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The World Bank

FOR OFFICIAL USE ONLY

Report No. 15481

IMPLEMENTATION COMPLETION REPORT

REPBULIC OF UGANDA

SUGAR REHABILITATION PROJECT(Cr. 1893-UG)

March 25, 1996

Agriculture and Environment Operations DivisionEastern Africa DepartmentAfrica Region

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

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CURRENCY EOUIVALENTS

At Appraisal: US$ 1.00 = Ugandan Shilling (UG Sh) 60.00At Completion: US$ 1.00 = Ugandan Shilling (UG Sh) 960.00

WEIGHTS & MEASURES

Metric System

ABBREVIATIONS AND ACRONYMS

KSW Kakira Sugar Works (1985) LimitedMTI Ministry of Trade and IndustrySIU Sugar Industry UnitAfDB African Development BankAfDF African Development Fundtcy tons cane per yeartcd tons cane per dayha hectareSAR Staff Appraisal ReportMTR Mid-Term ReviewSDR Special Drawing RightUA Unit of AccountIFAD International Fund for Agricultural Development

FISCAL YEAR

Government of Uganda: July 1 to June 30Kakira Sugar Works (1985) Ltd.: May 1 to April 30IDA: July 1 to June 30

FOR OFFICIAL USE ONLY


REPUBLIC OF UGANDA


CONTENTS

PREFACE ..........................................................................................................................

EVALUATION SUMMARY ................................................ ii

PART I: PROJECT IMPLEMENTATION ASSESSMENT ................................................. 1

A. STATEMENT OF PROJECT OBJECTIVES .1B. ACHIEVEMENT OF OBJECTIVES .2C. IMPLEMENTATION EXPERIENCE AND RESULTS .2D. PROJECT SUSTAINABILITY .10E. BANK PERFORMANCE .10F. BORROWER PERFORMANCE .10G. ASSESSMENT OF OUTCOME .10H. FUTURE OPERATIONS .11I. KEY LESSONS LEARNED .11

PART II: STATISTICAL TABLES ............................ 13

PART III: APPENDICES

FAO/CP AIDE MEMOIRESUPPLEMENTAL TABLESBORROWER'S COMPLETION REPORT

MAP

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


REPUBLIC OF UGANDA


PREFACE

1. This is the Implementation Completion Report (ICR) for the Sugar Rehabilitation Projectin Uganda, for which Credit 1893-UG in the amount of SDR 18.9 million (US$ 24.9 millionequivalent) was approved on March 7, 1988, and became effective on October 7, 1988.

2. The credit was closed on March 31, 1995. Final disbursement took place on November 6,1995, at which time a balance of SDR 0.2 million was canceled. Cofinancing for the project wasprovided by the African Development Bank, African Development Fund and Kakira Sugar WorksLimited (KSW). This ICR' was prepared by the staff of FAO/CP on behalf of AF2AE Division ofthe Africa Region and reviewed by Ms. S. Ganguly, Division Chief, AF2AE, and Mr. G.Sengupta, Acting Projects Advisor, AF2. The ICR is based on information obtained from theproject files and on the findings of an ICR mission which visited Uganda in July 1995. KSWprovided comments and inputs to the draft ICR. The Borrower contributed to the preparation ofthe ICR by providing inputs to the Aide Memoire drafted by the FAO/CP completion mission, andhas also prepared its own assessment of the project's performance. A copy of Govemment'sCompletion Report is attached.

1 The ICR was modified to reflect the inputs of vaious Bank staff who reviewed the draft report prepared bythe FAO/CP Completion Mission, and may not completely mirror the FAO/CP mission's assessment of theproject's performance, and some of the mission's findings / lessons of experience.

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REPUBLIC OF UGANDA

SUGAR REHABILITATION PROJECT(Credit 1893-UG)

EVALUATION SUMMARY

Introduction

1 The Sugar Rehabilitation Project was appraised in April 1987 and approved by the Board of theBank in March 1988. The total project cost was US$ 61.5 million towards which IDA provided a total ofUS$ 32.3 million: US$ 24.9 million under the project (Cr. 1893-UG); US$3.3 million from the IndustrialRehabilitation Project (Cr. 1248-UG); US$3.8 million from the Agricultural Rehabilitation Project (Cr.1328-UG); and US$0.3 million from the Second Technical Assistance Project (Cr. 1434-UG). Co-financing for the project was provided by the African Development Bank, African Development Fund andKakira Sugar Works Limited (KSW), a joint venture company owned by the Government of Uganda andEast African Holdings Limited. Project funds were provided to KSW through subsidiary loan agreementsbetween KSW and the Government of Uganda. The Credit closing date, originally envisaged to beDecember 31, 1993, was extended to March 31, 1995 in order to accommodate the final phase ofrehabilitation of the KSW factory.

2 The objectives of the project were to (i) restore sugar production of Kakira Sugar Works Limitedto historical levels and, by so doing, save Uganda's scarce foreign exchange resources that would otherwisehave been utilized to import sugar; (ii) strengthen the role of Ministry of Trade and Industry (MTI) inmonitoring the performance of the sugar industry, coordinating industry policy and responding in general tothe industry's need for assistance during the period of rehabilitation; and (iii) support the liberalizationof sugar marketing and processing in Uganda.

3 These objectives were to be achieved through a major investment program of rehabilitation of theagricultural production, factory and infrastructure facilities at Kakira; technical assistance forstrengthening of management and training; and, financing of incremental working capital. In addition, theproject was to establish a Sugar Industry Unit (SIU) within MTI to strengthen the monitoring andcoordination role of Government during the rehabilitation phase of the sugar industry in Uganda; and tointroduce an import parity pricing policy and mechanism for liberalizing sugar marketing. The scheduledtargets for capacity installation/rehabilitation and production were adjusted at the time of the Mid-TermReview (MTR) in the light of implementation progress and the revised costs.

Implementation Experience and Results

4 Implementation Experience. Overall, the implementation experience has been satisfactory, buthas been characterized by slippages in the time schedule anticipated at both appraisal and mid-term review.While this was partly caused by delays in procurements, project execution had to be adjusted in order to besynchronous with other factors. After the factory started operations in 1989/90 at Stage I levels, factoryrehabilitation to Stage II levels had to be accommodated within an operational plan that took into account

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the availability and best use of maturing cane under the agricultural development program, the workingcapital position of KSW, and the impact on the national sugar supply position that would have resultedfrom extended factory shutdown. An action plan to balance these factors was designed and executedsatisfactorily.

5 Project management demonstrated a commitment to successful implementation during the projectlife, and in general, dealt adequately with various implementation issues. Due to cost escalations during theproject period and under-estimation at preparation/appraisal of the scale and cost of works involved insome components, some activities needed to be re-scaled (factory capacity from 3,000 to 2,500 tons of caneper day, and rehabilitation of infrastructure) or dropped completely (irrigation rehabilitation) in order tokeep the costs within the levels of available financing. However, KSW financed out of its own resources,some of the activities that were originally expected to be financed through both IDA and AfDB/F credits(some housing rehabilitation and road improvement). These modifications were agreed to at the time of themid-term review.

6 Results. The objectives of the project will be fully achieved during the operational phase. Duringimplementation of the factory rehabilitation program, factory performance and operational efficiencyimproved steadily. Throughputs increased from 735 tons of cane per day (tcd) in 90/91 to over 2,000 tcdin 1995. Domestic production improved from 4,499 tons of sugar in 1989/90 to an estimated 52,250 tonsin 1995/96 and is expected to rise further to 74,200 tons in 1996/97, primarily due to the support providedto KSW under the project; this increased domestic production reflects gross foreign exchange savings ofsome US$ 40 million p.a. The project reactivated an important industrial complex, providing directemployment for 7,600 staff, together with improved health, education and housing, and improved incomeearning opportunities for some 1,400 outgrower farm families. However, the agricultural research aspects(e.g. for cane variety development) were not adequately addressed at the design stage, and wereaddressed, somewhat belatedly during project implementation. Nevertheless, despite cost overruns andsome delays in implementation, the project has resulted in an estimated economic rate of return of 23%(SAR 28%), with the economic benefits resulting from this investment, flowing to the Government, both interms of improvement in the balance of payments position and as shareholders in KSW, and to the privatesector. In addition, there is also a fiscal benefit to Government in the taxation being levied on KSW profits.The financial results indicate that gross profits of 65 % of production value can be expected during theoperational phase. This is high by world comparison, largely due to low labor costs, high import parityprices due to high transport costs to Uganda, and import duties on sugar. Net profits before taxes areestimated to be in the order of 24% on turnover, or some USh 12 billion for 1996/97. In view of theforegoing, project performance is deemed satisfactory. Also, while not specifically stated in the SAR,the project has made a substantial impact on achieving the Government's objectives ofprivatization, while achieving, in particular, the objective of liberalization of sugar manufacturing/processing activities in Uganda.

7 Sustainability. During the period 1988 to 1995, KSW has demonstrated the management,technical and operational capability that is required to secure the future of the project beyond therehabilitation phase. Sufficient financial returns, crucial to continuing operation and expansion, can beexpected. Planting and harvesting programs are well established. Operational targets should therefore beachievable, and, as KSW is a fully commercial enterprise with private sector shareholding, the project'ssustainability is likely; recently the private sector has acquired additional shares from the Government,

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reducing the GOU holdings to 30%. Financial and economic analysis of the project carried out atcompletion, indicate that sugar production in Uganda is financially sound and economically viable.

8 Bank and Borrower Performance. While, during the preparation and appraisal of theproject, optimistic targets were set, and, in some components, the extent of works and equipment involvedand their related costs were under-estimated, this was corrected at the mid-term review. IDA's role in thesupervision of the project has been quite good. The supervision and the mid-term review missions providedsupport to the project management in the administration mechanisms of the credit, although World Bankprocedures were perceived by project management to be not entirely suited to a private sector project.Assistance was provided directly to KSW management by both Bank Headquarters and Resident Missionstaff throughout the project, and an effective working partnership involving Government, the Bank andKSW was established. This aspect was crucial when implementation delays arose as it enabled the requiredflexibility to be incorporated, as illustrated by the adoption of revised capacity and production targets atMTR. Throughout the project, the Government and management of KSW have shown continuing commitmentto successful implementation, with the exception of the Sugar Industry Unit (SIU) for which adequate budgetarysupport was not provided, hampering SIU's capability to be effective in collating updated and reliable industryrelated data and information (after trade liberalization was introduced by Government in 1991/92,sugar price determination by SIT was no longer required, and the perceived importance of theunit declined sharply). Additionally, when viewed in the context of a forthcoming Agricultural SectorManagement Project, which inter alia seeks to rationalize and strengthen the statistical data and informationcollation / dissemination capacity of the Ministry of Agriculture (support will also be provided to the StatisticsDepartment of the Ministry of Finance ), continued support to the SIU does not appear necessary.

Future Operations and Key Lessons Learnt.

9 A plan for the operational phase of the project was completed by KSW management and forwardedto MTI for comment. The plan sets out targets for production, operation and maintenance of KSW.Included in the plan is the construction of an ethanol plant within two years in order to utilize molassesproduction in excess of that which can be sold locally. Future plans also include proposals for usefullydisposing excess bagasse resulting from continuing expansion of cane production. KSW has alsodeveloped a "Ugandization" program, for the future replacement of expatriate staff with qualified Ugandannationals.

10 The key lessons to be learned from the project are as follows:

(a) the time frame for importing, transporting and installing the equipment involved in a largeindustrial investment project in a land-locked country needs to be set more realistically andreviewed more closely at the design stage.

(b) agricultural research aspects were not fully addressed at project design stage. Anagronomic research unit was established towards the end of the project. Cane varietydevelopment requires a long lead time for testing and propagating improved adaptivevarieties, and this should have been addressed in the early stages of the project'simplementation.

(c) creation of a working partnership between Government and international financinginstitutions with joint venture participation with the private sector in implementation canlead to successful results.

(d) replacement of expatriate staff by Ugandan nationals was envisaged under the project.Despite implementing staffing development and training programs, this was not fullyachieved. Constraints not visualized in this case, included the difficulty in attractingqualified Ugandans from townships or from overseas, to rural areas.


REPUBLIC OF UGANDA


PART I: PROJECT IMPLEMENTATION ASSESSMENT

A. STATEMENT OF PROJECT OBJECTIVES

1. The principal objectives of the project were to (i) restore sugar production of KakiraSugar Works Limited (KSW), a joint venture company owned by East African Holdings Limitedand the Government of Uganda, to historical levels and, by so doing, saving foreign exchange thatwould otherwise have been utilized in importing sugar; (ii) strengthen the Ministry of Trade andIndustry's (MTI) (formerly the Ministry of Industry and Technology) management of the sugarsector; and (iii) support the liberalization of sugar marketing and processing in Uganda.

2. These objectives were to be achieved through a major investment program ofrehabilitation of the agricultural production (reclaiming and replanting some 7,900 ha anddeveloping another 4,100 ha of outgrower cane production), as well as of the factory andinfrastructure facilities at Kakira, technical assistance for strengthening of management andtraining, and the financing of incremental working capital. In addition, the project was to establisha Sugar Industry Unit (SIU) within MTI to strengthen the monitoring and coordination role ofGovernment during the rehabilitation phase of the sugar industry in Uganda, and to introduce animport parity pricing policy and mechanism for liberalizing sugar marketing. The scheduledtargets for capacity installation/rehabilitation and production were adjusted at the time of the mid-term review (MTR) in the light of implementation progress and revised costs.

