA Le C$25.00 20.00 13.13 12.44IDA SDR 12.80 11.98 15.42 15.09Government 11.27 Zh 6.11
Total 289.98 356.54 343.71
Note: Taken from ADB data of September 1989.
,a Saudi Fund for Development.a Abu Dhabi Fund for Arab Economic Development./c Islamic Development Bank./d Overseas Economic Development Fund (Japan)./e Canadian International Development Agency./f Includes SDR 21.43 million from ADB's Special Funds resources under
Supplementary Loan.Lg Includes additional funds of $23.21 million equivalent./h Arranged through commercial banks and other sources.
The cost overrun of US$53.7 million equivalent was primarily provided bysupplementary financing from ADB (US$26 million) and OECF (US$23 million) andthat OECF financing was denominated in yen. The financing was satisfactoryand provided in a timely manner, and it did not have a significant impact onthe implementation schedule.
3.9 Disbursement. The disbursement for the IDA credit as estimated atthe time of appraisal and the actual pattern are summarized below (see alsoAnnex 1).
Cumulative IDA Credit Disbursement(US$ million)
FY83 FY84 FY85 FY86 FY87
Appraisalestimate 3.0 13.0 15.0
Actual - - - 10.8 15.0
The credit of SDR 12.8 million (US$15.0 million equivalent) was fullydisbursed by June 1987. The slow rate of disbursement was due to the 24-monthdelay in the start of project implementation (para. 3.6). For the IDAportion, Japan won the largest share (90%); the rest (10%) of the contractswere won by Singapore. For the overall project, about 71% of the contractswere won by Japan.
IV. OPERATING PERFORMANCE
A. Production
4.1 Production started on October 29, 1987, when the project wasmechanically cc ?leted and until the end of June 1988, the plant producedabout 281,000 tons of urea of "trial operation." Commercial operation of CUFLstarted at the beginning of fiscal year 1988/89 on July 1, 1988, and throughthe end of May 1989 the plant produced about 361,000 tons of urea. The plantis now operating commercially without major problems. TEC continues toprovide technical assistance, and management at CUFL is reasonably good. Theplant should have no difficulty achieving 90+% sustained capacity utilization.The monthly operation of CUFL since start-up is summarized in the table on thefollowing page.
CapacityProduction utilization
Month/year (tons) (a)
October 1987 3,520 8November 1987 20,500 44December 1987 48,760 104January 1988 18,250 39February 1988 29,390 63March 1988 50,960 109April 1988 42,170 90May 1988 32,930 70June 1988 34,510 69
Total (1987/88. 8 mos.) 280.980 75
July 1988 40,550 87August 1988 26,720 57September 1988 46,500 100October 19A8 10,180 22November 1988 0 0December 1988 280 0January 1989 47,000 101February 1989 45,480 98March 1989 49,100 105April 1989 43,000 92May 1989 52,000 112
Total (1988/89. 11 mos.) 360.800 70
B. Marketing
4.2 In the fiscal year 1987/88 CUFL shipped about 184,000 tons of urea.Because of low demand of urea in local market and increased supply of ureafrom existing plants, almost all urea, about 183,000 tons, was exported toneighboring countries such as Nepal, Sri Lanka and China and earned aboutUS$20 million of foreign exchange. CUFL estimated that in 1988/89, themajority of urea production, 0.3 million tons out of 0.4 million tons would beexported, earning about US$50 million of foreign exchange. (Actual ureaprices in mid-1989 were lower than forecast so foreign exchange earnings mayhave been less.) GOB has recently authorized CUFL to sell urea to privatedealers at prices administered by GOB.
V. FINANCIAL PERFORMANCE
5.1 The balance sheet for CUFL as of June 30, 1988, is presented inAnnex 2, and selected data are shown in the table on the following page.
Selected Data from Balance Sheet(Tk million)
1986/87 1987/88
Current assets 704 1,854Fixed & long-term assets 12,068 14,816Current liabilities 26 126Long-term liabilities 10,254 13,112Equity 2,492 3,432
RatiosCurrent ratio 27.1:1 14.7:1Debt/equity ratio 80:20 79:21
5.2 During the first three months of commercial operation, July-September 1988, the project produced about 114,000 tons of urea and sold about107,000 tons of urea. After allowing for the interest charge of 12% p.a.,CUFL incurred a financial loss of about Tk 323 million during this period.Financial data for the whole of 1988/89 are not available, but could besomewhat worse than the performance for the first three months due to noproduction in November and December 1988 and lower urea export prices in mid-1989. The company will not be able to fulfill its financial obligations underthe subsidiary loan agreement. Thus a major financial restructuring will berequired as discussed in para. 6.2.
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Sales Revenue. July-September 1988
Total amount Per metric ton(Tk million) (Tk)
1. Sales 411 3,841Local sales 26 4,312Export sales 385 3,814
Subtotal
2. Variable costsNatural gas 115 1,012Other variable costs 29 592
Subtotal 144 1.604
3. Fixed costsDepreciation 171 1,503Other fixed costs 39 344Interest charges La 407 3,584
Subtotal 618 5.432
4. Total Cost 762 7.036
5. Change in stock and others /b (28) --
6. Profit (loss) before tax (323)
La Based on debt/equ!ty ratio of 80:20 and 12% p.a. interest./b Includes increase in stock of 6,794 tons.
VI. ECONOMIC PERFORMANCE
A. Economic Rate of Return
6.1 The assumptions used in the calculation of the economic rate ofreturn (ERR) and capital restructuring and also project costs and benefitstreams for ERR are shown in Annex 3-1 and Annex 3-2, respectively. The ERRis now calculated at 6% 2./ which is considerably lower than the appraisal
/ Since the actual expenditure schedule of the project is not available, itis assumed that the expenditure schedule takes the same pattern asenvisaged at the appraisal, but with a 26-month delay.
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estimate of 19%. The most dominant factors explaining the lower ERR are(a) lower world urea prices, currently US$166 per ton, than projected atappraisal which was US$330 per ton for export and US$360 per ton for domesticsale in 1985 constant value, and (b) capital overrun as discussed inpara. 3.7. The correct urea price is difficult to establish. The base caseERR is partially based on t'he IBRD commodity forecast of December 1988. THeactual international price in mid-1989 is well under that level but ourjudgement is that urea price will recover during 1990 and the "base case" of$166/ton urea, f.o.b. in 1989 and US$213/ton thereafter to Asian markets is agood approximation for purposes of measuring long-term project viability. ADBis using a 15-year project life (vs. 12 years by IDA) and assumes opportunityvalue of gas at Tk 30/MSCF. For purposes of this report, the ADB estimate ofopportunity value of gas is used in the base case. The 12-year life ismaintained in the base case to make it comparable with the appraisal estimate.The table below shows the results of sensitivity tests.
Sensitivity Analysis of ERRERR(%)
1. Base case 62. 10% increase in price of urea 83. 10% decrease in price of urea 44. Project with 15-year life rather than 12-year 8
As is shown later, estimated cash production cost of urea is well under thepresent international price of urea, thus the production of urea at theproject can be justified on sunk capital basis. However, with an ERR at 6%,the economic objective of the project will not be obtainad. As discussedabove, due to overestimate on demand of urea both in international anddomestic market, the projected price of urea in the appraisal report was toohigh and the estimated and realized capital costs are substantially higherthan current contractor quotations. Both of these factors account for thedecrease in the ERR, compared to appraisal estimates.
B. Capital Restructuring
6.2 CUFL has a debt/equity ratio of 80:20. Under the assumptions of(a) total project costs at TK 15,585 million, (b) annual production of 505,000tons (90% of rated capacity), and (c) depreciation provisions at 5% p.a. forplant and machinery, and 2.5% p.a. for building, the 1988/89 estimated cost ofproduction of urea before interest and return on equity is Tk 3,570 per tonwith gas at its present price of Tk 28.5/Mscf. However, the cost ofproduction of urea will increase to Tk 3,615 per ton with the proposedincrease of the natural gas price to its economic cost of Tk 30 per Mscf. Asshown below, at the Bank's projected international price of urea in 1989,US$166 (Tk 5,345) per ton in constant 1988 US dollars, the plant will meetonly 64% of its interest charge in case of the natural gas price of Tk 30/Msf.Therefore, there is a need for a major capital restructuring of the company.
- 12 -
Estimated Cost of Production of Urea. 1988/89(Tk per ton of urea)
Natural gas -riceTk 28.5/Msf Tk 30/Msf
Annual capacity (tpy) 561 561Annual production (tpy) 505 505
Variable costs 1,447 1,492Natural gas 855 900Other variable costs 592 592
Fixed cash costs 767 767Total cash costs 2,214 2,259Depreciation 1,356 1,356
Cost of production beforeinterest charges 3,570 3,615
Interest charges (12%) 3,042 3,042
Cost of production beforereturn on equity 6,612 6,657
International price of urea /L 5,345 5,345
/a Based on US$166/ton @ Tk 32.2/US$.
6.3 CUFL/BCIC has proposed to GOB that CUFL should be restructured by(a) revising debt/equity ratio to 50:50, (b) reducing the interest rate from12% to 10%, and (c) reducing return on equity capital to 7.5%.%/ With thisrestructuring, CUFL would be able to reduce unit interest cost per ton by 47%to Tk 1,609, which will be covered at the projected international price ofurea. but it will not be sufficient to meet the entire amount of interestcharge and return on equity capital. The estimated cost of production of ureasummarized below shows that in addition to the capital restructuring proposedby CUFL, a Tk 3.9 billion write-off from the present investment cost ofTk 15.6 billion may be necessary. If the face value of the present investmentcost is reduced by Tk 3.9 billion (25%) and the debt/equity ratio is improvedto 50:50, the company would be able to reduce (i) depreciation cost toTk 1,016 per ton of urea, (ii) interest charge to Tk 1,233 per ton, and (iii)required return on equity to Tk 867 per ton. Full cost of production of ureawill be thus reduced to Tk 5,375 per ton which will be about equal to theprojected international price of urea. However, the actual international ureaprice in 1989 is well below the assumed level of US$166/ton, so the actualfinancial restructuring required will likely be different.
i/ Under the IDA Subsidiary Loan Agreement, the IDA on-lending rate was12% p.a.
- 13 -
Estimated Cost of Production of Urea 1988/89. Before and After Write-off(Tk per ton of urea)
Before write-off After write-off
Total investment cost (Tk mln) 15,585 11,690Debt/equity ratio 50:50 50:50
Variable costs /a 1,492 1,492Fixed cash costs Lb 767 767
Depreciation &_ 1,356 1,016Interest charges (10%) 1,609 1,233Cost of production before returnon equity 5,224 4,508
Return on equity (7.5%) 1,157 867
Total cost of production 6,381 5,375
International price of urea 5,355 5,355
/a Based on the natural gas price of Tk 30/Mcf.Lb Based on annual production of 505 Mtpy.Lc Based on depreciation provision 5% for equipment and machinery and 2.5%
for buildings.
6.4 The Government has recently undertaken some of the required financialrestructuring. The Government has approved a debt/eauity ratio of 50:50 andan interest rate of 10% p.a. Consideration is being given to raising ex-factory prices and to convert loans of Tk 3.9 billion into equity. Thesesteps would improve the financial pcsition of CUFL considerably. Becauseinternational urea prices are fluctuating well outside the Bank forecast,there will be a need to continue assessing the financial position of thecompany.
VII. IDA ROLE
7.1 During the various stages of the project, the ADB, as the leadfinancial '-.stitution, worked closely with GOB, CUFL and their consultants inidentifying problems as they arose and in evolving practical solutions. Undera Memorandum of Agreement signed by the seven co-financiers and the ADB in1983, IDA worked closely with the ADB. In addition, the IDA credit has beenadministered by the ADB. This arrangement worked well and lessened thecomplexity of procurement under multiple sources of financing. IDA played an
- 14 -
important role to ensure the supply of natural gas for the project under theIDA-financed Bakhrabad Gas Development Project (Credit 1091-BD). Bothprojects have been implemented in a well-coordinated manner once initialcontracting delays were overcome.
VIII. CONCLUSIONS AND LESSONS LEARNED
8.1 The overall assessment of project viability is mixed. With an ERRof -- % the project is not an economic success. However, on a sunk-cost basis,the project covers more than economic cash costs. Thus, it should continue torun. Virtually all of the problems at CUFL can be traced to high capitalcosts and lower than expected urea prices. Project cost of about US$525 mil-lion compares to current estimates of about US$350-375 million for the sanecapacity.
8.2 The financial restructuring proposed by CUFL (para. 6.3) is notideal. To the degree that these figures are below the opportunity costs ofcapital, there is still a hidden subsidy that should not be forgotten.However, the alternatives would be to set higher interest charges and increasethe capital write-off, or to forego the return on equity.
Lessons Learned
8.3 The project reconfirmed several lessons that we have learned overthe past few years, i.e., (a) the elapsed time of about two years between theBoard date and start of implementation signifies that project preparation wasnot as thorough and complete as desirable, (b) capital costs estimatesprepared in the early 1980s were consistently high, and (c) the highinternational urea price forecasts made in the early 1980s were not realized.
8.4 The project was implemented by a general contractor under a cost-plus fee arrangement. It is ADB's assessment that this implementation systemcontributed to overdesign and higher costs. We concur. There could have beenmore competition in the contractor selection that may have yielded a lowercapital cost. However, this point would be impossible to prove after thefact.
8.5 In the earlier Ashuganj project, it was thought that themultiplicity of cofinanciers contributed to project delay due to varyingcredit approval and procurement systems. This was also the case in CUFL, eventhough ADB did a good job in coordinating the seven financing sources.
- 15 -
ANNEX 1
CITYAa~cURFA ET!LZKft PROJ= (CRIDT 1204.3M,
_~~~asua [ss _
Dinburs.mene achedul.(USS dllion)
FLacal ~~~~~~~~umulAgive dbusesmat-Fiscal Appraisal
year estimate Actual
1983 3.0 .
1984 13.0
1985 15.0
19862 0.53 2.24 10.8
1987 1 12.1 L1
2 12.43 13.74 15.0
- 16 -
ANNEX 2
X&lAnee Shct for CUFL(Tk aillion)
1986/87 1987/88(estimte)
Current AssetsCash ln b4.nk 212 176Accounts receivable 64 489Stocks 91 927Other 338 262
Subtotal 71 S4
Fixed and Ln-toom AssetsNot flzed assets 302 12,007Capital work in progress 8,923 160Unallocated capital overhead 2,842 2.649
Subtotal 12.068 14816
total Ass-ts 12.773 16z5671
Curent LiabilitiesAccounts payable 7 77Short-term loans 19 .5Other -- 24
Subtotal 26 126
Long-TarmLablteLong-term loans 9,051 11,170Deferred liabilities 1,202 1,941
Subtotal 10.2S4 1L.L12
Share capital 2,492 3,432
Total Caital and Liabilities lZ7IZf 1 .6671
.]
-17 - ANNEX 3-1
cHmaoN im,. ¶ILZE ppRoj=C (eunit 1204. 301
ef*ZUftiOfl for Eomi atse -of Aetur
1. Economic lti of the project is 12 years starting fros October 1987.
2. Rated productive capacity of the plant is 561,000 tons per year.Capacity utilization rate is based on 52% for 1987 (actual), 59% for1988 (actual) and 80% for 1989 and 90% for 1990 and onwards.
J. AlI prices nd costs are expressed In July-September 1988 constantvalues. Exchange rate of US$ to TK 31.5 is useod.
4. Economic price of natural gas is assumed to be TK 30 per Mscft asits long-run marginal cost in Bangladesh. Consumption unit per tonof urea is 30 Mscft.
S. All other production costs are based on ctual figures during July-September 1988 except maintenance cost, which is sassumd 3% ofequipmnt, and offaite facillty costs.
Variable costs (TK per con of urea)
Natural gas 900Packing material 368Other 224
.Total 1492
Flxed costs (Tk mllion p.a.)
Salaries and wages 31.3Overhead 78.8Insurance 28.3Maintenance 249.0
Toals IUA6. Economic price of urea is based on the Bank's projected international
price of urea. FOB price of urea per ton (bagged Europe in constant1988 US dollars) is projected to change from the 1988 level of US$148to US$166 in 1989, US$213 in 1990 and US$198 in 1995. However, theERR is based on US$213 prices continuing from 1990-1999.
7. Slnce actual expenditure schedule of the project is not avallable.expendLture schedale is assumed to take the same pattern as envisaged atthe appraisal. Expendlture is assumed to start since avard of generalcontract in 1984.
8. Vorkiaf cepitel (Tk 334 dillion) Is based on (a) one month of fixed cashcost. (b) am mouth of variable cost, and (c) one month of salesrecelvable.
- 18 - ANNEX 3-2
DANCSH
CR
Appraisal Estimates and Actual Project Cost.($ million)
Appraisal (1981 a2 Appraisal (1986) o/ Actual Cost Overrun (Ihderrur)ste ~~~~~~........................... ........................... . .......... ........................... ................................................ ....................................................................Appraisal 01911) Approisal (1986)Local foreign Total tocal foeign Total tocal foreign lotat tocal foreign Total Local foreign total
1. Lad Acqtuisition 0.76 0.76 0.67 0.00 0.67 0.57 0.57 *0.19 0.00 -0.19 -0.10 0.00 -0.102. Sit* Preparatlon 12.47 12.59 2S.06 16.25 1S.6 31.89 6.56 1O.99 23.55 -S.91 4.40 -1.51 -9.69 1.35 -0.343. Process Equipment 0 76.74 76.74 2.33 112.77 115.10 2.20 114.25 116.44 2.20 31.S1 39.70 -0.13 1.48 1.SS4. Catelyst. CheaIcals 0.00 0.00 0.00 0.00a Spare Parts 12.82 12.82 0.47 4.06 4.53 0.25 3.17 3.41 0.25 -9.65 -9.41 -0.22 -0.89 -1.12S. Uttiit I offsite 0.0 0.00 0.00 0.00facilities 1.42 48.49 49.91 8.06 75.41 83.47 S.17 80.36 85.53 3.75 31.87 35.62 -2.89 4.95 2.066. Nlterib l Sawdling 0.00 0.00 0.00 0.00Eqipent 16.37 16.37 1.45 21.62 23.07 0.49 23.70 24.19 0.49 7.33 7.82 -0.96 2.09 1.127. CMrvatlin Equipment 19.47 19.47 1.4S 16.06 17.50 1.66 13.78 15.44 1.46 -5.69 -4.03 0.22 -2.28 -2.068. luilding 9 Structures/ 0.00 0.00 0.00Constrctlon S Erection 40.79 18.42 59.21 52.09 35.91 88.07 5S.50 43.20 98.70 14.71 24.78 39.49 3.41 7.22 10.639. freight. lnswance 000 0.00 0.00 0.00& Custom uty 6.79 20.49 27.28 27.77 28.79 56.56 20.83 5.36 26.18 14.04 *iS.13 -1.10 -6.95 -23.44 -30.3810. Profe"fsi Services 3.53 55.12 58.65 7.46 39.53 46.99 S.4S 38.38 43.83 1.92 -16.14 -14.82 -2.01 -1.1S -3.1611. Pro-Operating Expenses 6.7 4.19 10.90 S."6 1.82 7.48 14.28 O."6 14.94 ?.S7 -3.53 4.04 8.62 -1.16 7.4"0.00 0.00
Total Base Cost 72.47 284.7 357.17 123.66 351.67 47s.33 112.95 339.83 452.78 40.48 55.13 9561 -10.71 -11.84 -22.55waotkIll Capitol 29.8 5.28 35.08 3.62 2.46 6.08 9.82 3.88 13.70 -19.98 -1.40 *21.38 6.20 1.42 7.62Interest Iring 0.00 0.00construction 15.29 75.29 96.41 0.00 96.41 55.86 58.86 -16.43 0.00 -16.43 -3.SS 0.00 -37.SSTotal Capital Outlay 171.56 289.96 467.54 223.69 354.13 577.82 181.63 343.71 525.SS 4.07 53.73 7.81 -42.06 -10.42 -352.4
a/ Phsicat wnd price contingencies allocated to cost item.
0
-20- ANNEX 4Page 2 of 2
Soure of Foreign Excae Finr.ing
perentfinancier 198218 1983/84 1984/85 1986 1986/67 19871/8 19/89 Total Share
ADB 5.18 0.87 2.30 19.34 34.52 21.07 5.10 8.38 25.7ADFAED 6.29 15.15 1.66 23.10 6.7CIDA 6.57 2.79 3.08 12.44 3.6IDA 11.77 3.32 15.09 4.4is" 1.03 15.38 0.69 17.10 5.0OECF 0.40 19.8 73.4 5.85 8.64 106.15 31.5SF 14.87 48.85 9.t2 73.34 21.3Ooverrmmnt 4.65 1.45 6.11 1.8
Total 5.18 0.87 2.71 79.09 198.11 43.42 13.74 343.71 100.0
Notoes The financing from the Isimic Deelopmnt I.* is in the form of its leasing of the powrgemration coaponent to OUFL for 10 ears, after ihich the owemrship vests in CUFL.
-21 - ANNEX 5
CHIfooCwo URn FA RT!UZ2R PROJECT (CREDIT 1204-BRD
ID-inaneed P?aeugement of Foreign Gooda and Services
Amount Percent(US$ million)
Equipment, mterials, spare parts lS.0 100
Japan 13.5 90
Singapore 1.5 10
.~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
- 23 -ATTACHMENT I
RESTRICTED
ThisRWrthasbeen prepared forASIAN DEVELOPMENT BANK t e of the Bank.
PROJECT COMPLETION REPORT
OF THE
CHITTAGONG UREA FERTILIZER PROJECT(Loan Nos. 541/796AN(SF))
IN
BANGLADESH
Sepumber 1988
_ 24 -
a~ WWALImr
Currency Unit - Bangladesh Tkas
ARDraisal (1981)
$1.00 = Tk 16.00
_esuipraisl t(1986)
$1.00 = Tk 31.50
ProJect Comuletion Report
The folloimng average exohange rates were used in eachrespective year of Project Implamntation:
Actual Disunts1984/85 - $1.00 - Tk 24.611985/86 - $1.00 = Tk 29.671986/87 - $1.00 - Tk 31.841987/88 - $1.00 = Tk 32.20
Uzdisbursed:-Mby 1988 - $1.00 - Tk 31.50
-X3IRT8AD MU UR-I
1 Metric Ton (Ut) = 2,205 lb1 kilomztar (km) - 0.62 mileI hectare (ha) - 2.47 acres1 oeter (a) - 3.28 feet1 cubic emter (cu. m) = 35.31 cubic feet1 kilo calorie (ical) = 3.97 Btu1 I Ul' = 1,000 stinuard cubic feet1 tMICF 1 million stAndard cubic feet
MI) The Fisoal year (MY) of the Government ands on 30 June.
(II) In this Report, "ton" refers to mntric tons unlessotherwise specified.
(III) In this Report, "$" refers to US dollars.
- 25 -ATTACUMNT I
PwET CON REP
OF TE
CnH A; UtWA F0fLII W(LIen Nos. 541/796-DAN(SF))
IN
BANGADEH
September 1988
Note: This Report was prepwred by a Bank Mision that visitedBangladsh from 19 April to 5 May 1988. The Missiun consisted ofB. C. Kwong (Project Engineer, Mimion Leader) and V. Rodriguez(Assistant, Project Administration).
- 26 -
ABiR ITIO
ADFAED - Abu Dhabi Fwu for Arab Eo130ic DevelopmantBADC - Bangladesh Agricultural DSvelo~mst CorporationBCIC - Bangladesh Chemical Industries CorporationBGSL - Bakchrbad Gas System LimitedCDA - Canadian Internationsl Dawlopat AgeocyCUFL - Chittagong Urea Fertilizer Limitedf - (Dutch) GuilderDH - (United Arab Emirates) DerhamDM - (Deutsche) M ' cGC - General ContractorID - (Islamic) DinarIDA - International Developnt AssociationIsDB - Islamic Development BankMWK - M. W. KellogNCC - National Coodinting CmitteeOBCF - Overseas Eonmic Coration nd of JapanGMAS - Operational -- g.nt Advisory Services-YSRI - P. T. Pupuk SniwidjASUB - Special Drawing RightsSFD - Saudi FwPd for DevelopmentsR - (Saidi) RiyalTA - Technical AdvisorTBC - Toyo Engineering Corporationmt/day - Metric Ton per daymt/year - Metric Ton per yearTIC - Urea Contractorl,NIOO - Unico International CorporationV02 - Van Oord Utrecht
- 27 - ATTACMENT I
LOCATION OF THE CHITTAGONG UREA FERTILIZER PLANTAND
BAKHRABAD.CHITTAGONG GAS TRANSMISSION SYSTEM
'1n
P,kp4Ac44n M\. LEGEND:_> : . >iA St * ~ ~~~~~~~ GuFhild
TMAKIAGAON ,i \ \r . k * FerFilr Plt (ExistUg)
-216° * i nNILPHAMARI tACM>In Plnt Site'J .-. LAMOH Gas Transm,iian Pliline IExbttng)
ICUt ); ICuRAcM^" -ffi MaIo R wtiiOafAIPUR P -- Olstzct Soimd
t_> a ; iw Intwnot Unwl Eound)2 : # ys ( ~~~~~~~~~(8Wjnd&deuee tr eM erlt nOMI uthafitahfve)
!AIPtURHAT | H*ERpu CHiHATAKp~~~~~~~~~~~~~~~~~~~~~~~~~~~
MAOGAC*4 * - ~~~~~~~~~~~~SUNAiMGANJ A $VLIIV1.A0 QAQh> . . t - E .TROK "- ̂ NAt .
SOGRA . j**AMAL 4rKR ICAILA TILA
AWASGA;'-%~~~~~~~~~~~~~AA 'lj .-- '4Gm HdA A' I& " ,U
RAISltAHI , , N- * *
( *., , A~"^.IRKGA~% K AA* . IA
'-'S* " $MARITPUq . , ̂ t j\ tMA AACI\ .' (
* < : M'IOLA * * 4ILL TRACTSI ".,-CHANOAGAOM
GAYZF B NUA
t t9
, . _. OMILAI
- 28 -ATTACD4EN I
LAYOUT OF PLANT SITE
AccAee Road with Odt ConveyorSystem connecdng 5 3.12 and 13
LEGEND:
I Power Rewvlug Sttio -W Emamnt2 AuxUlay BulUding Area3 Ura Bulk Steap4 Water Tmamnt UnitS Uresa Unit6 Ammonia Urdt7 Sam and Powe Gntieraton F aIltyI Cooling WtUr fuJcity9 Ammonia Stuap Faclity10 Effluent Stem LConneon Road11 Nauri Gm Meteing Studan12 Uma Bagging Faculty13 jetty
14 Fery Beh IExistng )is Goml Caro e hb 2
LOCATION DIAGRAM 3
MIDDLE ISLAND MSit
Center of Prilrlng Tower
PSUWbA*UM_S Arni
O 100 t0O 100 400 S00
P iROJECTSITE|
ATTACHMENT I
- 29 -
RASLC DATA SNT
A. Loan Identification
1. Comtry Baladesh2. Loan Nunber 541/796-BAN(SF)3. ProJect Title Chittagong Urea Fertilizer4. Borrower The People's Republic of Bsangladesh5. Executing Agenoy Chittagong Urea Fertilizer Limited6. Amount of Loan $98.000 million (Total)
541-BAN(SF) *72.000 Million796-BAN(SF) $26.000 million al (SM21.427 million)
B. Loan Data
rLinalLJaM SmDlem_ntars Loan5 ?~~~~96-nAUSF.}
1. Ail-Date Started 24 October 1980 23 June 1986-Date Completed 15 November 1980 10 July 1986
2. Loan Negotiations-Date Started 29 September 1981 13 Ootober 1986-Date Completed 01 October 1981 15 October 1986
3. Date of Board Approval 17 November 1981 13 November 1986
4. Date of Loan Agreement 23 November 1981 09 January 1987
5. Date of Loan Effectiveness-In Loan Agreement 21 February 1982 09 April 1987-Actual 19 January 1983 16 June 1987-Number of Extensions Seven (7) Three (3)
6. Closing Dite-}n LA*n Agresment 31 December 1986 31 December 1990-Actual 30 June 1990 31 December 1990-Huber of Etnsi (1)
7. Term of Loan-Service Charge 1% p.a. 1X p.a.-Mstuwity (no. of years) 40 years 40 years-Grace Period (no. of years) 10 years 10 years
8. Term of Relending-Interest Rate 12I p.a. 12I p.a.-Miturity (no. of years) 15 years 15 years-Grace Period 5 years 5 years-Seoond-step Borrower Chittagong Urea Fertilizer Limited
a/s $ equivalent at the timne the lown was approved by the Bank. At thepreparation of the PCR, the loan was equivalent to $28.961 million.