3. Central to the design of the project was the implementation of the major project activitiesthrough the joint venture company between Government and the private sector (owning theKakira complex). Project funds were thus channeled to Kakira Sugar Works Limited throughseveral subsidiary loan agreements covering Cr. 1 893-UG and other Bank credits, viz., IndustrialRehabilitation Project (Cr. 1248-UG), Agricultural Rehabilitation Project (Cr. 1328-UG), andSecond Technical Assistance Project (Cr. 1434-KE), as well as, an African Development Bankloan and an African Development Fund credit. At the inception of the project, the Governmenthad a 51 percent shareholding in KSW, which has been reduced in line with Government policy tothe present 30 percent.

B. ACHIEVEMENT OF OBJECTIVES

4. Agricultural development objectives have largely been met, but cane yields and quality fellduring 1994/95 due to adverse seasonal conditions. The factory rehabilitation (Phase II) is beingcompleted and the factory will be rehabilitated to a throughput of 2,500 tons of cane per day (tcd)during the 1995/96 crushing season. While there were delays in implementing the project, theMTR objectives for sugar production are expected to be met in 1996/97. The correspondingimport substitution objectives will also be met. Thus, the project has had a substantial effect inachieving both the macro and sector objectives. Also, while not specifically stated in the SAR, theproject has made a substantial impact on achieving the Government's objectives of privatization,while achieving, in particular, the objective of liberalization of sugar manufacturing/processingactivities in Uganda.

5. The sugar market in Uganda is now fully liberalized, both in terms of supply (local andimport) and pricing. However, lack of resources and staff turnover within the SIU is placingconstraints on its capacity to advise and monitor the sugar industry.

C. IMPLEMENTATION EXPERIENCE AND RESULTS

General

6. At appraisal, the project was envisaged to close in December 1993. The Credit closingdate was however extended to December 31, 1994 and again to March 31, 1995 to accommodatedelays in completion of the factory rehabilitation. Accordingly, the project was implemented overa period of six and half years.

7. Overall, the implementation experience has been satisfactory, but has been characterizedby slippages in the time schedule envisaged at both appraisal and mid-term review. While this waspartly caused by procurement related delays, project execution also needed to be phased inaccordance with other factors. On completing Stage I of the factory rehabilitation, the factorystarted operations in 1989/90. The second stage of factory rehabilitation to had to be re-scheduled in accordance with an operational plan that took into account: the availability and bestuse of maturing cane under the agricultural development program; the working capital situation ofKSW; and the impact on the national sugar supply position that would have resulted fromextended factory shutdown (for rehabilitation). An action plan to balance these factors wasdesigned and satisfactorily implemented..

8. Project management demonstrated a commitment to successful implementation during theproject, but had to deal with a number of procurement problems that were largely outside theirdirect control. These included delays in opening letters of credit, delays in shipments from thesuppliers, delivery to Dar-es-Salaam instead of Mombassa, and delays in on-shipments fromMombassa. A time interval of 12 to 18 months often elapsed between first requisition and deliveryto the site.

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9. In addition, due to cost escalations during the project period and under-estimation atpreparation/appraisal of the scale and cost of works involved in some components, a few activitiesneeded to be re-scaled (e.g., factory capacity from 3,000 tons down to 2,500 tons of cane perday; and, reductions in the rehabilitation of works related to infrastructure) or dropped completely(e.g., irrigation rehabilitation), in order to keep within the levels of available financing. However,KSW financed some of the activities (some housing rehabilitation and road improvement), fromits internally generated funds; these activities were originally expected to be financed through bothIDA and AfDB/F Credits.

Agricultural Development

10. While there were some delays in procuring agricultural equipment at the commencementof the project, the progress with the rehabilitation of the nucleus estate was satisfactory, giventhat the cane supply/production levels had to be coordinated with the pace of rehabilitation of thefactory's processing capacity. The present complement of equipment is reported to be adequatefor the operation of the nucleus estate, the outgrowers, and for infrastructural requirements. Themajor portion of the new equipment was received between 1989 and 1991 and the replacementcultivation tractors by 1992. The equipment supplied has given satisfactory service except for asupply of 30 wheel tractors in 1988/1989. By 1992/93 only 7 of the original 30 units were stillfunctional.

11. Bush clearing, cultivation and planting of the 7,840 ha on the nucleus estate has now beencompleted in accordance with SAR projections. Progress with cane plantings had to be revised tobe synchronized with factory capacity; the nucleus estate now has a full, steady complement of5,000 ha of mature cane to be harvested in 1995/96 and subsequent years.

12. The rehabilitation of the irrigation systems was originally estimated at US$ 1.5 million.However, when costs were reassessed in detail for these works in 1990, these were estimated tobe around US$ 15 million. The incremental yields expected from irrigation (16 ton per ha perannum based on pre-1970 levels) would have resulted in an overall increase in sugar production of7 percent. However, the net value of this incremental production was determined to be insufficientto support an investment of this scale, and a decision was taken that no rehabilitation of theirrigation infrastructure would take place.

13. Historically, under a regime of labor intensive crop husbandry, a liberal use of agriculturalinputs, and one-third of the nucleus estate under overhead irrigation, cane production averaged779,444 tons of cane p.a. in the period 1967 to 1971, peaking at 853,467 tons in 1970. The SugarRehabilitation project opted for a more sustainable approach, i.e., more economic use ofagricultural inputs, non-irrigation of commercial cane and a less labor intensive agronomic regime.Accordingly, the SAR projected cane yields at 112 tons per ha for the nucleus estate and 94 tonsper ha for outgrowers, equivalent to about 80 percent of historical yields.

14. Cane yields on the nucleus estate increased from 45 tons per ha in 1989/90 to 99 tons perha in 1992/93, but have fallen again to 92 tons per ha in 1994/95 mainly because of a reduction inrainfall over the past two years. The yield pattern for outgrowers has been similar to that for the

nucleus estate. Indications are that with reasonably good climatic conditions, both the nucleusestate and the outgrowers will achieve the SAR yields. In so doing, cane production is estimatedto be 560,000 tons for the estate and 150,000 tons for the outgrowers. Cane quality (as indicatedby pol (sugar) paercentage of cane and fiber percentage of cane), has been lower than projected inthe SAR. Sugar or pol % content is down by 8 percent, while the fiber content is up by 12percent. With lower than expected cane quality, a further expansion of area under cane, eitheroutgrower or nucleus estate, should be investigated to raise sugar production to historical levelsof 80,000 tons p.a.

15. During the early stages of the project, outgrower development was slower than expected -farmers wanted to see the factory in operation in order to renew their confidence in growing cane.Once the factory was commissioned, registration of outgrowers proceeded satisfactorily(currently 1,400 participants) and appraisal targets have been met. Outgrowers interviewedduring the completion mission expressed satisfaction at the positive experience with the scheme.Farmers in this area of Uganda have a significant proportion of their farms underutilized sincethere are few market outlets for cash crops, and their farming systems tend to concentrate on foodproduction for the household with limited marketable surpluses. While harvest and transport costsare perceived to be high, there are sufficient financial incentives under the current inputs packageand cane pricing arrangements for continued outgrower interest. However, farmers in general donot apply fertilizers, and some do not put sufficient effort into weeding. While the outgrowerscheme includes a credit component, with recoveries made from the value of cane deliveries,extension services under the scheme appear to be inadequate, and farmers lack confidence to incuradditional expense on higher input levels. Addressing these issues would be necessary to increaseoutgrower cane yields and financial returns to farmers.

16. Agricultural research aspects of the project were not addressed fully in the project design.Cane variety testing involves a minimum of six year lead time, and improvements in cane quality,both sugar and fiber content, need to be continually sought. The newly established agronomicresearch unit requires an enhanced variety evaluation program to identify suitable high qualitycane varieties to increase sugar production from the area available for cultivation. Incidence ofpests and diseases has been kept below economic thresholds, and continued monitoring by theresearch unit is essential.

Factory Rehabilitation

17. The factory rehabilitation program was designed for implementation in two stages. Thefirst stage was required to make the factory operational, after a closure of four years, in order toprocess 108,000 tons of mature cane which would otherwise be abandoned. In the first stage, thefactory was partially restored, utilizing available equipment, and 10,497 tons of sugar wasproduced between October, 1989 and August, 1990, at an expectedly low level of efficiency and arendement of 6.7 percent. Factory performance and efficiency were subsequently enhancedconsiderably by the installation during August to November 1990 of replacement equipment.During the crop season from November, 1990 to March, 1991, 94,219 tons of cane were

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processed to produce 8,401 tons of sugar at a much improved rendement of 8.9 percent, over afour month period.

18. After a further four month maintenance/rehabilitation program, the factory entered itsthird crushing season from August, 1991 to April 1993, processing 525,527 tons of cane andproducing 47,642 tons of sugar at a rendement of 9.1 percent, over a 20 month period.

19. The stage II rehabilitation program commenced in mid-1993, and was completed in April,1995. The stage I1 program was carried out in three phases -- before, during and after the 4thcrop season -- operating from September, 1993 to December, 1994. In this season, 556,703 tonsof cane were processed and 51,248 tons of sugar were made at a rendement of 9.2 percent.

20. The factory rehabilitation program was delayed mainly by the slow mobilization ofcontractors and belated delivery of equipment and materials. The latter was aggravated by atransport strike in a suppliers' country, rejection of manufactured equipment by inspectors, andother logistical problems, such as, shipping delays and transportation difficulties betweenMombassa and Jinja, where KSW is located.

21. Nevertheless, factory performance and operational efficiency improved steadily over theperiod of the rehabilitation program. Throughputs increased from 735 tons of cane per day (tcd)in 90/91 to over 2,000 tcd in 1995. These throughputs were below the SAR targets, but in mostcases were all that was required to accommodate harvesting rates and available cane. Asmentioned earlier, the fiber content in cane was running at higher than historical levels. This,combined with an increase in thermal efficiency of the factory due to the rehabilitation, resulted inquantities of bagasse in excess of the factory's energy requirements. While this excess is minor atpresent production levels, methods of disposal of future quantities that could be expected withincreasing crushing levels are being considered, particularly for electricity supply to the nationalpower grid.

22. The commissioning of the final outstanding equipment, a 3 megawatt turbo generator anda set of vertical crystallisers will ensure a factory capacity of 2,500 tcd at an acceptable level ofefficiency. Accordingly the factory is considered fully rehabilitated for the processing of cropsfrom the existing area of cane cultivation. However, the major components of the factory have acapacity well in excess of 2,500 tcd, and the plant could therefore be inexpensively expanded toefficiently process an increased tonnage of cane, should additional land be brought undercultivation.

Infrastructure Development

23. This component, financed by AfDF, was identified in the SAR at a cost of US$ 8.8million. A revision of the works and costs involved took place at the mid-term review followingthe report of the engineering consultants appointed in 1990 to accurately assess the rehabilitationrequirements. At that time, the full cost of works rehabilitation was estimated at US$ 50 million.Accordingly KSW management, in consultation with IDA, AfDB and AfDF, redesigned theinfrastructure component within a budget of US$ 9.8 million -- the extent of funds that were

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available. In addition, KSW undertook to finance, from internally generated funds, certain priorityitems - labor camp facilities, water supply and some housing. At the time of preparing this ICR,the revised infrastructure program was largely completed with the outstanding works envisaged tobe completed shortly.

Staffing

24. The project provided for recruitment of internationally experienced personnel initially; theexpatriate staff would be replaced by Ugandan nationals by the end of the project. As against aprovision of 278 person years, the project utilized 341 person years of expatriate TA, but stayedwithin the total cost estimate. The KSW expects this level of staffing to continue through 2003,when the number of expatriate staff is expected to be reduced to 15, as against six proposed bythe end of the project in the SAR.

25. This additional expatriate requirement is, in part, the result of the difficulty experienced byKSW in attracting qualified Ugandans to KSW from other townships or from overseas. Asemployee confidence develops with the continued growth of the project, and the results of thetraining program take effect, the replacement of expatriate staff with Ugandan nationals will befacilitated. KSW have set out a program for the future replacement of expatriate staff, which isprovided in the Borrower's Final Evaluation Report.

26. KSW employs approximately 7,600 workers, of whom some 4,140 are permanentemployees. Most permanent employees are resident at Kakira with their families and are entitledto subsidized housing, rations, medical and educational facilities.

Training

27. In 1990, intemational consultants were commissioned to prepare a four year trainingprogram which would put in place a sustainable training facility equipped to develop staffing skillsat all levels, and to ultimately facilitate the replacement of expatriate staff by Ugandan nationals,at KSW.

28. A training unit has been established with a Training Manager, a Technical TrainingOfficer and a Manpower Planning and Development Officer, together with support staff andclassroom facilities for 90 students.