ATTACHMENT I
- 30 -
9. Disbur I nts-Date of Initial Disbure.ent 15 Feb. 1983 29 Jan. 1987-Date of Final Disbursament 30 June 1989 (eat) 31 Dec. 1990 (eat)-Amount Disbursed $69.150 (eat) $28.961 (eat)-Amount Canoelled *2.850 (eat) -
C. Project Dtsa
APRAISAL R AU(1981) (1986)
1. ProJect Cost
(a) Fbreign RXnban Cost 289.98 354.13 377.83(b) Local Cost 177.56 223.69 135.12(c) Total Cost 467.54 577.82 512.95
2, Firancing PLan
(a) Borrowuer Financed 177.56 234.96 141.62(b) Bank Finsnoed 72.00 98.00 98.11(c) other Esternal Financing 217.98 244.86 273.22(di Total 467.54 577.82 512.95
3. Cst Breakdon by ProJect Coumonenta
(a) Lsnd Acquisition 0.53 0.57 0.35(b) Site Prepuration 18.37 29.22 23.89(c) Prooes q uEipa.nt 58.92 113.09 127.50(d) Catalyst, ChIeuics
and Spare Parts 9.84 4.40 3.26(e) Utility and Offaite Faoilities 38.22 81.15 90.58(f) m?terial HNedling Equipment 12.57 22.53 29.56(g) Conetruotion Equipment 14.95 17.05 14.44(h) Building and Struotues/ 42.60 79.72 99.85
Construction and Erection(i) pFretht, Insurane and
custom Duty 20.47 51.97 26.93(j) Professional Services 44.78 46.29 43.18(k) Pre-Operating ExPense 7.91 6.60 15.03(1) Subtotal 269.16 451.59 474.61(m) Pbysical Contingency 22.88 9.05 7 36(n) Price Contingency 65.13 14.69 )(o) Working Capital 35.08 6.08 10.55(p) Interest During Construction 75.29 96.41 20.47(q) Total 467.54 577.82 512.95
ATTACHMENT I
- 31 -
4. Pro.iect ScheduleActual
(a) Date of Contract withTechnical Advisor Jan. 1980 Jan. 1980
(b) Date of Contract with July 1982 Sept 1983General Contractor
(c) Date of Contract withOperational Advisory Services tb 1985 Feb. 1988
(d) Cawpletion of Engineeringdesism Sept 1983 Jwm 1
(e) Civil Works Contract-Date of Award Apr. 1982 MW 1982-Completion of Work Apr. 1984 Apr. 1986
(f) Equipment and SuppliesDates-First P mnt Jan. 1983 Jul, 1986-Last Procurement Feb. 1984 Aug. 1987-Completion of Equipment
installation Jan. 1985 Sept 1987(f) Start of Operations
-Beginning of start-up Oct. 1985 Ot. 1987-Completion of tests and Nov. 1985 Jan. 1988ComissiCoing
D. D%ta on Bank MissionsNo. of No. of Speciaization
Name of Each Mission Date Persom Man-days of ebers 1/
1. Advisory Mission 21-30 Oct 1981 2 16 A-C2. Inception cum 17-31 Mar 1982 2 30 A
Tripartite Meeting3. Review Mission for 12-19 Oct 1982 1 1 A
three Projects4. Review Mission 25 Jan-3 Feb 1983 2 20 A5. Disburst Mission
for ten Projects 22 S&p-i Oct 1984 2 1 E-F
6. Review Mission 21-29 Nov 1284 1 9 A7. Review Mission cum
Co-Leneirs Meeting 22-26 July 1984 2 10 A8. Co-Finmaiers Meeting 17-19 Feb 1985 2 6 A9. Co-Finmriers Meeting 23-29 Nov 1985 2 14 A-B
10. Review cum ReappraisalMission 28 June-10 July 1986 5 25 A-B-C-D
11. Review Mission 16-23 Jan 1987 1 8 A12. PCR 19 Apr-6 My1988 2 18 A
j/ A - Bginewr, B - Financial Aralut, C - Counsi, D - RommistE - Pro t Speciaist, F - Control Offiow.
ATTACHMENT I- 33 -
I. FROM DOBRrICN
A. Ob.JOtiVa.. Btia&MLe auA Soove
1. h 2aCittagin Ure Fertilizer Project as appraied by the BankWm to tablimb inteated _aurea fertilizer plant at Ransadia,Chittagan situated two kileters (km) south-west of the Mtrine Academy onthe left bank of the Karnaqwli River (se Mqp, pae J and ti). Thecapaity of the Plant was designed to produce about 1,000 metric tons perday (mt/day) of lnteediate amnia and to convert the aonia into about1,700 mt/day of prilled urea using natural ga frm Bakbrabad gas fieldthroug the 170 km Bkkhrbed-dittagoW ga tranmiusion system. On thebasis of 330 om-strem das per year, the Plant will hae a rated amualoutput capacity of about 561,000 metric tons of ures. The Projectconsisted of the following major Components:
(i) acquisition and preperation of the site for the Platcomprising 211 hectare (ha) for the aia/-ea Vuex aud4 ha for the water intake facilities downstrea of alMurghatbridge;
(ii) design, engineering, prAcurel"mt, construction andcomissionins of:
(a) a 1,000 mt/day ammenia unit,(b) a 1,700 ut/day prifled urea unit, and(c) utilities, offaites and ancillary facilities for the
aminmia and urea units including 16 MW captive pwergeneration, 110 tons per hour steam generation, 220tons per hour jetty and product handling network;
(iii) construction of office and plant buildings and a housingcolony including community facilities for the mmuigemat andoperation staff of the Plant;
(iv) provision for the contirnusation of the engageimnt of UNIODInternational Corporation (UNICO), as Technical Advisor(TA), to asist and advise the Exccuting Agency on thedesign, construction and start-up of the Plant;
(v) provision for the engagement of operational advisors tcasmist the Executing Agency to mwnage, operate and maintainthe Plant during the initial three years after coumissioningof the Plant; a-id
(vi) provision for the training of selected Executing Agencypersonnel in fertilizer plants similar to the Project, inlanglaesh and abrad, to _mage and operate the Plant.
2. During appraisal of the Project in 1980, the inrsm and Marestable supply of fertilizer was considered to be aim of the criticalfst.ors for PAngladenth to ar.hievR self-sufficiency in foodgmin producrtin.
ATTACHMENT I- 34 -
The Projeot Aied to producs urea fertilizer usn inxdigenots natum r gasan feedstook and fuel in order to enable the country to achieveself-sufficieny in this essential codity and to export the surplus, ifany. The additionl urea supply to be made available from the Projectwould help the country to realize foreign exchange savings and earningsthough imort substitution and export of surplus urea, respectively. IheProject also aimd at promoting inustrial growth and creating ploymetopportunities in the Chittagon region.
B. lolemntation Mngemats
3. I he Chittagong Urea Fertilizer Limited (lL)w established bythe Govemnut of Bangladesh in November 1980 solely for the uwrpose ofimplemnting the Projeot wd operating a in t the Plant facilitiesafter cauissicming. During the early phase of the Project, UNICO, the TAengaged under the technical service loan j/, assisted CUFL in theevaluation of prequlification response, preparation of tfia docutsaid review of bids for the selection of the site-filling acotractor, andprepuration of prequalification documents, evaluation of prequalificetionrespouses and preparation of tender documents for the syenral oontract.with the approval of the Bank, CUFL retained UNICO as TA for the
emplentation of the Project under an * amended ontract. UNIOD assistedWUFL in the following services: (i) ismmuma of bids, review andevaliation of bids for the selection of General Contractor (OC), (ii)review of tender speoifications and docunts prepared by C forprocuinmt of equipment mid materials required for the Project, and (iii)supervision of the work carried out by OC.
4. aWL enaged a OC, the Toy aigiemern Corporation (TBC) ofJapen, for servioce responaible for the overall impl_ tation of theProject, including guarantee of the performan of the Plant. Ihe servicesconsisted of:
(i) provision of process lioenses, and basic mid detaileddesigns of the amonia/urea units, off-sites and ancillaryfacilities;
(ii) managegmt of p kocurMA t for all materl md equipontfor the ammonia/urea units, off-sites and ancillaryfacilities;
(iii) supervision of erection and construction of the inteSratedPlant including civil works;
(iv) testing, start-up and the commissioning of the integrtedPlamt; and
(v) training of CUFL personnel.
Ij toan No. 282-BAN(SF) - see paras. 11 and 12.
35 - ATTACHMENT I
Equipnent and materials pro ored by OC on behalf of CUFL were in accordauoewith the prscurent procedures of the respective co-financiers with CUPLdirectly arranging payment to the relevant suppliers. Civil works,construction and erection works contracts for the Project were awarded byCUFL under separate contracts. With prior approval of the Bank, CUFLretained OC to provide management and operational advisory services duringthe first thirty months of operation of the Plant.
5. In March 1980, the Government established a National Coordinating
Comuittee (NCC) for the purpose of coordinating the implemPntation of the
(UFL Project and the Bakhrabad-Chittagong Gas Pipeline Project. The
IDA-assisted project for the construction of gas pipeline from Bakhrab d
gas field to the Plant was completed in 1984.
6f. As agreed upon between the Government and the co-financiers, theRank undertook the role of coordinator among the co-financiers. Ihe Bankparticipated in the co-financiers' meetings held in Dhaka for monitoringthe progress of implementation of the Project, and reviewing other mstterssuch as procurement procedures, definition of critical items, thecontracting arrangement between CUFL and oC and allocation and reallocationof Project comporents among co-financiers. At the request of the,
Government, the Bank also condueted a reappraisal of the Project in
June-July 1986, and organized a co-financiers' meeting in MIbnila in August
1986 to discuss the findins of the reappraisal and to finalize
arrangements for financing the cost overrun on the Project.
7. The Project as originally appraised was to be completed in
November 1985. However, the Plant was physically completed on 28 OCtober1987, two years behind schedule, mainly due to the long time taken infinalizing arrangents for the implementation of the Project and due tothe delayed selection of GC.
ATTACHMENT I
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it. M
A. DesiIt. Preition and AMsisal
8. 'he main objective of the Goverumt's Second Five-Year Plan(FY1980/81- FY1984/85), the goals and strategies of which wre largelyparalleled awl extene by the Third Five-Year Plan (FY1985/86 toFY1989/90), me to achieve self- sufficiency in foodgrain produotionthrougb improved farming practices and use of modern inputs. Efforts inthis direction resulted in an increase in foodomin produotion frm 13.45million tons in P11980/81 to 16.50 million tons in FY1986/87. In thisregard, the Governmet placed empais on ensuring adequate supply offertilizer to support the agriculture setor. Te eceo n ie mm ofindigenous natural gan for domestic produotion of chemical fertilizer toachieve self-sufficiency was given high priority by the Oovernaent.
9. At the time of appraisal of the Project in 1980, thefertilizer 1/ requirements of Bangladesh exceeded domestic produotion andthe shortfall had to be met by imports which acoowited for aboat 68 percent of the total amomut of fertilizer consud. Demand for urea wasexpected to grow steadily. The supply of locally produied urea in theearly 1980b depended on the perforizance of the existing ura plant atFenchuganj and ChorasaL, and the timing of coism ioning of the tWo nowurea fertilizer plants at Ashugapn and Pblash at (see Appndix 1). Itwas estimated that, after commissioning of the Project, the country wouldbe self-sufficient in urea fertilizer and would even have a temporarysurplus production from FY1987/88 to FY1992/93 (see ..ppeniix 2). However,by F11993/94, the country would have to rely partly on uroa fertilizerimport again to meet domestic dmwd, unless new produotlon plants wereestablished.
10. The Project was originally conceived by the Bangladesh Fertilizerrhemical and Pharmaceutical Corporation - predeoessor of BangladeshChfaical tndustries Corporation (BCIC) t/ - which, wtth the FertilizerCorporation of Indis, prepared in June 1974 a "Techno-Roonomic FeasibilityStuudy" prnposing a Plant in wangiadesh for manufacturing urea fertilizerfrom indigenous natural gas for export of the product to India. Theprnposal, was first brmuWht to the attention of the Bank during the visit ofa Project Identification Mission in Mbrch 1975. A Bank Fact-FindingMission then visited Bangladesh in Cctober/November 1975 to examine theproposal. After detailed investigations in the field and discussions with
I/ The major chemical fertilizers used in Bangladesh and their respectivepercentage of the total usage are urea (64 per cent) , triplesuperphosphate and di-ammonium phosphate (30 per cent), and mriste ofpotash (6 per cent).
?J Ashuganj and Polash plants started production in 1981 and 1985,respectively.
t/ ABrIC was constituted in June 1976 in accordance with PresidentialOrder No. 27 of 1972.
- 37 - ATTACHMENT I
govezwit authorities and BCXC, the Mission determined the brmd soap. ofthe propoma and comidered that the most appropriate site for the Plantshould be at Chittagong rather than at any of various altenative sitesbecaue of accessibility to both local and export markets. In thisconnection, the Government requested the Bank for a loan to finance theservices of a TA to carry out the nrcessary field investigation and toprepare a detailed proposal for the Plant and the related natural gassupply system. A Bank Appraisal Mission visited Bmngladeah from 8 to 15June 1976 and held discussions on various aspects of the proposed technicalservices with relevant government agencies ard BCIC. At the request of theGoverimnt and prior to the approval of the proposed loan, the Dank, an 8October 1976, convened a meeting of interested aid enie and gfovrntsat the Bank's Headquarters. The meeting was held to: (i) invite ommntson the soope and tenrm of refererne of the TA to be engaged muder theproposed loan from the Bank; and (ii) solicit preliminary interest in theProject of potential aid agencies.
II. on 23 November 1976 the Bank approved Loan No. 282-BAN(SP) of$2.5 million from its Special Furids Resources for the Chittagng UreaFertilizer Technical Services Project in Bangladesh. This Technical.Services Project was to provide technical advisory and consulting services,for the preparation and subsequent implementation of an integrmtedammonia/urea fertilizer plant at Chittagong and a related Gas Supply Systemoomprising the development of gas walls at the bakhraibd Sas field and agas transmission pipeline for the supply of gas to the Plant and other gasend-users in the Chittagong area.
12. On 4 January 1978 DCIC, the Executing Agency for the TechnicalServices Project, appointed UNIOD, a Japanese c lting firm inassociation with JGC Corporation of Japan, DeGolyer and MncNauehton of USA,Williams Brothers Engineering Company of USA, Technical Consultants andAssociates Ltd. of Bangladesh and Hydrocarbon Consultant Ltd. ofBangladesh, to undertake the required technical services. The serviceswere to be carried out in tihree phases. Phase I involved the preparationof a comprehensive project report covering the feasibility andimplementation aspects of the ammonia/urea plant and the as supply aystem.Phase II involved the development of design criteria and bid specificationsfor soliciting propoals from engineering firms for the construction of theammonia/urea plant and the gas supply system. Phase III involved theevaluation of proposals for the general ensineering contract and provisionof technical and management assistance for the implementation of theammonia/urea Plant. In late 1978, the Governmet requested the Dank tnassist in the mobilization and coordination of financing for the Plant andthe International Development Association (IDA) of the World Bank Group toprovide similar assistance for the gas supply system. In this regard, theas supply system project was appraised by IDA in February 1980, and thefinancial arrangements were finalized by the Government with IDA, OverseasEconomic Cooperation Fund (OECF) of Japan and OPEC Fund. Cocwurrently, apre-appraisal of the Project (the ammonia/urea plant) was conducted by aBank Mission which visited Bangladesh from IS February to 7 March 1980.Based on the findings of the pre-appraisal, a Project Report prepared hy
ATTACHMENT I
- 38 -
the Bank was circulated to interested co-financiers and a meting was heldin the Banks Headquarters from 24 to 25 July 1980 for the purpose ofmobilizing contributions and coordinating financiers' positions on theProject.
13. Subsequently, a Bank Appraisal Mission, aLso joined by otherco-financiers, visited Bangladesh from 24 October to 15 November 1980. Thescope and cost of the Project were finalized and agreed upon between theMission and the Government during the Mission's stay in the field. It wasalso agreed that the Government would establish a new company, CUFL unidrthe supervision of ECIC, to implement and operate the Project. Based onthe results of the apprmisal, the Bank on 17 Novemr 1981 approved a lamamounting to $72.0 million from its Special Funds Pesources to finroe partof the foreign exchange cost of the Project. The Loan Agreint (Loan No.541-BAN(SF)) was signed on 23 November 1981 and became effective an 19January 1983. The rest of the foreign exchange cost was provided by sixother co-financiers, namely, Abu Dhabi Fund for Arab Ebonomic Developnt(ADFAED), Canadian International Developent Agency (CID), IDA, IslamicDevelopment Bank (IsDB), OBCF and Sawi Fund for Development (SPD). Theentire local currency cost was provided by the Government as equity to
aeL.
14. At the time of appraisal, the ProJect was estisated to oost about
$467 million of which $290 million was in foreign exchane cost. However,the Project incurred a substantial cost overrun mainly due to realigeuntsof exchange rates of foreign currencies, change in arrangement for sitepreparation and change in location for fresh water intake. The cost of theProject was re-estimated at about $577.8 million of which $354.1 millionwas in foreign exchange cost. On 12 January 1986 the Goveriment requestedthe Bank to provide supplementary financing to ment part of the increasedforeign exchange requirements for completing the Project. Similar requestswere also made by the Government to the other co-financiers of the Project.A Bank RWview cum Reappraisal Mission visited Bangladesh in July 1986 toigather cmxprehensive economic, financial, market and other pertinent datafor the assessment of the Project's viability. Base on the findings ofthe Mission, the Bank approved on 13 November 1986 a supplementary loan(Loan No. 796-BAN(SF)) in the aumunt of SDR 21.427 million equivalent fromits Special Funds Resources. The Supplementary Loan Agreent was signedon 9 January 1987 and became effective on 16 June 1987.
B. ProJect fmflementAtion
1. The Executins Agency
15. The Governimt established a new company - CUFL which acted asthe Executing Agency solely for implementing and operating the Project.The Mesmoranum and Articles of Association of CUFL were approved by theGovernment in October 1980, aid CUFL was incorporated in November 1980 as alimited liability company ider the Crmpanies Act of 1913. CWL has aninitial authorized rapital *o Tk 3,000 million art 1h 3,533.53 million
-39 ATTACHMENT I
($116.64 million equivalent) has beow paid up as of April 1988. TheGoverrmn! t yearly subscription to the capital of CUFL duringimplentation of the Project is presented in Table 1.
Table 1 - StatanMt of the Govertent'sYearly Contribution of Fuvnds
Year ZAount(million TAIA)
1977/78 1.8801978/79 7*7001979/80 6..681980/81 35.0001981/82 37.9151982/83 62.4171983/84 01984/85 141.9531985/86 829.9001986/87 1,420.0001987/88 (as of April 1988) 990.000
Total 3,533.533
16. CUWL has been functioning as a separate company since it waestablished. Initially, it functioned as an enterprise of BCIC, with theChairman of BCIC acting as the Chairman of the CUFL Board of Directors. Inmid-1981, the Governrmt constituted a Board of Directors coqWising theSecretaries to the Ministries of Industries and Finance (both Finance andExternal Resources Divisions), and Member-in-Charge of the IndustriesDivision of the Planning Commission, besides the Chairman of BCIC and theManaging Director of CUFL. The Board was further reconstituted in February1985, when it was aain made an enterprise of BCIC, although maintainingits seFprate corporate structure. The Board at present oonsiats of theChairman of ECiC, as Chairman, and the &igineering and Comeroial Directorsof BCIC and representatives of the Ministries of Industries, Finance(Finance and External resources Divisions), Planning Commission and theMaiaging Director of CUFL.. The changes in the compositioa of the Board ofDirectors reflected thi' concern of the Goverrmunt for suiocessfulimplemntation of the Project, particularly in the critical initial phase.ahe reorgenization of CUFL as an enterprise of BCIC was designed for bettercoordination and assistance from BCIC.
1?. The present CUFL organization is composed of persons having longexperience in the fertilizer industry. The Managing Director and the.Prnjert. Director were appointed in consultation with the Bank. The Firunce
ATTACHSENT I
- 40 -
Director of ECIC oversees the financial mtters relating to atFL as anadditioma duty. Th prnt organization chart of CUPL is given inAppendix 3. Tho organizational build-up was in accordance with the outlinecontained in the originai appraisal report. The key personnel were damnmainly from BCIC enterprises, particularly from the existing fertilizerplants and other Goveriaet organizations. The total staff of CUFL as ofApril 1988 was 877 ard by mid-1989 is projected to increase to 1008consisting of 48 managerial officers, 223 supervisory officers, 351supporting staff and 386 operators, technicians and akilled workiers. Themanpower position of CUFL starting from 1982 to present is presented inTable 2 below:
Table 2: Mnuower Position of CUPL
~rtinsYear Officers Staff WOrF;ers Aiorentioes Total
1981 58 82 0 0 140985 105 118 0 0 223
1986 178 144 5 0 3271987 277 203 73 184 7371988 A/ 294 265 174 144 8771989 b/ 271 351 386 - 1008
L As of March 1988.v/ Mid-1989: projected manpower requireimt of CULFL at full strength
(see also Appendix 3).
2. Ian Effectiveness
18. The original Loan Agreement for the Project was signed on 23November 1981 and beam effective on 19 Januury 1983. The date ofeffectiveness of the Bank loan had to be extended sevui times because theGovernment took longer than expected to fulfill pre-onditionm for loaneffectiveness, such as: (i) a legal opinion covering the Loan Agreemnt,Financial Agreement, Gas Supply Agreement and acquisition of title of land;(ii) an order concerning the appointment of the Menaging Director of CUlL;and (iii) docimentation in relation to the effectivity of otherco-financiers' Agreements. Due to ttia different precondition set forth bythe co-financiers for effectivenese to their Loan Agreents, CIDA declaredits loan effective on 28 November 1981, followed by ADFAUD on 9 Mwrch 1982,OECF on 27 April 1982, SFD on 21 November 1982, IDA on 19 January 1983 andIsDB on 2 February 1983.
ATTACHMENT I
- 41 -
19. While the Sul t oan u scheduled to be effeetive on orbefore 9 April 1987, the Man actually be effeotive on 16 June 1987.Thmere a delay of about two months after two eteions in declaring theeffectivenes of the Loan due to the following reass: (i) latesubmission of the legl opinion covering the Lan ad Project Agremts;(ii) late approval by the Governmet'n Project Evaluation Camittes of theProject Proform; and (iii) late comitment by the Govenent of its ownresources to met a portion of the foreign exchange financing gap estimatedat $11.3 million at the time of reappraisal.
3. * Recitment of Technical Advisor Service
20. With tho approval of the ank and following the Bntk's Ouidelineson the Use of Consultants, BCIC engaed WICO in 1978 as Its TA for theProjeot urAer Loan No. 282-BAN(SF). lhe work an the fesibility study ofthe Project (see para. 11) undertaken by UNICO vas satisfactory, and theOovernmt/BCIC requested Bank approval for retaining UNICO as TA for the
l:emp tation of the Project uner a revised contract with CUFL. Inacw with the provisions set forth in Clause 5.06 "Continuity ofonsulting Services" of the Bank's Guidelines on the Use of Consultants
the Bank approved the Govern_mnt/BCIC's request to continue the technicalservices of UNICO. In term of the revised agremit executed betweeUNICO and CUFL on 14 May 1983, the team of TA, particularly the keypersonnel including the Pioject MIiger, wastethened with theconcurrence of the Bank after a review of the service provided du&ring theinitial stages of Phase III (se par. 12). Gut of the total 291man-mnths provided by TA for assisting ClJFL in implmenting the Project,258 man-months were used at a total cost of $2.968 millim and theassignent of UNICO was comleted on 22 Februsry 1988.
4. Earth Filling ard Site Prem tion Contractor
21. In order to expedite iwplintation of the Project, theGovernment throush SCIC, advertised in June 1980 (in Bangadesh nswspapers)for prequalification of contractors for carrying out dredging work relatedto earth filling and site preparation for the Plant. Copies of theadvertisement were sent by BCIC to twenty-three embassies of the Banktamember countries in Bangladesh for transmittal of the informtion to theagencies conoerned in their respective countries.
22. twenty firms responded to the advertisement and indicated theirinterest to be prequalified. The firms were from the following countries:Netherlands (9), Japan (5), Belgium (2), UA (1), Korea (1), Sineapore (1)and Bangladesh (1).
23. The proposas were evaluated by CUFL with assistance from UNI0O.Of the 20 firms, 17 were found to be qualified to do the work. Theprequalification procedure and evaluation criteria were reviewed by theBank and found them to be in accordance with the Bank's Guideline. forProcurement. Since earth filling work cannot be carried out during themonsoon season from May to September, the site filling work was considered
ATTACHMENT I- 42-
"tim criticsl" to the implementation schedule of the Project so thsz eathfilling of the mite reeded to be carried out during the dry seam fromOctober to April. In this regad, the Bank appoved j/: (i) the
prooedures followed by the Governmnt in invitins c cte So prspalifyfor the earth filling aid site prepLration oontrts; and (it) the
Govertuts' request that the aboventioned tende docmnts should beissued and the earth filling and site prepLration ontract should be
subsequetly awarded to the lowest bidder in accordance with the Bank'sGuidelines for Prount. Moreovert the GovernIt, thruo* WaFL, agreedto bridge finance the down payrent to the su8eful contrwtor fro, itsawn resources and to request re u t for such pyrnmt from the Bankafter the loan for the Project had been approved maul declared effective bythe Bank.
24. on 16 July 1981, the tender doouwents were issd by aCL.P to the17 prequalified firms. However, only one bidder, Van oCrd Utrecht (VW) ofNetherlands, submitted its bid before the original bids' olosing dateof 30 September 1981. After consultation with the Bank, CUFL decided toextend the closing date of the bids up to 22 October 1981. Four bidders,all from Netherlands, submitted their bids during the extension and werefound to be substantially responsive to the tedhnical mad finacialrequirements of the tender documents. On 22 April 1982, the Bankapproved CUFL's reo lndation to awsrd the drWedging contrat to the lowestpriced/evaluated bidder, V02, at a fixed cost of DPL 13.99 million ($5.67million equivalent) in foreign exchange coet plus Taka 17.07 million inlocal currency cost with provision for price adjumtient up to DFL 426,150for an estimated 5 per cent representing additional fill volum.
25. A dredging contract was signed on 13 Mby 1982 betweem CUFL andvo2 which agreed to start work in early September 1982; however, V02actually started work on 18 November 1982 after 1.5 months of delayawaiting customs clearance for its dredging equipment at the Chittagoagport. Since most equipment of V02 required re-export out of Bngladeshafter completion of the dredging work, the delay was mainly due to the longprocessing time in obtaining an inventory of the equipmit prior to firalclearance from the custoim authorities. The dredging work wse completed inAugust 1983. A total of 80 hectare (ha) out of 215 ha acquired by CUFLwas filled of which 47 ha are for the Plant, 22 ha for the housing colony,9 ha for the jetty and 1.6 ha for water intake stations.
5. Recruitment of General Contractor
26. CUFL we. to engage a GC on a lump-sum fixed price basis for theservices required of it to complete the Plant. In order to m_ett OCFrequirements for its funds to be utilized for financing the urea unit on alumpsuma basis, CUFL was to engage a contractor to be responsible forproviding the process licenses and basic and detailed engineering desiguw,
/ Bank approved "Advance Procurement Action" on 13 July 1981- Board paper No. R62-81 dated 22 June 1981.
- 43 - ATTACHMENT I
for the supply of equipzeut anl for providing techical supervision for theerection of the ures unit under the overall coordintion awd supervision ofOC. As GC required to guerantee the overall perf e of the Plant, OCwa given an opportunity to associate with a urea contrtor (UCI if (C sodesired. Therefore, prequalification for the general coxtractor anxd ureacontractor was to be conducted simultaneously on a ccmtrutinig arrnSementto include: (i) all services relating to prooess licenses, basic anddetailed engineering, prc t, supervision of comstruction anderection, commissioning and start-up in respect of the entire complex on alump-sum fixed price basis; and Wii) all servicea relating to proceeslicenses, basic and detailed engineering and supply of equipment for theurea plant also on lump-sum fixed price basis.
27. The notice for prequalification of oC/tc was published by CUFL inJune 1981 1/, and response were received from 13 applicants from Austrta,Belgium, Canada, France, India, Italy, Japan, Korea, FPderal Rbpublic ofGenmany, UK and U9A. Nine firms/consortia from Birope, Japan awd UBA wereprequalified on 2 November 1981 for bidding for (otIC for the Projoct. Thetender documents to be used for inviting bids for actuc wars prepared byCUPL with assistance from UNIOO, and submitted to the co-financiers fortheir review. It was intended to finalize the tender doouints for OC/Jcin the co-financiers meting held at Dhai from 5 to 7 JuIr 1982, which wa:attended by r pre entatives of the Bank, the Government, WD and aWIF. Inthe meeting, however, SFD insisted that sequential bidding should be usedfor selection of CIC first and then seleoction of Ur, later, bmasd ondocuments to be prepared by the selected OC, so as to enmble Wc to aseufull responsibility for suaranteeing performenoe of the entire complex.However, OBCF insisted on simultaneous bidding for CC nd UC. Consderebleefforts were spent by the Dank wnd the Goveriet to resolve the iss0U ofcontracting arrangements required by S9D and OBCF. The Government
mpted to seek common agreement between the two co-financiers whichwould be acceptable to the Bank.