29. Under the project-supported training program, 25 employees benefited from overseastraining, some 56 staff attended courses at local training institutions or received on-the-jobtraining. The training program was broad-based, with 78 managers/professionals receiving in-house and external training, over 280 technicians/ supervisors receiving training in Uganda (272)and overseas (10), and some 325 craftsmen and operatives receiving in-country training. A totalof 17 Ugandan nationals received management training; and over 150 staff have benefited fromthe skills enhancement training program.

30. The training center requires some additional equipment - overhead projectors, videos,computers, photocopiers; also there is a perceived need for the appointment of additionalvocational training officers to accelerate in-house training and thereby contribute to the overallsustainability of the project.

Sugar Industry Unit

31. A Sugar Industry Unit was set up within the Ministry of Trade and Industry as a projectrequirement to monitor the implementation of the project at KSW together with the rehabilitationactivities at two other sugar factories, Lugazi and Kenyala. Initially the SIU was also responsiblefor regulating sugar supplies and sugar prices within the country, and the SIU was staffed by ahead (senior economist) with adequate statistical and secretarial support staff, in accordance withthe project design. The SRI carried out the market information and coordination role as planned.However, after trade liberalization was introduced by the Government of Uganda in 1991/92,sugar price determination by SIU was no longer required, and the perceived importance of the.unit declined sharply. Staff and budgetary resources to the SIU were reduced to the point that, atthe completion of the project, the SIU consisted of only the present officer-in -charge, engagedpart-time on SIU activities. As a result, the unit could no longer effectively monitor the affairs ofthe sugar industry and provide Government with pertinent statistical information for sugar policyformulation.

32. This Unit has provided a linkage between industry and Government during liberalization,and during the ongoing rehabilitation of the industry. However, while the current staff resourcesare not considered adequate for the Unit to be effective as a locus for collecting and disseminatingup to date and reliable sugar industry related data and information, such support to the SIU mayno longer be necessary, in view of a forthcoming Agricultural Sector Management Project, whichinter alia seeks to rationalize and strengthen the statistical data and information collation, analysisand dissemination capacity of the Ministry of Agriculture, Animal Industry and Fisheries; supportwill also be provided under this project to the Statistics Department of the Ministry of Finance.

Major Constraints

33. The major constraints associated with implementation, and discussed above, arerecapitulated below:

(a) the administrative and logistical difficulties associated with procurements ofmachinery and equipment;

(b) scheduling of rehabilitation works concurrent with continuing factory operations;

(c) mobilization and performance of contractors.

Project Benefits

34. The direct and indirect benefits resulting from the project are:

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(a) domestic production improved from 4,500 tons of sugar in 1989/90 to about52,250 tons in 1995/96, and is expected to rise further to about 74,000 tons in1996/97,

(b) gross foreign exchange savings of about US$ 40 million p.a.(despite the highlyfavorable conditions for in-country sugar production, at project inception,Ugandan imports of sugar were about US$ 20 million p.a., ranking second only topetroleum imports);

(c) direct employment for 7,600 staff, together with improved health, education andhousing facilities;

(d) improved income earning opportunities for about 1,400 outgrower farm families;

(e) reactivating an existing industrial complex which, directly and indirectly, provideseconomic benefits to a large number of Ugandans;

(f) contribution to overall macro-economic recovery during a period of rehabilitationand reconstruction.

35. A major benefit of the project has been the impact on the balance of payments position ofUganda. As anticipated at appraisal, significant direct benefits from project investment haveaccrued to both the shareholders of KSW, and the outgrower farmers supplying cane to thefactory. There is also a fiscal benefit to Government in the taxation being levied on profits of KSW.

Project Costs and Financing

36. Total project costs were US$ 78.2 million, compared to the SAR estimate of US$ 61.5million. Total incremental working capital amounted to some US$ 18.5 million (SAR US$ 11.0),with capital costs equal to US$ 59.6 million (SAR US$ 50.5). External financing by IDA, AfDBand AfDF were denominated in SDR and in Unit of Account (UA), respectively. Due to changesin cross rates between US$ and SDR, and US$ and UA (appreciation of SDR and UA against theUS$), additional funds were available in terms of US$. At appraisal, IDA financing for theproject -- in addition to the US$ 24.9 million under the proposed Credit (Cr. 1893-UG) --included transfers from the following three IDA credits: (a) US$ 3.6 million under theAgricultural Rehabilitation project (Cr. 1328-UG) for the refurbishment, storage and shipping ofequipment, (b) US$0.35 million under the Second Technical Assistance Project (Cr. 1434-UG)for a first phase of factory engineering services to KSW; and (c) US$3.6 million to KSW as a sub-project under the Industrial Rehabilitation Project (Cr. 1248-UG) for the procurement ofmachinery and agricultural inputs. The proposed new IDA credit of US$24.9 million was tofinance factory rehabilitation beyond Phase I requirements covered under ongoing credits, forforeign exchange costs of remunerations to KSW expatriate staff, incremental factory inputs, andinstitutional support to MTI. At project closing, the total financing by IDA is estimated atUS$36.5 million, of which some US$27.9 million was disbursed under Cr. 1893-UG. The credit

was closed on March 31, 1995. Final disbursement took place on November 6, 1995, at whichtime a balance of SDR 0.16 million (equivalent to US$0.24 million) was canceled. Theundisbursed balances in the AfDF credit and AfDB loan, (both closing on December 31, 1995) atthe time of preparing this report (August 1995) amounted to UA 2.6 million (US$ 3.8 million)and UA 1.36 million (US$ 1.95 million), respectively.

Economic and Financial Aspects

37. An economic analysis of the project has been undertaken at completion on a similar basisas that contained in the SAR. The results are provided in Part II, Table 9. The reduced scale ofthe project, combined with increased project costs has had the effect of reducing the economicrate of return from the 28 percent anticipated at the time of appraisal to 23 percent, which isnevertheless still a very attractive rate of return on the investments. Due to the comparative agro-climatic and labor cost advantages of Uganda, and the costs involved in importing commoditiesthrough Kenya or Tanzania, the analysis shows that sugar production for domestic consumptionremains economically sound and well justified.

38. The project has also resulted in the additional employment opportunities for the localpopulation, and provides seasonal work for cane cutters from northern districts of Uganda andincome generation opportunities for outgrower farm families.

39. KSW's overheads, built up in a period when sugar revenues were lower than expected,were financed by KSW from its own funds. In addition, some essential works originallyenvisaged to be financed by IDA or AfDB/F were also financed by KSW. This placed somefinancial constraints on KSW during the implementation period. Nevertheless, KSW, from profitsgenerated by the end of the project, has commenced repayment of loans in accordance with therespective Subsidiary Loan Agreements.

40. Import duties on sugar result in financial prices being higher than economic prices forsugar, and the financial returns for 1996/97, the first year of full production, are estimated to bearound USh 12 billion (about US$ 12 million), representing a return of 24 percent on turnover,before taxes. Details of these estimates are in Part II, Table 9.

41. In these circumstances, sugar production in Uganda is currently financially viable as wellas economically sound.

Environment

42. The project has led to no adverse environmental implications. Factory waste water istreated in effluent ponds adjacent to the factory. The main by-products are: filter press mud, usedas a fertilizer on the estate; bagasse, which is the energy source for the factory; and molasseswhich is temporarily stored in tanks before being disposed of locally as an input to distillationprocesses and as an animal feed supplement.

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D. PROJECT SUSTAINABILITY

43. During the period 1988 to 1995, KSW has demonstrated the management, technical andoperational capability that is required to secure the future of the project beyond the rehabilitationphase. The sustainability of the project is dependent on the financial returns generated in thefuture, and as mentioned above, sufficient financial returns can be expected. With a sustainableharvesting program, operational targets should be achievable and, as KSW is a fully viablecommercial enterprise with major private sector shareholding, the project's sustainability is likely.

E. BANK PERFORMANCE

44. The mission considers that, during the preparation and appraisal of the project, optimistictime/completion targets were set; additionally, for some components, the extent of works andequipment involved (hence, related costs) was underestimated. This was corrected by the mid-term review. IDA's role in the supervision of the project has been very good. The supervision andthe mid-term review missions provided support to the project management in the administrationmechanisms of the credit, although Bank procedures were perceived by the project managementto be not entirely suited to a private sector project. Assistance was provided directly to KSWmanagement by both Headquarters and Resident Mission staff throughout the project, and aworking partnership involving Government, the World Bank and KSW was established. Thisaspect was crucial when delays arose as it permitted the required flexibility to be incorporated inproject execution, illustrated by the adoption of revised processing capacity and productiontargets.

45. The Bank also recognized the procurement and disbursement difficulties beingexperienced, addressed this problem by sending a special IDA mission in 1991 to investigate theslow disbursements in IDA (and IFAD) assisted projects in the Agricultural sector. Towards theend of the project, disbursement issues were addressed by the Resident Mission when it assumedresponsibility for pre-screening withdrawal applications for disbursements.

F. BOROWER PERFORMANCE

46. Throughout the project cycle, the Government and management of KSW have showncontinued commitment to successful project implementation, with the exception of the SIU forwhich adequate budgetary support was not provided. In general, there has been compliance withBank Operational Statements, and the covenants contained in the agreements have been compliedwith. The project management provided a draft "Borrower's Final Evaluation Report" as part ofthe ICR procedures.

G. ASSESSMENT OF OUTCOME

47. In summary, the overall outcome of the project is deemed satisfactory, in view of itssignificant contribution to the successful restoration of domestic sugar production capacity atKakira, and the indirect boost to Government's efforts to rebuild the economy of Uganda.

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Domestic production improved from 4,499 tons of sugar in 1989/90 to an estimated 52,250 tonsin 1995/96 and is expected to rise further to 74,200 tons in 1996/97, primarily due to the supportprovided to KSW under the project; this increased domestic production reflects gross foreignexchange savings of some US$ 40 million p.a. The project reactivated an important industrialcomplex, providing direct employment for 7,600 staff, together with improved health, educationand housing, and improved income earning opportunities for some 1,400 outgrower farmers.During implementation of the factory rehabilitation program, factory performance and operationalefficiency improved steadily. Throughputs increased from 735 tons of cane per day (tcd) in 90/91to over 2,000 tcd in 1995. Despite cost overruns and some delays in implementation, the projecthas resulted in an estimated economic rate of return of 23% (SAR 28%), with the economicbenefits resulting from this investment, flowing to the Government, both in terms of improvementin the balance of payments position and as shareholders in KSW, and to the private sector. Thefinancial results indicate that gross profits of 65% of production value can be expected duringthe operational phase. This is high by world comparison, largely due to low labor costs, highimport parity prices due to high transport costs to Uganda, and import duties on sugar. Netprofits before taxes are estimated to be in the order of 24% on turnover, in the region of USh12 billion for 1996/97. The agricultural research aspects (e.g. for cane variety development),however, were not adequately addressed at the design stage, and were addressed somewhatbelatedly during project implementation. The key objectives of the project will be fully achievedduring the operational phase.

H. FUTURE OPERATIONS

48. A plan for the operational phase of the project was completed by KSW management andforwarded to MTI for comment. The plan sets out targets for production, operation andmaintenance of KSW. Included in the plan is the construction of an ethanol plant within two yearsin order to utilize surplus molasses (in excess of that which can be sold locally) production. Futureplans also include proposals for usefuil disposal of excess bagasse resulting from continuingexpansion of outgrower participation in cane production. A program for the Ugandaization ofKSW staff has also been elaborated, which sets out arrangements for future replacement ofexpatriate staff by qualified Ugandans.

I. KEY LESSONS LEARNED

49. The key lessons to be learned from the project are as follows:

(a) the time frame for importing, transporting, installing and operationalizing theequipment involved in a large industrial investment project in a land-lockedcountry as well as the costs related to major infrastructure rehabilitation and

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construction works, needs to be established more realistically and reviewed moreclosely at the design stage;

(b) agricultural research aspects were not fully addressed at project design stage. Anagronomic research unit was established towards the end of the project. Canevariety development requires a long lead time for testing and propagatingimproved adaptive varieties, and this should have been addressed at the early stageof the project's implementation;

(c) creation of a working partnership between Government and intemational financinginstitutions with joint venture participation of the private sector in implementationcan lead to successful results, if there is an adequate commitment by all parties;and

(d) replacement of expatriate staff by Ugandan nationals was envisaged under theproject. Despite implementing staffing development and training programs, thiswas not fully achieved. Constraints not envisaged in this case, included thedifficulty in attracting qualified Ugandans from townships or from overseas to ruralareas.

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PART II: STATISTICAL TABLES

Table 1: Summary of Assessments

A. Achievement of objectives Substantial Partial Negligible Not Aplicable

Macro policies H,,/ L3 [F'Sector policies [I] [] Financial objectives L] Eg F

Institutional development [] l L] F

Physical objectives [KI El LI] [I]

Poverty reduction L1 [ I] E

Gender issues I Ei ]2 F

Other social objectives l r] E F

Environmental objectives El El F] 0Public sector management El El ]

Private sector development 1 F El [I

Other (specify) E El E

B. Project sustainability Likely Unlikely Uncertain

(C)

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HighlyC. Bank Rerformance satisfactora Satisfactory Deficient

(V) (I)Identification [ I L •

Preparation assistance [] [F

Appraisal F [3 F

Supervision F [3 2

HidhlvD. Borrower performance satisfactory Satisfactory Deficient

(1) S())Preparation I LC

Implementation E 71 E0

Covenant compliance ED ED F

Operation (if applicable) En ]

Highlv HighlvE. Assessment of outcome satisfactory Satisfactorv Unsatisfactorv unsatisfactory

L{) Li K]n ED

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Table 2: Related Bank Loans/Credits

Loan/Credit Title Purpose Year of approval StatusPrmeding operations1248-UG Industrial Rehabilitation 1982 Completed1328-UG Ag. Rehabilitation Project 1983 Completed1434-UG Second Technical Assistance 1984 Completed1539-UG Agricultural Development 1985 Completed

Project1824-UG Forestry Rehabilitation 1987 Completed1869-UG South-West Region Ag. Dev. 1988 CompletedFollowing operations2176-UG Livestock Services 1990 Ongoing2190-UG Ag. Sector Adjustment 1990 Ongoing2424-UG Agricultural Extension 1992 Ongoing2446-UG Ag. Research & Training 1993 Ongoing2609-UG Cotton Sector Development 1994 Ongoing

Table 3: Project Timetable

Steps in Project Cycle Date Planned Date Actual/LatestI I Estimate

Identification (Executive Project Summary) Feb-84Preparation" Apr-84Pre-Appraisal Apr-85Appraisal Apr-87 Apr-87Negotiations Nov-87 Nov-87Board presentation Mar-88 31-Mar-88Signing 11-May-88Effectiveness 15-Jul-88 7-Oct-88Midterm review 31-Dec-90 31-Dec-91Project completion 31-Dec-93 31-Mar-95Credit closing 3 1 -Dec-93 3 1 -Mar-95

Preparation was undertaken by international consultants financed under Cr 1328-UG.

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Table 4: Loan/Credit Disbursements: Cumulative Estimated and Actual(US$ thousands)

. I ~~~~~~~~~~~~~~~~F Y ..................1989 1990 199 1992 1993 1994 1995

A. Expressed in SDRAppraisal Estimate 6.4 13.9 16.5 17.6 18.6 18.9 -

Actual 2.4 2.4 5.2 7.3 12.7 15.3 18.7Actual as % of estimate 37% 18% 32% 41% 68% 81% 99%

B. Expressed in US$Appraisal Estimate 8.4 18.2 21.7 23.2 24.5 24.9 -

Actual 3.2 3.3 7.2 10.1 17.7 21.3 27.9'Actual as % of estimate 38% 18% 33% 43% 72% 86% 112%

Date of final disbursement: November 6, 1995

2 Actual disbursement exceeded appraisal estimate due to depreciation of the US$ against SDR.

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Table 5: Key Indicators for Project Implementation

Item Unit At Adjusted at ActualAppraisal MTR

AgriculturalDevelopmentArea under cane- Estate ha 7,935 7,636 7,840- Outgrowers ha 4,100 2,580 3,336Yield- Estate tons/ha 112 112 94.7- Outgrowers tons/ha 91 91 73.9Harvest labor tons/day 1.5 1.5 1.4productivityFactory RehabilitationCapacity tons cane per 3,000 2,500 2,500Rendement day 10.5% 10% 8.5%Overall recovery % 78.3%Time efficiency % 78.8%

InfrastructureLabor houses No. 2,800 1,800 1,440Water supply N/A N/AElectrical supply N/A N/A

Outgrower roads Km 109 109 98Staffing and TrainingExpatriate staff No. 69 56Training No. 387

" Based on actual operations for the period April 16, 1995 to June 30, 1995, extrapolated for the full season.

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Table 6: Key Indicators for Project Operation

I. Key operating indicators inSAR/President's Report Estimated Actual

NA NA

Table 7: Studies Included in Project

Purpose as defined atStudy appraisal/redefined Status Impact of StudyOutgrowers Review the impact of cane Completed February, Two stage paymentDevelopment Scheme - pricing on net earnings of 1992 system for outgrowerA Study of Cost of outgrowers cane dependent onProduction and actual recovery andSu arcane Pricin sugar rices realized.

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Table 8A: Project Costs

Appraisal Estimate Actual /1(US$ m) (US$ m)

Item Foreign Local Total Foreign Local TotalInvestment CostsA. Agricultural Development

- Estate Machinery 7.04 0.20 7.24 5.96 0.17 6.13- Outgrower Machinery 1.58 0.05 1.63 1.46 0.04 1.50- Vehicles 0.83 0.02 0.85 0.72 0.02 0.74- Equipment 0.64 0.12 0.75 1.07 0.29 1.36- Rehabilitation of Irrigation 1.36 0.14 1.50 - - -

Sub-total 11.45 0.52 11.97 9.21 0.51 9.72B. Factory Rehabilitation

- Equipment and Installation 17.90 2.13 20.03 25.94 3.13 29.07- Engineering and Supervision 0.94 0.02 0.96 1.04 0.02 1.06

Sub-Total 18.83 2.15 20.99 26.98 3.15 30.13C. Infrastructure Development

- Vehicles and Equipment 0.35 0.02 0.37 0.2 0.01 0.21- Staff Housing 3.60 1.04 4.63 4.64 1.28 5.93- Admin and Social Buildings 0.85 0.17 1.02 - - -

- Services and Utilities 0.46 0.35 0.80 2.07 1.66 3.74- Engineering and Supervision 0.43 0.08 0.51 0.99 0.19 1.18

Sub-Total 5.69 1.65 7.34 7.91 3.14 11.05D. Management and Training

- Expatriate Staffing 7.39 1.94 9.32 5.99 1.67 7.66- Training 0.61 - 0.61 0.40 - 0.40

Sub-Total 7.99 1.94 9.93 6.59 1.67 8.26E. Sugar Industry Unit 0.33 - 0.33 0.45 - 0.45Total 44.29 6.26 50.50 52.02 7.60 59.62

Incremental Working Capital 2.51 8.50 11.00 4.36 14.19 18.56TOTAL PROJECT COST 46.80 14.76 61.50 56.38 21.79 78.17

Note: /I Break up of project costs between locul and foreign costs has been assuned to be the same as at apprisal which is considered to berepresentative of actual experience.

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Table 8B: Project Financing

Appraisal Estimate (US$M) Actual/Latest Estimate (US$M)Source | Foreign Local Total Foreign Local TotalIDA 30.40 1.94 32.343 35.34 1.16 36.50AfDF 7.76 1.63 9.39 5.86 0.17 6.03AfDB 8.65 0.12 8.77 10.86 3.29 14.15Total Extemal Sources 46.80 3.70 50.50 50.76 4.12 54.87KSW 11.00 11.00 4.32 17.17 21.50TOTAL 46.80 14.70 61.50 56.38 21.79 78.17

Note: The break-up between actual foreign and local costs has been made on the same basis as at appraisal.

3 Total project financing by IDA of US$ 32.34 million was comprised of US$3.6 million from Cr. 1248-UG;US$3.6 million from Cr. 1328-UG; US$0.3 million from Cr. 1434-UG; in addition to US$24.9 million underthe Sugar Rehabilitation Project itself.

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Table 9: Economic and Financial Costs and Benefits

An economic analysis on the same basis as set out in the SAR has been carried out, and the details areprovided in Part III, Table 1. The economic analysis was undertaken using 1995 constant US$. Importparity prices for sugar have been calculated for each year of project investment, and have beenprojected in accordance with Bank commodity price projections for the operational phase of theproject. Investment costs are actual costs, adjusted to constant values. Recurrent costs have been basedon infornation provided by the project management concerning input cost structures, with adjustmentsmade for import taxes on imported process materials, and an adjustment for the value of labor to halfof the financial price has also been taken into consideration. As there exists a free foreign exchangemarket in Uganda, no adjustment for currency distortions has been considered necessary.

The main justification for the project was the impact of domestic sugar production on the balance ofpayments position of Government. The economic benefits resulting from investment in domestic sugarproduction have been proven to be substantial, particularly in view of the investment being directedtowards the rehabilitation of an existing facility, with substantial sunk costs involved.

At appraisal, the economic internal rate of return was estimated at 28 %. Due to delays in projectactivities resulting in production lags, and some cost increases, the economnic rate of return is nowestimated at 23 %.

The SAR also set out a financial analysis and projections for KSW. Since the accounts prepared byKSW available to the mission were prepared for taxation purposes, and the accounting treatment formany items is on a different basis from that set out in the SAR, it is not possible to compare the formalaccounts with the SAR projected accounts. It was also not possible to disaggregate and reconstruct thehistorical financial statements of KSW to enable a comparison to be made. However, an analysis of thefixed and variable costs structure of KSW has been completed to give an indication of expected levelsof financial profitability during the operation phase of the project. The details of this analysis are inPart III, Table 2.

The financial results indicate that gross profits of 65 % of production value can be expected during theoperational phase. This is high by world comparison, largely due to low labor costs, high import parityprices due to high transport costs to Uganda, and import duties on sugar. Net profits before taxes areestimated to be in the order of 24% on turnover, in the region of USh 12 billion for 1996/97.

Financial benefits flow to the shareholders of KSW, namely Government of Uganda and East AfricaHoldings Limited, and to outgrowers supplying cane to KSW. There is also a fiscal benefit toGovernment in the taxation being levied on profits of KSW.

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Table 10: Status of Legal Covenants

Agreement Section Covenant Present Origiinal Revised Description of Covenant ConenntsType Status Fulb3Ci3 e G.irtlment

nt Date DateDCA 3.01 3 CP Funds and resources for SIU Inibally compiled wite,

non-ope3tional atcompletion date

3.06 (a) 1 3 C Sugar and cane pricing to be Set at import parityinitially determined by Govt. prices until 1992

3.06 (b) 1 3 C 3 1-Dec-92 Govt. intervention in setting Fulfilledsugar prices withdmwn

3.07 1 3 C Repayment of proceeds of Cr Fulfilled1328-UG and Cr 1434-UG

3.08 5 C 28-Feb-90 Govt. to settle outstanding Fulfilleddebts to KSW

3.09 10 CP Maintenance of outgrower Fulfilledaccess roads

3.10 13 C Govt. to impose duties to Action not requiredensure minimum domesticprice levels

PA 2.07 9 CD Annual work programme2.08 9 CD 30-Dec-90 30-Dec-91 Mid-Term Review Fulfilled3.02 (b) 6 C Environmental factors -

agricultural pest control,effluent disposal and waterquality monitoring

4.01 1 CD Accounts and Audit Often delays incompletion

4.02 2 C Deficit financing Fulfilled4.03 2 C Limits on debts of KSW4.04 2 C 31-Dec-93 Restrictions on dividends of

KSW4.05 5 C 31-Dec-88 Revaluation of assets Fulfilled

SLA Article 4 (b) 3 CD Availability of foreign Lengthy delays inand 4 (c) exchage procedures

Abbreviations: DCA - Development Credit Agreement PA - Project Agreement SLA - Subsidiary Loan Agreement

Covenant Types: Present Status:I. Accounts/audit C - Covenant complied with2. Financial performance/operating revenue from beneficiaries CD -Complied with after delay3. Flow and Utilization of project funds CP - Complied with partially4. Counterpart funds NC - Not complied with5. Management aspects of the project or executing agency6. Environmental covenants7. Involuntary resettlement8. Indigenous people9. Monitoring, review and reporting10. Implementation11. Sectoral or cross-sectoral budgetary or other resource allocation12. Sectoral or cross-sectoral regulatory/institutional action13. Other

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Table 11: Compliance with Operational Manual Statements

Basically, there was compliance with the applicable Bank Operational Manual Statements.

Table 12: Bank Resources: Staff Inputs

Stage of project cycle Planned Revised ActualWeeks US$ Weeks US$ Weeks US$

Preparation to n/a n/a 141.9appraisal

Appraisal n/a n/a 8.1Negotiations through

Board approvalSupervision n/a n/a 113.1Completion n/a n/a 11.0

TOTAL 274.1 482,800

n/a - Not available - not recorded on Cost Accounting System

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Table 13: Bank Resources: Missions

Performance Rating

Number Days in Specialized Staff Implementation DevelopmentStage of Project Month/Year of Field Skills Status Objectives Types ofCyle Persons Represented Problems

Pre-appraisal 5/85 5 n/a n/a - -

Appraisal 5/87 3 n/a E, FA, SI

Supervision 5/88 1 7 E - -

3/90 2 7 A, SI HS HS P

11/90 2 7 E, SI HS HS P, F'

11/91 2 7 E, SI S HS P, F

10/92 3 7 E, FA, SI S HS

11-12/93 2 7 SI, FA S HS

|i 2/95 2 7 FA, SI S HS

Completion /I 7/95 2 12 E, SI

Abbreviations: E = Economist; A = Agronomist; FA = Financial Analyst; SI = Sugar Industry SpecialistHS = Highly Satisfactory; S = SatisfactoryP = Procurement; F = Financing (due to underestimation of costs of certain activities)

1/ Carried out by FAO/CP

PART III: APPENDICES

Appendix 1 FAO/CP ICR Mission Aide MemoireAppendix 2 Other Statistical Tables

Table 1 Economic AnalysisTable 2 Estimated Profits - 1996/97Table 3 Production IndicesTable 4 Factory Indices

FOOD AND AGRICULTURE ORGANIZATIONOF THE UNITED NATIONSInvestment Centre Division

UGANDA:Sugar Rehabilitation Project - Implementation Completion ReportMission - Aide-Memoire

I. A FAO/World Bank Cooperative Program (CP) mission" visited Uganda from 4 July,1995 to 14 July, 1995 to prepare the Implementation Completion Report (ICR) for the aboveproject. The Mission held discussions with relevant officials from the Ministry of Trade andIndustry (MTI), Ministry of Finance and Economic Planning (MFEP) and visited Kakira SugarWorks (KSW) at Jinja. The Mission worked closely with the senior management of KSW andstaff of the Project Implementation Unit. A wrap-up meeting was held on 14 July, 1995 at MTI.The FAOR, Uganda was briefed on the outcome of the Mission.