28. On 9 Norember 1982 the Bank was informed by CUFL that 9FD arAOCSF had agreed to the condition that C, his associates/affiliates, wouldact as independent contractors and would not be permitted to bid for anyother component of the Project. In this connection, the cost of the OC'sservices (other than in relation to services for the urea unit) we to beclIintiffed and paid on lump-sum basis by the Bank. Similarly, the cost of
the (IC's services in relation to the urea unit (i.e., for the provision ofdesign, basic and detailed engineering, mnagemsnt of procurm nt cfequipment and materials, supeivision of erection and construction andsupervision of commissioning of the urea unit) was to be identified andpa1i4on.p--8ur basis by OECF. The detailed scope of the WD's servioes ispresented in Appendix-4;
29. A firm from Austria d-elined participation in the bidding as eachof the prequnlified firma was requested by CUFL to reoofirm its positionwith regard to the change in ( 'a .onntractual arrsig_nt. Subsequently,
1/ SSf fn,rd Pnper Rt'-8t.
ATTACHMENT I- 44 -
CUJFL issued an invitation to bid (ITS) an 22 Dem~r 1982 by following theBank's guidelires for the "two envelopes" produre to the eight reuinirgprequalified firms/consortia. TNo prequmlified firm advised after thepre-bid conference hold at Dhak in Febrnary 1983 that they would notparticipate in the bidding.
30. The technical proposals were publicly opened an 31 Mu-oh 1983and technical evaluation was conducted in accordance with the criteria andprocedures an approved by the Bank in November 1982. As a reult, two morebids were rejected an non-responsive in May 1983 atter obtainin priorapproval from the Bank. The reaining farw biddes. JapanR co.orti.u(1), Japan (2) and Italy (1), were irvited by £¶WL to visit Dhaka frcm 9 to16 My 1983 for clarification of their bids. The financial bids, togetherwith the price adjustmunt proposals, were publicly opuad on 9 Jua 1983.Ihe final price evaluation of the bids ws then carried out by CUlR awd atem of TA. CUFL's Board of Directors r o_mm IAtion sent to the Dankon 4 Augst 1983 for review alonm with the evaluation rept of CAlL.
31. In view of the representation md by sveral firm eitherthrough their respective Thecutive Directors or directly to the Bank inwriting, the Procur..t Comittee decided that it would be neoua forCUFL to send a delegation to the Dank for detailed dimsiA of allcamplaints recived and all matter related to the teenics and fiinialevaluation. Metings were also held co!mmw ut with bider'sreprentatives in order to obtain a better urstaiding of therepresentations edo by them. On 26 Septembr 1983, the Bonk accepted therecomindtion of CUFLs Board of Directors that the lowet evaluatedbidder was T0 of Japan in the total aiwt of $22.78 sillon equiv&lent.But (UFL was unable to ca_noe contract negotiation unless clearae hadbeen given to thus by the Goverrmant.
32. On 21 Murch 1984 CUFL as finally authorized bv the Goverment toissue a Letter of Intent to 1Tm and to invite thm for contractnegotiation. The draft contract negotiated betwon CUR. ai ndC w sentto the Bank and other co-financiers in June 1984 for review and Omanafter obtaining prior approval from the CAFL Board ad the Orvmbut. Anagrement for the geneal contrat between CtPL and TiC was- aid on 5November 1984. The agreement became effective on 24 Doomr 1984. Inaccordance with the ed contractual schedule, the _duinioal aopletionof the Projeot was seduled for Novmber 1987 ad plant start-up andacceptance was scheduled for Mrch 1988.
6. Mtkor Activities uader the Genral Cont1ztg
33. W was enSaged by CUFL on * lump-su cost bai to provide forprocess license, basic and detailed engineering, pro mmnt, oomtnzutionsupervision and commissioning services. The major activities relating toengineering, procurement and construction aspet of the Project, cariedout by aC are briefly presented in the following pArars.
ATTACHMENT I
(a) Engineering
34. ac ws reponsible for overall engineering services; however,sow detailed engineerins services were provided by poakage contractors,partucularly for utilities and =Jor cffaites uxler the overall supesionof aC. These package contracts as well as those contracts relating toconstruction amd erection were a d an a lump-su. cost bais.
35. The design of the Plant was bsed on the M.W. tGellogs (*X)amania process technology and Mitsui-Toatsu urea proces provided by, OC.In Junm 1984, following the issuance of the Letter of Intent by CUlL to QC,an initial meeting betwee OC and MWI ws held in Houston, WA. thismeeting was also attended by CUFL and its TA, UNt(. The basic designpeamters of the aumonia unit, i.e., process and materials flow diagram,instruentation and controls, equipmnt specifications and plits erectionand operation were reviewed and finalized; the features involved providedfor a greater amoumt of preheating of cad mtion air and naturml og-stess
mixture for reforming by an integrated waste heat recovering system so asto maintain a low level of energy conau ption in the production of anfonia.
36. During the period from August to october 1984, a series ofmeetings was held between C sand CUFL/TA in Dhaka and Tokyo, including aninitial meting for the Project in Dhaka from 22 to 30 September 1984. Theworks relating to pre-construction planning and preparation, prooedures forprocurme nt and disbursement, and finalizing the basic design paranetersfor the ures process that included the supporting anid utility facilitieswere carried-out during this period. The issuance of a consolidatedprequmlification notice for materials, equipment sand various onsntruotion/erection services was also carried-out by aVFL in acoordane with thepackages as agreed by the co-financiers during appraisal of the Project.Most of the preliminary engineering works were initiated arl co pleted byOC in the second half of 1984 before the official start of the gemeralcontract (see para. 32).
37. The amnionia/urea processe and the offaite facilities weredesigned and engineered by the oC offices in Japan with 90 per cent of theengineering works completed by the end of April 1985. All of the technicaldccuments were reviewed and approved in Japan by the TA temm on behalf ofCUFL. Ihe docuwnnts in respect of equipment bid evaluations prepared byGC were sent to Dhaks for review and acceptance by CUaLJTA before dispatchto the respective co-finaniers for final approval. The auxiliaryfacilities such as buildings, offices an* shops were designed in Dhaka bvthe Bangladesh firms working as suboontractors to oc.
(b) Procurement
38. For the procurement of equipmnt, materials and service fcr theProject, OC established two groups - one in the h off i:* atTokyo and the other in the Dhaka office. An sdditimal of f Vp -utestablished later by OC in Canada for the procurm ent of those vCrAiponntmfiraft'ed under CTl)A. For prncurement procedures in reBpect :,l 1%4e
- 46 - ATTACHMENT I
ompx_ts allocated for firu ing by the seven co-finawciero, GC followedthe repective guideline., procedes and eligibility requirmnts of eachco-finlmaer. 00, asng other thing., undrtook the following procurmntactivities: (M) prequilification of vendors and preaation of aprovedvendor list; (ii) preparation ard imnoe of bid documents nd receipt ofsatisfactory bids; (iii) bid evalumtion ard preparation of bid mry withrecv dation; (iv) assistance in obtaining neuesawy approval from theGoverint and co-firAniers; (v) prepartion and issumno. of purchaseorders; (vi) timely expedition of delivery by the vendors; (vii) inspectionof equi4mt and uterials; (viii) aceptwnc and distribution of W§tarialsat site to ume; (ix) Frocrt of spae asn (x) registration of claimfor short landing of it or diSges during shipment.
39. ac prepared a total of 104 enquirioe for the prmurnamnt ofequipment, eterials and variom aervioes for the Projet. Tedistribution of the enquiries u the swn co-financiers is mmarizedin Table 3.
Tmble 3: Co-firAnciers vs. rNuor of Eaodries
Ftriers NMabr of Baudirie
AlB 17ADPAUD 3
KMI 84
26SPD 26Freight Forrder 1
Sub total 93G wv'erinat of Bangladeh AL
Total 104
In early 1985, #b enquiries for pr`crmsnt of proprietary it_m, processand tim critial item wre issued by OC to a nimo of ldected vulorsapproved ewlie by the co-financier.. Theme critical items w inlycompoets of the ammia ard urea process anx package units firAnced bySFD, CUCT ad ADFAUD, respectively. Similarly, the Bank also approved arequest by the Ooverxnent/CUL to finanoe a civil works ontract (BageBerth anmmting to $0.5 million), a tim-critical itn, an the beaia ofinternational shopping which mes in accordane with Schedule 4, pus 6 ofthe Loan Agreement. By mid-1985, msmt of the foreigp enquiries for theProject had ben floated and purcha orders had been issued an schedue to
ATTACHMENT I- 47 -
all of the 11 local enquirers for p nt o ods and sevie. QCissued a total of 94 porcase orders for most of the quipnt, mterialaad service by mid-1986 which mm generlly on tim in relAtion to thecontracted emntation schedule. No nejor problm me o -u mxatred inthe timlY delivery of major process equiput sad ahirAry (seeAppedix 5 for detailed description of the enqruries and their respetivevenor/ conttors uer each finncier).
40. Me proceeds of the Bank loan wer usd by tJFL for theprocuremet of equipment, usterials, civil and engiering servi, stafftraining, freight and other projeot raLted eKpanes - envisaged at thetime of apprail in 1980 and reappisal of the Project in 1986. Theprovedue followed by CJFL ard ac for PrMcureMMit under the Ba loanwere in accordance with the provisions set out in Sdieftle 4 of the LoanAgrea.t which conform to the Bank's a Ouidelines.
41. Thu utilization of the Bar loans for the fozego p rnfor the Project frcs various tember countries is .unrized in Table 4 (seaAppendix 6 for further details). It may be noted that ppramzrt uindrthe Bank loans for the Project was mie minly in Jma , Singapore, Koreand Netherlans (see also Appendix 7 for utilization Of n from varicutcountries for the entire complex).
Table 4: Precure mnt Under Bank Loan from Mb bor Countries
Countries Amount ( million) Percentage
Japan 33.723 73.03Singapore 10.284 11.79Korea 6.990 8.01Netherlands 5.513 6.32Cans" 0.511 0.59India 0.224 0.26Bangl .h 0.010 0.01
Total 87.255 100.00
(c) emtion. Construction. Start-un and Testing
42. Site preparatim uuder the dredging ontract completed in
Augiut 1983 (see pars. 25). In 1984, civil related oontract were awardedto lcoal contractors to carry-out construction of road and area drainage aswell a construction of temporary facilities such as: electricity andwater supply, offioe and living quarters and the unloading berth.
ATTACHMENT I
- 48 -
43. eM constmution of jetty (m parse. 47 to 50), water intakestation and pipeline, water treatmnt aid cooling awd distributicn unitawas undertakm an separate ontract an a lump-as bais. and coeredprovision of dtiled design, supply of equipamnt aid materials, anderection and constrtntion. 0C ws responible for supervision of erectionand construction, testing, start-up ad take over of these packagec-q_onents and coordinated the work n thointh work in respect of therest of the Plant. Similarly, contruction and ereation contracts wereawarded by CUFL under separte lump-am. contract(s) supervised by OC as apart of its contractuLl responsibilities. The contraot of the foregoWiwere financed by different oo-financiers as suwarized in Table 5 below(see Appendix 8 for aore information of the service contrIctor i:
Table 5: Major 9brvioe Cntractore
Inquiry No. Deecription of the Padrag Nationmlity PFanciers
WV-1 Civil and Building Works Kbra ADSfor Psoces and Utility
WW-2 Civil aid Buil4ing Works Korea SIDfor Storage and Transportation
W-3(lI) frection of Ammnia Plant China 9JDWW-3(II) Erection of Urea, Utilities Chim 9FD
and Awdiliary FacilitiesWW-4 Non-Deetruotive Test Japan ADBW-5 Custom and Inlaid Services Japan ADSW-6 Ccnstruction Bquipment Singapore ADSWW-7 Freight Forwarder U. K. All Finwnciers
qmpt CMAPU-1 Jetty Facilities Japan ADBPU-2A Coling Water Facility Japan ADFAEDPU-2B Cooling Water Facility Japan 9PD
for A onia UnitPU-3 Water Treatmet Facility Japan AWARDPU-4 Rhw Water Intake and Pipeline Japan ADFAEDXX-12 Amamia Storage Tank Japan 8PD
and Erection
44. The piling and fowilation work at the Plant site ced inmid-19865, after th engineering work was completed by (EC o, w0 appointedin Novdbr 1984 (see para. 32). The work of acat of the packs servicecontractors ws initially delayed by two to six unths dus to late signingof their respective contracts (see Appendix 8). The -- t of eaChof the service contractors started between October 1986 and October 1986 inaccordance with the Project implementation schedule. The pae of
- 49 - ATTACHMENT I
implaimitatic wm glow durin the early phase of the omstruotiom. Inthis regard, the CC had mAs efforts in requeting all service nttorto: () mbilize r , ma-pomur (ii) wMr extra hours and (iii) enauetimly suppl of materials and equipent as needed for comtrotion. Sincethen, all activities of the servioe contracts wre cupleted either an tinor ahead of their respective schoedes. The total ma-poww recordeduring the construction period fri 1985 to 1987 is su.inized in Table 6below (see Appnix 9 for detailed m_np_n distrihbtion uagcontractors):
Table 6: SWMrA of tbWr Used for the Proieot
Poreign loca Total
General Contractor Iincluling 191 211 402vendors' supevisors)
Service Contractors 781 18 6966
Total 972 5395 6367
45. The onstruotion of the Plnt carriet out by OC mmpyWsicallyxe.petsd on 28 Octobwr 1987. Testing and cai ing of the ure
fertiliser aome we dmw frao Aumt to Deoebr 1987. Amia mefirst produed cn 25 Ootbor 1987 and urean 29 Ootober 1987, and followedby a guarantee perfoiwame test fzc I to 11 Janiry 1988. Th rmlts ofthe ten-day perfaromo test with respet to the production rate, qualityand unit cost of urea war ithin the ganteed figures givu in the accontrat (NWe Aix 10). The opleti ot the guarantee perforunetest by WC ad the aubeequmat isawe of the Plant meptume by OlL an IFebruary 1988 ws on nth ahead of the agreed ocattl de.
(d) TanhsA
46. A comprehesive training program wa prepared by CLOL in closecooporation with QC and TA of the Project. With prior aproval from theBandk, this training pa was plented in acoordae with theprovision set out in S le 6 of the Lan Agremut for training of JUFLpersormel in dsign and engineering, operation and maintance, technicalservices and n _mgmnt. A total of 74 personnel was given training in thehome office of ac in Jalan and the operating plnt in P.T. Pupuk Saiwidjaja(Ri) 1/ in Indoxeia for 75 nn-mnth. and 150 umn-*anths res tel,a total of 225 u.n-mnths. The duration of irAividual training mm betwem1.75 Dxths and for umnths. Ihe pers el trained abroad ainisted of
Ij This plant comparable in size and design wm built by the _ aC.
ATTACHOIlNT I- 50 -
administrative officers, engineere and technical staff in plJa W -.. nand mainte ance. A total of 582 CUFL personnel cumprirsinQ r inengineering, 20 in procurement, 50 in technical services, 250 in ;.>p2>tionad 250 in maintenance were given on-the-job in-plant trai,,,n ui theopermting fertilizer plants in Bangladesh of compsrible size. lit Ili,3tion,340 construction craftsmen hired by different sub-contrectorn v'ew; i. rvinedin various trades at site training centers and on the job (se& Appendix11).
7. Procurement of the Jetty Facilities
47. The jetty package (PU-1) is a civil works contrast. The jettyconsisting of loading platform (175 meters long x 25 meters vid_a nDvoringdolphin, bridge-type trestle and catwalk was to ba aonstrucvld CrOr thepurpose of loading bulk and baggage product urea at 220 toiuf per Ii; tuj and2,200 bags per hour, respectively, to ocean-going vesselo and coactalbarges. It was also to be used for loading and unloading of equiplment,materials, supplies and conaumbles. The scopa of work a? the jettypackage comprised the design and engineering, prefabrication of piles,pile-driving and extensive concrete works. These activities tware estimatedto take at least 13.5 months for the completion of the jetty and anothereight months for the erection of the materials conveying/hanilinU system on.the loading platform of the jetty by other contractors.
48. Notice for prequalification of bidders' for all mzjor coatpnentsof the Project was consolidated in one advertisem2nt and i-susd ill thet,ocil and foreign newspapers in September and October 1984, rsepsctively.Tn response to this advertisemant, CUFL received 18 applications f sevencountries, namely: Japan, Korea, Singspore, Thailand, China, 'ur,tey andIndia for the jetty construotion under Package PU-1. Sinr theprequalification notice did not indicate the source of financing underPU-I, the bidder's eligibility clause from each respactive financiers wasriot imposed during the prequalification stage. In the co-finnnciersmeeting held in Februny 1985, ADFAED agreed to finarce the jetty package.The prequalification documents were subsequently forwarded to ADFAED forapproval of the eight prequalified bidders from four countries: Japan (5),Korea (1), Netherlands (1) and Turkey (1), as proposed by iJFJ and 'TEC.
49. On 28 June 1985 the tenider documents usirg the tca-nvelopebidding procedure were issusd to the eight prequalified biddesr*w As aresult of the evaluation of the seven bidders who submitted their bids (theTurkish firu declined to submit its bid), recommondation by CUFL to awardthe jetty contract to the lowest priced/evaluated bid,er, TaiseiCorporation of Japan, at a total coat of Yen 912 million plus Takm 28.5million ($4.77 million equivalent 1/) was initially approved by ADiAED; butADFAED later expressed inability to finance the jetty contract bsacuiefunds available from ADFAED had been decreased considerably due to currencyrealigmnent.
1] 7 September 1985 exchange rate: $1.0 - Yen 239.86 - Tlrl 22i ,
ATTACHMENT I- 51 -
5o0. M oa-fimmiers metina in NoWs im_ the Bh*s w kin-wn!o the jetty pwkage; hawr, te B.* inMiatld that froda
tendim-0 b ie3mr in aordam with the k*g Ch,daliMf_i P 'to the P pmumLified bidders and stip4ated a tderiag peid of no1ew U GO deo . t freh tad.r enquiries wer immd by
.PI w4t bid&' closing date on 17 May 1986. One Japemm bi decidednot to p<eicij>zto in the rebidding du to the fact that it hA mpzeuadinablity t its original cost in i ti of a abrterilGzXtiozat pariod. All of the six ining bidders wra fosubattialy g'poive to the technical amd comrcial I q izma0 ofthe b c-ufry, and (WFL to ard Pi-I to TriasiCorpomtBioaa wAo rmminedthe loiest priced/evalustad biMr Afterobtaiir the v aprva on 27 Augmt 1986, the R-i contrat emsi 1 Q5 tor 1986 at a total cost of Yea 92'.7 million plu T1a44.8 oilliom (07.15 m5illion equLvalmit) e/. TM wEk of the PU-I meoolet in AQ-t 1987 about two intha ad of =dale.
8. 9g2M!RWt of Ooertional HMD_nit M&dviMor Smricas (Ig"WI
51. RE,t to S &tion 5.04 of the olw AgretI atQi {@ ptat) ndviso83 was to be by aM to eaft-JL in the
pPP ea8at and tion of the Plant for tim itial pS!icd oft *t1g U YaXro aftAr the oclpetio ' of of thu Plnt. In
early 19O7 i -Gilt and (IL ianfo d tAB that In the inteatof eoawtrr &a officia of the Project, they p to nge thesoCC (TIE) to yA&3 the eervicei for a A9ooPl the Bk r11 _tadthe Gov-i'--t ed CLi to fish inforition on tih a m p &wuticm andmnmer in &lc the proose CHO a to be provided by IIC.'
52. e r4 -ty 1987 the BaLnk in Winciplo to the prcoeiari2ot by ths Gwave t and CJIL to the T that erectcA thePlant for sovioas to oa1rate it latuew but subject to the folloingconditicno: M the fil pl will be subject to the apcoval of theBUk; and (ii) O by TDC rahod omly after its obligatioA am Chad ba c etd in t of suoossful coletio of teOrmin testsand aQS~zF of the Plant by JL. No part of Mg hadd in w m beutilized foe £ of fulfilling anW of TiC's obligatim 00.
53. R and TM negotiated the drft WS aoemt In Octaber 1997ard aiis , tkt daft has bam r tinted twie m certain tun_relatW to raouraticn rates, bho office bec-qV uervioe, ovartimpay&zat, hei leavG expen and hoc office service diw tun.eThe a coant=.t wao finally signed an 26 April 1S taa Imorporting
dEBX by the Bmk an 2 Novembw 1987. 1m inPut of theexpatriato edvicary tam will be about 330 ma- mth for a period of 30
n-=tho otartintg frE February 1988 to A t 190 at a totl amt of$4.77 @il1licn GtlivlGeIt. Although siaiing of the co_txat -- delayed,ThC initiated their ansirt for the AS MaXIn, 2 Vebaify 19M8 a dawafter tha Plant'2 ec date.
1/ 17190! e,kowo rate: $1.O Yen 163.50 a T1a 30.36.
ATTAChM4 I- 52 -
9. rile_ntation Schedle
54. At the tim of Project aprisal in 1960, the completion of the Project schdeduled for Aut 1985, and Plant stUNupa acceptmace wa scduled for Novke_r 1985. Ite amplmiatsIia
scedule of the Project was later reisd at the tim of Ippniul for asuppl_ntary loan in 1986. The revised mImntat schdule me in-auordanxe with the Geal Contraator Agremobt (m par. 32) in whioikthe cac arsnteed to omwlete the mohanicl worM of the ProJet- inNovber 1987, and Plant start-up MAd acceptac in M1Ch 198U8. I.ver,the actual completion of the Project was on 28 OctAbe 198? an the Plantwa officially accepted an I Februay 1988, am math am of th QCscontractual schedule (we AppeAix 12 for coarison of the Mr t,schede at tim of appraial reapprmisal and actual) * a to the ).in the early pMh, the upla tation of the Project wa cXleteddi Umnnths behind the oriainal schdule emrissd at the tim of the alprmtal(see causes of dela in par. 72).
10. Comlim with on Coveatts
55. * T Goveuat and uWL hod awamlly a Ulid ith thw lan project coveAnt stiplatd by the B and the oM (Appudix 13). 1T institutimal and fiit3. _OVI WS Athe period of pmatton included: (i) engu ot of a (ICfor th eoomtrution of the Plat, (ii) ma-tination of the TA to amiut CM' lb
seetion of, and supervision of the works of We, (iii) _"A ot bo ersoiel in consultatian with the 1u&, (iv) availrAlity of f*aa fr
the Goven_nt to alL in acoarduie with a firAnigt ara t, (v)apication of prefertial rates for custams Utes and teme, aid (viisuiiasin of Project prowress repots and audited fimmal ststinns.CUiL had cmplied with thes oblisatim. t1_ fimncta and taittcoveanta particularly those relating to capital strutum ad prwicing ofure ae not yet applicable as the Plant h_ not offiiaUlly ttdcomacial opertion (se par. 63) at the tim ot the .- MissiciaPurwnt to Section 11(b), Schedle 6 of the L A_ei t anoemind theBorrowr's review A approval of omit t aazds by OBL, the approvingauthorities of the GOVenAMt re not acting in the bst intwret aidecoom of the Project ad took abdst It inthe looger thm aipected toapprove the apoint of the cO after the k ui othe tco-f iumierhad given cmnwraose to the CWL reoesmidtion.
11. Pro* et go&
56. The ProJect we originaly estieted to ost abot *47.54million including $289.98 million in fareigm ai-s ad *177.5 fiieequivalent in 1ll curreny at the tim of appraJfIl in OotNbwmobw1980 based an an exhange rate of 51.0 a You 225 amd $1.0 u Th 16. Inview of substantial dels (see pars. 54) ai sigifiuiot cat 1 as 'inthe course of implimnting the Project,a rerSisl of the Project meme in Junz/July 1986. It was foun at the tim Of re1aml that thetotal eatimted ProJect cost had ireased to mAt W577.8:1 million
- -3 _ ATTACHMENT I
incluZdiu $354.13 million in toeii exbue and *223.69 millin in localcurrt based an as exchange rate of $1.0 - Yen 153 ad $1.0 a T1a 31.5.Thus, the revised cost etimte of the Projeot in Jum/JulY 1986 Indicateda cost overna of $64.15 million in foreign sexcange sd *46.13 millionequivalent in local oumenco, corrspM I1g to a total aost overwm of$110.28 or an overall izrins of About 23.5 per aent.
57. The actual total cost of the Project as of April 1988 ammted to$512.95 million comprising a foreign exchae cost of *377.83 million and alocal curreny cost of $135.12 million equivaleft. 12 cwpaon of theProjeot cost estiuta at the time of a'pndisal i l and theactual Project cost is su_rized as belw (see Appenix 14 for detailedcmonents of the Project cost):
Table 7: Sumir of Proeot Cost
UN Mi11licm EamilaentAppraisl ReprisalEstiutes Estimtes Actual Coat % Iz2reaeNov.1981 Oct. 1986 Cost Oveu'ta vs. Apprai(A) (B) (C) (C-A) (C-A)/(A)
FX Cost 289.98 354.13 377.83 (+)87.85 (+)30.2LToca Cost 177.56 223.69 135.12 (-)42.44 a (-)23.9 /
Total 467.54 577.82 512.95 (+)45.41 (+) 9.7
TANA Million
Local Cost 2,841 7,046 4,150 ()1,309 (0)46.1
/ Cost unwerzm in tez of US$ equivalent is dw to looal currmdevaluation throughout the lupleatation period of the Project.
-ATTACHMENT I- 54-
58. For foreign deobge coat of the PFoje,t, the 8atu&. COtirs3urred by the seven co-financiers and the Govermat is sumerized asbelow:
Table 8: Foreign chae FiPmaing Plan
uS Millian £ouivalentActual Amtunt Api a al A_tual
(Million) NOV. 1981 t. 196 cost
ADB $72.00 72.00 98.00 W 98.11 lySFD SR 283.50 85.00 73.31 73.83ADFAED DH 85.00 25.00 23.15 23.00laDS ID 12.76 16.00 16.28 19.92OBCF Yen 13.250 60.00 106.98 _/ 124.76CDA CS 25.00 20.00 13.13 14.37MDA SDR 12.80 11.98 15.42 17.34Government - - 11.21 4y 6.50
?YAL 289.98 356.54 2/ 377.83
2/ Includes the equivalent in variou currencies of SR 21.427 million($26 million eqyuvalent) frem the Dank's Special Funis rescurc underSup\apleitary Loan.
/ As of Mby 1988, Suppleuentary Loan wos equivalent to $28.96 million.2/ Include additional funds from COCP in the amsnt of $23.21 million
equivalent.4/ Arranged through commercial banbs and other sources.g/ Total funcl available (total financing as required is *354.13
million).
59. The ost overrun in local currency (Ibble 7 and Appendix 14) wasmainly due to higher rates of duties mazi taxes ($19.73 million equivalent)than those contemplated at appraisal 1/. and inaressed in interest durrintconstruction ($20.47 million equivalent) on account of an implementationperiod that wm longer than that envisaged at the tim of appraisal. Thecost overrtm in foreign exchange was mainly coaued by the realign ent offoreign curmicy rates after award of contracts apart from delays in theearly implementstion phase of the Project (see pars. 54). Other factorsthat contributed to the foreign exchane cost overrun are su.irized asfollows (see also Appendix 15):
j/ The imposition of development surcharge aid import fee in addition tocustom duties mad sales taxes has increased the rate from an estimated2.5 per cent to 7. 5 per cent.
ATTACHMENT I
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(iM Unforeseen cotingecies aros relating to osta of sitefilling by the foreign dredging oontzaatar in lieu of the
local dredgers to an increas of fill area ftom 65 to 80 ha.(about $2.55 million) and to the um of imported pre-stressed-conorete piles to murm timly completion andreliability of the Plant foundation (about $1.67 million).
(ii) The location of the fresh-water intake station ws changed,due to saline water intrunion, from the forser location atthR Siklbah Canal to the preset loostion at the}arnaphuli River. This involved an increase in costs due tothe increase in pumpira capacity as al as inarease inlength of the water pipeline (about *4 Million).
(iii) The price of equipmet, mterials and service escalated asa result of delays relating to finalization of the Projectiinpleintation arrangements and the selection of Oc for theconstruction of the Plant (about $2 olliom).
(iv) The construction and erection of process facilitiesoriginally contemplated to be carried out by direct local'labor were, however, awarded to foreign ccntractors due toshortage of skilled local labor. These costs related toforeign subcontraotors for process vesel fabrication,equipment erection, insulation, refrectory lining, pipinginstrumntation and electrical installation (about $16.75million).