2. The Mission would like to express their appreciation for the assistance given by theofficials of Government, and the cooperation and hospitality of the management and staff of KSWduring the Mission.

Project Objectives

3. The objective of the project was to (i) restore KSW's sugar production to historical levelsand, by so doing, saving foreign exchange that would otherwise have been utilized in importingsugar, (ii) strengthen MTI's management of the sugar sector; (iii) provide a mechanism forliberalizing sugar marketing and processing. These objectives were to be achieved through amajor investment programme of rehabilitation of the agricultural production, factory andinfrastructure facilities at Kakira, technical assistance for strengthening of management andtraining, and the financing of incremental working capital. In addition, the project was to establisha Sugar Industry Unit (SIU) within MTI to strengthen the monitoring and coordination role ofGovernment during the rehabilitation phase of the sugar industry in Uganda, and to introduce animport parity pricing policy and mechanism for liberalizing sugar marketing. The targets forcapacity and sugar production were adjusted at the time of the mid-term review in the light ofimplementation progress and the revised costs.

4. Agricultural development objectives have largely been met, but cane yields andquality fell duing 1994/95 due to the seasonal conditions. The factory rehabilitation (Phase II) wascompleted and the factory commenced full operations on 16 April, 1995. Therefore, whilst there

4/ The Mission comprised Tim Lamrock (FAO TCIR - Economist/Mission Leader) and David West(Sugar Technologist - Consultant).

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were delays in implementing the project, the revised objectives for sugar production are expectedto be met in 1996/97, the year of expected steady-state conditions. The corresponding importsubstitution objectives will also be met.

5. The sugar market in Uganda is now fully liberalized, both in terms of supply (local andimport) and pricing. However, lack of resources and staff turnover within the SIU is placingconstraints on its capacity to advise and monitor the sugar industry.

Implementation Experience and Results

6 General. Overall, the implementation experience has been satisfactory, but has beencharacterized by slippages in the time scale anticipated at both appraisal and mid-term review.Whilst this was caused by delays in the procurement processes, implementation also needed to bephased in accordance with other factors. After the factory started operations in 1989/90 at Stage Ilevels, factory rehabilitation to Stage II levels had to be worked in with an operational plan thattook into account the best use of maturing cane under the agricultural development programme,the working capital position of KSW, and the impact on the national sugar supply position thatwould have resulted from extended factory shutdown. An action plan to balance these factors wasimplemented, albeit behind the appraisal schedule.

7. Project management demonstrated a commitment to successful implementation during theproject, but had to deal with a continual set of procurement problems that were largely outsidetheir direct control. These included delays in opening L/Cs, delays in shipments from the countryof origin, delivery to Dar es Salaam instead of Mombasa, and delays in on-shipments fromMombasa. A time interval of 12 to 18 months often occurred between first requisition anddelivery to the site.

8. In addition, due to cost escalations during the project period and incorrect assessments atpreparation/appraisal of the scale and cost of works involved, some activities needed to be re-scaled (factory capacity from 3,000 to 2,500 tons of cane per day, infrastructure) or droppedcompletely (irrigation rehabilitation) in order to keep within the upper level of the financingarrangements that were in place. However, KSW internally financed some of the activities thatwere originally expected to be financed through both IDA and AfDB/F credits (some housingrehabilitation and some road improvement). These issues were addressed at the time of the mid-term review.

9. Agricultural Development. Bush clearing on the nucleus estate was completed in1990/91. Progress with cane plantings had to be revised to be synchronized with factory capacitybut the estate is now fully developed, in excess of 7,000 ha of standing cane.

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10. he slippage in Stage II contract by an additional 6 months, and two years of drought (1993and 1994) resulted in delivery to the factory of over-mature and sub-standard cane during1994/95.

11. The rehabilitation of the irrigation systems was originally estimated at US$ 1.5 million.However, when costs were reviewed for these works in 1990, the costs were in the region of US$15 million. The incremental yields expected from irrigation (16 ton per ha p.a. based on pre 1970levels) would have resulted in an overall increase in sugar production of 7%. However, the netvalue of this production was determined to be insufficient to support an investment of this cost,and a decision was taken that no rehabilitation of the irrigation would take place. This hastherefore had an effect on cane yields and quality in the areas of the estate that would have beenirrigated (1,800 ha), especially in the light of the recent drought experienced in the area.

12. During the early stages of the project, outgrower development was slower than expected -farmers wanted to see the factory in operation in order to renew their confidence in growing cane.Registration then proceeded satisfactorily (currently 1,400 participants) and targets have beenmet. However, farmers in general do not apply fertilizers, and do not put sufficient effort intoweeding which, together with the drought mentioned above, has resulted in outgrower yield levelslower than expected.

13. Outgrowers that were interviewed during the mission expressed positive experience withthe scheme. Farmers in this area of Uganda have a significant proportion of their farms unutilizedsince there are few market outlets for cash crops, and their farming systems tend to concentrateon food production for the household with limited marketable surpluses. Whilst harvest andtransport costs are perceived to be high, there are sufficient financial incentives under the currentinput package and cane pricing arrangements for continued interest.

14. Agricultural research aspects of the project were not addressed fully in the project design.Cane variety testing through to use involves a minimum of six year lead time, and improvementsin cane quality, both pol and fiber in cane, need to be continually sought. Whilst the incidence ofpests and diseases has been kept below economic thresholds, further varietal and agronomicresearch would also lead to improved productivity.

15. Factory Rehabilitation. The original SAR estimates of the time required for theimplementation of the factory rehabilitation component were very tight and not achieved in theearly stages. The mid-term review (MTR) set a more realistic set of physical targets, 2,500 tons ofcane per day (tcd) capacity and 74,200 tons of sugar produced by end 1993. However, furtherdelays in completing Stage II resulted in Phase III (of Stage II) taking place during the periodNovember, 1994 to April, 1995, and the factory commenced the current crushing season on 16April, 1995 at 2,000 to 2,200 tcd. With the completion of the vertical crystallizers and thecommissioning of the turbo alternator, factory efficiency will be in line with design expectations ata capacity of 2,500 tcd. Poor cane quality has resulted in rendement levels in the region of 8.5%to 9%, lower than MTR revised targets of 10. 5%.

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16. Infrastructure Development. This component was revised at the mid-term reviewfollowing the report of the engineering consultants appointed in 1990 to accurately assess therehabilitation requirements. This component, financed by AfDF, is now complete with theexception of Water Works I (40% complete), where the contractor is facing difficulties with itsbankers, and rehabilitation of housing (currently 1,440 out of 1,850 complete) which is expectedto be completed by loan closing on 31 December, 1995.

17. Staffing and Training. KSW currently employs 4,139 permanent staff, (SAR 4,300),plus another 3,500 contract workers. Placing of expatriate staff was subject to delays initially andkey positions were not completely filled until 1991/92.

18. Consultants were appointed to develop a comprehensive training program to satisfy thetraining requirements at all levels. The program has been adequately implemented through theprovision of a training institute and the provision of both local and overseas training opportunities.The program, in its three years of operation, has provided training to about 400 employees, ofwhich 25 were overseas courses. The program is a necessary pre-requisite for the localization ofpositions currently held by expatriate staff. Since the rehabilitation program has been extended,the extension of employment of expatriate staff in the short term is expected. The operational plansubmitted by KSW (see below) includes details of the schedule for the replacement of expatriatestaff with national staff, with expatriate numbers, presently 56, reducing to 22 by 1997.

19. Sugar Industry Unit. Initially, the SIU was staffed by a head (senior economist) withadequate statistical and secretarial support staff, in accordance with the project design. The SIUcarried out the market information and coordination role as planned but, following thederegulation of the industry in 1992, staff has reduced and, at completion of the project, consistedof only the present officer in charge, engaged part-time on SIU activities.

20. This Unit has provided a linkage between industry and Government during liberalization,and during the ongoing rehabilitation of the industry. However, the current staff resources are notconsidered adequate for the Unit to be effective.

21. Project Costs and Financing. Total project costs were US$ 75.53 million, compared tothe SAR estimate of US$ 61.5 million. Total incremental working capital amounted to US$ 18million (SAR US$ 11.0), with capital costs equal to US$ 57.3 million (SAR US$ 50.5). Changesin both the SDR/US$ and UAIUS$ exchange rates in which the credit agreements weredenominated have resulted in increases in funds available in US$ terms. Final withdrawalapplications under IDA Cr 1893-UG have been submitted and an undisbursed amount of SDR .5million (US$ .8 million) is expected to remain. The Special account under Cr 1893-UG will beclosed on 31 July, 1995. The undisbursed balances in the AfDF credit and AfDB loan, bothclosing on 31 December, 1995 are currently UA 2.6 million (US$ 3.8 million) and UA 1.36million (US$ 1.95 million) respectively.

22. Financial and Economic Aspects. KSW's overheads built up in a period when sugarrevenues were lower than expected, and it has had to finance, from its own funds, some essential

- 5 -

works originally to be financed by IDA or AfDB/F. This has placed some financial constraints onKSW during the implementation period. KSW has also imported sugar in the past 2 to 3 years tokeep up national supply and market presence. KSW has commenced repayment of loans under therespective Subsidiary Loan Agreements.

23. On the economics side, whilst a full analysis has not yet been completed, clearly thereduced scale of the project with increased project costs must have some effect on reducing theeconomic rate of return from that anticipated at the time of appraisal (28%). However, due to thecomparative agro-climatic and labor cost advantages of Uganda, and the costs involved inimporting commodities through Kenya or Tanzania, sugar production for domestic consumptionis economically sound.

24. Bank Performance. The mission feels that the preparation and appraisal of the project setunrealistic time targets and underestimated, in some components, the extent of works andequipment involved. This was corrected by the mid-term review. IDA's role in the supervision ofthe project has been very satisfactory. The supervision missions and the mid-term review missionprovided support to the project management in the administration of the mechanisms of the credit,although WB procedures were perceived by the project management to be not entirely suited to aprivate sector project. Assistance was provided directly to KSW management by both Washingtonand Resident Mission staff throughout the project, and a working partnership involvingGovernment, WB and KSW was established. This aspect was crucial when implementation delaysarose as it enabled the required flexibility to be incorporated, for example, in the revised capacityand production targets and the extension of the closing date for the credit.

25. The Bank also recognized the procurement and disbursement difficulties beingexperienced, and reacted by sending a special IDA mission in 1991 to investigate the slowdisbursements in both IDA and IFAD assisted projects in the Agricultural sector.

26. Borrower Performance. Throughout the project, the Govermnent and management ofKSW have shown continuing commitment to successful implementation, with the exception of theSIU. In general, there has been compliance with Bank Operational Statements, and the covenantscontained in the agreements have been complied with. The project management provided a draft"Borrower's Final Evaluation Report" as part of the ICR procedures.

27. Major Constraints. The major constraints associated with implementation have been: theadministrative and logistical difficulties associated with procurements; scheduling ofrehabilitation works concurrent with continuing factory operations; mobilization andperformance of contractors.

Project Benefits

28. The direct and indirect benefits resulting from the project are:

- 6 -

(a) domestic production of in excess of 55,000 tons of sugar in 1995/96, rising to74,200 in 1996/97;

(b) gross foreign exchange savings in the region of US$ 40 million p.a.;

(c) direct employment for 8,200 staff, together with improved health, education andhousing; improved income earning opportunities for 1,400 outgrower farmers;

(d) contribution to overall macro-economic recovery during a period of rehabilitationand deregulation.

Future Operations

29. A plan for the operational phase of the project has been completed by KSW managementand forwarded to MTI for comment. The plan sets out targets for production, operation andmaintenance of KSW. Included in the plan is the construction of an ethanol plant within two yearsin order to utilize molasses production in excess of that which can be sold locally. A statement onGovernment policy concerning ethanol is awaited. Future plans also include a co-generation plantthat would be necessary to usefully dispose of excess bagasse resulting from continuing expansionof outgrower participation in cane production. With a return to normal seasonal conditions, morecane supply, and variety improvements resulting in higher yields and quality, these operationaltargets should be achievable and, as KSW is a fully commercial enterprise with private sectorshareholding, the mission's assessment of the sustainability of the project is "likely".

Lessons Learnt

30. The key lessons learnt from the project were as follows:

(a) the time frames for importing, transporting and installing the equipment involved ina large industrial investment project in a land-locked country need to be set morerealistically and considered more closely at the design stage.