(v) The costs related to catalysts and chemicals, watertreatment, cooling and distribution (abort $2 million),jetty, equipment for maintennme facilities and materialhandling (about $2.5 million).
12. Disbucrsmnt of Bank Lans
60. The original Loan Agreement for the Project signed on 17November 1981, but tk date of effectivenes of the lon bed to be extendedseven time as reqysted by the Goveront before all pre-conditions forloan effeotivmmsa could be fulfilled (see para. 18). The original loanme r finall declared effeotive on 19 Janury 1983. Dt of loanproceeds at a cumulative amount of $6.351 million for th yers 1983 and1984 pri,mrily covered the expenditures of two sezvim contracts, i.e.earth filling/site preparation and the TA service. Soon after CUFLappointed oc in late 1984, the pwce of iementation as well asdistxwsaent activities of the Project improved at the start of firstquarter of 1985. The disbursements of the loan proceed1 w'r at peakduring the critical construction period from the first quarte of 1986 tothe third quarter of 1987 (aee Appendix 16 for actual disbu_nts of loanproceeds). The approval of the Supplementary Loan by the Blak in late 1986was timely, enabling both GCr and the subontractors to mintain theirrespective contractual obligations on a continuom bsis.
ATTACHMENT I- 56 -
61. In the original Loan ASreement, the utilization of the lognproceeds expetoted to be completed by 31 Dw1br 1986. Horvr, theloan closing date w' extended to 31 December 1990 in order to coincidewith the closing date of the supplementary Lan. Out of the total loan of$100.961 million 1/, the contract awards aid disbusmnts as of 31 May1988 amowated to $88.326 million and $80.609 miion, repectively. Inview of the completion of the Project, it was estimted that about $2.85million will be cancelled from the original lon ainmt. The renminingdisburse_ts to be e xier the origial loan are expected to becompleted in Jum 1989 upon issuance of the final acceptano by CJFL of thetwo major contracts (Jetty and civil works for proces/utility) armsubsequntly, the Governmnt/CUFL will request the Bak to effect closingof the original loan (see Appendix 17 for final allation of proceeds ofthe original lown). For the Supplentary Lan, the contract aids awxdisbursements ammted to $19.81 million and $12.01 million, respectively.The remaining proceeds of the loan will be utilized for the Operational andenamnt Advisory Services and the praourmnt of oonsumble catalysts/
chemicals and critical materials and apares a needed in the intenand operation of the Plant till late 1990 (see Appendix 18 for rvisedallocation of prooeeds of the Supplentary Lan).
13. Bank's Role as Coordinator
62. Te Bak was requested by the Goveziat in 1979 to undertake therole of coo tr as the co-fianiers. A r.nim of agremntsetting forth, in gairal term, such aspects as the Project ionarr-ng- ta, allocation of coqmp ts to be fi'ard by eob co-finanier,aid coordination amnn them was siged aang the oo-finoiers and the Bankin 1983. The lank also performed a similar role during the early stage ofthe engineering loan for technical services for the uw fertilisr plantand the gas systm. Because of the nagituie of the total forein exchOngerequirements which made it difficult for the Bank to finane the Projectcost alone, the Goverunent requested Sank assistance in mobilizing thetotal foreign exchange requirements of the Project. In respns to therequest of the Bank and the Government, the other co-finaniers agreed tcjoin the Bank in the financing of the Project. The firet pro-appraisal ofthe Project in February/Mrch 1980 was initiated d bory theBank, with representatives of ADFA1D, CIDA, IaDB, OUF and SPDparticipating. All these co-financiers also participated in the appisalof the Project in October/Novenber 1980. The Bank also paticipated in thesubsequn _meetings of the co-finenciers held in Dhaka for nnitoring theprogress of iplantation of the Project, and reviewing other nattersrelated to Project implementation. The matte disc_used includedprocurement procedure, definition of critical item, contratingarrangmnt bete F CUIL and GC and allocation and reallocation of Projectcomponents among co-finaniers. Following a request of the Goverrimnt, theBank also conducted a reappraisal of the Project in Juma-July 1986, anr
1 loan No. 541-RAN(SFI at '$7 2.' ,' 1; on and Lan No. 796-BAN(SF) at$28.961 million (S e4ouivft1enI -." +4t 21.427 million).
ATTACHMENT I-57 -
organi aco-finaniers' meting in MMii. In August 1988 to discum thefiediugs of the 'al Minsimi sd to finalize t orfirAini the cost owrrua an the PIojeat.
14. Initial OQerations
63. Since start-up of the Plant an 29 Otober 1987, 12 minorincidents reported cauing interruption in the prodt tian of a_nia/ureawar reported. Most of these incidents war maumd by fealty proesu/
safety its except oecmud by mahanica failure of twohtgh-presue ps in the _ania presm. The frequoy of interruptionduring the testing and camieionins of sucb oaml facilities isconidered norml. aclR considered the Plant .till an "trial opration"till 30 June 1988. Camercial opamtion of (UPL was .du.ued to start atthe beginning of FW1988/89 on I July 1988. with psior approvL givea bythe Bak, (UJL has retained Cc to provide opet1_ - advisoryservicer covering the period from Febriy 1988 to August 1990 (an parae.51 to 53). Sas of the major events durwi the fina pnae of the Projectare highlighted as foIlows:
25 October 1987 production of first drep of _ia29 October 1987 production of first prill of urwS3 Deoocewb 1987 forzLl inauguratio ofCUPL
21 Deeember 1987 1st shipumet of bilk was (11.085 ton for export)27 Deciber 1987 completion of the 20 dW* d MYtr ation uno11 January 1988 ccopletion of the 10 dbay' gmfrnatmeeforme
test and subteqmat ahut-dam of the Plant.15 Jamary 1988 1st ohi nt of bagged urea (?7832 tons for
export)1 February 1988 Plant remuad produt.ion wd attained centinuou
operstion anward. Plant acceptmno effectivedate.
64. The operational performance of the Plnt since start-up is shaomin Tabe 9 below:
Table 9: PwrnuoM of C& sin Start--Am
Downtime, Hrs. Actual PW&%tion X ofMbnth/Year (Frequency) Operation* Hre ftte4 tan/hr) Capacity
Oct. '87 0 71.75 49.00 69.17Nov. '87 (3) 384.0 366.00 61.00 86.12Dec. '87 (2) 53.4 690.50 70.61 99.69Jan. '88 (2) 490.0 254.00 71.85 101.43Feb. '88 (5) 191.5 504.50 68.25 82.24mar. '88 0 744.00 68.49 96.70upto 25 Apr. '88 0 600.00 50.57 84.11
ATTACD I- 58 -
65. Sims tril production started in Octbr 1987, CUWL ba pradoedabout 207,111 tam of urea and recorded a total .le of about 107,763 tonas ot 25 April 1988. The mthly production md dispatb figums of CUFLarm given as follow (unit in mtric ton):
Table 10: aCUL Production md Salem
(Ide) monthly MbnthlyMonth/Year Production Dispatda Stock Elo anc .lativ Stock
Oct. '87 3,514.80 0 (+) 3,514.80 3,514.80Nov. '87 20,496.50 0 (*)20,496.50 24,011.30Dec. '87 48,758,00 11,085.48 (+)37,672.53 61,683.83Jan. '88 lat248.96 10,266.90 (+) 7,982.07 69,669.90Feb. '88 29,388.69 29,321.80 (M) 66.69 69,732.79Mar. '88 50,959.27 28,203.31 (+)22,755.96 92,848.75Apr. '88 2/ 35,744.55 28,885.60 (+) 6,858.95 99,347.70
207,110.78 107,763.09 W (+99s347.70 96,063.63 (bilk)3,294.07 (bonged)
g/ up to 26 April. 198b/ 99% is expOrt mhipdaint
The movement of ptduct out of the Plant is solely dbpudent on thembrketin a It betwm IC E am Bnladesh tw DevelopmntCorporation (BADC) for expor and lo'al ro m t-, respectively. Thesupply of urea frt existing plats in the comtry in at premit sufficientto met local demnd for FY197/88 duo to a large volum of 0.2 milliontons carried over frm last year Im pwra. 9). An a ro ult, aboat 99 percent of CUFL's urea shipints wero arranged by BCIC ror the export oorket.With regard to local ura dend for FY1988/89, UDC has projected a dersndof 1.176 million ton that inoluds a su.ly of 0.191 million ton fry.CUlL.
ATTACHMENT I- 59 -
SIi. XFIewM UMMATION 3VAUIA.TCN
A. Proieat De_iMn ald Comnmts
66. The soaps and coparAnts of the Project an foruAlated duringappraisl in 1980 we based on infomtion and data obtained from thetechnical advisory services which we finmnod by the Ban* uner Loan No.282-BAN(SF) in late 1976 (see pars. 11 & 12). The Plant was constructedin oonforuity with the scope of the Project an originaily envisaged.During the iuplintation of the ProJect, however, there ws only one majorchawe in the oontractor a scope of work related to the onstruction of thefresh-water intake station and its pipeline network. The revisionrecmmniurded by TA was mainly due to saline water intruion at the SikalbahsCanal for the propoed water pumping station. A new location at theKVAryphuli River was later decided upon for the tter paping station whichinvolved increase in puiug a ity and increase in length of waterpipeline, from 8 1m to 28 km from the Plant site (see pas. 59). Thisincrease was reflected in the updated cost of the Projet at the tim ofreappraisal of the Project in 1986. There we, therefore, no chanp in thescope of the Project as envisaged during the time of reappaisal. Both theoriginal scope and the increased copmptos under the up;plry loanwer wel* conceived. The provisions in the Bank loon for pr mnt ofequipmant, materials and services were adeqtLte.
67. The use of the Kellogg aonia process and the Mitsui-Toatsu ureaprocess as provided by GC wa made with the conr m of the Dank andother co-finaniers while selecting OC through interntional oampetitivebidding mong prequalified contraotor (para. 27 to 32). Both processesare well-proven, and have been in suooessful comercial operation in anumber of plants for several yewas in miny countries. The urea process isalso in operation in the Ghorasal fertilizer plant in Bangladesh which wasalso engineered and constructed by the sam oC in 1970. For the abeorptionand regeneration of carbon dioxide in the aimnia plant, the well-provenactivated Benfield process has been applied. The mmin ammonia synthesisgso comprssor and recycle gas compresor and their stem turbines werefabricated by well-known umnufacturers and suMpliers. These units are alsocommercially proven. Other major process equipment such as the ammoniasynthesis converter, high-pressre steam boilers anl critical papa werealso supplied by repAted manufac rs. lhe Plant is furnished with awater treatment facility with a satisfactory design and ample capacity toensure adequate supply of boiler feed-water systm and other processrelated cooling systema.
68. The design of the Plant adopted sma proven features of low-energy process involving more eoonomical utilization of process heat thanthe conventional process such as combustion air preheating in the amoniaplant and condensate recovery hydrolyzer in the urea plant. As a result,the capital cost was increased by about $6 million ($4 million in the
ATTACHMENT I
- 60 -
amis plant and $2 million in the urea plant). ghe Plant ha beeoperating satisfactorily in ton of ewu om tiaa of 8.31 millionkilocalories per ton of acia oqmpwd to a range of 8.42 to 8.74 millionkiloslories for the cowentiaol psaoeas, an raoovey of about 85 percent of steam prod about 1. 17 tons per ton of uras c red to 75 percent in the conventinal prooes.
B. Proieot Cost
69. The estimate of the Project 'm prepad by TA, i.e. UNIOD on thebasis of simliar projeot built in late 1970'.. The iplinntatian of theProject originaLly scheduled to c e in July 1982 tm ectmLly startedin November 1984 with the appointmet of TBC of Japan as OC. The ProjectWEs completed 26 uomths behind original schedule (m pia. 54). nheprocurement of most of the equipment, uterials and srvies me omletedin the last quwrter of 1985 (the foreign procunt for the Project issurized in Tae 11 - see also Appuenix 7). About 71 per oent ofcontracts awarded were derosinated in Japrae Yen. 9.8 per cent inDeche Mwk*s, 106 per cent in Dutch Quild, 1.3 per ent in ItalianLira and the balance in U.S. Dolla C ider the fozei1 eodhner&tea prevailing dtring the time of bid opeing (1985) of oot of thecontracts for equipmnt, materials and servies, the foreig mahmg coatwould have been in the order of $258.93 million, well within the origi41
(Foreign Fmshag Componnts of the Pojeot)Table 11: Suinrz of Prcuresmn Of Godad rvo br-Cm=
Countries Ammht (UW Equivalent) Prcentae
Ranladesh 0.01 0Canada 14.88 4.15Gezny 35.25 9.82IndiA 0.22 0.06Italy 4.48 1.25Japan 256.09 71.35Korea 17.38 4.84Netherlands 5.66 1.58INC (China) 11.02 3.07Singapre 11.78 3.28U S A 2.13 0.59
358.91 100.00
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cost estiute (ee Appendix 19). Howw r, due to the appreciation ofcurren-ies, particularly the Japanese Yen j, in which the contracts wereawszded vis-a-vis the currencies in which the loans and credit werede_minBted, this amount increased by about $100.77 million after takinginto aoccmut the contract variations listed in Appendix 15 and theprevailing rate at the time of the disburseemnt (Appendix 16). There os aforeign-exchange cost overrun of $87.85 million (30.3 per cent) and $23.7million (6.7 per cent) as compared with the cost estimte at the timr ofappraisal and reappraisal, respe¢tively.
70. The tote.l actual Project cost is summarized in Table 12 comparedwith the Ashusani fertilizer project completed in June 1983. The AabuganjFertilizer Plant / in Bangladesh which was also co-financed by the Bank(Loan Nos. 217/396-BAN(SF)) may be used as a couparison beoause of its veryconsiderable similarity to the Projeot; both projects were designed toestablish a new amnenia/urea fertilizer plant using natural g asfeedstock and fuel. The rate capacity of the Ashugani plant is 1600 mt/dayof ures and is slightly smaller than that of the CUFL plant which has acapacity of 1700 mt/day. However, there are more components added to theCUFL plant such as raw-water intake station and pipeline, Jetty facility,bulk urea storage and handling facilities and site dredging. In comparing,the total cost of the two projects taking into acoount the above'differenoes and adjustment on completion period on the s basis, the CUFLplant is about $96 million (20 per cent) lower than the AahuganJ plant (seenote "d" in Table 12).
J Averoge exchange rate in the past 6 years for USL.00 is equivalent toYen 238.78 (1983), Yen 236.8 (1984), Yen 239.65 (1985), Yen 169.45(1986), Yen 145.12 (1987) and Yen 126.13 (up to June 1986).
;/ The plant was built using the Friedrich Uhda prooess for theproduction of ammonia and the Stamicarbon prooses for the productionof urea.
ATTACHMENT I- 62 -
Table 12: Comoarison Between CUIFL and Ashugmni
CUWL Ashugaj
Number of Co-financiers 7 10Loan Approval Date (A) 17 November 1981 20 February 1975General Contractor's
Effective Date 24 December 1984 01 January 1976Physical Completicn Date (B) 28 Ootsber 1987 30 June 1983Impienentation Period
Actual (A/B) 71 months (34) a/ 100 months (90) WAmraisal Estimate W 45 months 38 monthsDelay 26 months 62 months
Plant CapacitiesAmonis 1000 tons/day 925 tons/dayUrea 1700 tons/day 1600 tons/day
Project Cost Estimate (Appraisal)FX $289.98 $142.3Le $177.56 $107.1Total *467.54 $249.4
Actual Project Cost 4/FX $377.83 $258.69LC $135.12 a/ $220.26Total $512.95 $478.95
_ost Overrun (%)FX (+)$87.85 (30.3%) (+)$116.39 (81.8%)LC (-)$42.44 cf (14)113.16 (105.7%)Total (+)$45.41 ( 9.7%) (+)$229.55 (92X)
a/ Imple_entation period exclusive commissioning and testing under thegeneral contract in parenthesis. Plant acoeptane date for CUFLProject is 1 February 1988 a month ahead of Oc contractual schedule of38 months.
~/ Estimated time to complete the Project at tim. of appraisal.cJ Underrun of LC in USD equivalent due to depreciation of the local
curreny (TaIa).4/ In comparing the two projects on the sam basis, the follcwing
adjustmets were made: (i) pro-rata in termn of plant capacity; (i)estimated cost of $10 million for the water intake station, ureastorage and handling system, Jetty facility and site dredging; and(iii) present value adjustment based on escalation at 5 per cent peryear (total of 4 years). Therefore, the CUFL plant is about S96.0million lower than the Ashuganj plant.$478.95 - ($512.95 (1600/1700) - 10) (0.95)4 $96.0 million96.01/$478.95 x 100% = 20
- 63 - ATTACHMENT I
C. IuDlemntation Pla and Project Schedule
71. The iplementation plan for the Project was satisfactorilyfollowed using: (i) a TA team to assist CUFL in the prepartion of tenderdocouents for the recruitment of the site-filling contractor awd QC, andsupervision of QC works; (ii) a QC for services responsible for the overallimplementation of the Project including engineering, procurement,supervision of erection and construction of services contractors, guaranteethe performance of the Plant and training of CUFL personnel; (iii) CUFL asExecuting Agency, with key personnel drawn mainly from WCIC, responaiblefor overseeing the implementation of the Project and for liaison with theBank and (iv) the Bank as coordinator among the co-financiers. To ensuresatisfactory and timely implementation of the CUFL project and the IDAassisted Bakhrabid-Chittagons gas pipeline projcwt (see pars. 5), theGovernment established NOC for coordinating the activities of the twoprojects. These arrangements contributed significantly to efficientimplementation of the gas pipeline project that was completed in 1984;however, NOC was urable to expedite the Government's confiraation for awardof oC contract (see pam. 55). In retrospect, the TA and CC arrangementfor executing a project as complex and as large as the Chittagong UresFertilizer Plant has proved to be successful.
72. The Project implementation schedule as presented in the AppraisalReport of 1981 Was reasonable. It allotted 13 months for prequalificationof aWplicants and subsequent bidding for the general contract, two mx*thsfor mobilization of GC and 38 months for completion of the Project by (c.However, during the early phase of the Project, the implemnttion was 27months behind the original schedule envisaged at the-tim of the- appraisal.The main cpases of the delay were:
(i) The prequalification of nine contractors for the generalcontract, out of 13 considered, took four months more thanexpected due to the need for properly assessing theengineering and financing capability of some firmB;
(ii) The ITB for the general contract was issued to theprequalified contractors some 12 months later thanoriginally scheduled because bid doowuents could not befinalized until the arrangements for the implmentation ofthe Project were agwxL =oc6_ cs=£inanisn> Due to thedifferent procedures, guidelines and prefereos held by theco-financiers, a series of protracted ocnsultations amWngthe co-financiers, as well as between the Goverzuent and theco-financiers, were held during 1980-1982 before a finalcoqpromise formula for contracting arrangemuat for theimplementation of the Project could be evolved n bember1982 (see paras. 27 and 28); ad
(iii) The appointment of oC took about 11 months longer thanexpected mainly due to procedural delays in the Gove2wurt'sdecision after the Bank and other co-finamiers had given
- 64 - ATTACHMENT I
concurrence to the CUIFL rewi ca,dtion of the selected ocand the need to confirm the availability of ammonia prooesslicense from licensor through the seleoted oC (see pyras. 31and 32).
The general contract agreement between CUFL and TBC wis signed on 25November 1984 and be¢ame effective on 24 December 1984 with the aim ofcompleting the Project within 38 months. The Plant was mechanicallycompleted and subsequently accepted by CUFL on 1 February 1988, a monthahead of the contractual schedule.
D. Contractina for Goods and Services
73. The procurement of equipjmnt, materials and various services wasundertaken by oC on behalf of CUWL in accordance with the respectiveguidelines, procedures and eligibility requirimts of the sevenco-financiers in respect of the components allcoated for their financing.The procuireent activities (see pars. 38 to 41) were generally carried outefficiently and according to the principles of quality and economy. Noserious problem was encountered in the contracting and procurm ent of "o3ormachinery and equipment, particularly the process-and time-critical it _ ,as most of the these vendors/manufacturers (about 70 per oent, see Table 3and 4) were from Japan where TBC gave them utmost asswrance for itscommitment. As a result, deliveries of the process-and time-critical itemwere kept on schedule.
E. Environmental Aspects
74. The Plant was constructed with appropriate treatments to controlspills and dust emissions and to minimize the discharge of liquids, gasesand urea dust particles into the environment in all areas of the complex.The environmental protection measures adopted for the Project were inaccordance with the Western/Japanese standards as they are more stringentthan the local environmental authority, the Deprtmmhnt of Envir&omentalPollution Control. Provision was made in the design of the facilities tosafeguard accidental process spills including pump leeks and chesicalvessel ruptures such that they could be adequately contained, collected,treated as required, and recycled back to the prooces. Also, discharge oftoxic or hazardous materials from the Plant is strictly prohibited.Enforcement of the environmental rules and regulation and routinemonitoring of the effluent from the discharge point of the sources iscarried out by an in-house environmental unit function under the utilitydepartment. With respect to the oocupational safety aid health of thepereonnel in the Plant, the facilities were constructed in acoordance withstandards acceptable to the chemical industry which provided the following:(i) adequate exhaust/ventilation system for buildins; (ii) adequate mstersupply and sanitary disposal within the oomplex; (iii) maximun atmosphricexposure for high pressure and hazardous prooess; (iv) adequate catwalksand railings for routine maintenance (v) good insulation with protectivealuminum jacket for high temperature piping; (vi) vent stacks for processrelated equipment and machineries; (vii) fire fighting, rescue and first
- 65 - ATTACHMENT I
aid facilities including fully equipped ambulanoe, fire trucks, portablefire extinguishers, dry/wet fire sprinklers, fire alarm and fire detectionsystem; MAn (viii) essential safety tools including hard hats, goggies/safety glassm, boots, respiratory masks; safety showers and eyewashstations.
75. Natural gas with the absence of sulphur is used as fuel for thegeneration of steam and power. Stack height of at least 30 meters aboveground level provided for the fuel gas exhaust systma is acceptable onstandard engineering practice. A build-in scrubber/exhaust fan systemintegrated on top of the prill tower was installed to capture fine ureadust carried-over during the prilling process. No sample has been taken sofar at the discharge of the exhaust; however, based on site observations,the scrubber seems to be operating well within the design para eters. Anumber of beg-house type collectors were also installed at the sizing andtransferring points of the urea handling system. As the Plant is the onlychemical plant located in the rural area far from large urban areas, noparticular probleums with effluent air have so far been experienced at thesite surroundings.
76. The concept of treatment of liquid effluent at source ofgeneration wms adopted and the treatment system Wms specifically designed'to meet its requirement as follows:
Area of Source TI t System Puroo
ammonia unit neutralizing pit boiler blow-downneutralizing tank polir regneration mastesoil separator/skiinr oil wastes
ures unit oil separator/skimmer oil wastes
utility facilities neutralizing pit boiler )1low-downneutralizing tank polisher regeneration wastesoil separator/skimmer oil wastes
auxilliary areas oil separator/skimer oil wastes
All the treated liquid effluents from the souroes are piped undergrouiwith grmvity flow to an effluent pond (16 x 15 x 3 cubic i-ters) designedfor a four-hours retention time for final pH control and dilution/aerationby the use of a blower. he effluent frao the pond is then _mped fordisposal (at a design flow of about 790 gallon per miute) into the meataking into acout the beeficial ues and the asimilative capcity ofthe receiving water and carried to a point where rapid mixing is asured atall times during the year. Effluent sample from the Plant outflow wastaken by the in-house environmental unit analyzing for pH, amonia (NH )and supended solid (sa) once a day; oil, copper (Cu), iron (Fe) and ziL(zn) once evEry week; and bio-oxygen demRnd (BOD) once every ncnth. Theanalysis of the effluent outflow for the months of Mbrch and April 1988 isaveraging as below (all unit in milligram per liter except pH):
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Table 13: Analysis of Effluent Outflw
aUFL Gov't.Actual Standard S
(EPD)
pH 7.650 6 to 9 6.5 to 9Ss 93.000 350.0 150.0Oil 2.300 3.0 10.0NH3 7.000 20.0 5.0Fe 0.500 7.0 10.0Cu 0.055 less than 1-Zn 0.740 6.0BMD t 8
Temperature 42 to 45°C
D ata not available.
F. Initial Onerations
77. The Project has attained its min objective to establish anintegmted ammonia/urea fertilizer coWlplex with a production capacity of1,700 mt/day prilled urea, based on indigenous natural ga as feedstock andfuel (see Table 9, para. 64). The Project facilities are well maintainedby a number of well trained engineers and technical staff, so=a of whomhave had overseas trmining and are familiar with nmdern fertilizer plants.With prior approval given by the Bank, CUFL has retained GC to provideoperational and management advisory services covering the period fromFebruary 1988 to Augut 1990 (see paras. 51 to 53).
78. Since March 1988, CllFL has been facing a critical imbalance inits finished product's in-and-out flow at the storage facilities (see Table10, psra. 65). The overloading stockpile of urea has ethd te 95,000tons (85,000 tons bulk and 10,000 tons bagged) in-plant storage capacity.Consequently, it has frequently caued CUFL to reduoe its production ratein order to sustain continuous operation and to avoid untimaly and costlyshut-down of the Plant. Most importantly, the stockpile of urea valuad atabout $12.0 million would adversely affect CUFL's finanial position. Themain cause for the overloaded stockpile of urea are:
(i) full-scale commitment for export by BCIC was not anticipateduntil such time as urea achieved export quality in lateDecember 1987 and the Plant attained continuou steadyopertion in March 1988;
(ii) low demand of urea in local market because sugpply of uresfrom existing plant was sufficient to meet local demsnd forFY1987/88 due to a large carry-over of 0.2 million torna from
ATTACHMENT I- 67 -
last fiscal year (production of 0.968 million tons versnprojected local demd of 1.06 million ton);
(iii) material handling conveyor system and shiploaders were facedwith various mechanical problems (the original mtanfacturerof the conveyors went bankrupt in Deoember 1987 and a newfirm (original manufacturer under new u gnt) hasrecently taken over to rectify these problems);
(iv) the majority of the shipments made so far was in bagged ures(see Appendix 20) (bag loading is much slower than bulkloading); and
(v) mostly "general cargo" vessels were used by the buyera ofurea instead of "bulk" type carriers (loading efficiency ismuch less for "general cargo" vessels).
G. Perfonrmnce of Technical Advisor and General Contractor
79. CUFL engaged a TA, a GC and an Operational and MEaIeenmat Advisorto assist in the implementation and initial operation of the Project.
1. Technical Advisor (TAL
80. The TA team, UNICO of Japan in- association with threeinternational well-known engineering consulting firms from Japan and USA,and two local firms, (see paras. 11 and 12), completed the feasibilitystudy of the Project uider Bank Loan No. 282-BAN(SP). The performmoe ofthe TA team was satisfactory in carrying out the initial phase of theProject work which included the development of design oriteria and bidspecifications for soliciting proposals from engineering firms for theconstruction of the amnonia/urea complex. As a result, the Bank approvedthe request of the Government/CUFL to retain the services of UNIOD for theimplementation of the Project under Loan No. 541-BAN(SF). In the earlyphase of the Project, UNIOW was able to maintain the eiploy,mt of expertswith high technical stanrard in the fertilizer industries to assist CUFL inthe evaluation of bids for the general contract. However, due to the delayof 11 months before CFL was able to obtain the Goverment'as approval forcontract award (see para. 72), most of these experts beosce omitted toemployment elsewhere and, in consequenoe, the new TA assigned to carry-outthe construction, commissioning and testing Lt the ammonia/urea complex didnot perform satisfactorily. The TA services were then taken over by the GCwho considered it necessary, in the construction of a plant as oomplex and aslarge as the CUFL plant, to employ technical staff more -cupetGnt andexperienced than the staff of UNICD.
2. General Contractor (CC)
81. The overall perfornm3ce of oC was highly satisfactory. Incomparison with the Ashuganj Fertilizer Project ompleted in June 1983 (seeTable 11, para. 70), the achievement of OC in completing the Chittagong
ATTACHBEIt I- 68 -
Urea Fertilizer ProJect, inclusive of a comissioning ad testing period of37 xmmths, a month ahead of the contractual sd3dule, is outgtandingcompared to the AahuSrnj Project which took more than 90 mths. aIC mable to achieve all the important milestones set forth at the begirning ofthe implementation:
Start of Piling stobsr 1985Start of Civil Work Februsry 1986Lndergrowd Piping Work Starting Date 9 March 1986Start of Equipmnt Installation Jum 1986Power Incoming Date 24 Novasr 1986Instrmnt Air Supply Horeb 1987Steam Supply April 1967Abmoia Unit-Manical Completion Date 28 Ootobr 1987Urea Unit-Mechanical Completion Date 28 October 1987Plant Acceptance Date I Februwry 1988
82. During the Project implementation period, seversi events snddifficulties interfered with, or samtim s briefly disrupted, theconstruction works of the Plant but these did not adversely affect theimplementation schedule because of countermeasur actions taken by oc tocope with each problem. These events and difficultie were: (i) shortageof qualified welders; (ii) delayed shipmnt of materials by vendors sodmanufacturers in the early phase; (iii) shortage ofm enpower in the civilconstruction and installation of equipmant; (iv) defective quality controlof civil works; (v) slow pace in custom cleranoo; (vi) labor problems;(vii) stoppage of work due to general strike; (viii) 1wm sad ordersituation; (ix) temporary scarcity of building aterials aaoh as cemont,steel bar, asbestos sheets snd etc.; (x) delay in contract wards for WW-2,WW-3(1) and (II), and PU-1 (see par. 43 for description of works); (xi)laying of water pipeline along busy public roed and (xii) hostile weatherconditions. In addition, the most difficult one wms the shortfall offoreign currency cost of the Project due to realigmmnt of foreigncurrencies starting in 1986 (see pares. 56 to 59).
83. In spite of the foregoing, aC encoountered no serioua problem incarrying out its duties and responsibilities diligently bt taking actionwhich included: Mi) the initiation and completion of preliminaryengineering works before the official start of the general contract (seopars. 36); (ii) the establishment of an effective intexuational network toexpedite foreign procurements including quality control inspections andtimely delivery of equipment and muaterials; (iii) the firm asurasnce ofpurchases to vendors and manufacturers of process-sod tier-critical itemswhen funds were otherwise constrained; (iv) the establiaShent of a closeworking relationship between oC and CUFL, and between oe and the service(subWcontractors; (v) gaining service subcontractors' oooperation inmobilizing manpower and being willing to work extra long hours; and (vi)mobilizing effective and efficient manpower to meet Project requiranats.Most importantly, the principal other factor contributing to the suoe ful
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implementation of the Project carried out by GC was the satisfactoryperformance undertaken by the fourteen major service (or package)contractors (see Table 5 in para 43).
H. Performance of Executing Agency
84. Despite their unfamiliarity with the co-financiers' procedures inthe early stage, CUFL with the assistance of TA and GC was able tosuccessfully implement the Project. The Plant was completed 26 monthsbehind the original schedule envisaged at the time of the appraisal. Thedelay was mainly due to late appointment of WC in the early implemntationphase. Although the causes of delay (see pam. 72) were beyond the controlof CUFL, the efforts made by CUFL to expedite early resolution of theproblems encountered in the selection of GC dCtrated aUFL'a ability tocarry out the duties and responsibilities of an Executing Agency. lhe sameefforts were demonstrated later by CUFL when the Project went into a costoverrun crisis in 1986. The Project was reappraised by the Bank andsubsequent financing arrangements were made from twc, of the original sevenco-financiers to finance a major portion of the foreign exdhange Cost
overrun on the Project.
85. Since its establishment in 1980, CUFL has functioned as anenterprise of BCIC mnd has ensured the effective management and efficientoperation of the Plant after the campletion of the physical erection workof the Plant. Overall, its tie-up with BCIC has been a positive element inthe institutional strengthening of CJFL (see Table 2 in parm. 17). CUFLhas faced no significant problem in assigning technical staff and officialsbecause of the availability of adequate experienced personnel within ECIC.Srince BCIC is in charge of all ongoing and planned chemical fertilizerplants in the country and because of its significant technical and manpowerresources, BCIC is able to provide support to CUFL in: (i) tacklingtechnical/operational problems, (ii) assisting/effecting annualturnarounds, (iii) filling senior staff vacancies quickly, (iv) pooling andprocuring spare parts, and (v) contending with the bureaucrsay. As same ofthe problems it enoounters are comon to the fertilizer industry, ECIC hasperiodically organized consultations with concerned staff and officialsfrom other fertilizer plants in the country with the objective ofexchanging information on problem and their suocessful solutions likely tobe of assistance in dealing with its own current and possible futureproblems.
86. In addition to the overseas training of CUPL personnel providedunder the Bank's original loan (see para. 46), the supplementary loan alsocontained a provision for a team of expatriate advisors to assist CUFL inthe proper amnagement and operation of the Plant in the initial periodstarting from February 1988 to August 1990 (see paras. 51 to 53). Theexpatriate team is expected to assist CUFL in the management and operationof the Plant, in particular in the scheduled initial overhaul of the Plantduring September/October 1988. At present, all activities must be reporteddirectly to the Managing Director, who is concurrently acting as Executive/Technical Director. This involves the Managing Director in decisions which
-70 - A
should be made at a lower level, and limits the time he can give toimportt policy matters, corporate planuing or m,nitorin of theperfoimance of the various deprtments. In short, deoision-mking isovercentralised ari the Muging Director is oveiwrked. Also, in myoperational, adnta d-technical matters, CUWL is still substantiallydepedent on CIC. As (nJFl ontiues to grow, it will require a strategicplan for identifying various operational and directioal option so that itcan operate independently in aordance with accepted intentionalchemical fertilizer industry principles. In this respect, the expatriateteam will provide a strategic plan to strengthen CEWL's imnagement andoperational activities.
I. The Bank's Performance
87. The completion of the Project took about 13 years starting fromthe Project Identification Mission in Mbroh 1975 to the completion of thePlant for production in February 1988. The initial six years mad threemonths were spent on Project formulation and preparation, and the followingsix years and nine months on Project implementation. From 1975, the Sankwas involved in the feasibility study, the selection of the plant site, thepreparation of a suitable fza.m.ork for Project formulation andimplementation and in the financing plan arrangements for the Project. TheBank undertook the role of coordinator among the co-finaniers of theProject and, mot importantly, played an important role in retaining the TAservices, selecting the UC and reappraising of the Project forsupplementary finacing. At a tim when the Govwrn t withbeld theclearance for CUFL to o ae contract negotiation with TE (se par.72), the ECnk played an important role in piruing the Gover(mnt to cwwith both the Bank and CUPL's decision for ontract award to the lowestevaluated bidder for the general contract. The Governet finally issuedthe authorization to CUFL for contract negotiation with T9 after 11 nmthsdelay.
88. A good working relationship between CUFL and the Bank mmmaintained throughout and no significant difficulties with CUFL wereencountered during Project imFiei.ntation. The Bank has closely mmitoredthe implementation of the Project and responded expeditiously to specialrequests made by CUIL, more specifically in: (i) financing additionalcomponents such as nom-4estructive testing, water pipeline, oto mmication,vehicles, oonetruotion equipment and unloading/inland trnsportation usingthe unallocated prooeeds from the original loan; (ii) financing the jettyand maintenance equipment from the Supplementary Loan awd (iii) using theproceeds of the original loan for disbarsements of additional contraotsprior to the effeotiveness of the Supplementary Lfan. The Bonks tin lyapproval of these requests enhanoed Project implementation in ter ofefficiency awd economy.
ATTACHMENT I- 71 -
N. OONCULlSION AND RUaCtfIDATICON
89. 'he completion of the Project fell twenty-six months behind theschedule envisaged at the time of its apprisal mAnly due to the lan timetaken in finalizing ang ts for the implmntation of the Project andto the delayed selection of OC (see pars. 72). The implemtntation planusing the services of TA and CC to assist CUFL for Project implementation(see paras. 3 to 7) has proved successful in executing the large industrialcomplex constituted by the Chittagong Ures Fertilizer Plant, particularlyin regard to the involvement of several co-finanoiers.
90. The Plant was physically completed on 28 October 1987. Testingand commissioning of the urea fertilizer complex were undertaken duringAugust 1987 to December 1987. Ammonia was first produoed on 25 October1987 and urea on 29 October 1987; this was followed by a guamateeperformance test from 1 to 11 January 1988. The Plant was officiallyaccepted by CUFL on 1 February 1988, one month ahead of the GC's agreedcontractual schedule (GC's work started effectively on 24 December 1984).The overall performance of GC was highly satisfactory. With prior approvalgiven by the Bank, CUFL has retained GC to provide the operational andmanagement advisory services covering the period February 1988 to August,1990 (see pera. 51 to 53). The facilities are at present being properlyoperated and maintauned by CUFL. Comoercial operation of CUFL wasscheduled to start at the beginning of FY1988/89 on 1 July 1988.
91. During the implementation period of the Project, OC and the 14major foreign services (or package) contractors had done their utmost tocooperate with the Government and CUFL in the use of national resources . Anumber of local firms had been engaged as sub-ontractors for construction,erection, installation and other related services. A workforoe of about5360 Bangladeshi was directly employed by the foreign contractors (seeTable 6 in pam. 44), and also, local manufactured goods as well as localavailable equipment and raw materials were used by the civil constructioncontractors for the Project. By enabling the country to achieve self-sufficiency in foodgrsin production by ensuring availability of therequired fertilizer, the Project has attained its main objective toestablish an integrated asfonia/ures fertilizer complex with a productioncapacity of 1,700 mt/day of prilled urea, based on indigenous natural gasas feedstock and fuel (see Table 9 in para. 64). Since trial productionstarted in October 1987, CUFL has produed 207,111 tons of urea andrecorded a total sale of 107,763 tons as of 25 April 1988 (see Table 10 inpara. 65).
92. CUFL has been facing a critical imbelance since Mrch 1988 in itsfinished products in-and-out flow at the storage facilities. Theoverloading of the urea stockpile has exceeded the 95,000 tons in-plantcapacity. As a result, it has frequently caused CUFL to reduce itsproduction rate in order to sustain continuous operation and to avoiduntimely and costly shut-down of the Plant. Most importantlY, thestockpile of urea valued at about $12.0 million will adversely affectCUFL's financial position. The main causes for the overlcaded stockpile of
ATTACHMENT I
- 72 -
urea are described in para. 78. It is anticipated th&t a normal level ofures at the storage facilities should be mnintained by October 1988 afteroverhauling of the Plant scheduled for September 1988. It is reomrenidedthat the Bank closely monitor the progress of the first scheduled overhaulof the Plant and the inventory of ures at the storage facilities. Themonitoring of the scheduled plant overhauling and urea stockpiling problemmay be made through the monthly progress reports submitted by CUFL to theBank.
93. The actuil total cost of the Project as of April 1988 amnuted to$512.95 million comprising a foreign exchange cost of $377.83 million and alocal currency cost of $135.12 million equivalent. The comparison of theProject cost estimates at appraisal in November 1980 and reappraisal inOctober 1986 and the actual Project cost is sumrized in Table 7 (seepara. 57). The cost overrun in locl currenoy of about Tk 1,309 millionwas mainly due to higher rates of duties and taxes, and increased ininterest during construction (see para. 59). The cost overrun in foreignexchange of about $87.85 million was mainly caused by the realigiuent offoreign currency rates after award of contracts apart from delay in theearly implementation phase of the Project (see puesa. 56 and 59).Had no delay of 27 months been incurred during the early stage of theProject, the urea fertilizer facility would have been completed on scheduleas envisaged at the time of the appraisal and at coat well within theoriginal cost estimate of the Project (see pam. 69). Sinoe the actualtotal cost of the Project is substantially higher than the originalestimate, it is expected that effective from the date of co.merialoperation, CUFL may have difficulty in complyint4 with the financialcovenants in Section 2.16 of the Project Agreement, particularly: (I) adebt equity ratio of not higher than 60:40; (ii) a current ratio of notless than 1.5; and (iii) a debt service ratio of not less than 1.5. It isrecommended that the Bank closely monitor the financial status of CUPL inthe forthcoming years, and suggestion to the Governat and BCIC/CUFL waysof improving the financial profitability of CUFL after reviewing the firstyear performance of comercial operation of the Plant.
94. The proceeds of the Supplementary Loan are to be used forfinancing the cost of the operational and usnagmnt advisory servicesuntil August 1990, catalyst and chinicals, and some ancillary equipmt andmaterials. It is reco ended that the Bank send a Review Mission for theProject during the fourth quarter of 1989 to examine the status of: (i) theproduction of the Plant; (ii) the proceeds of the Loan, and (iii) thefinancial data particularly on production cost and compliance with thefinancial covenants.
95. The supply of urea from existing plants in the oountry is atpresent sufficient to meet demand for FY1987/88 due to the large volut of0.2 million tons carried over from last year (see pra. 9). As a result,about 99 per cent of CUIFL'a urea production was set aside by BCIC for theexport market. With regard to lornal urea market demad for 1Y1988/89, BADChas projected a demand of 1.176 million tons which inoludes a supply of0,191 million tons from CUFL (see para. 9 and 65). Pursunmt to Section
ATTACHMENT I- 73 -
16, 17 and 19, Schedule 6 of the Lan Agre'mnt concerning traport ofurea for loal urket, the Governmet wil take nVoessary stepe to ensuethat: (i) rnGdaYs are in good condition; and (ii) a river- crosing ferryfor truck hauling urea is provided duing the pek dmmd season of ureafrom September to March in the folowing year. Also, L shuld closelycoordiate with BADC so that loading of urea to local haulers is done in asystemtic and efficient way. The relevant provisions in the LoanAgreement are as follows:
"Facilities for ortation of Ure fa the Plant(a) To enable urea to be t te bV roao fro, the Plant tothe consuin areas in the Chittagong district, the Borrowershall ensure that the Potiya-Anwra main road and the 5 kIm roadlinking the ProJect site with such main road are onstruted andcompleted by June 1985.(b) The Borrower shall provide and aSke available on a timelybasis adequate transportation faoilities including coasters,bargee, rail transportation and trucks, for collecting andtransporting ures from the Plant to the urea conmuAing areas."
"Facilities for Storase and Distribution of FertilizerPrior to the completion of the Project, the Borrower shallprepare and implement an overall prvgrm for impoving awAexpanding the existing interal network of facilities for storageand distribution of fertilizer within the country. The Bankshall be kept informed of steps taken in tis coeotion."
":Exort of UreaThe Borrower shall take steps to ensr that the urea fertilizerprod: ed uner the Project is utilized primarily for metingdmstic demods and needs. No export of suck production shallbe permitted exaept to the extent of any surplus that ay remainafter meting such domestic dmwxs."
In view of the foregoing, it is recamamded that the Special LaanAdministration Mission should also closely exmine the continuingconforzmane by the Goverent and CUFl in aooordace with the provisions inthe Loan Agreement conerning export and locl umzkets of ures as well astraportation, storage and distribution networks for the lal market.
ATTACHMENT I
- 75 -
APPnENDD
ndmxix PaSe
I Production and Capacity Utilization 44of Existing Fertilizer Plants
2 Projected Urea Fertilizer Domestic 45Demand/Supply (1987-88 - 2002/03)
3 Organization Chart of CUFL 46
4 Detailed Scope of the General 47Contractor's Services
S Description of Tender Enquiries, 48Vendors/Contractors Financed by the 7Co-Financiers
6 Procurement Schedule of Major Civil 52Works and Equipment Contracts Finnedby the Bank
6 Procurement of Goods and Services 53by Country - Financed Under the Bank Loans
7 Procurement of Goods and Services 54by Country - Foreign Exchange Componentof the Project
8 Major Package Service Contracts 56
9 Manpower Distribution Among Contractors 59
10 Guarantee Perfonmance Test Results 60
11 Locl Workers Trained by the 61Service Contractors
12 Comparison of Project Implementation 62Schedule During Appraisal andActual Implementation Schedule
13 Compliance to the Loan Covenants 63
14 Comparison of the Detailed Components 69of the Project
ATTACIHHENT I
- 76 -
Appendix Pase
15 Copasrison of Appraisal Vs. 70Actual Project Cost
16 Comparison of Projected and Actual 72Disbursements of Loan Futds
.7 Allocation of i1an Proceeds 73(Loan No. 541-EAN(SF))
18 Allocation of Loan Procesds 74(Loan No. 796-BAN(SF))
19 Cost Escalation Due to Exchange Rate 75Fluc+ustion ---
20 Loading and Unloading of Urea 76
- 77 ATTACHMENT IAppendix 1
Production and Compity Utilizationof Existina Fertilizer Plants
(1977/78-1985/86
(tons I
Fisca5. Ures TSPYear Fenchugali Ghorasal Ashuga ., Polash Total Chittagong
A. Production('000 tons per year)
1977/78 61 151 - - 212 411978/79 60 236 - - 296 621979/80 105 256 - - 361 711980/81 99 245 - - 344 711981/82 93 253 63 - 409 581982/83 87 283 138 - 508 681983/84 88 257 381 - 726 8119-A885 95 232 415 - 742 531985/86 72 300 431 29 832 0OO
B. Design Capacity
('000 tons) 106 340 528 10 1,074 152
C. Casocity Utilization(per cent)
1977/78 58 44 - - 48 271978/79 56 69 - - 66 411979/80 99 76 - - 81 471980/81 94 72 - - 77 471981/82 87 75 12 - 42 381982/83 82 83 26 - 52 441983/84 83 76 72 - 75 531984/85 90 68 79 - 76 351985/86 ff8 88 82 58 a/ 75 b/ 66
a/ Based on six month's running-in-period.b/ Excluding trial production from the Polash Fertilizer Plant.
Source: BADLC BCIC
(Reference in text: para. 9)
- 78 - ATTACHMENT IAppendix 2
Proiected Urea Fertilizer Domestic Deimnd/SurmlYd1987/884- 2002/03)
('000 tonsa-- -- - - - - - -
SUDD1I_ DomesticYear Consumption Existing Plants Project Supply Gap/
(Surplus)
1987/88 1,010 919 311 (218)
1988/89 1,060 915 505 (360)
1989/90 1,110 890 505 (2851
1990/91 1,150 845 505 (2001
1991/92 1,195 836 505 (146)
1992/93 1,245 748 505 ( 8)
1993/94 1,293 48 i05 40
1994/95 1,345 524 505 316
1995/96 1,400 524 505 371
1996/97 1,455 524 505 426
1997/98 1,515 524 505 486
1998/99 1,560 524 505 531
1999/2000 1,605 524 505 576
2000/01 1,655 524 505 626
2001/02 1,700 524 505 67I1
2002/03 1,755 524 337 894
Source: Mission Estimates
(Reference in text: para. 9)
0
ORGANIZATION CHART OF CUFLI IO'ERATING PtHASE)
t r c c CUFL WARD rt0
Pb | ~~~~~~~~~~~~~~~~~~~~~~~~W. J. It
ii
I SNISVn - DRM
T2C"v Dl"fDX
" 22 _ : | *2 }1 , _ ¢§~~~~~~~~~~~~~~~~~~~~~~~~416
WWRANCIE l 1 I _ [ w7 S I li AND _LJ
,_. g _ 1a 1* a 75 I l74 | I In so~~~~~~cCtfOa.MAaTihNC
r ," 'l , s , , 1OW M IF
< #CUXITY Z t < 5 tr¢l"X"^@CXt^t | - L ] 1~USIAY SAiDUN UllUJTY
Too U&V~ Rsqvimd: SON ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~
oforws~ ~~~ 2n"x 1'mpi s8
I Suffl . sMI I om U 6
13
I I P 1S~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~C
- 80 -
ATTACHMENT IAppendix 4
DETAILED SOOPE OF THE GENERAL CNTRACTl'S SVICES
(i Provision of process licenses, basic and detailed design andengineering of the ammonia plant, the urea plant, and allsupporting and utility facilities required for the operation ofthese units other than the package units.
Xii) Procurement services in regard to all equipment and materials forthe asmonia plant, urea plant and all supportin and utilityfacilities, except those supplied by the lump-suns upplier of the.package units. Procurement service for all construction,equipment and materials, as required to construct the entirecomplex excluding the jetty and the water intake station.
(iii) Construction management, coordination .and supervision of all theconstruction and erection facilities in the complex, within theframework of overall responsibility of OC in respect of processguarantees and Project completion schedule.
(iv) Preparation of basic design and bid documents and evaluation andsubsequent supervision of lumpaum package contractors for: waterintake and pipeline facilities, water treatment facilities, watercooling and distribution units, and jetty construction.
(v) All necessary work including prepsration of bid documents for theconstruction/erection contractor(s) for the complex, other thanthose works included in the above lump-sum packages, and for allother subcontractors.
(vi) Coordination and supervision of the work of all associatedcompanies, licensors, package unit contractors, construction anderection contractor(s) and other subcontractor(s), to the extentof assuming full responsibility for these works.
(vii) Training of CUFL personnel for all the facilities in the complex,as required by CUFL.
(viii) Pre-commissioning, commissioning and start-up of all thefacilities in the complex with the assistance of subcontractors,licensors and equipment vendors. The responsibilities duringthese period lie with the CC.
(Reference in text: para. 28)
- 81 -
ATTACHMENT IADDendix 5Page 1 of 4
DESCRIPrfON OF TENDER ENQUIRIES. VENDORS-I1IUFCKeSFINANCED BY THE 7 CO-FINANCIERS
I NwIRY NO. DESCRIPTION VENDORS/0C1ACTORS (OONTRY)
I. ASIAN DEVELD0MET BANK (ADS)
CZ-10 Piping material for water pipe line Sumitomw, JapanPU-I Jetty Taisei, JapanUB-88002 Barge Berth Taisei, Japanwh-l Civil & building work for Daelim Industries Co, S. Korea
process and utility1WW-4 Non-destructive test Non-destructive Inspection
Co ,JapanW_-5 Customs and inland transportation Nippon tcprest, JapanWW-6 C'onstruction equipment Walter Wright, SingaporeXX-9 Catalyst and chemicals CCI Ltd., JapanX_X-0 H.V.A.C. Nakano Singapore Ltd., Singaporexx-li Civil and building material Mitsui Construction
Co., Ltd., Japanzz-5 Firefighting equipment Voltas Int'l. Ltd., IndiaZZ-6 Vehicles Kinsho Mttaichi, JapanZZ-7 & ZZ-7C Maintenance shop equipment Toyo Menka Kaisha, Japan72.-8 zammunication Toshiba Engineering Ltd. JapanZZ-8X Walkie talkie United Traders Ltd., BangladeshZZ-9 Laboratory equipment Toyo Menka Kaisha, Japan
Site reclaim V°2 & VANCOD tfl T, NetherlandsGeneral Contractor -Lutp-rum fixed fee Toyo aigineering Corp., JapanConsultancy Services UNICO International Corp., JapanOperational/Mbwagement Toyo aEgineering Corp., JapanAdvisory Services -
11. ABU DHABI FUND FM. tRAE ECONCMIC DEVELIRPMTN (ADFAUD)
P1'-2A Cooling water facility for I.H.I., Japanurea unit and utilities
PU-3 Water treatment facilities Kurita Water Industries, JapanP1:-4 Raw Water intake station Shimizu Construction Co, Japan
and pipeline
I I r. CANADIAN IN lW NAlArIm.* DhVF.tflPmM?tF AcGPc) £CTPAi
CZ-2 S.team generation Babcock and Wilcox, Caniad(2-3 Uondensate polisher for
utility unit Eoodyn, Cwnada
(Reference in text: para. 39)
- 82 -ATTACHMENT IAppendix 5Page 2 of 4
Xa-2 Condensate polisher for NH unit Ecodyne, CanadaXX-1-D Heat exchanger vessels MuirHead, CanadaXX-15 Electrical equipment Federal Pioneer, CanadaXX-16 Polyethylene pellets Dow Chemicals Ltd., CanadaZZ-3 Instrument air dryer with comp. Atlas Copct., CanadaXX-8 fnsulation materials for ammonia Mansons Ltd., Canada
It'. ISLAMIC DEVELDWMENT BANK (1sDB)
CZ-1 Power generation Toshiba Corp., Japan72-1 Emergency gas turbine Fuji Electric, Japan
generators & Diesel enginegenerator
ZZ-2 Electrical substation Hitachi Ltd., JapanZZ-4 Inert gas generator Nippon Sanso, Japan
V. TNTERNATIONAL DEVELPMENT ASSOCIATION (IDA)
CZ-4A Construction equipment (crane) P & H, USACZ-4B Construction equipment (crane) Sumitm Heavy Indus., JapanCZ-5 Construction equipment Kinsho Mataichi Corp., Japan
(tractor & trailer)CZ-7A Construction equipment Kinsho Mataichi Corp., Japan
(trucks and etc.)CZ-7B Sulphuric acid tank truck Isuzu, JapanCZ-8 Construction equipment Orient Trading (Nissan), JaparC2-9 Construction equipment Denyo Co., Ltd., Japan
(generator for constructionQB-OO001 Piling Kajima Corporation, Japan
VI. OVERSEAS ECCNCMIC COOPERATION Ft N OF JAPAN (OECF)
CY-1 Various urea equipment Mitsui Ehgineering Co., JapanCY-2 Mixer Sumito Heavy Ind., JapanCY-3 Urea synthesis reactor Kobe Steel Limited, JapanCLY-4 Evaporator Bus , W. GenwSnyCY-5 Ammonia feed pimp & turbine Ebarm, JapanCY-6 Recycle Solution feed pump Sund Strand Corp., USACY-7 High pressure absorbent pump Sund Strand Corp., USACY-8 002 compressor & turbine Nuovo Pignone & Hitachi
(Italy and Japan)CY-9A Prilling basket Tuttle Prilling System, USACY-9B Prilling device Machine Fabrick Krebs Bv,
NetherlandsCY-10 letvalve valve Yamntake-Honeywell, JapanCY-i1 Control valve Yamntake-Honeywell, Japan
- 83 - ATTACHMENT IAppendix 5Page 3 of 4
CY-12 Diaphragm seal level transmitter Yakogawa-HokishinElectrio Co., Japan
CY-13 Parallel slide valve Motoyam Mfg. Co., Ltd., JapanCY-14 Underground piping Niuhho, JapanCY-15 Steel structure (bulk storage, Emoto Ketsetsu, Japan
bagged urea storageSY-4 ?iping Hitachi Ltd., JapanSY-5 Steel Structure Lucky Goldstar, S. KoreaSy-6 Instrunent Yamatake-Honeywell, JapanSY-7 Electrical equipment Toshiba Corporation, JapanSY-8 Insulation Nichias Corp., JapanYY-I Urea plant equipment Hitachi Ltd., JapanYY-2 Urea material handling equipment PWH, W. GermanyXX-4 Piping Hitachi Ltd., JapanXX-6 Instrument Yam_take-Honeywell, JapanX-7 Electrical Toshibs Corp., Japan
VITI. S=AUDI FUND FOR DEVEIPPN (SFD)
CX-1-A Primary reformer radiant coil Kubota, JapanCX- 1-B Convection coil Sumit Heavy Indt. JapancX-1-C Transfer line Takada, JapanCX-1-D Burner John Zink, JapanCX-l-E IDF/FDF Ebara, JapanCX-1-F Combustion air preheater Gadelius KK, JapanCX-2 Ammonia synthesis converter Mitsubishi Heavy Ind., Japan(C-3 Waste heat boiler Kawasaki Heavy Ind., JapanCX-4 Secondary reformer Koerver & Larch, W. GermanyCX-5 Centrifugal compressor Hitachi Limited, Japan
(101J, 102J, 105J)Cx-6 Synthesis gas compressor (103J) Mitsubishi Heavy Ind., JapanCX-7 Lean circulation pumps & turbines Niigata Worthington, JapanCX-8 BFW pump & turbine Ebara, JapanCX-9 Motor operated ball valves Borsig Gnbh, W. GermanyC!X-10 Control valve for steam letdown Niigata, Japan
stationCx-l1 Desuperheater station Kiekena Bv, NetherlandsPU-2B Cooling water facility for IHI, Japan
ammonia unitWW-2 Civil and building worais for Daelim Industrial Co., S. Korea
storage and transportationWW-3(I) Erection for amnonia plant CNCCC, ChinaWW-3(II) Erection for urea, utility/ CNOOC, China
auxiliary facilitiesXX- I-A CO2 absorber, etc. Sumita Heavy Ind., Japan
KX-1-B ToRer vessels & heat exchanger FBM, ItalyXX-1-C Startup heater Hitachi Ltd., Japan
- 84 -ATTACHMENT IAppendix 5Page 4 of 4
XX-3 Rotating machine Niigata Worthington, JapnXE-5 Steel struxture with crane LAwky Goldstar, JapnXS-12 Anmia storage tank Nitachi Zosm Tanks
and erection system, Japan
FUNDED BY ALL SIX 0)-FINLANCIERS EXCEPT CIDA
WW-7 Freight forwarder Hudsans Holding Ltd., U.K.