(b) the agricultural research aspects of this type of project need to be brought out inthe design, and put in place early in the project due to the long lead time involvedin testing and propagating improved adapted varieties;

(c) creation of a working partnership between Government and international financinginstitutions with joint venture participation with the private sector inimplementation can lead to successful results.

Follow-up

- 7 -

31. On return to Rome, the mission will prepare a draft ICR to be forwarded to IDA by thebeginning of August, 1995.

Items Outstanding.

32. Preparation and Audit of 1994/95 Accounts. Preparation of the accounts is expected tobe completed by 22 July, and the audit process will take place between 1 August and 14 August,1995, with the result that the audited accounts should be available by the deadline of 31 August,1995.

33. Outgrower Road Maintenance. Project management and Government have commenceddiscussions concerning the arrangements for the sharing of costs for road maintenance in theoutgrower area as set out in the Development Credit Agreement. KSW has not claimedreimbursement from outgrowers for these costs, and have submitted a claim to Government formaintenance of 25 km of roads. In addition, KSW is claiming reimbursement from Governmentfor the cost of equipment for the maintenance of outgrower roads, in accordance with the SAR(section 4.13).

LIGiA" Sua PARkfo Prp

Ecoi:mic Analysi T" I

1988 te 1990 tot ti2 19te3 t994 1996 lo 1907 tOU 19e Mo 2000

Eaxiwc Suv Pdcs_ IPric.-Cmugei19o00 Daa n 225 282 277 193 187 206 244 252 212 200 200 200 242MUVA*n&r_(d 10C899 1069901 t108.W 10690 19 tO399 1OC6 105tW9 105W 99 108tW 0 108W9 10899k4m,_Id Price - Cm,4 196s DOls 245 307 302 210 204 227 26 275 231 21U 216 218 264Quw* ran&sin 01 25 31 30 21 20 23 27 27 23 22 22 22 26B@ev - 924 24 24 24 24 24 24 24 24 24 24 24 24S54b Todu 294 362 356 255 248 273 317 326 278 254 264 264 314

Fri ws ndVawuc as s5 65 65 65 aS as 65 65 65 65 65 65APJnmsbadEspwas 10 10 10 10 10 10 10 10 10 10 10 10 10Priced elf b_1 39 437 431 330 323 346 392 401 353 339 339 339 389

P. Hin9 ChSwg 35 35 35 35 35 35 35 35 35 35 35 35 35T rmnpon Mw.. to KW" 140 140 140 140 140 140 140 140 140 140 140 140 140

Exs-Fecry upost Psy Pnce 544 612 606 506 496 523 567 576 526 514 514 514 564

Tin Swim Exdmlp RAgs 168 370 540 915 1,216 1.130 950 960 1,000 1,000 1.030 1.000 1.000re 5euW" muV khmx 95.31 04.65 100 102.23 106.64 104.42 101.35 106.99 106.90

SugrP,uift c () - wilh rad r2 - 4.499 14.410 20.7C0 26,924 27.472 24,976 55,000 73,000 73.000 73,000 73.000 73,000

VA6e dg wwl d bwuIi(US$-300) - 27U4 8.734 10.461 13,413 14.378 14.150 31.687 36.556 37.506 37,506 37.506 41,182

V i dew l-1r8d bmur -1967 cnatii1 $13 250 250 440 730 1.180 1,670 1,750 1.750 1.750 1,750 1,750 1.750 1.750Vsbjeof_wlAbM _-'jed e1995 001t 9 3D7 307 540 957 1,448 2,040 2.147 2.147 2.147 2.147 2.14? 2,147 2,147

.we.ud EmiSs_ (307) 2.447 8.194 9,506 11,98 12.329 12,003 29,540 36,400 35.350 35.359 35,359 39,035

Cagekuesoge cage - C"e s 14.204 6.60 7,044 4.636 10.425 6.465 7.625kuegeuu COMM -1995 Cas1At S 16.356 7.411 7,510 4,740 10AM1 6.564 7.625PFcLsur Coos - Cuawd S 4 255 3.091 4,311 5.317 7.9t1 6.545 5.496 9,90 13,140Raecurecmdb -loss cUeae s 292 3560 4.699 5,669 6,157 ,31 5.5se 9,900 13,140 13140 134 13.140 13,140RF_eut Cimb 1967_ IY Ss'A 455 1,060 2.242 2,561 2.729RFpceuee Cads-e I uli 558 1,300 2751 3.179 3.348

TaUl Cae- 19 usue ,S5 292 19,956 12.100 13,176 12.897 17,713 12,164 17.526 13,698 14.440 15,691 16.319 16,46

Hg wjndd 6l (S9S (17.460) (3.915) (3,674) (932) (5,394) (161) 12.015 22,711 20.916 19,466 19.040 22.547

Ebair RU d d RAMn is 23%

V C sa P Prajeim Msy1995- SA dy prie Ib CeMs12 VataA p*d ug pvdiwbot Is wo -hEgy * produ13 -hN l - km SAR _emnlee.i4 Deod fSuo r csis d d shue.1S F.. SAR seirueb - gqmeg In '5pmg .. nd yd cemmefwed14 Cdnig for b p Sd d prod wuhest pgA 10 yi_

UGANDA Sugar Rehabilitation Project

Estimated Profits - 1996197 Table 2

Cane USh per ton caneCane Purchases 24,000 for 150,000 tons canePlantation Expenses 18,182 for 550,000 tons caneWeighted Average Ca 19,429

Process Chemicals USh per ton caneLime 339Suplhur 159Superfloo 45Phosphor 55Washing S 6Caustc So 49Sodium H 18Bleaching 9

EnergyFirewood 40Furnace 0 55

Engine oils and lubri 300Packaging Materials 1,100Factory Repairs & M 2,500

Variable Costs per t 24,103

Cane Crushed 700,000 tons

Total Variable Costs 16,872 USh millions

Fixed Costs USh millionsFactory Costs 5,000Administration 8,000Financing Charges 5,000Other Electricity 1,200Depreciation 1,831

Sub Total 21,031

Sugar Produced 66,500 tonsEx Factory Sugar Pric 750 USh per Kg

Sugar Sales Value 49,875 USh millions

Profit before Taxes 11,972 USh millions

Net Profit before tax 24%

Source: KSW (1985) Limited

UIr2ADA 3gw RuheUen Pvo9

AgnouCuru k.Scev Ta 3

Annua l Plang ()

Rened (R) 57e 514 1.050 1,6W0 1.850 I 660 I: 1,920 1,424 1,600 I,6O 1.6OoAatul(A) sn 014 311 12 1.216 1,461 1.261 1.44 16 1 1,416

A4RS 100% 1O% 2i% 20% 66% 76% 61% 75% e9% 70% 89%

RoSe d - 200 eso 650 asm gso eso eso aso eso esWAa l- 22 l 106 33I 432 361 413 485 58

AIR% 11% 2% 17% 2% e6% 5s% 64% 75% W%TOWMRenSed 576 514 1.258 2.250 2.500 2.600 2.250 2.570 2.074 2.250 2.250 2,250A.utl 076 S54 3 33 2 1.227 1.1 1.723 1,625 1.676 1.697 2.003

A/R% 100% 100% 27% 1496 s5 70% 77% 71% 81% 71% a6%

A.e Unda Crana (a)

Ravead l.513 2.W5 2.549 4.085 8.502 7.110 7.663 7.9 7.744 7.444 7.210 7210Adoal 1.513 ZOOS 1.5N7 1.014 2.NC 4,007 4.731 6.767 6,S26 6,713 7,236

A4R% 100% 100% 62% 40% s0% 5s% 80% 73% 84% 91% 100%

Nb RMlard - 6 ae 0 go 107 652 1.002 1.346 1.403 1.400 1.400RaW - - 40 #64 1.640 2,270 26920 2.566 25401 2.58)Advel 23 43 152 4S5 657 1,807 27e6 3,6 3.314

A41% 10n% 42% 26% 41% 62% 107% 129% 126%TrW

R.," 1,512 2Wos 2.549 *.7O se5s 6.7SO 10,253 10,620 10.226 10,024 1.760 7210A.tal 1,513 2.005 1.611 1.857 2.912 4.462 s.668 7,574 9,294 10.110 10.YO

AOR % 100% lOcS 63% 46% s0% 51% ss% 70% W0% 101% lam

Aren H4r_ed 0()

ErMRavald 251 12 25839 332 4.107 4.775 5.203 4.965 5,.4 000AduaI 1 26 1764 1.6s 2.267 2.005 2.654 5,151

lRS% 0% O % 4O % * % 40% 47% 39% S3$ 102%argoRand 40 264 765 1117 I.66 Ie60 Ie.0 16o 1.600Aau 1 25 276 764 704 932 574 1.635

A4R% 0% 7% #6% 70% 42% se% 56% 116%

Re - .d 251 1,339 2,203 3.787 5.314 6.447 6.003 6.5e5 6e6,4 6.600A4555 . . . . 1,424 2.042 2,449 2.071 2.637 3.226 e.9ss

A4RS 0% O% 44% S4% 40% 46% 43% 49% 10S %

Tona Cans a-d 000

ROd. 104.713 287.165 523.870 481,540 S55.588 602,60 561,006 564,675 se0.o0oAdaml -Jamery 16.664 6.179 6.64Adadl - Lual; 18.241Aa.ILW k - - - - 62s.63 122.216 164.460 224.60 190.62 244231 416,006AtaM.-TOM - - 16.04 24.420 06,753 122216 164,440 224.606 190.02 244.231 416,000

AIR% 2%2 24% 75% 34% 40% 32% 42% 71%

Raed 326130 40.460 76.450 720,505 167.610 166.000 150.000 1000,6 150.000A.usDL . . . . 1.34* 1000 62.78s 5S3.316 7.?. 34.472 134,000

AIR% 0M 2% 20% s2% M Y 52% 23% e %

R6.iw d 108.313 37625 4333.20 602,05 MI.SS3 `70,630 731m.W 734,670 7o.ooAdal -164.166 135216 227260 277,24 277.665 278.703 550,000

'RS% 0% 20% 32% 36% 36% 3s% 38% 75%

Ca. YlIds (Tonsla)

EorftRrd e - 61 101 117 11u 1l6 1le 117 lie 112Nasal . . - 45 69 SO go 63 92 M 6

AIR% 44% 69% e6% 65% 83% 79% 70%

Ra6ad 90 Ill 104 108 101 10* 64 64 64Ada 54 S8 so 76 63 6o 73

AIR% 0% 46% 55% 74% 75% 69% 64% 76'TotalRSWd - - I 2 114 113 112 113 ill 1llt 18A4usD . 45 n 94 9s 66 76

A/R% 0% 44% S6 S % 63% s4% 76% 71%

Su3gr PRodoaflan (Toila)

Ramod - - 7,00 27,200 3.000 56,6W 72.300 74,200 74.20 74,200 74.200Aual CI4.466 14,410 20.700 26.24 27.409 24.666 53250

A4R0 17r% 37% 37% 37% 37% 34% 70%

Rnldis (Tona *uogaflO Ions amne)

R.,AS. 7.20 130 9.00 9.40 18.00 10.60 10.60 1. 108.0ACt.1 . .. 60 1962 9.20 6.s6 6.6 586 6.3

415% 66% e6 s0 80% 93% 1i% am

Pal In Cr u. tyewt/7

R6,6W 11.50 12.0 1230 12.60 12.80 12.60 12.604ACus - 1160 11.74 11.07 12.28 10o. 10.90

A4R1 101% 66% 60% 66% M5% s0%

Nolan: Figur adJIlead by Mtalon alioamuRewod f11 am SAR s s d et r036tom rnn .60/66 beawd on 4adol Irnr1 rle Apd 965, naotasled lot nrrkn aecoon.

UGANDA Sugw Rehabation PrOct

Factory Indices Tabl 4

*tcy 853,467 779,444 803,200 710,000 82.830 167,018 227,410 298,117 278,000 292,330 550.000 710,000-tcd 2.943 2,784 3,000 2,500 nla 735 830 849 1,241 1,386 2,006 2,500

-tch 136.0 129.0 139.0 118.0 n/a 49.5 51.7 50.0 70.5 8Z2 93.0

Cane Qualiy-%pol 13.2 12.8 12.5 12.8 n/a nla 11.7 11.6 12.3 10.9 11.8-%fibre 13.4 12.7 13.5 13.5 nla nla 14.4 15 16.5 16.9 18.8

Primaly Juc. Qualty-Brix 18.9 18.6 18.7 18.7 nla 17.9 18.7 18.2 19.7 18.2 18.5- Purity 85.5 84.6 84.5 84.5 n/a 84 83.6 83.4 83.8 82.2 83.5

Factory Efficiency (X)- Mill exDraction 94.8 .93.7 n/a nla n/a nla 93.7 93.3 92.8 90.8 93.0- Boiling house rovely 87.9 86.4 n/a n/a nla n/a 83.6 82.8 86.4 86.2 86.0-Overallwrcovery 82.3 80.9 nr/a n/a n/a nla 77.5 77.3 80.1 78.3 80.0

Sugar Recovery- Rendement 10.80 10.30 10.50 10.50 5.70 8.50 9.20 8.96 9.86 8.55 9.52 9.57

Sugar ProductinRevised 27,200 39,000 56.600 72,300 74,200 74,200 74.200 74,200

.Actual 84,560 80,627 84.300 74,200 4,499 14.410 20,700 26,924 27,409 24.989 5Z250 74,200AIR% 17% 37% 37% 37% 37% 34% 70% 100%

* Extrapolated using actual data from 18 April 1995.Estimated.