h6carettalt Icbd0dl. Of bjof Civil ltis sad Iqaipeest Custncta flouted by the link
:11te of . lid lot oft *t Br6tioe:1Bte of :Paesties:11ste of :hkt&tio: Bate of %mi.. atcer.q: kittul Aleart e f C.esact :Aaaai Lert of Coatraet. M CII
:Wumsc Cheiag ?ieculpt hy kishu lBai's (Beisi Iatneat. Ihel :kiespt hi: (bolt' : of :.......... ..................----------of1 Teade.: kite 3ak of tie: 14.31 :APPMuvl 1s-4l: :1-1 1 :6 lash of: 1104 "A fact: I kiqualest :I 0
lachage b.Barp,a Bocuernia: :suusutift : : : Coetesot "M lat :at hod aomt : aqaivulet :Assot 21pa"eaet
III:is:is: i41:sI:4l:?s:0sIg;ess:sa,s,~: ti: ISIS :sssu: Alto :,l-s18: oss11
5. Icaedliag 16-81-85 U3-1441 16-1.041 In1 33-4-6 It 53-05-83 35 11-08-83 St BIt 8.188 3.11 1.8 3.151, I-.lIl11 583135
15 41.0421 3.11 4181 5.53 - 18.43
3. UM55 Barg. bth I5-04481 I06-08-5 3-4-1-5 go 00-08-55 6 34.05-85 Is I-I-Si-H Is n 50.3388.0 5513l 6.51? iL.3111 0.5115
113 804 -hBar Ocatrctiwe lest 56-8.8 01-0-85 35-58-6 it 11-01-55 65 3-01-16 55 13-01-66 IS 13 31.88 .144 334.411 3.588 sin.4?55 0.161
lb 4. U-S - Cudt a kidBaulda 54-46-85 I--S5-11- 541-- St 11.11-81 38 13-5t-8i I? 13-81-8 31 got 1.180 1.180 L.88 8.688 1.383 5.355
1 . U-SI Civil fead lsauSiag 151-00-8 30-11-55 11-01-U 04 13-3-55 it 09-014-16 11 51-04-16 I InI 353.012 5. 451 310.810 zoos1 :.:1 s.snltteneSs
5. 10 lttjl *aculaae, Itts1 11-03-55 11-01-55 511-08-18 8 60-6 51 8i1-5-18 St 13-11-1l 30 in3 1122.811 5.632 M2.113 8.258 .1)2 0.121
x 1 -s Pipiog Eattenal 62-85-85 304-0-8 53-551-55 48 82-10-85 41 61-58-61 I 25-50-6s1 4 in1 1,85.363 4.314 5,54.5141 5.8115 0.103 5.18?US .341 5.301 8.556 0.562 58.3815 58.83
- 1 . 83-8 - QICeatLtOe 1qeaPest 81-, 01- 880 4-8- 18-18-81 85 51-52-81 66 35-52-85 It 20-01-68 25 III 8.550 5.516 II-tit 58.548 as: 1.,),
1 . U-I - lehoclca 36-08-55 18-6-105 31-32-61 83 83-05-65 It 04-03-55 Is 30-03-86 I8 in1 11.803 8.311 53.833 0.340 I'll 808
a o. r.-5 - f.refoght.aj iqailpeet 51-61-81 JO-Il-IS 13-02-46 318 08-03-81 25 51-04-81 of 18-04-66 1 In1 3.003 .4 .4 0.114 .i 811 10.oil:
H5. :-4 - Coaeaaacetios IqnLpeet 516-5-85 11-50-IS 1-11-66 92 01-01-86 It 23-04-16 lot 85-01-IS it 1in 553.24 0.418 11.143 .5.11 .3.44:1 0.181
M2 ':-- -L ostr iqtua :4-so-il 23-05-6 01-06-S6I l53 :-48-816 88 0-58-81 is 01-10-86 33 188 185.061 .1S3 112.140 0.111 - t3 .:1S
:2 11-50 - Slit - 2-04-05 30-05-68 05-12-86 lit 21-12-86 25 601-05i 3 615-1. 23 5 .8 838 824 .3 0. all
14. 11.1 - Cacaulat sUe Caiestcai :-43-64i i-0-il 55-68-86 2.1t-Si-hf 5t 89-0946 34 00-10-88 le Ill 3.3.111 s.o.s 3133.31 2.24 :.44 0..966
15. U-i -ilaAaad Iteauaaeutuorn .- 4-85l 50-Ba-IS 14-10-Il 61 13-12-11 64 56-U12-8 I 3-1-4S i3 1TN 448.530 Z.851 8SUM8 S.AM 355..Ai :.o42
18. 84-i - Iaoiaat iqaiaetftu :48 26- 1-8 -IO-1S 8 2*46-015 21 01-50-86 11 ::1-so-16 Is 181 36.080 0.543 30.080 t.21912.538 0.5 0.865 40.51 .0.55
- iBLIAOm aCe aeusesiO Oi-03-6i 35-81-8. 5Ii-884 113 640.4--: 86 440:4-5- - 32-44-6? 61 in 438.511 1 .652 4.1.ts *.zo6 14l ::.431
MIt 6.024 48.18 L:oS 8.84 - 09066 1.61i 0.:31 4.51) t.is :.i 0 oa sP
............ ......................
foul~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~1O ~ &
ATTACHMENT I- 8 6 - Ap pendiz 6
Page 2 of 2
PIOCU1JR1UT oF COOS noD 9U1vicis ST COUNTRt(Fionmed aoder the lank Loean)
(IS illion
' ~~~~~~~coustm of nbocUMT
'LAUCLADISI CANADA INDIA JPIAN : 003£ :UIfnlUML0D: 9tiNKPOBI
1. site Preparation -- 0.5?? *.513 6.090
2. Process equipeeat * . . . . .
3. Utilitlea ead Ottuitefacilities 0.010 - 0.206 11.126 - - - 11.91t
4. aterial Usadling - . . . .
S. Catalyst, Cheuicaloend Opaer Parto - - - t.tt4 - - 2.214
6. Conatructioo Squipmeot - - - - lO.1l9 10.41
1. Building soad Structures/ - - 4.4218 6.990 0.124 11.542CoRftrection and 1tection
F. Preight - 0.511 0.018 6.6S1 - - 0.011 1.199
9. Serviceo - - - 32.115 - - 3t.119,,,,,,,,,,,,,,,,,,........... ................. ........... ................. ........... ................. ........... .....................
total 0.010 0.S11 0.224 63.123 6.990 5.513 10.234 81.255
Percentage 0.01 0.59 0.26 13.03 1.01 6.32 11.19 100.00:::::::: :::::::: ::::::: :::::::: :::::::::::::::s :::::::::::::::
::::: -:::::::::::::::::::::::::::::. : : : : : : : : : : : : :.::
ATTACHMENT I- 87 - Appendix 7
Page 1 of 2
PEOCUSNINt OF GOODS AND SHiVlCIS Of COUNTS?iUoreiag Iscdulge Cooponent or tie Projecti
11 ail1innl
c O 11 P O 11 I t ----------------------------- v--------------------------------------------------------------- TOtAL:A1CNL0131:CA1ADA:CILGNAIt: INDIA ITALI JAPAN :1081A :111T11iLUNDS: PIC :SmuC U: USIA
1. Site Preparation - - 13.1 S.SI - - 19.33.......... ............. .............. ........................ ............... .............
IDI - - * - * O.SI 5.SI * .09107*80 - - - - - - -.
CIDAIDIA - - - 11.tl - - - - - j3*34leDA1608 - - - . . . . . .
COroGOB- - -
2. irocess Equipment - 6.01 6.51 4.41 105.36 - 0.15 - - 2.13 114.61........... ...... ............ ,,.,,, ....... ....... ...... ,, ., ,, ........ ........... ...... ......... ..... ,_. ,t,
IDtS* - - - . . . . . . .
CIDA 6.01 - - - - 6.01IDA -
OICF - 2.83 - - 66.43 - 0.13 - - .13 11.5)SFD - 3.14 - 4.48 38.94 - 0.0l * - 41.18COB
. Itlilities SadOfftite facilities 0.01 6.94 - 0.21 - 76.43 - - - - - 83.58
........ ....... ....... ..... ......... ....... .................. ...... ......... ...... .......
ADO 0.01 - 0.21 - 1I.13 - - 11.94ADFIID - - - 23.00 * 23.00CIDA - 6.94 - - - - 6.94IDA - - - - 1.41 - - - 1.41
Dt * - - 1.92 19.912OICF - - 1.56 - - - 1.56S8D - - - 6.30 - - 6.1Coo - 6.50 - - - 6.50
1. Iletetiol Sasdling 28- U.ll6 - * - -*8 - -.- 21.68..... ........ ...... ....... ........ ...... ......... ...... .........
CIDAIDA . - - - - - - - --
ISOtOICF - 28.68 * - - - - - - - 28.68lS570- - -e- - - - - - .
C09 ~ ~- - * - -
(Reference in text: paras. 41, 69)
- 88 -
ATTACHMENT I
oautuum of con a Ingle" of coutnt Appendix 7UIt niI b_eUI cJN e.t of U I? J"ti Page 2 of 2
:OUNTS? of DIOCulEliITC O * 1 ° 1 - -~ - - O
:uImu!ca:.aut: all: [TuA : ioANmii:uuuuu m :uctmuu: NA:s::S:SSSS::22U :SSU2333SS2 :8UU2SU3I22U 233323U23Z2222fl UZ:UU32UUUflUSSSU:SSSl3SU: Z::.. SSU S... ::::.. s
1. CataliSI. Cheulale.sad Spare lotte 0 .63 - .21 - * : .IS
........ .. . ......... _.. . _...... .... ....
LOFAII - - t.t - . . t
dna 0 .6 . . . . . . . . ..es
IN . . . . . . . . .
6. Csustruclum Ijuiplea . .19 - 11 .65 12.1460*3 . . . . . .- . .
ce m. . . . . . . . . .
s. Owntse4 ie - -- I.I - -- 111.ll
.......... ...... ....... .......... ....... ....... ...... .................... ...................... ...........................
IFS - - - - - - - l.sll
mf^ -. . . . . . . . .
AD$- - 443 61 10.52 1 1.14
III - - - 1.11 - - I '
'l -g - . . . . . . *.
Un - - - ~ ~ ~~- - -50 -.0 - - .- .1
1. ildial ud Jtnin/atSF . .tlZ - * 2 - - 11.31 1.-32 11.02t ..1 - 40.43
m . . . . ... ...... .. ........ _....... .. ... . ... ..... .
6. Freight 6.55 . 6.62 6.66 . . . ~~~~ ~ ~~~~~~~~~0.05 11.20£01 - *.6 0.0 - 6 .66 l. - - .ss . 7l.26
ISA . - . - - -
CIU . - '- - - - - .- -
lUm . . . . . . . . .
Id . . . .
°tS IL- - 11 .01- ** * .Sin - - - - . t - I -
Ii. ,. - - - - - -
ONE#,,j . l,1 . .,l . .s -' '- 00 .
N~~~~......... ... ... .. ....... ...... .......... ............ ...... ....
IF. .- e§ O . t.s - - .. .
Feusatae .3 .1 1.2 .06 . .15.3 4.40633 .10 0. 1.SO
:le.
[ele
In
e. .rio MU . . .. I
~~~~~~~~~~~... ........ .*^*.......... ...... ...... ... _ wZ...... ............
CIU * ~~~~~~0.11 * - - - -- -* * ltID&
OmC
tet l .11 IS.11 31.2l t.U1 .41 WAII 11.Jt S.tl 11.01 lI.tl t.1l ISI.SIfeNnt"e l.H l.U I.~~LU l.t6 1.d 11.11 4.14 I.SI l.tt .1.1 *.S lot."O
- 89 - ATTACHMENT I
iIPe 1 of 3
A. list ci hiZm Se lquaei st. It4
u y im t ainE _ s n , ea is,uiad w.,mttretnu_ N au_1i outtlama Um mua Uaun sai.cva
flu ~ -.. .. sissit(11 {t1 111 141 I1 161 C11
1. Cmil a luildies foli fr. I baps 131 I S I le leiss..i.l Ce.t tra &W 6iliL *h. ge" 31l Itetit (tonl
Z. nvt Civil I hi,ilid* erks for It Jae 4fi 6 I3 6 alts ( sdst¢,sI Ce.itese ua lreqeutiea Is. tlm 1i) IloSeat hfte
ttrbto III
1. n-llgt . Itet i. to, assgs Pleat ' las I') 4§ 3 6 CKCC
I. nUll) - eetleez.* tee ..........&tt.*I l I l&ie/ . . ..pu III 6 3 6 Csc=£sse.pt,t Pfealities Is. lem 1)1 (C%..in
1. n- ha-kttsecti fel t Jelt" 13) 6 lt,. geee. III IMeatl
6. VI4 iltad Tr.usportatl.e I latlps ) 6 li"pe ltaprs
llisas. III
&. Wr.oetnetie.Spip t S laual2) I ValtArlrtigbt W.. I illa el
S. nV.? Pr. lahi Uem,dse * iae II) { I I S lid.. takerit fuats 16il
Stappe III
hhbrled III lapseviae III
lati 11fittiUft
ISP4 Csiglater t USSjht I faiite toap. IIII 3 ( 11ttgm III ()sou*Mae (11
Ii. PLI.) 1 Pettt | ter eIttas,a 1itie Ito" Cn Co.
Ile.. lal
htleadet {Ilk
is. it-it Celias btIera Solap"e (41 talk4 s I ls.
from 111 J|
Ii (11fU X . #.t* tnz e tcilit X J rinc II (JIapan)nu 11 1ns
. 1u6p. III
(teference in text: para. 44)
ATTACHMENT I- 90 Aippendiz B
Page 2 of 3
MAJOR PACKAGE CONTRACT SERVICESI. Blidders Who Participated For Prequalification
…---------------------------------------------------------------------NUMBER OF
COUNTRY BIDDERS PERCENTAGE(1) (2) (3)
1. Japan 43 51.19
2. S. Korea 19 22.62
3. Singapore 4 4.76
4. China 3 3.57
5. Turkey 2 2.38
6. U.K. 2 - 2.38
7. F.R.G. 2 2.38
8. Netherlands 2 2.38
9. U.S.A. 2 2.38
10. France 2 2.38
11. Thailand 1 1.19
12. Belgium 1 1.19
13. India 1 1.19
Total 84 100.00_____… ___
-------------- _---------------------------------------__--------------__
- 91 - ATTACMHENT IAppendix 8Page 3 of 3
C Sch. le of orvie Ceatraeb
................................ ...... .. . . ... ................... . ......... . . ..... v. ... _.......... ... ......................... _..........
life uo lint"n UisAtPUlC O/ITItAlO 1.11 1111 ou aF _lCt Xetu U n fili vl^IUm ADeITIOIU
... . . . . ....... . ..................... ACCmItAICI P3100 ViAUASI? tImIll ACIII COIIIACIuBL XAtUl;
III (2) (3) I4) (I1 (I1 ITI III , 1i
WW 1 CvitlI vi leildilg lorbe Oulls 1dee.itul IU-I-I 1341-01 15-10-11 25-10-1 t 3I-l-IS 1 I eethte 11 eoothefor Process ue Utilitt Cobqa Lisited
. It-t Civil I leildial Worfk Oisrl lndstrial 0l01- IS 11- -86 215-10-11 t5-lO-lt Ot-12-U 11 eeette It wtUf(r Storage led Tress- Ceepeua Liitedf-rit:ior. I
*u III' prrrtine for Aussie CIhC 16-Ot-1S 21105-i 21-10-II 10-l 1-it i;-;i-U IS seethe 12 seatlePleat
4 VW-'!ll . Irortiao for Urs, el= I-3-3 21-05-1I 251-11- 10-SI-I? 01-01-S 1 ISethe 12 eetheJtilitiesIAal&IligrFacilitis
S flu-I J. etty Taisti Corponteios 11-0416 O110-I 13-1 I-1 S 1 5-014t 1l2-11 It eeeUt It soothe
6. ri.: Coolilg Woter Facilities I I t 0141-lI 110-01-16 1.--1 11-04-It 01-02-11 13. Soeethe It south.uad
115-3-3?
1. V U.) I Wber Trestebet twlit 31-13-lS t1-11-6 15-11-86 11-1i-11 15-01-11 It ueothU It seetheactilities
I. PU- - lee WateI Itstae acd Diiulee C drstetlee 221-1 -1 5 S110 -1 31.103-16 310-S4-I 1-O3-I? 23 seethe 1I seetbePipliee ged
11-03.35
- Overall Plut to - 01-IS-Il ti-l0-l1 21-10-1 0I-01-lZ it seest
!0. 11 12 AIeesia Storage 31.11 6-6- 11-01-SI 2S-01-11 16.10-1t It seeUte ?it scas
II SW-' W .Oe-sltrctihe lost lug I 21-011S * * OS OJ-I I 11 seeth 1l seethe
Oversil Ptoject - *- 21-lO-lt I seethe(311 duel
Actual Operation
............................................... ................................................... ........................................
Free th te date of the certificate of ltsa ee atus.bt for sea defect that vill atis viUi s e snattat peried. res Ue date of cospletios of Ink retedlaltsork or of the earraty period bhicheter
occurs first.
- 92 - ATTACHNT Iunm mawmo. i msuwmu Appandix 9
a. Q;s"en § ntne TIC,
tic Airm1 1_ ,1WtiQt wwmitUl AUlCluant U onumaIa 1III t)1 131 S) ilI
::::::::::: : :323s::ssl223::z3::::::u:s:ss:sss;s:s::::::::::::::::S:::S::: :::::2u:.
TIC lhpstriato 3sHI 46 1 40Peadr lto"iur 11 3 t10TIC L4Ml ItA 11 F." httlee 1 IS U
Cost pe.ti.. 53I Ill.. _ ....... ........................... . ............ ..........
Tetal I l 1fI i1 462
(11 121 IJI 141 M I Is) l11
1. 514 *~u-D l ld. Co.. 1. #m n is 2l 151 2.35 .561
3 VI-3It) .CI, ChAss 314 n H6 Ul 'lioeF11111)
;.5n.4 *lc, Jsa . U4. tt 6 n? u
I. n -l ippu lpes, Jap 1 14 5 to t1 46 it
3. VV4 -baltesr ribt, liqee. it 1 if a 3U i? ttS
6. *.N-ti4aisi CEtc., J"" I 1i II S Itt It
1. *i-m jlnu Corp., Japa 1 n It 166 Ill
,. Po-. I jt ili Cot,., Japa 4 It ts6 1t is 31 411
t. 1111-11 jet" Jq is lit a5 to Its la
It. 51.3 -ggrita Istet led.. J"ps a 1 3 564 is 41 446 461
I. 51. 4 *fthjsi hAul. Corp.$ J""s It It lit 1In 35 £14 lit
IS F1C1t -116I, LI, , Jepe 11 I U to l 311 51
Iotal lit Ino 4,436 J 3t IIJ 1N 1.175:fnh2, 3 3 23x 32u u c283" 3 J :It S3S Inun333323
C. Total Isa-rotI
onciptItol TALOTALJetic ilt Ul I"? ISI ill '4'
:::::::::::::::::::::::::::S::::::: :US:SSS3333Z3SS3333333SSJU::::3#SJ 3SU 3U 38SSSJSSSS3S:::::::::::::: ::::.:::::::::
Coaltactets I 6154 .11
Total 112 5,31
(Reference in text: para. 44)
- 93 -ATTACUI
Appendix 10
Ton days cimtims ie:Start - 10:00 AM, I Jm 7 1988Ed - 10:00 AM, 11 Jauar 1988
A. Productio of Ifre
GC ' aULguarultee Calculations Calculations
17,000 tow/day 17,290.42 tom/day 17,289.20 ton/day
8. Product Quality
Nitrogen Biuret Water Iran Fr Colo 8+ mesh 20- meshSSVXATTON (wt. %) (wt. %) (wt. X) (wt ppm) (wt ppMT Ram (wt. X (wt. %)
Guarantee 46 0.9 0.3 1.0 150 2.0 '.0ain. Mx. M=. mx. mx. . MX. x.
Astu.Ll 46.46 0.88 0.21 0.13 84.1 2.3 0.99 0.63
C. Row fteriCl. Utilities Corstmtion and ProF:t Cost(PEt M8IC 1TM OF FJMT)
Cooling Can.co StEals Pbsr water get. Produt
JATXQ4 (N (;t? (at) (k) (ate) () Cost (USDW
GarLCante. 0.572 0.760 1.17 53.0 2.34 89 97.426min.
GC 0.568 0.755 1.233 52.25 1.808 89.4 97.034(4.) (4) (-) (*) (4.) (+1 C.)
CUFL 0.568 0.755 1.233 52.29 1.808 89.4 9,.0,0.T70 / - - 2.21 t/ (4) 97.3t
qf Ammonia consumption based on amonia unit (lowater.b/ Cooling water makeup based on evaporation calculations.cf Costs blad on ammonia consumption plus coolin' water makeup or
maxim pssible cost of production.
(Reference in text: para. 45)
-94--ATTACHMENT IAppendix 11
Loal Workers Trained by the Service Contractors
All the service contractors, in acoordame with their respectivecontrsots, were to trmin certain nirhers Of 100l wOrkers to upygrade theirskills during the contruction period. The mnuber of worker trained bythe service contractors an the type of crfts were identified as follows:
Work Nam of No. of WorkersCatesory &/ Contractor Trained Craft Item for Trainin1
1. *i-i Dmelih, Korea 40 Welding (steel structur),operation of batcher plant,
2. W-2 Ikelia, Korea 40 cntral control for air-cmanitioni
3. WW-3 (I) OC, China 90 We, pipe fitting,equipnt insallation,
4. W-3 (I1) QCOCM , China 120 rier, m lwright,instrtintation, painting
5. P-2 M, Japan 15 an mwfac prepaution,refrigeration as air-
6. PU-3 Kurita, Japan 20 oanditionirs, thenulinulatitn, refractry
7. RPJ-4 Shimizu, Japan 15 insalation and carpuetry
a/ See Thble 5 in para. 43 for description of work.
(Reference in text: para. 46)
LOAN NOS. 641mG SAN(SFI: CHITTAGONG UREA FERTILZER PROJECTCOMPARISON OF PROJECT IMPLEMIENTATION SCEDULE DURING AOPRAISAL
ID ACTUAL PLEMNTATION 8CNEDIIJL
A C T I V IT I t 9 les 11411 isea uBe 81s. 1ies 19c6 111? s.sell
... ;~ftI _ .
1|$* *§*l 1*$X tl§X l@@4 l§§* l@|$ lll7 1||~~~~~~~~~jl l*l l
A t 11 V | T l t s ; ;; ; ; ; ; ; Looj 141 II .j~ Ifh IIIA'bAI 'j6K t,OOL.w, I)IP"L1JOL
___________ LI I It:
m>dZ AMPOW of n A A 0l1i
But sttd ;UN :1.NO -- ij----.I-l !1 f T-fi - t
IMLA6A ftWi 4841 0"A 0OA .P
.~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~iHNC I O',1§-94Inorod "
AN AC&IA.4 LAl I1.dfl A 11 9
- 96 - ATTACHMENT IAppendix 13Page 1 of 6
StaUm of :oupime WIth Covta
COVENANTS RE3 COMPLIANCE
L F1zaWl C_t
1. Emrd of r1*xa i the P1ig L.A. dplm withApm_t. No rita or ob1lgtims shI Sacon 4.07be a d, a abrogated or wivedvdmt czrmw of du BAik.
2. Ib 6mermul debt sbll hlam prirty cmer LJ. pad WIthe ln by irof aE lnca i th baua Ssctio 4.08of the Borrow.
3. QaL' lshm caftrl .ab11 be hold by tih L.. th1rr, mnt to be tferAed cr altedl Sdi1e 6.1(b)without apwral of ttm Be*.
4. Mbbenmilmble to CIoW }urr fzmfL I I de d an to-a folI.: Sdmde 6.3 del of tih =1
1981 - Ik 51,5.000 idative1962 - 228,640,a000d Ie of Ail1983 - lc 591,520,0W 18 In 1k 3,533.53 iUlm984 - 1k 774,400,000
1985 - Tk 983,040,000
5. EtwA to UITL (1) a custm duty of not L.A.4fid wltf, btt dselq)-wt mre 2.5 pe cnt al a Poject po S dula 6.13 mat adup of 21 ad_d t .dA (iL anm *ptim fzo psadt fer of 2.5Z mm
pe it of m ta fr* the Cda1 laad at rim ofOpeatio ata for a peid of at leastfive yem.
6. RPvi. of tim mpftoz prie ofU LA.ab To be aWpl ble starthn 1tsmug adjtts to a]1e ML to Sd00dl 6.18(a) JW 1986.adntd4 la fh^tA ratios.
7. lAVIa fti Odd= poIq of fetillr ad LA. Ub be =Wi,e srtin 1stpro6. te& lng andlig out 8b- Sfdule 6.16(b) My 196.
sdh and poidInowtie to fto mdntaiadequata pooduti.
8. bgursme apiva risk and of goods iqp'- P.A. m1isd witted u r die RJet. Section 2.05
(Reference in text: para. 55)
ATTACUMT IADvend*i 13
- 97 - Page 2 of 6
9. wintain recard ad An m to idutfy P.A. C4Usd 1,1bthe goa fni aut of thm Sectim 2.060()
10. a,:of izlpulmt exit A sib- P.A. T_W a±auc haemisson of Aittud FEmaL Stat mt Secti- 2.09(a) b emalacd by CI (firtlater tha six ft after dt cls of adiad Pmt bl bmeach fisca year. ae-ai
11. Se-aio of uxlZsI ficisJ stat1w PA. n9647 aidtem f1nalwidtI 45 das aftw the alo of each SeetIo 2.09(b) stm already mtadfilst ttXn (=tws. to the Bwl1.
12. Ibt selI, lam or dA et rArd PA. CUud wId*in caeit ou t the Project vituA appro- SecIo 2.12vlof thank.
13. Apply tim pmds of tim LIm to ft P.A. cwUad Id*of Pkojc syslitze. Scaon 2.13
14. P m it obUpA ad tim Thnks PA. Oud. withApeiit ad ti Qa &y Ayxhe-t. Secon 2.14
15. After cmAl op11tIon mIntin a debt PA. lb be awllie IeAty ratio of mt m 60:.40; debt senke SectIo 2.14 1 July 1988.ratio of not lem t 1.5 tl1; and
wrmt ratIo of wt low t 1.5.
IL TnsIbiml CovmuM
16. cam out tb PxoJect with dillfuc and LLA. (hqa4ld wIeffcI~. SectSoc 4.01(a)
17. Fums, fc±tIM,AMVICn, IMalsl wA CLA0a witha totmy renaluzss dbuuad be pra"ty ud. Section 4.02
lam
18. X stall cau1et and coadttm L.A. tadlnatim mm caded outactivltls of km dep its ad _g.i Section 4.03 bythe %doul Coordinsti_gwith r~ect to do troject crdh to e_sud - d FoCB&M.
19. Malt to the Ba* all repo asnl infor- L.A C1IAd WithutIo dta B3k sbal relst Swaon 4.04
20. Eiih tim Bwk*s ri resaItatiws to LALal WItinspect tim Project. Sction 4.05
21. CUIL sbal be reUabe for ths oar- L.L CoMpid wihall IaplaiMtaim of the Project. Sec 4.06
ATTACHMT I
- 98 - Appendix 13Page 3 of 6
22. MJIL's ging DiMatr shel be the LA, Wand 81b1 be reWinLle for Scdidm 6.1(c)
tb day day of tProject.
23. Appaka_ of the 1 1ng Drectr, LJA CctUid with, ProjectProject Mrector wA RI== Directwr Szlae 6.1(d Direcr mm in duty upof Cm.. and any c1ut In thes to De.'87 aad Firposizia. Diecto of Dc [a_s
OLs E fimal =ttere.
24. Qwrdutim with M&.eated project On vipall"m & ampi1atdfor cmtctim of g pipslhm frm Scluihle 6.2(a) in 1964.Biizram po fld to the P1am,be c ourtd ct tio the 1Natima
A Codtae (MM) estabedby tim Borraur
25. NXC shel am£st of the folIadz LA. MM ead with no hugs in(butrlm d M Divhl=) Plamift Sl.e 6.2(b) is , .
Cm.Iu1aam as ii the Secrtary,)flnisuy of rUNtiain, the secretary,IUnistxy of PetzoAm and ifirerl Resmengad the Secretary, Seaml hmcesivivi, flistzy of P,ini
26. NOC shel fiPtian l the cLatkn L.. UA wa&of the Projct amd tie( Gss Doulpin Sddzle 6.2(c)Project.
27. _-seommt of a GwArsl 01 - mmur reapm- q pedmu testsile fer the w tia of the PFlgt. Sh11 is 6.4 _ cated in Febrimzy '88
am nmih ahed of sddle.
28. 7h Tcml Myisor shl sadat (Li LAn-led withselcia of the wl C_txctor r,ile Schudul- 6.5of de_Iu, spfcatm ad tOder &oc-UK"t pr 9I erad by the Geneal Cozructiw,aid dtozlft the mxk of the G1
29. Afte ie cautvictin of the L. A.Plit, a tem of aptriate advr hel Sld 6.6 adv8s8 uPvlm catmtbe e1gqpd to asebt In the*mumpmt and aSmead effeetiely f ,operapin of thQP for a period of 2 Md. 88 for a periodaf3 yews. 30 umtis.
ATTACUE I- - Appendix 13
Page 4 of 6
30. Pecrt techlcl staff ,wig dhe c* tut- L.A. ttl kio3mtn astim of the Plant ard arrame for technial Sch&bile 6.7(a) of Of 1988 Is 877 withtrainbg prim to dte start of the Pmnt. a tduical strength of 560,
an additim of abot 200eeins vi. be reenutteIn do n.c 3 yews.
31. Cry cat the Project In acdance with L.A. C o -fICAr Metiiar_wgmmm agreed upw. betm the Bak Scbz3e 6.20 liditatmd by the BaD*/QILand otbor Financlm mmre hold In July '82,
Jan'83, July '84, Feb.'85ad b*nt 1986.
32. Bploymen of ctent cmwutuits amA P.A. Oaq]hd withacu~tors, SectIca 2.03(a)
33. AU 8o and sesvices to be fnme ad t P.A. mUy elied *wthof the Lomi shall be pronwed accdz to Seton 2.03(b)the Wp islow of Sdelas 4 and 5 of theL.A.-
34. Imfom the Bank of -w cation uiui P.A. COqIUd wItinterfres with the progress of the Project. Sect 2.07
35. Rnish the B.k with thly propi P.A. C=*l1d whreIo=t. SectIon 2.08(b)
36. Furnish the Bawk with an hAmul Propin PA. Qqi1iad withReprt. Section 2.08(c)
37. Withn sixc mths after the cai u of P.A. Ppwrt gLvm to Bak'sthe Project, CDiL shall sunt to die Bank SetIon 2.08(d) PM t9si at site.a Project Couplatim Report.
38. MMF shall mu aintain its coporate dstm. P.A. CcepUad withsection 2.11(a)
39. MFL shall a eht its hsul acording PA. CdR14UM Withto sound practie. Sectim 2.11(b)
40. Inoi the Buk of my propal to amd PA. Cmplid withand suopwx any provisica of its Mmoz Seton 2.15dt or ktilas of Assoclatino
u JIt"} I| I| || I1 It Iit zII I
- 101 - ATTACM3N IAppendix 13Pegs 6 of 6
51. Ades n fadtim for LAL Ibt adeqatey errt it Sd c e f Sci1 6.16(b) by RAW .the Plmt to te Wu wm,ns are.
52. Prim to the ciq -atkn of the Project, L. tbt adequately arI byVA&rOMr ShaLl prepor. ad iu t an Scdule 6.17 C s DCC for locl dis-ovrll, proga for izprw1z aid euandlz 6s aMIor bettv,the Intemi rmtiink of faI±les for r Oct,e1y. A th emlit,storge sa distxlm of fertll. avweddW sdq4lm of
finied ur 1 .be t
53. mame that th uc fertLln produced L.A. W awl ofa im u locaIu d Project in prbrly for intti* Scbale 6.19 in pidS n b. bem omsd
wse d . dam -" 17.
54. By .A of 1962,. iult a prmgpr for LA.4opvIag ad acld. vi a m balamd Scbdl 6.21uitriset ratio In ti. iS. ad appicatImiof f.1t1iz.
55. 1nfom tiu fla of y pal sw for t L.A. C 4ud Withutzuetim of nw and addlitol plants Sdbe3a 6.22
for tim inxf-cu of umu
56. Caxy ot the Prect IAc wlih P.A (=AM WI&plan, deads stnds, d Pecficatlu, Secon 2.04iu,* sdboas ad au.toctmic matdacceptabl* to the Du&.
57. Opeat d nmiutuin plant, eqL4ini and P.A. T be epimbUl startlI4othe ropettas In admce with mod Section 2.11(c) 1 Wyu L36Pratc.
102 ATTACHMENT I102 - Appendix 14
ccuuAainu of II M.iuo co"i.m? of in ruaju
: PPUI'AL 418511 A18313ARMS (8llit8 cCton 'al? 07tUW I(81wU ll
UCIPtl--- --- :- -:-:-:-'.e..................: ~ ~ : Iltl 13 11 :,C- Il-SI: ItJsl ;?z 13aLi11,11It: WCAL TOTAL :ionau: LOCA 1 : L tl2: ! 'i o.0, } ! !t a 5: IGN: OCAL : 41L. :;iCS: LOCAL: t1
I. li. A1qitio. 0.51 8.51 0.81 '.18 0. 1 '0.111 Ii - l.tSI i0
t. Iif Pt.aretias I.? 1.10 18.11 15.41 13.31 ll.2; :.. I 8U l.111 SI S .32 11.511 Is
3. Itce.st Squipavot 18.12 - 58.-1 111.11 1.18 1813.0 'I 2.tl I1t.Jt 65.11 L.1 HA.S3 13.58 .83 14
4. Cabt glt Clnicaul 8 3.14 . 3.84 4.00 0.41 4.40 24S 0.41 3.261 (6.81 0.41 16.511 11.151 b.01 IttwoparePts
3. Otilitt a OtISit. lcilities 31.u 0.83 3t.22 14136 5.85 11.85 33.18 1.e6 16.81 48.25 6.0t 12s . .1U .1s I
6. is"fIerl ihullng Squlumat 12.5? - 82.5? 21.30 l.U 2.U U2.5 1. U3.1S. 13.8I 0.88 8.51 1.38 (0.35) 1
1.CbmuvtneU ,qidpo 14.15 - 84.15 81.3 8.13 1I.ai L2.38 8. 14.44 (2.111 1.60 ($.$II (1.811 0.3?1 (
S. SalIdlag t lttmeune 14.14 231.46 42.6 31.45 44.21 1.12 45.t- S.11 13.35 32.63 h.;; 11.2 11. 8.14 20Casutrtlom 8 In l.
!. V,i461l4.W. a 81.11 4.tl U8.4t 28.21 2U65 5.1 ? S. 1t.1t 8t.71 26.33 Il.1tl 8611 .ltl fI t :s
I0. pnr. "imi Services .3U 2.U 4.13 3.31 6.38 41.21 4W.84 :.2 43.18 (8.38) (0.22: (1.60e 1.11 44.100 (I
II. F,e.4uratisS L zPas 3.2U 4.l1 t.11 8.1t 4.11 t.60 5.13 14.14 15.03 (2.431 1.11 1.12 41.130 1.43 a
1011, gatU 2c3.18 1.51 2t3.16 346.16 05.55 45.18 35.13 A C 1.U 414.15 1.14 16.5 10.46 28.U3 1.14 S2
FIOS"l U1eu ci 6.613 6.01 22.38" - 1.05 MS I I I I I II 1.80 I 0.251 1 .3 !;s;.al1(l0.64liI0.6 1 5.33 1 311.31)118
fin cmunn t 43.2 51.05 61.13 *.*l 3.12 14.61 1 1 8 I 1 I 8 1
18t13 1g 8 WUITI 2I.1l 12.41 311.81 121.61 411.33 313.33 IU 8.6 408.12 15.13 3S.A2 l;.11 22.15 IlS.111 6
oUsu1witAs. S.2 21.36 35.08 2.45 3.62 6.08 4.10 C.5 :3.5S z:3 S z 1.:S 4 :i.S31 1.54 2.13 4
Im liUtusll Ai3Jti(u . 11.U2U 11.2 - 16.SI 16.41 2 U0.41 2.4? (SI4.3I S4.11 * 115.343 (tS
t5 "fwIar Uc 253.1 81.15 461.54 314.81 IU.63 111.02 311.012 35.82 582.31 3 1.1 112.44 41.41 23.16 85.5?) 164
s::s:5:Sz5SS::55::::::::U:::::22 I :::::2 .I:.. II:I:: ::2::1 :::2::::::Uz::::fl:::z::: :::.:::..:S:..:::.::::::.::::::
(Reference in text: paras. 57, 59)
ATTACHIDNT I
- 103 - Appendix 15Poge 1 of 2
nzssunns,htsuts::us*w ssztsn.:v, -tSfa SztUsSt3iW: 9I6UA; IINI : a,euiua 11,161 : *cm :Iiniv _ 1_ !
.... ,._...,, ........... -. -_||l
mim u lu :tou'w WCA&: urn:v11l1: Wm : u:murn: WA: 1111m: I l : Wm:: : : : : : : : Wi-t: 11-311:1111-1
1ll : Itl: ill: 141:~ ~~~~It IN1 (11I fill || (III :t| 1 lil: 11 31ezI {a
1. eM cqumesiea . 0.5s 0.1 .1? '5 0.35 10.111 11111 1 Ce peta ll he m
1. site I,epaatise .6? 1.11 IU 11.11 11.41 13.11 M3 11.3 .11 Up .5 11.0 (4.131 .l t eIKm in till isna (Iteha te IS ?; ^aemet of
lfol disgen n a,esucallpawksawe: ONet sepet d .pt _ seepete pile.lasted 1 1 audit nte.eda OeUl-eitl ples .
I. hfteee esul . 11.11 I *. 1 113.00 13.3-0 LOS 1W.10 6.1. 3.31 u. e psepismsesIsae tal_, ilelaim ot
*.PI Is$, usbeUpn gsa-s, det tu 4 itt_l ;1luap ee_e3e
_hild - at appwl fv- intd ep_ipmet. twe -slwash d Pe
4.Clegte eiaeIe 11 .5 1.14 4.010 0.40 4.40 2.55 L.41 31.11 16.3 1.41 11.031 V i.ie a'to aumOee eed.nswl ist d is uSpatte |tsazis . .4 4" *1 .4 . .1 J# l.l l4 .{slee.} iee lese esees
eastleg aptal. Aiaeailelitgrne st a ethel, teeil Umrpelea. met *t spe patila pilau. Mt of P outis todilteabali ist a thU
1. Uttlatg 6 itfelte Fesilzitas 31.U 0.11 3.10. 14.16 6.35 11.15 63.00 1.6 1.18 U.J .61 63.136 aee et eaeuatiel tieldaeseblai Wel# Iated otdid-i _ pteaeeledpipellee m1e aeest iae t o*a ' letls et eae eW e
ileui otf detsiled aneet.leg sad intveree,s "a ege.etnegt euni a ,p lgeatetad delitpr aebedele. peev.est Ste Lesea Itaw
Ite lesal lnure, cat of tlb
kea d e ttleet t?estabtis ileewed is eshugregipieg ad eUba taselitiee.lieenta Ia aep -t nap ofsoeleteme eaebitelsetp adIse.rtstp. etegisel esap Of tIeflit staltis uel sdigredPiglet Us kept lsm, eA
(Reference in text: paras. 59, 69)
lito istPl 11111 3 1 1115 tlitL n WGit 211311 nil tW l t HlI flVial Wm il11
fUss) EU*'vo "If II uI * S tlt * "-a muI * I lUhis It'll
t111l rlfi In111,4 1111 41I ni al "I s r mu t "In "l au i'
WuIN sti er us0 t usil tru tsu nmit 1nn risl i t l as nt I ainl vausi m ia ̀iau
I I I I I I * it's. til tal' *sli Wm ausu.u uIn n115311111i501)I u's £ fl I fll I
I 2 | | { "* u - ns~II' ",I wl umu1m JUN
wd INWNI I I IS s' * U33IUs IUIUI IIi
4p 6i M *"m 'wwIa
'1m anmov I eou1sm in s rl a it's ws It It's wat Isri wI uts fsan IStWasm #"P
GM isudns.tppj PR s
"a n Ob p le si"
4A" as; p.m SiUj * n
u"llwPA 'ovs amtip a u I*i a-II Iusi SI'S, u*1 it'ss Psl rin wai iris1 tiss mit iasgwsmu i
_~~~~~~P "$"Up
'a 3' &SW1nub P -lqIo nnm 4, g*'
ma psuaas mom as aSW
4aqaas wad b;up sqj* Wso a"s * a" 65 113'nas aas; Se i * li 11d
*u'aai aSTi in t _ mUji i0is~ula~n p - 'aum "_F
'qil Iqa s-psqgg un uJn is's issa it teTt is ** s - nitT *g n inst ,a.aasau wisum '
.rn seas q
do@a~l u_a p _ 1ssisbs.jq,usll Uq lt- 1|1"n n nnTG a l r t X bl l
I *VIVd
- 105 ATTACHMENT I
Appeadix 16
COMPARISON OF PROJECTED AND ACTUAL DtSBURSHBBNTS OF LOAN FUNDSIs million)
YEAR/QUARTER PROJECTION ACTUAL CUMULATIVETOTAL
1983
Firnt Quarter 1.327 3.936 3.936Second Quarter 2.300 1.242 5.178Third Quarter 2.300 0.108 5.286Fourth Quarter 8.710 0.690 5.976
1984
First Quarter 0.82? 0.059 6.035Second Quarter 1.390 0.012 6.047'rhird Quarter 1.93? 0.220 6.267Fourth Quarter 2.461 0.084 6.351
1985
First Quarter 1.700 0.694 7.045second Quarter 1.780 1.304 8.349Third Quarter 1.800 0.787 9.136Fourth Quarter 1.500 1.074 10.210
1986
First Quarter 3.000 4.036 14.246Second Quarter 3.500 13.415 27.661Third Quarter 5.000 5.469 33.130Fourth Quarter 20.145 9.112 42.242
1987
First Quarter 13.646 12.8665 56.107Second Quarter 9.598 7.794 62.901Third Quarter 5.347 6.140. 89.641Fourth Quatter 1.685 2.728 72.369
1988
First Quarter 7.001 6.767 79.156Second Quarter 1.056 1.453 80.609
Subtotal 98.000 80.609 a/Amount to be cancelled 2.8650 b/Remaining to be disbursed 17 502Total 98.000 c/ 98.111 d/
a/ Actual disbursements as of 31 Mnay 1988.bl Amount to be cancelled from Loan No. 541-3AN(SF).cl At the time of Bank's approval, Loan No. 796-SAN(SF) was equivalent to $26 millid/ At present, Loan No. 796-DSN(SF) is equivalent to $28.961.
(Reference in text: paras. 60. 69)
- 106 - ATTACHMENT IAppendix 17
LOAN NO. 541-SAN4SFI: CUITTACONG UllA 1EUTILIZER FPOJICT(Allocation of Lose Proceed.)
II gillinal
ORIlIAL 11131M FINALCiAlTigT ALLOCAtIION ALlCATION ALlCATIN
II) (2) (31 (4)
I - Civil Wokg (Site Prepafrtiommad eldted Vorkil 6.010 24.331 13.950
It lquipent 1.430 18.111 18.201
[i1 - Catallst and Chemieals 3.530 0.503 0.5tS
IV - Services 21.310 11.113 16.321.................. .......... ......................
a. Ceseral Costractor 23.120 15.620 15.911b. technical Advisor 0.130 1. 3 0.144C. WelVor Senriees 1.810d. ambgement Advisory and
Optatlioal Advisors 3.100
* * teight 1.010 8.100 6.117
VI * Staff Training and Trasiingfmcilitles 1.180 0.8., 0.591
VII - rte-Operationl lIxpoeso 1.360 0.310 0.019.......... .......... . .... .......... ................
a. staff Oerseas travelsed other CUL OetreadEipenses for lpleaentatio 0.310 0.310 0.019
b. Plut Start-Up ipouses 1.050 -
fill - Vorhilg Capital 5.210
11 Ref incing otf tecnicalAssiotuce Lou 2.000 2.000 1.946
1 - Unallocated 16.130.......... .......... . .... .........................
total 12.000 12.363 69.150 a/
.ix :-*--~~~~~::::;:= s : ::::: :.::::
a/ lEpected loa soaigsi amountinl to 12.810 *illioo Vill b e llmi.
(Reference in text: para. 61)
- 107 - ATTACHMENT I
Appendix 18
WU 0. 1164A11111: a[tM KU Ft IYUtLIUC PIft
lilltutic~~~~~~~~~~~~~~~~I cl LcItdc
: ~ ~ ~ ~ ~ ~ 3 ::: ::: ::: : ::::::::s::: ::::3:::3:3331331:3s 3z:::u2u3331s1332st:::a3:::33333s:3*st::::3::::23:81:3:s:::†:*:::::::t: : : :
CLINgOUCld ..- *--* U1105l3*311 UIScat,w *----- .......................... . ... ............... .. ................. Ru
Us 1111 661 ill Dli g1eIII Ml 131 141 III M6 III l
:::::::: ::: ::: :::::: :::::::::::SS:S3S:s2:333*2131:3Su::3:us2sX:2u333:U::u23:33:::ss$X :3::sssss:3:::::::: :::::s:3:::s:u:::::::
t1s -it r,.El*,zite PfStcI~t.cii blete l etell
11 Dqui,bet 4.616 1.161 3.436 3.66 16.3111 16.1611 Ot1iglel elqttee otl toMt Ut deft rells out#-1-, 4., mkike, sadmiet_age tiesint eUetlit *imll_us spm"e". Ittis_methat at 0l.t dsli3stmdom to be utiliud (of
sttial itm.
liI Ctelellt COdbath 1.331 I.66 3.5 .IU" (t.H1t (lIUl to "fink totalcst ud.
IV sorice" 11.311 13.1U 1.11C I3.l1H (6.611l ItJUI... . ,................ .............. ............... ..... ..... _.
Ges ul Co etrS.tJ 1.113 6.t4 1.6l0 I.SU4I (6.163) to iled tat dcecloidMt mwn tis es!tnst.
I. teetotal Uabect t.lU0 t.1tl (6.166) (6.166) Allatics I so totso.
e. blew kinee - ' I. Isasqeesut iiw3sot~ d Z thIs u.tat log tUst
Operstiosul Uoiicc. 3.l1MU 4.lH 11 l.U I.H16 t.44U 6.10S cis tec tctaO cnt of04.116 eilita tot It UeMct is du tdi is Jawsn teal l(.s pwied of 03Uath. Te teiee ui tiate
eeleda egutit"l" foresttewemp Clstatieo tillAegatt 1|16.
. u. l, . . 6.316 0.101 t.31n .51* s. otl ct sctul ceeterctau"u i cade tileutw.
* teif Ttesie ee tisislefacalltios 6.311 6.661 6.31 L.i63
vi1 - P@e-tpntiel It 0.116 6.304 (-.36 1 (6.343
s. Itaff ren hanl . ottle u i ma 1 elu
Dipole (f oeepleaettias 6.30 .114 * (6.3663 (10.154t. flat Itat4" - a -po- b.
Vill oUi tie Capial t.OU t.111 3.31 l.1H l.UI 1.1U IllAtli is iecttl (eOtht procuaemt or coacoullehwtieel|clcteliete ee en.wtical uceoiehs mu $parestill lae 3111.
ID tefiuzeiag of heedate Isstuaee Lou ' '
I - hillcAted 3.133 4.U3I t.U1t 3.116 16.3441 It.UI......... ......... .................. ..............
otal tl.l 11.13 1 U311.412 U.UIs.s:::::: 3:3:s . . ..... :. s::ss:en:u sseus
*J I eqeassloet u, .1 II F ISU. l as eetu loat to 1U.H111 sillbt at the tinue Dais a' u onl.
(Reference in text: para. 61)
- 10o -ATTACUHMIT IAppendix 19
COST ISCALATIOD 0UI TO ICRCANGE MATE FLUCTUATION(Foreign CurremJ Portionl
1t millixnn
CONTRACT VALU COITCONPOINEt ----.............. ISCALATION
IVALUATED ACTUALCost COST
(1) (2) (31 (4)
1. Land Acquisition -
2. lite Preparation 13.64? 19.321 5.6S 1
3. Process Iquipsest 84.636 114.611 40.005
4. Catalyst and Chemicals 3.141 1.14U (0.79S1 AI
,. Utilities and Offslites 51.010 13.513 26.503
6. Naterial lhndlins 15.519 28.632 13.083
1. Constractioo Equipment 14.3S2 It.335 (1.111 bi
8. Suilding and Structures/Construction and Erectioo 34.610 46.U33 12.153
9. Freight, Inseraoce andCustome uties 3.212 7.191 3.91?
10. Profesmioe-l services 30.240 32.110 2.610
11. Pre-Opersting Espenses 1.111 OtI4 (0.1931 e/............ ......... ....................
Total Z58.934 3S9.101 100.1C1
~~~~~~~~~~..... ....... ~. . ... .... ......
*/ AvaIlabIIItj of some stock from othet tfttilliet plats.b/ Proeurement and lease of locallj available equipmeot.
' ci Utilization of facilities is tsistlug plate.
(Reference in text: para. 69)
- 109 -
ATTACUMN IAppendix 20
LOADING .i) UNLCODING 9F UlEA iP4OUCTS
Shipment Cargo LAoditg Dst? Q6uantity Lo"ing Loading L/No. Type Eitort Ed Tons Hours Rate (Tonsm/Kr
I BulE 14 De. 2f't_.v. 11,085.5 133.75 82.9
2 Bulk 8 .Jaa. 15 Jan. 10-IO36.9 153.50 66.9
3 Bag 18 JbI. 28 Jan. 7.831.6 239.50 32.8
4 Bag 5 Fec. L6 Feb. 15.C(u.W 270.00 55.6
5 Bag 18 r:b. 24 F.eb. ;;,431.Q 133.T5 48.5
6 Bag 28 Feb. 9 Aor. 10,00Q.0 224.00 44.6
7 Bulk 11 Mar. i4 t ar. 1,486 6 67.50 111.0
P Bag '5 !kr {i3 1h. 10.2*00 228.00 44.7
9 Bag 25 Mar. 2 Apr. 6,818.2 181.50 37.6
10 Bag 2 Apr. 10 Apr. 12,466.2 191.75 65.2
It Bag 12 Apr. 13 Apr. 466.2 12.00 38.8
12 Bag 13 Apr. 18 Apr. 5,000.0 109.00 45.9
13 Bag 18 Apr. 22 Apr. 3,500.0 88.00 40.0
14 Bulk 27 Apr. 30 .Apr. 14,900.0 78.0 191.0
1/ Plant Produitxion Capacity is 1700 tons/day (70.8 tons/hr.)Design Loading Rate is 220 tons/hr. for bulk urea.rTere are '2 IAuiers for loading tagged urea with design rmte at 2200 bags/hr(110 t,ns/ht. iI 1 i4g/JotdiPr .vern %.3 seconds)
(Reference in text: para. 78)
- lll -5 less
ATTACHMENT IIExtermal Resources Division
Frm\MDeputy Secretary Ministry of Planning( ) _rom:- l. Kamaluddin, Sher-e-Bangla Nagar* ~~~~~~~~~~~~~~~~~~Dhaka
Comments Received fron the Government
D._O. No. .. pLDpA-I/Ind7/ 8 6 (Vol lV)/d63 0 Q b4.
Dear Mr. van Gigch,
Fertilizer Industry Rehabilitation Project(Credit No.1023-BD).Chittagong Urea Fertilizer Project(CroNo.120 4 -BD)project Completion Report.
In continution of our letter of September 14, 1989
on the above mentioned creditsp I am pleased to forward
herewith a copy of comments of Ministry of Industries and
Bangladesh Chemical Industries Corporation on the above
mentioned project completion reports.
You are kindly requested to despatch the comments to
IDA's Head ruarterse,ashington, at your earliest convenience.
with best reGards,
Yours since e
u/finMr. Francis van Gigch-Chief of mission,World Bank Resident Missionin Bangladesh,3/A, ParibaghtDhakao
- 113 - ATTACHMENT IS
Govt. of the People's Republil of BangladeshMinistry of Indaustries
Uhilpa Bhabab
SubjeotsProjeot Completion Report ( POR ) oA Fertilizer IndustryRehabilitation Project (Cr. 1023-3D )
AndChittagong Urea Pertiliser Project (Or.1204).
The Project Completion Report prepared by the World Bank
on the above projects were examined by the Ministry of Industties.The
oouents of the Ministry of Industries on the relevant pwwtions of
PCR a are given below s-
A. Pertiliser Industry Rehabilitation Project OFIRP).
(i) trice of Urea Pertiliser
The uniform ex-faotory price of urea has been fixed for all
factories at Tk. 4025/ Mton esoept for chittagong urea f*rtilizer
faotory. A proposal for upward revision of prioe of urea fertiliser
covering cost of production li under Consideration of the government
of Bangladesh.
(ii) Debt-equity ratio 1*
(a) Usea Pz'tlliser Company ltd. Ghorasal.
A proposal has been submitted to the Ministry of Finanoe for
oonverting foreign loan amounting to TIk. 713.60 million into equity
so that the debt-equity ratio of the Company beoomes 60t40. This
Proposal is under consideration oS the Ministry of AanaaOte s
(b) Natural gas fertiliser factory,Fenohugonj.
The Ministry of Finance has given oonourrence to a proposal
submitted by the Ministry of Industries to oonvertO foreign loan
amounting Tk. 255,70 Mlllion 1i to equity. Now the debt equity ratio
of the faotory is 60s40
ContGd... .P/2
- 114 - ATTACHCNT II
(c) TSP Company Ltd- Chitfagong.
A Proposal has been made to the Minisatry of Finanoe to *-eu-..
convert . foreign loan amounting Tk. 602.10 million into equlty
so that the debt equity ra%io of the company becomes 60s40.!,This
proposal is uider examination of the Ministry of Pinance,
So Chittagong Urea Pertiliser ( cUmL )
Governsnt has approved debt equity ratio at 50s50 and
relending rate of iAtereat on foreign loan at 10% instead of usual
debt-equity ratio of 60s40 and prevailing relending rate of 11.5%
on foreign loan in order to minimise the loss of the Oompany. As
mentioned above a proposal for upward revision of ex-faotory prioe
of urea covering cost of production in under consideration of the
government . The Ooveranabt Is also considering other alternatives
to avoid reourring loss of the company and to make It a viable one.
A proposal to convert foreign loan amounting Tk. 3900.70
Million into equity to make the debt equity ratio 60s40 is under
consideration of the Ministry of Pinans ee
- 115 - ATTACiENTS II
Comments Received from BCIC
rWiTTAGONG UR1A PBRTILIZER LIKTEDRANGADIA: CITTAGOONG
Parowise comments an PCR on CUL preparedby the World Bank.
r: Intredoauti
No commonta
II. Proiect Bagkground
Ae Project Identificatioz Preparation,Appraisal and Credit Effectiveness.
. . . . . . . . . . . . . . . . .
No commentsO
B. Project Description and ObJectives
No comments.
III. Project ImDlomentatien and Management
A, Achievemont of Projeot ob-iectives. . . .... . .. . .... .. .. .
The Proj,oct during the Ist three months of Commercial
Operation commencing from Ist July, 1988 has operated at 83%
of tho designeid capacity, and not at 81% as reported in the PCR
of the World Bank. Actual Production,jt!yv193841i8pt.mbor 1988=
117554 M. Tons .Capacity Production for 3 months
= 330 dave X 1700 UT I 92 dar"
365- dai ......
141402 M.T.
% of rated capacity 11755 8%49419400-X 83%
Because of the poor lifting of urea by the domestic buyers a
substantial quantity of this output was exported. The foreign
exchange earning during tho fiscal yoar was about US$ 20 million.
The pro3ect was completed ahead of schedule after the agree-
ment was signed. The delay in the project excution prior to the
signing of tho contract with the General Contractor was due to
delay in finalizing contracting arrangements & delay in signing
of the contract with the General Contractor.
ATTACUIKUT 11- 116 -
Total Oapital investment in te orlglnal PP was U8% 44;624million and the actual project osot ls US 467.00 million based onthe exchange rate prevailing on the actual date of dilbuirss%.the project cost based on the exchange rate proveLlig on 30.6.*8
is U8* 495.748 mdllion.
The Boonomoi rate of return as worked out in the report is
^ compared to the appraisal report of 19% The ERR in the roporthae been oalculated on the following assumptions *-
1) Eoonomio life of the Project is 12 *ears
2) Rated production capacity of the plant is
5.61,000 tons per year. Capaity utiliaation rate in
based on 52% for 1987(actual) 78% for 1988 & 90% for
1989 and onwards.
3) Econodio Price of NG is assumed to be Taka 35 per X2 &
usag. per M.Ton of ures Le .NKI(.
N) The maintenanoo cost is assumed at 3% of the equipaent
and ofisite facility cost; Eoomiocl price of urea has beeA
considored from 1988 level of US$ 148 to U8*169 in 1989,
Uf1 213 in 1990 & U1$ 198 in 1995i
The expected Pinanoial & Economic rate of roturn in the revised
P.P. of CUWL approved by the Government has been worked out to be
12.5% & 13.88% respectively on the basis of 50.50 DebtEquity ratio
& 0 10% interest on foreign loan and selling price of US$ 200.00 per
M.*T! of urea.
The realised Economd Rate of Return based on more realistic Oircuuu1-t9nces worked out by CUPL Le 8 L1% (Annexurs '&')qM-seA Ow%lVc.
1) Project life 20 years
2) Production Capacity - 1987-88 & 1988-89 actual
1989-90 to 1993-94 - 90%
1994-95 to 1998-99 - 85%
Remaining years - %:!>,Cora. &e M? '0 - £C;P Ao u a.