BORROWER'S COXIPLETION REPORT

BORROWER'S FINAL EVALUATION REPORT

1.0 Proiect Obiectives

1.1 The objectives of the project were, as recorded in the Staff Appraisal Report,

over a six year period, to

(i) Restore KSW's sugar production from then zero level to historical levels

and save foreign exchange used for imports.

(ii) provide a mechanism for liberalising sugar marketing and prices.

1.2 Essentially and primarily it was intended to rehabilitate the sugar factory at

Kakira and bring it back to its 1972 level of production. As the factory was the

largest processing unit in Uganda, its revival was essential to boost economic

activity and confidence in Uganda's industrial growth. A direct consequence of

this factory rehabilitation would be to save considerable and precious foreign

exchange to the country. As Uganda is land locked and provides a convenient

natural barrier to dumping of imported sugar, at import parity prices sugar

production would not only be a remunerative undertaking but also conserve

foreign exchange for other essential purchases.

1.3 With the gradual increase in production levels, rationing of sugar across the

country and price restrictions would become redundant and at full production,

there would automatically be a case for free market distribution and pricing

liberalisation. In future this would lead to export opportunities for the Ugandan

sugar industry.

.J2

2

2.0 Design of Proiect

2.1 The Rehabilitation Project was structured as under to achieve the above stated

objectives:

(a) Provision of agricultural machinery and equipment, civil works and

vehicles for agricultural development, involving the rehabilitation of cane

production on 7935 ha of estate area and establishing 4,100 ha of

outgrower area (US$ 12.0 M).

(b) Provision of factory equipment and technical assistance (engineering

supervision) for phased rehabilitation of the sugar factory to a capacity of

3,000 TCD; a major part of rehabilitation to be undertaken using

equipment procured earlier by the Government for Kakira but never

installed (US$ 20.0 M).

(c) Civil works, vehicles, equipment and technical assistance (engineering

supervision) for rehabilitation of infrastructure including housing, utilities,

roads, social facilities, etc. (US$ 7.3 M).

(d) Technical assistance for strengthening of management and training (US$

9.9M) and

(e) Financing of KSW's incremental working capital requirements in support

of the company's initial operations (US$ I 1 .0 M).

.13

- 3 -

2.2 The design of the project was fairly comprehensive, but in retrospect has

revealed certain weakness in the assumptions and estimates. A Mid Term

Review undertaken by a joint World Bank - AfDB/AfDF Mission in November,

1991 addressed the appropriateness of objectives and set revised targets based

on more accurate information. There were significant cost increases on opening

of tender packages, and hence KSW jointly with the mission scaled down the

production target to 2500 TCD at the end of project rather than 3000 TCD as

originally contemplated.

2.3 Accordingly the revised targets were quantified as:

Original Target Revised Target

T/Y T/Y

Cane Production 803,200 700,000

Estate 576,300 550,000

Outgrowers 243,700 150,000

Sugar Production 84,300 74,200

2.4 The original design of the infrastructure rehabilitation involvecd construction of

54 new houses, renovation of 350 staff houses and 2800 tenements; constructioln

of 3.5 KM of new water supply pipelines, with a new chlorine dosing system,

resurfacing of 11.3 KM of tarmac roads, technical assistance for 36 months for

engineering supervision, repair of 7 irrigation pumps and 2.2 KM of main water

pipeline and replacement of one-third of the portable irrigation equipment.

.14

4

2.5 After detailed survey, an independent consultant firm appointed under the

project, estimated the total funds requirement for the rehabilitation contemplated

under para 2.4 above at US$ 50 millions which was far in excess of project

provisions. Further the irrigation component was estimated to be US$ 15M

against provision of US$ 1.5M., and could not be economically justified in

terms of additional cane yield.

2.6 Consequently, the infrastructure component was redesigned for a total budget of

US$ 9.8 million to cover:

(a) raw water supply and irrigation (main station alone) - US$ 1.2 m.

(b) treated water supply for domestic use - US$ 0.73 M.

(c) water supply to labour camps - US$ 1.41 M.

(d) Strengthening the existing electrical system - US$ 0.28M.

(e) power lines to labour camps - US$ 0.78 M.

(f) rehabilitation of labour housing - US$ 3.5 M.

(g) Agricultural office, laboratory and seed water treatment plant building -

US$ 0.31 M.

(h) rest rooms, canteen and toilet - US$ 0.28M.

.J5

5

(i) telecommunication and radio links - US$ 0.42M.

(j) road works - US$ 0.9M.

2.7 The shortcomings on the overall design of project were also in other areas:

(a) Utilisation of molasses/by products and cogeneration based on bagasse

were ignored.

(b) The achievement of economies of scale - ultimate growth possibilitics of

plant were not addressed.

3.0 IMPLEMENTATION & OPERATIONS

3.1 The agricultural development in terms of estate rehabilitation and planting in

outgrower areas was initially progressing slower than targeted owing to lengthy

delays in procurement of the heavy agricultural machinery and equipment to

prepare land. The lighter Reggiane equipment proved to be inadequate for the

work to be undertaken. The delays of over two years has been recorded as delays

by the International Financial Institutions tying up the credit agreements, delays

in Uganda Commercial Bank in opening L.Cs, and temporary suspension of

disbursements from ADF/ADB.

3.2 However, on an overall basis, the implementation of the agricultural

development component is satisfactory, especially with regard to land area to be

brought under cane. Shortfalls in yield and pol % cane against targets were a

consequence of successive droughts, and normalcy in rainfall will restore the

desired levels in yield per hectare and pol % cane.

...16

- 6 -

3.3 Stage-I Factory Rehabilitation was delayed by 10 months and this was chiefly

attributable to unduly lengthy procedures adopted by local commercial banks

and their overseas correspondents in opening LCs.

3.4 Stage-I rehabilitation completed in October 1989 did not bring sustained

operational capacity to the envisaged 1200 TCD, because of problems with old

cane carriers, restricted capacity of the clarifier, inferior quality of existing

vacuum filters, and limited capacity of the evaporators. Corrective action was

taken and procurement of additional new equipment erected during shut downs

between consecutive interim crushings helped to increase effective production

capacity, ensuring that matured cane was harvested and milled.

3.5 The Stage-II Rehabilitation of the factory was completed in 3 phases, and the

factory commenced crushing on 16th April, 1995 after completion of Stage-Il

works and no-load trials. The production is already over 2,000 TCD and is

expected to gradually come upto full capacity in a couple of months once our

Franco Toshi Turbo Alternator is commissioned. The delays in completion of

Stage-II works were due to delays by contractors in supply of materials, opening

of L.Cs and rejections by inspection agencies and departmental erection of

Franco Toshi T.A. which was delayed due to non arrival of spares fi-om

Reggiane, Italy.

3.6 The progress on infrastructure development is fairly satisfactory with substantial

completion in the Electrical Works, Water Treatment Plant and

Telecommunications Contract. About 60% of the housing rehabilitation was

completed, delays chiefly due to shifting of labour families to temporary shelters

and back to rehabilitated houses. Contractor defaults on the Main Water Works

has led to delays in supplies. Balance work on both these contracts is expected

to be completed by end December, 1995.

.J7

- 7 -

3.7 The Government of Uganda in March, 1991 abandoned the system of

administratively determining producer and consumer prices for sugar. This

measure was foreseen to be taken under the project by no later than December

1992 and followed in the wake of Government's broad policy of trade

liberalisation. Currently the sugar prices are determined freely by producers

based on market conditions. Distribution is also freely determined based on

market demand.

3.8 Consistent with the Government's import liberalisation policy, the controls on

sugar imports were also eased. Import licenses valid for six months are issued

by the Ministry of trade and Industry.

3.9 Another objective of the project was the dependence on expatriate staff be

reduced over time as a comprehensive program for training of Ugandan staff is

implemented. Accordingly, an international consulting firm (SOFRECO) was

employed to prepare and carry out a four year training program at an estimated

cost of US$ 1.6 million involving on the job training, training in institutes in

Uganda, and overseas training. Based on such training, a plan for

Ugandanisation of expatriate staff has been prepared, and is under

implementation.

./8

- 8 -

4.0 Borrower's Performance

4.1 The implementation and operation experience has been satisfactory despite

several problems which were beyond borrower's control. However, several

measures to counter the shortcomings were undertaken, resulting in overall

achievement of project objectives. The key problem areas were in timely tying

up of loan agreements, opening of LCs, contractor delays in supplies and

adequate and timely recruitment of staff. In retrospect one can only state these

are normal problems in any project, and have been valuable in terms of building

up experience to handle future eventualities.

4.1 The KSW Management was alive to each of the problems, exhibited

considerable initiative and incurred timely additional expenditure to overcome

contractor's deficiencies by procuring short supplied items on urgent basis, and

fixing incentives and bonuses to contractors for timely completion. KSW

Management also directly coordinated affairs of sub-contractors under the Main

Contractor to ensure effective completion of pending jobs. The Company has

commenced repayment on the loans and has conformed in all respects to its

commitments under the Credit Agreements signed with the International

Financial Institutions and the Government of Uganda.

5.0 Evaluation of Bank/cofinanciers

5.1 There has been commendable cooperation between the Borrower and the Bank

and other cofinanciers. Despite several difficulties and delays, there was good

communication and interaction with the Bank officials, at the Headquarters and

the Resident Mission. This enabled quick resolution of problems.

...l9

- 9 -

5.2 The Bank through its officials demonstrated considerable flexibility in adapting

to Borrower's problems and requests which ultimately provided the basis for

mutual cooperation, leading to successful project execution.

5.3 As far as the procurement procedures of the Bank are concerned, it was felt that

these were not entirely suited to a private sector organisation. Especially the

lengthiness of procedures, and different stages and levels of processing and

approvals caused considerable delays. There may be a case for fine-tuning the

generalised procurement guidelines of the Bank to suit private sector projects.

5.4 Another important aspect of Bank-Borrower relationship is assuring continuity

of interface officials. This is necessary to establish smooth flow of activities and

consistency in approach to and methods of problem resolution. In this particular

case, continuity was ensured and substantially contributed to the positive

progress of activities on the project.

PLAN FOR OPERATIONAL PHASE OF THE PROJECTPER ANNUM STEADY STATE TARGETS (1996-97 onwards).

AGRICULTURAL DEVELOPMENT PLAN TARGETS

(a) Area under cane 10,230 ha

(b) Area harvested 6,600 ha

(c) Yield

(i) Nucleus Estate 112 MT/ha

(ii) Outgrowers 94 MT/ha

(d) Quality ( pol % cane) 12.5%

(e) Harvesting labour productivity 1.5 MT/perman/per day

(f) Outgrower infrastructure

Maintenance Expenditureon Roads: UShs. 100

million p.a.

(g) Cane pricing UShs/MT25,112.50

(Based on formula and 10.25% recovery; cane price = 0.35 x 0.1025 xaverage sugar price realisation).

FACTORY

(a) Capacity Utilisation 2,500 TCD

(b) Sugar Production 73.000 MT

....l2

2 -

(c) Analysis of sugar losses Pol % Cane

(i) Loss in Bagasse 0.90(ii) Loss in vacuum Filter cane 0.08(iii) Loss in Molasses 1.12(iv) Unknown losses 0.12

Total losses 2.27

(d) Mill extraction 92.80 %RME 95.00%Preparatory Index 81.83%

(e) Boiling house extraction 88.19%

(f) Overall Recovery 81.84%

(g) Time efficiencyHours lost/Hours Available 15%

11 INFRASTRUCTURE

Project Expenditure Budgeted ExpenditureMaintenance of & CompletionTargets (Revenue)

USD: by 31/12/95 UShs. per Annum

(a) Labour Camps 2 million 500 million

(b) Water Supply 250 million

(c) Electrical supply 25 million

(d) Roads 0.8 million 200 million

..3/-

3-

IV INSTITUTIONALNumbers Expenditure(95-96) (95-96)

(i) Staffing 8630 UShs. 7.2 Billion

(ii) Training 1563 UShs. 263 Million+ USD 202,484

(iii) Planned program of Ugandanization )of expatriate staff ) Please see Annexture-I

V COMMERCIAL

(a) Sugar Marketing Currently on cash & carry basis.Freely distributed on first comefirst served basis to clients whoapproach KSW.

(b) Sugar Pricing ( average relisation) Ushs. 700,000 per MT.

VI BY PRODUCT UTILISATION

(a) MOLASSES

Molasses generation will be 4 MT per 100 MT of cane crushed orannually 28,500 MT. Normally, about 12 to 15,000 MT of molasses canbe sold in a year. Additional molasses storage tank is being built.