* -£ATTACMNT IT- 117 -
4) The.eo"ooio eprice at Vroahaa been pensideped at * -
160.00(Tk. 5146.00) Per MET. C & P fiked.basis insteadof variAble ecoonosl price(t 148 to 6 i98) considered
by IDA:If the above assumption can bo materialised the future of
CUOL in economlc torm would not be frustrating as anticl-
pated by IDA In their POR.
a Oaneorhin and Managnme kt
The Chltt4goog Urea Pertilizer imiteda is a fully Govt.owned
company eatablishod in November, 1980 to implement and subse-
quently opeorte the proJect.
The Board of Directors of CUPL consists of the Charmamn of
BCIC as Chairman and one Director of BCIC & reprosentatives
of the Ministry of Industries, Pinance, Planning Commission,
ERD and the Mnaging Director of CUPL.
*mAgnn r DOveloogNnt & Training.
No comments
De Performance of consultants & 3nRineorinst Firm, ~~.............. ..
No comments
N; Procurement & oerformance of suolier
No comments
P. Proieot Imolementation,
The plant was mechanically completed on 29th October, 1987 1
and was formally acceptod by CUPL management on 2nd Pebruary,
1988. The Project execution was dolayed by 26 months due to
delay in finalising the contractlag arrangoemnt and delay in
the selection of the General Contractor. The Project has ex-
perionood a not 10.5% cost over run, attributing to exchane
rate fluctuation, changes in project scope, and inadequate
cost estimate of certain items. InVostment oosts in foreign
mechange have increased by 26% in terms of US dollar at the
exchange rate prevailing on 30.06.88. but if the exchange
rate provalling at the date of disburssemnt is considered
this increase would be 16%
* - 118 - ATTACHMENT 1I
cilmeto eas porll - -- . -Oriminal Actual .C Cost ',of incres
illion irate of ,0.6 ateofsctuaMillion US$ Itisbuseoflt I
Milllon USA I. .. ~~~~~~. . . . . .... . . . . . . . . . . . . . . ........... ...............
Invostment Cout 367.00 33)8.00 26% 4Costs 291 '
0G The Prodeat co0t finanlini and disbursemeWts
The final project oust as reported by WB in not US$ 543 million but
as per OU's books of account the aotual oast is USA 495.748 Mils
based on the exchange rate prevailing on 30.6;88. The project coat is
however US0 467,.ncludlng a forelgn currency cost of USB 338.00 miii-lou on the basis of the exohange rate prevailing on the date of aotw
-1 disburessemnt. The oost overrun of the project oompared with the
of original estimate of approved P.?. is USA 47.124 million. The per-contage Increase in projeot cost is about 10.5% based on the exchanse
rate provailing on 30.6.88 & 4% increase based on the xchange rate
prevailing on date of actual disbursement. The smmary of the projeot
cost as per CUPL's record is shown in the following Table s
Sidle. ien of werk AauuntinM, ufli.a.u5p. ---
1. Land acquisition 0.27
2. Site preparation(including Pilling) 21.944
3. Projects equipment 127.129
4. Catalyst Chemicals & Spare Parts 3.636
5; Utilities & Offaite facilities 90.839
6. Materiel Handling Equipsent 28.659
7. Construction Equipment 15.71
8. Building Structure/Construction & Becotion 96,958
9. Freight,Insuranoo & Custom duty t8-;79
10. Professional Service 43.05211. Pro-operational expa. 14.722
12; SUB - TOTAL 46Ji109-
13. Physdeal contingeoncy
14. Prioo contingency
15. Working Capital 6.620
16; Interest during construction 27*;419
17. TOTAL
ATTACHMENT I1
- 119 -
3r.B Zlanahlflcn.'The *otual etreign exchange coat funded by the 7(aeven) 0e-
finanoier. & Govt. of Bangladesh is aheuA in the iO,le g
Table s-
PIwure in Million
'ingualeN. _~Iloan Ame-nUnT -t n
f Cureno;y uE ¢2urronog jAIM' US$ 9T735 p 89.385 US 89.355 USe7.865 * This surplus
shal Vs utilUsod fupurahose of spare partsand for the services rtulred duin Annual
CAr Arwd.ADFARD in 85,00 DHe84.934 USO 23M124 DE Oro066 * Cannot be utl-
AS= W ID 14e715 ID 149715 USE 19.00 -
3IDA CD 25.00 CD 17.636 USA 14.360 CD 7.64 Vry sawll aaeitoan be utilleod,for purchas oSspare parts-
IDA 9DR 12.80 SR 12.800 USA 16.529 -
00 if 16801.00 o f 16200-484 US$ 124.304 Y 600.516 *** This sipl-ua Shall be utlU.sod fox purchaUZof spare parts &services re uiredduring Annual Around.
SPD SR 283.50 SR276.683 US 73.700 116.817 *** This surplIsshall be utilizedtor purchase ofspare Par8 OtC
Bjogla4uh US$ 650 US 6.310 USS 6.310 USE 0.190
ly. o.eratin Perfiewra 7as
!he monthly *pereti.n of CUlL since start up as compiled in the PCRis corrected and go-produesd bols s
* - 120 - ATTACHMENT II
mostb hisr i Produstion(tons) ! atehes To
Ooob g 1987 3,515 0Noueaber, 1987 20,497 t I
D o ea*r,197 'i8,785 11,065
Jauary, 1988 18,229 16,98
lebruwy, 1988 29,389 22P402
Nash 1988 50,959 33,027
April 1988 42,168 37,251
my 1988 32t930 27,194
Jane 1988 34,512 441060
Sub-Total i 1.23.119
Jul 1988 40,547 31.598
Asugst 1988 26,715 416248
September 1g88 46,502 39,708
Sub-Total t 1,13ZC Z1.17.554
Total 3 ,9.10464
B s NJkotles
DurIg fiscal y7ea1987-88 CUnL exported 1,85,349;Y34 U.T. of Urea to variouscotries issuch as Nepal, Srilanka, China etc earning a foreign exchange ofUs$ 20,00 million.
Q.i Financial nereormancos
5he Balance sheet of CUlL as on 30th Juon, 1988 is presented below s
Selected Data from Balance Sheet(Tk.md lion)
Current assets 705 1,864lted & long tow assets 12#068 14,816Cu rret liabilities 934 i773Loag term liabilities 9,347 -11475squity 2,492 3,432
Cw reat ratio 045t1 1.05:1
Dubt/oquity ratio 78s22 76s24
_ _ .~~~~~~~~~~~~~~~~~
-121 - ATTACHMENT II
Tim CUnls selliny price at present 1i 1k.,4025.00 per T. The Ga-factory price of ure a In ndia Is at present about 5ir5500.00 per UTU As aresult of iadeqato selling price to cover the full cost of produation,CUILts likely to suffer leoss to the tuna of Tk*200 million during 1988-89.
nI . L I Caltal Re-structurina IAs per fial project costs CUIL bas a Debts Equlty ratio of 74t26 butunder the assumption of a) 5Ot50 debts,quity ratlo and 10% Interest asapproved by SCIEC. b) Depreolation provision of 5% on plant & machinery& 2.5% for Building, the 1988-89*s actual production cost ot uroo arrivedat is Take 5069.68 including Interest on loan of TW.1839.05 per M.Tonwith the Gas price of Tk.28.54 per MCF. The actual production of ureaduring 1988-89 was 4,10,86?.00 UT.
the etimated cost per Y.Ton of urea as per Budget of 1989-90 under
the asswpti"A of a
a) Anual production t 5,00,000 MY
b) 50:50 Debts Equity ratio.
c, Depreciation provision s 5% for Plant & Machinery & 2.zo for Building.
d) Gas Prtce: ¶k.'28.54 per MCI & usage ratio; 30 MCF per MLe.
BUDBGETD COST OF PRODUCUlONFOR THI YEAR 1988-8;.'
Total amount Per metric Ton3 (Tk. Milion) (Tk.)
1. ariabis Coasts
Natural Gas 428.10 856.20Other variale costs 330.10 660.21Sub-Total : 758RW WrS5u
;. Iled Cost t
Deprclation 653.oo 1306.00
Other fixed costs 185.1) 370*07Interest Charges 780.10 156r.1)0Sub-Total s 1618.93 3237.8
3. Total costs 23773 4?5V@8
ATTACHEMENT II-122 -
,¢QNCLUSIOIS
the project vlability of CU.L as per assessment of CUPL managemet
Is not the masfo has been montioned In the PCie The realised Ecnomuic Rato
of Return as assessed by CUFL 1 9.30% as againot IDA assossment of 4j. Ben
In the existing ciroumstances the project well covers the cash costs(l.e.
vithout considering depreciation).
As per suosament mde is the PCR, the current project cost of similar
capasity urea factory is US$ 350 million as against CUlL'. cost of US$ 512
millioniur coat estimate Is 467 mllion based an the exchange rates preval-
1lig on the date of disbursements. The comporison has presumably been made
wlth reference to the project cost of Jana Fertilizer Co. Ltd.
the project cost of smlilar capacity plant shall differ depending upon
eontracting arrangement, acope of works, world economic situation with refer-
ence to tl30 of contract, Location of Project, Process Involved and a }pst of
other tectors. A comparative project coot analysis of CUnL &-J1CL Is shown In
Aanezmre-D and a comparitive statement of some major Item Is given in
ena"WosCo0 .
CHITTAGONG MURE EBRTILIBR LTDCUITTAGONG i CUITTAGONG.
Priuxe In Million Tak-INTERNAL RATE O1 RTURN (ECONOUIC)
Year Total ITotal gNot Di1scount Not Present ' Discount Not present value at 5%senetits Icoasts Ionefits |tactor at 15% value at 15% j factor at 5% I
2~~~
198/W 5 85 633472 (633.q72) S;00 (6330772) 1;00 (633;772)1985 86 3532.'654 (35329654) Oi870 (3077.4408 0MU5 (3363-086)
1986 * 87 - 62992,389 (6292.389) V*.756 (47?57;46) Oi07 (570t.'196)
1987 . 88 659.239 3980.241 (3321.002) 0W.658 (210.1$) 0.864 (28699396)
1t88 _ 89 17466I94 1436j645 310;1449 0572 22595 0.823 255;253
1989 .90 2753.l1O tO40.85 t712;26 0.497 850"993 0.784 1342.412
1990 - 91 2573 000 1040.85 1532.%15 0.432 661;889 0.746 1142.-9841
1991 " 92 2573.o000 I04W85 1532.15 0.376 5740088 0.711 108903591992 493 25984730 1050.28 1548.450 0i327 506'343 **77 1048;301
1993 - 94 2598fl30 1050¢28 t548.450 0;284 439.760 0;655 998.750
1994 - 95 2598;730 10F.443 1553.887 0.247 383*810 0.614 954.87
1995 - 96 24444350 991S,263 1453.087 0*15 31Z2414 @M585 850.*056
1996 - 97 2'444'50 991r263 145dy8? 00187 271.727 0a55? 809.-369
1997 * 98 244/4050 991.263 1453.08? 0i163 236.853 R0530 770r.e136
1998 _ 99 2444h350 991.263 1453X087 0o141 20W85 04505 73A*091993 v a000 24441350 98E0O27 146t4823 0.123 179*767 0?481 ?Og*3 92
8000 * 01 23192700 935%>677 1300g.023 0107 14ft662 0t458 632--050
01
l-~ ~~ t- 3 | 5 1!
2001 - 02 2315i700t 93*#77 1370.023 Q.;093 12z4&12 0;o436 597.330
2002 - 03 2315400t 935.0677 137?OP023 Q0.8i 1102972 0*-6 565-929
2003 - 04 231517@00@ 9'S,4,677 1376iO23 GI,0?0 99.902 Oi396 542-;529
2004 05 230-.700 935r,677 13?7-*23 q@j061 83.571 0-377 5 6I.499
2005 0 06 231S,700 935.677 1370.023 U053 72.611 0.359 491.838
2006 _ o7 2315.700 935.6?7? 1370.023 0.046 63.021 0A342 468.548
2007 ,08 2524200 935.677 1370.023 0040 54.801 0.;325 445.257
(59114559) 2388;088
2388;088'33(1) = (1f%-5%)
2388.O88 * 5091d09
=8t;11%
s4,l
o N
N'-4s
12Mw D6I CO4PARISOS or PaRosC COST OfIUIYfAOGSflA PeRITUUUP LIE AID JSC.
WAs. ln Mxllon U181
s L * I*i *f *ork §~ cmr ROnL Olft3re I C o a a * R t a
1. lead AoqUsitieme 0a7 1.032 (0.762) Nest of the cun Land to Gever ent Land & h"S Lan wbhereas, VOcLLand is Private Land acqudred by the Govt. for the Project.
2. Site rOparattio 194985 1348 6.505 ntoal oluma Of flll In CUtL was 2.90 mllion cublc meter agalnst tbeialauding Piling estlated 2.30 mdllion cubic seter In nICL. A total nuber of 4342 piles
wyre used at a eoat of US 12.278 dillieo In CUIPL whereas the stimateplllng cost of JDC! Is oaly 08C 0.676 aillion.
3. Process Equipment 110.50 90.834 19.666 The cost of Equipent anW matertale for Fertilizer Plants In t*e Inter-national Market bas d.creused durlng the last few years, particulrlyat the bidding stage of JFP. furtbhr tbo JIP bid wam invited on LOTbasis while that of CUFL was Fixed too Plus cost re-i_bursible basis.
4. Catalyst Cheamcals 3.75 5AS (1.70) J P estimate Includes Polythene Pelletc, utilities & offeites cbemicalswbile that of CUWL Includes cost at catalysts, Polytbene Pellets &Chemicals. D CL cost includes cost of coating materials whieb ws nJotrequired iD CUILns case. 4A
S5 Utillties & offeite 88.s8 61.521 27.299 The length of water latake pipeline In CUL Is about 28 31 and that ofPaeilltls oJFP is abeut 41U. the coat of Jetty of COn Is US 7.683 million while
that of JFP is only US$ 0.188 million. 5FCL cost Includes cost ofrailway yard which In not Included in CUFL cost. CUOW* Jetty Is forocean going versele & that of SICL Jetty In fer Internal basis.
6. WAterial Naadllng 25.05 122579 12.471 CMlL's materlal Handling pisb system md conveyor length to more*quipment complex and longer compared to JFCL. Moreover. COWL'a Bulk Orea storage
Is for 85,000 asgainst 50,000 ST of tCL.
7. Construction squipenut 15.94 8.43? 7.503 the cost of construction equipmeas and rental charges have fallen Inthe lternattonal market and period of Implecmntatien of JICL Isscheduled to be two months lower tban CUWL.
8. a) JreCtion costruction 74.563 34.326 40.237 CUFL construction and BroctUou was accomplised under separate constracte i f wowr & materials but In SCL tl this lseluded In Lsn1 Price of the General CootteoteO. U Ie
b) Doming complex 19.05 8.890 10.160 CUW7. Provided 67718 32 ia lousin Complex while that of SICL is 35696 @ t I Zonly. 0II
t IU4~~~~~~~~~~~~~~~
81. XItm of work | cu L. am ICL 3ftereaen I C o a a * a * sxh. I I * Overion r) 1
9. Presight1 Imwa"ae L 23.847 39.97 (16.123) Cost is muhb lower thba that of JUL cost Is this respect.-Ua ooet ofrosm dwty JDCL equipment is less tboa t"at of C0L but the ilead transportatien
distance tor hiYL equipment o much longer compred to that of canprojeet.
-10. Prof eaional Services 41.635 32.795 8.840 the CUlL techaical Advisery Services started from the feasibility studyand 113 propMOrtiOn OtUtq. DrtiUon of US end total MamDatOs is morethan tCL estisato. General eostrecLerls quoted price in gm lCL forthe scope of work in lso lower than CUlL*s actual Oost.
11. Pre-OperaUtional lapa. 13.518 12.718 0.8u CUFL cost Ineludes salaries wages, everbead, Project malowace tfr theentire i ple_entation period. s*rt-..p cost, CUlL works & facilitie,G 'Cs field office expenses, .Cls personnel *te. JDCL oxpenses underthis band Inciudee saltries & "ages, Project ellowaee, Initial a rksof project & Aucililary facilitle* sCCs field Office Impenses etc.
12. Sub-Total a 4364.928 322.032 14.8i6
13. Physical Contingency _ - -
14. price Contingency - 14.00 (14.00) CUlL to completed. So no contingency is necessary;
1U. Working capitol 6.620 5.714 0.906 So comments.
16. isterest during 23.452 27.177 (3.725) CUIL Interest was calculated on the bim basis of 50:50 Debts Squity &enatraction 10% Interest. JlP interest has been oaleulated on the bais of 60840 Debts
Bquity and 6.5% Interest per Aum_.-tOT. I z 467.00 368.92 98.08
* this project cost is based on the exchange rate prevailing at the date of disbursenents.
U
- 127 - ATTACHMENT II
Annexure C
CuAwison of ome- major items of OM & T L
nie. in Miillion
CUFL CL Difference
1. Pillng (QB 00001) 12.278 0.676 11.602
2. material DanGling 25.05 12.580 12.470Uquipsont (YY - 2)
3. pce r generation & 17.88 10.251 7.629distribution(Cl-I, U -t & PL.2)
4. aStoan Generatlok 9.86' 10.000 (0.fl36)(CZ-a & CZ-3)
5. Jetty IJt-I) 7.*692 0.188 7.'5o4
6. Cooling water facilities 7.970 7.350 0.620
(PVU..U & 28)
7. Water Troatment Plant 13.806 12.163 1.643(PU - 3)
8. Water Intake & PlIpOlIl 14.092 1.723 12.369(Pg - 4)
9. IretiLon, Conhtruetion Works 74.565 33.705 40.860& Materlils (IX-1, CY-IS,ST-5, 11.5 1X-10, W-1 ,w.a & W2., 1.3(l) &UV-31U).
10. Ilousnia Complse 19.05 8.889 10o.,161
Total s 202.247 97.125 104-.qaa2
- 128 ATTACHHET II
Conments on Draft Project Completion Report on FertiitserIndustry lUeliabilitntloct Project ( Credit 1023 - BD ).
The draft Project Completion Report on FIRP (Credlt No. 1023-BD)prepared by World Bank has beon revieuved and our commeuts nre given helow s
1. Financial and Economic Rate of Return i
In calculating the FIRJ & EIBR in the draft PCD of tho oh-Id Daukthe assumptions made were realistic, The cumulative iiacrementail productlonwas, however considered from 1988 to 1995, which resulted io poor finan-clal and economic rate of returns. It should be from 1983 to 1995 sinceDCIC started acruing the benefits of F1RP from 1983.
2. Sustainabillty of Rehobilitated Project s
Sustainability predicted in thae draft PCR of World Daik may notr4fleet the actual situation, as the preluction was made on the basis oflow YIRR & LIRR calculated for 1988-1995 productive years instead of1983 to 1995 production-years as mentioned earlier.
further, taking into account the present trend of developmenttowards more economic and efficient management of various enterprisesunder BCIC and based on cumulative experievces of operating spphisticatedfertilizer industries in this part of the world, there are definitereasons to be optimistic In sustaining economic operation of the plantunder discussion.
3. GENISAL COUUENTS t
a) Fenchuganj Fertilizer Factory experienced difficulty in proruringequipment which are at present more or less obsolete in natube.This had appreciable impact on project completion time.
b) The objectives!.of all the three improvement projects werefulfilled after implementatton and the benefits derived have beendiscussed in details in the P1W of respective project.
a) It is worth mentioning here that the problems or plant defficieon-cles, identified by the in-plant personuel zere realistic and asa result, the achievement after implementation was up to thedesired level.
4. CONCLUSION t
We have no other comments to make in the draft PCR.
- 129 -&ATTACUS III
ASIAN DEVELOPMENT BANK
6 September 1989
Coinents Received from the Asian Development Bank
Mr. Alexander NowickiDivision ChiefPolicy-Based Lending, Industry,Public Utilities and Urban SectorsOperations Evaluation DepartmentThe World Bank
Dear Mr. Nowicki:
Re: Chittagong Urea Fertilizer Project- Project Completion Renort -
We refer to your letter dated 2 August 1989 seeking our viewson the Project Completion Report (PCR) on the Chittagong Urea FertilizerProject prepared by your Department. Our Post Evaluation Office is alsocurrently evaluating the above Project based on the work of a PostEvaluation mission which visited Bangladesh earlier this year. Theirdraft report may be expected around late September 1989.
In response to your request, we wish to offer the followingcomments on your draft PCR:
1. Paras. 3.1 and 4.1
The statement about capacity utilization of 81 per cent and theassessment that the fertilizer plant is operating without majorproblems on the basis of only three months operations duringJuly-September 1988 in FY1989 do not appear to provide arealistic picture of the operational capability of the plant.In fact, during the subsequent three month period in October-December 1988, there was virtually no production of fertilizerat the plart. We provide in Attachment 1 the production detailsuntil May 1989. Based on this, paras. 3.1 and 4.1 shou)d eitherbe amended to include information for the full year orappropriately qualified.
2. Para. 3.7
The actual cost of the Project is computed at $525 million.Details on the latest estimates of actual Project costs,including breakdown between foreign and local costs, as well asyearwise disbursements, are provided in Attachment 2.
s*"R_1.-B.d.aa3o 1.10.. M.t..P.lI.-p6. 1 P. IAiJ..- P. O.Bow 7,1og- M...PLpy.. .C.6..: ASIANBANK MANI"Ar.l *4-- -. -. bas-2 ,u -(aiw .) .F...l.d. ( -e) 7,1- 711 1 T1l. s31a0 ADB Plf. To. ADD PM. es3a ADB PN
- 130 -ATTACHMENT III
3. Para. 3.8
We provide as Attachment 3 the latest financing plan on theProject.
4. Para. 6.1
The economic internal rate of return (EIRR) as calculated,appears low and differs from our re-evaluation of EIRR of 9%.The reason for the variation in the EIRR is evidently due to thedifferent assumptions made in its calculation, as indicated inAttachment 4.
5. Para. 8.4
The summation that the Project was implemented on a turn-keybasis does not appear to be correct. The Project in fact wasimplemented through a cost plus fee arrangement through aGeneral Contractor and it is our assessment that this hascontributed to overdesign and higher costs.
6. Para. 8.5
It is true that the Bank made a major effort in coordinatingseven financing sources. However, the multiplicity of co-financiers contributed to delay in Project implementation.
We hope you will find the above comments useful in finalizingyour document on the Project. We look forward to receiving your finalversion of the Report when it is ready.
Very truly yours,
E. A. NONISManagerPrograms Department (West)Division II
Attachments: a/s
- 131 -
ATTACHMENT IIIAttacbment I
Monthly Production of Urea Fertiliter at CUFL
. .....................................................
ProductionCut)
... .... ,. .,_ ..................................................... ..
FYt1987/1988
October 3,S14.8November 20,496.5becembar 48,758.0Janmary 18,249.0February 29,388.7March 50,959.3Aprit 42,168.0May 32,930.4Juwe 31,511.9
Total t8 months) 280,976.5
FY1988/1989
July 40,547.SAuAust 26,?1S.5September 4.6S01.5Oetober 10,181.0NovemberDecember 276.8January 47,003.9February 45,480.9March 49,0$9.0April 43,000.0May 52,000.0
Total (11 months) 360,806.1............................... S......................
Source: CUJFL
Appraisal Estimates and Actual Project Cost.($ million)
Appraisal (1961) at Apprsisal (1986) a/ Actual Cost overrun (Undeerun)Ite -........................... .........m....... .......... .................... ...............................................
Appraisal (1981) Appraialt (1986)Cocal Foreign Total Local Foreign Total Local Foreign Total Local Foreign Total tocal Forefgn Total
1. Land Acquisition 0.76 0.76 0.67 0.00 0.67 0.57 0.5 -0.19 0.00 -0.19 -0.10 0.00 -0.102. Site Preparation 12.47 12.59 25.06 16.25 15.64 31.89 6.56 16.99 23.55 -5.91 4.40 -1.51 -9.69 1.3S -8.543. Process Equippent 0 76.74 76.74 2.33 112.77 115.10 2.20 114.25 116.44 2.20 37.51 39.70 -0.13 1.48 1.354. Catalyst. Chemicals 0.00 0.00 0.00 0.00
a Spar Parts 12.82 12.82 0.47 4.06 4.53 0.25 3.17 3.41 0.25 -9.65 -9.41 -0.22 -0.89 -1.12S. Utility 8 Otutite 0.00 0.00 0.00 0.00
Facilities 1.42 48.49 49.91 8.06 75.41 83.47 5.17 80.36 85.53 3.75 31.87 35.62 -2.89 4.95 2.066. Naterial Handlng 0.00 0.00 0.00 0.00
Equipment 16.37 16.37 1.45 21.62 23.07 0.49 23.70 24.19 0.49 T.33 7.62 -0.96 2.09 1.12 L7. Construction Equlpzent 19.47 19.47 1.45 16.06 17.50 1.66 13.78 15.44 1.66 -S.69 -4.03 0.22 -2.28 -2.06S. Building 4 Structures/ 0.00 0.00 0.00
Construction & Erection 40.79 18.42 59.21 52.09 35.98 88.07 55.50 43.20 98.70 14.71 24.78 39.49 3.41 7.22 10.639. Freight, Insurance 0.00 0.00 0.00 0.00
S Custom Outy 6.79 .20.49 27.28 27.7 28.79 56.56 20.83 5.36 26.18 14.04 -15.13 -1.10 -6.9 -23.44 -30.3810. Professlon l Services 3.53 55.12 58.65 7.46 39.53 46.99 5.45 38.38 43.83 1.92 -16.74 -14.82 -2.01 -1.15 -3.1611. Pre-Operating Expenses 6.71 4.19 10.90 5.66 1.82 7.48 14.28 0.66 14.94 7.57 *3.53 4.04 8.62 1.16 7.46
0.00 0.00Total Bae Coat 72.47 284.7 357.17 123.66 3s1.67 47S.33 112.95 339.83 452.78 40.48 55.13 95.61 -10.71 -11.84 -22.5Working Capitat 29.8 5.26 35.08 3.62 2.46 6.08 9.82 3.88 13.70 -19.98 -1.40 -21.38 6.20 1.42 7.62Interest 0uring 0.00 0.00
Constructfon 75.29 75.29 96.41 0.00 96.41 S8.86 S8.86 -16.43 0.00 -16.43 37.55 0.00 -3?5S7Total Capital Outlay 177.56 289.98 467.54 223.69 354.13 S n.82 181.63 343.71 525.35 4.0.7 53.73 7.81 -42.06 -10.42 -52.47
at Phtycal and price contingencies allocated to cost Items.
t ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~~~~f'*E
- 133 - ATTACHMET IIIAttacbmint 3
Sorces of Foreign Exchange Finsicing
PecntFinncier 1982/83 1983/84 194/83 1985/86 1986/87 1W8A/8S 1988/89 Total Share
ADB 5.18 0.87 2.30 19.34 34.52 21.07 S.10 88.38 25.7
ADFAED 6.29 15.15 1.66 23.10 6.7CIDA 6.57 2.79 3.08 1Z.44 3.6IDA 11.77 3.32 15.09 4.4
1,03 1.03 15.38 0.69 17.10 5.0DECF 0.40 19.82 73.44 S.8S 8.64 108.15 31.5
SF, 14.87 48.85 9.62 n.34 21.3fovernent 4.65 1.45 6.11 1.8
Total 5.18 0.87 2.71 79.69 198.11 43.42 13.74 343.71 100.0
Note: The financing from tho Islamic Devetopment Sank is in the form of Its Leasing of the power
generation component to CUFL for 10 years, after which the owership vests-in CJFL.
- 134 - ATTACUMN IIIAttacbment 4
EIRR CALCULATIONS - ASSUMPTIONS
IBRD ADB
Project Life 12 years 15 years
(In the original appraisal aneconomic life of 12 years wasassumed. In the Bank'ssupplementary appraisal of theProject in 1986, a Project life of15 years was assumed. In dwrelopingcountries high cost industrialplants are used for longer lives andthoir retirement is usuallydeferred. In Bangladesh, theeconomlc life of the new JamumaFertilizer Plant is assumed to be20 years. In the circumstances, aProject life of 15 years has beenasssumed in the re-evaluation.
Project Costs $513 million $525 million
Economic cost ofNatural Gas Tk 35 per MBCF nk 30 per tSCF
Gas consumption 35,000 SCF per ton 30.000 SCF perof urea ton of urea
(The guaranteed rate of consumptionis 26 000 MSCF per ton of urea. CUFLhas achieved rates below 30,000 MECFper ton of urea and has projectedconsumption at this level.)
Benefits - Urea Exports International FOB Price International FOB PriceUrea Cons. International FOB Price International FOB Price plus
C&F and port handling costs
Urea Price Projections Differs from the World Bank's Based on World Bank projectionsprojections of 28 J-me 1989. of 28 June 1989.