It is proposed to construct and operate an ethanol plant within 2 years.This is in line with the National Ethanol Programme now approved byGovernment of Uganda for substitution of and blending with petrol upto15 %.

(b) BAGASSE

A steady state over 45,000 MT of bagasse will become available w hichhas to be disposed off. Currently it is envisaged that boilers inneighbouring factories will utilise these quantities. However, a long termsolution is only through burning of bagasse in a cogeneration plant whichis envisaged as an integral part of the Outgrower's Expansion Scheme,currently being studied under a grant from ADB funded study by anInternational Consultancy Firm.

.... /4 -

.. 4 ..

VII FINANCIAL PERFORMANCE

(i) Category-wise allocation and utilisation of funds. Please refer Annexure-Il

(ii) Disbursement of funds vis a vis SAR projections - Please refer Annexure-Ill

ANNEX I

Page 1 of 3

KA;KIRA SUGAR WORKS (1985) LTD.UGANDANIZATION PLAN

DEPARTMENT: Administration: |

POSITION 95-96 96-97 97-98 98-99 99-00 00-0 1 01-02 02-03General Manager EXU 1 T I I 1 1

Finance Controller EUXP I I -J 1 1T 1

Deputy Fin. Controller EX I I l 1 1 1

Management Accountant UXP I l I I 1 1_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ U ti ;IT 1 1

Cost Accountant EXF .1 I _ 1 I

Deputy Fin. Controller Finance EXP . 1 1 1Vacant UC; l l 1 1

hief Internal Auditor EXU( - 1T 1 13 -1 --UG IT 1 1

Internal Auditor EXP 1 I I Vacant UC; I T 1 1Manager. sales Office EU I -1 _ _ 1

_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ I c II. 1 1 1

Local Purchasing Manager EUP 1 1

Sales Manager EXP 1 1 1 1Vacant UG I T 1 1 1 1Chief Training Manager EXP

UG 1 1 1 1 1 1 1 1Senior Medical Officer EXP 2 2 2 2 2 2 2 2

UG __ ___ _

Civil Engineer EXP 1 1 1 1 1 1UG ______IT 1 1 1

Stores Controller EXP 1 1 1 1 1 1 1

Stores Supt. EXP 1 1 1 1 T 1UG i

Project Co-ordinator EXP 1 1 1 1 1 1 1

Assistant Project Co-ordinator EXP 1 1 1 1UG_

Project Engineer EXP 1 1 1 1

Draughtsman EXP 1 1 1 1 1UG. - 1 T 1 1 1

Company Secretary EXP 1 1 1 1 1U G__ ___ __ _ _ _ _ _

Remaining Expatriates 22 22 22 22 19 15 10 10

12/06/95AGSUCPLN.XLS

ANNEX IPage 2 of 3

KAKIRA SUGAR WORKS (1985) LTD.'UGANDANIZATION PLAN

DEPARTMEN: Agriculture.

POSITION 1__ __ 95-96 96-97 97-98 98-99 99-00 00-01 01-02 02-03Agricultural Manager EXP I1I I 1 i

UGN. Estate Manager EXP 1 I I 1

UGN. Estate Supt. EXP 3 3 3 2 I

UG 2T& l IT&213 3 3Transport Manager EXP I I I I

_ _ _ _ _ _ _ UG __IT 1 1- 'ech & Trpt. Supt. EXP 2 2 2 1iVacant UG I T IT &I 2 2 2 2Agric. W/S Manager EXP I 1 1Vacant UG I T 1

Agric. W/S Supts. EXP 3 3 3 2 1Vacant UG IT 2T& I lT&2 3 3 3

Car & Lorry Garage Supts. EXP I IUG 11 I

Loco WIS Supt. EXP I IUG IT I I I 1

Field Service Supt. EXP I IUG IT 1 1 I 1 1 1

Agric. W/S Tecimucian EXP 2l Vacant UG 2T IT &I 2 2 2 2 2 2Car & Lorry W/S Technician EXP 1 I. __________________ UG IT I I I 1 1Loco W/S Technician EXP I

acant UG IT I 1 I 1 1 1Field Service Technician EXP I IVacant UG IT I I I I 1 1Agricultural Engineer EXP I I I 1Vacant UG I T 1 1 1Outgrowers Manager EXP I I I I

UG 1T 1 1 1Chief Agronomist EXP 1 1 1 1 1

UG I 1T 1 1 1


1 2/06/95SUCCPLAN.XLS

ANNEX IPage .s or i

IAKIRA SUGAR WORKS (1985) LTD.UGANDANIZATION PLAN

DEPARTMENT: FactoryPOSITION 95-96 96-97 97-98 98-99 99-00 00-01 01-02 02-03Works Manager Expat. 1 1 1 1 1 1 1

Vacant Ug.Chief Engineer Expat. 1 1 1 1 1 1 1

Ug _Maintenance Engineer Expat. 1 1 1 1 1 1 1

9 _.Shirt Engineers Expar. 3 3 3 2 1

Ug _ _ 3T& 1 2T&2 1T&34Boiler Supts. Expat. 3 3 3 2 1

_ Ug. 3T&1 2T&21T&3 4 4Machine Shop Supt. Expat. 1 1 1 1

I _ Ug. 1T 1 1 1 1Welding Shop Supt. Expat. 1 1 1 1

_ Ug. 1T 1 1 1 iMaintenance Supts. Expat. 3 3 3 2 1

Ug. _ 2T&1 1T&2 3 3 3Foundry Supt. Expat. 1 1 1 1 1

Ug. - IT 1 1 1Process Manager Expat. 1 1 1 1 1

Ug. _ 1T 1 1 1Process Shift Chemists Expat. 2 2 2 2 1

Ug. 2T&1 2T&2 1T&3 4 4Pan Boilers EXP 2 2 2 1

UG 1T& 1 2 2 2 2-. Quality Controller Expat. I

U9. ~~~~~~~~~~~~~~1T 1 1

Electrical Engineer Expat.Ug. 1 1 1 1 1 1 1 1

Electronics Engineer. Expat. 1 1 1Ug. 1T 1 1 1 _1

Senior Electricians Expat. 2 2 2 1Ug. 11T8 1 2 2 2 2


1 2/06/95SUCSPLAN.XLS

of 3

ANNEXURE-II

KAKIRA SUGAR WORKS (1985) LIMITED

SUMMARY OF FINANCIAL ALLOCATIONS WITH DISBURSEMENTS

Source of Funds Category Disbursements till Allocation31-03-95 (US $)

IDA CR 1248-UG Various procurementsunder 43 individualletters of credit forFactory & Agriculturalequipments, stores,hardware&consumables 3,898,582 SDR 3,124,000

Sub-total 3,898,582 SDR 3,124,000 (Total Allocation)

IDA CR 1328-UG Reggiane equipmentrefurbishment 1,863,563 US$1,863,563

Transportation ofReggiane equipment(Intraship contract) 1,117,674 US$1,117,674

Erection contract(Part A Uni-erector) 1,005,742 US$1,010,742

Sub-total 3,986,979 SDR 3,145,727 (Total AllocaLion)

IDA CR 1434-UG Assets Valuation 45,000 US$ 45,000

Opening Balance Sheet 50,009 US$ 50,009

Technical Consultancy 360,627 US$ 360,627(J.P.Mukherji & Associates --------------------------------------Contract)

Sub-total 455,636 SDR 368,000 (Total Allocation)

of 3

| Source of Funds Category Disbursements till Allocation31-03-95 (US $)

IDA CR 1893zUG

Categorv I

Equipment, material &installation works forfactory rehabilitation 15,207,448 SDR 10,230,000

Categorv 3

Factory inputs 828,526 SDR 660,000

Catcgory 4

Consultants services forfactory rehabilitation 635,309 SDR 530,000

CatezorE 5

Staffing services 6,572,462 SDR 5,030,000

Cateuorv 6

TrainingServices 322,193 SDR 300,000

Categorv 8

Unallocated 66,792 SDR 1,900,000

Sub-total 23,632,730 SDR 18,650,000USS 28,847,820 (Total Allocation).

ADB-BI/UG/AGR/88/012

Procurement ofAgricultural Equipmentfor Nucleus Estate 5,840,170 USS 5,845,884

Sub-total 5,840,170 UA 6,857,000 (Total Allocation).US$ 10,061,825

…-- - - - - - - - - - - - - - - - - - - - - - -

of 3

Source of Funds Category Disbursements till Allocation (US$)31-03-95 (US $)

ADF-F/IUGAGRJ88/024

Procurement ofAgricultural Equipmentfor Outgrowcrs Dcvclopncnt I ,396,326 1,396,326

Infrastructure Consultancy 780,103 996,522

Infrastructure Rehabilitation 5,584,217 9,346,112

Vehicles ( AgriculturalDevelopment & Infrastructure) 593,194 596,294

Sub-total 8,353,840 FUA 7,738,000 (Total Allocation)US$11,354,587

TOTAL ALLOCATIONS US$ 58,710,233 (Approximate - Based… =========== on average conversion

of SDR/UA.

TOTAL COMMITMENTS US$ 52,253,470

TOTAL DISBURSEMENTSAS ON 3 1-03-95 US$ 46,167,937(From all lines of credit) = …

NOTE: (1) The allocation figures indicated in US $ are estimated figures and do notnecessarily correspond to the exact equivalent of UA/SDR.For thepurposes of funds authorisation the respective UA/SDR amountswould prevail.

(2) The US Dollar figures are approximate based on available average currencyconversion rates.

ANNEXURE-111

UGAND:A SUGAR REHABILITATION PROJECT=PROJECT COST SUMMARY

SAR ACTUALAMOUNTS AMOUNTS

PROJECTED DISBURSEDA. AGRICULTURAL DEVELOPMENT (US$'000) (US$1000)

ESTATE MACH1INERY 6,608.00 6.027.91OUTGROWER MACHINERY 1,467.60 1,396.32VEHICLES 771.8 740.24OTHER EQUIPMENT 633 1,260.70REHABILITATION OF IRRIGATION 1,312.00Sub-Total AGRICULTURAL DEVELOPMENT 10,794.40 9,425.17

B. FACTORY REHABILITATION

FACTORY EQUIPMENT & INSTALLATION 17,331.70 22,051.19ENGINEERING & SUPERVISION 865.4 1,062.72Sub-Total FACTORY REHABILITATION 18.197.10 23,113.91

C. INFRASTRUCTURE DEVELOPMENT

VEHICLES AND EQUIPMENT 340.6 209.87STAFF HOUSING 3,938.00 3,352.20ADMIN. & SOCIAL BUILDINGS 891.7SERVICES & UTILITIES 633.1 2,232.00ENGINEERING & SUPERVISION 448.7 780.1Sub-Total INFRASTRUCTURE DEVELOPMENT 6,252.10 6,574.0V

D. MANAGEMENT & TRAINING

EXPATRIATE STAFFING 8,266.80 6,572.46TRAINING 528 332.19Sub-Total MANAGEMENT & TRAINING 8,794.80 6,904.65E. SUGAR INDUSTRY UNIT 302 453.52

TOTAL BASELINE COSTS 44,340.40 46,471.32PHYSICAL CONTINGENCIES 2,745.20 6540.65*PRICE CONTINGENCIES 3462.6]TOTAL PROJECTS COSTS 50.548.20 53011.97**

^ Factory Equipment & Installation: US$ 1 ,306.38 _Services & utilities= US$ 1,403.67 __

Staff Housing = US$ 2,372.80Engineering & Supervision US$ 400Training = US$ 72.8Expatriate Staffing = US$ 985

*6540.65 are yet to be disbursed.

** TOTAL ALLOCATION US$ 58,710,233 (Approx. Based on average conversion of SDR/UA

30- 32- 3/ 30

SUDAN A

~{'SS Xuo\|> r ~N./tKOTIDOe 2 . UGANDAKITGUM C

, hA~~OYO '/ .K'.GU?'-' DISTRICT CAPITALS/ ' ~~~~~~~~~KITGUM

,;)ARUA - KOTIDO * NATIONAL CAPITAL

GULU DISTRICT BOUNDARIES

ZAIRE G- RIVERSZAIRE : NeBBI,., NEBB1 GUiL' MOROTOA INTERNATIONAL BOUNDARIES

NERBI~~~~, ~APAC Li LR

<-\ APAC LIRA 'IRA C,OROlO * Dsto,elenor s n ode wt Dl Cop,ios,.,,h

_2 2 APAC

MASINDI _SOROTI J-\; HOIMAi 5U v KAPCHORW,jA

P ...... 1 .o.p p o f

PALLISA o

*:I,'"' KIBOGA " KAMULI - < BL

FORT MUB-NE .,KIBALE ' - ,, -KBALBUNDIBUGYOTOR.,,

( d .~~~~~~MUBENDE, IGNA j L( M I R 0/ ORTA IGANGA __ _ __ _ __ _ __ _ __ _ _J PORTALKAMPALA JINJA" 5 0 lV. 50 00

KASESE ~~~~~~~~~~~~MU KONOJ MPIGI '"' - KENYA

, tMAASAKA KALANGALA !BUSHENYI j

A) MBAPA AALAN A A I

RUKUNGIRI NTUNGNdO RAKAI

f~~~~~~ .' . . . :- ': . ""' .I

i SK~ABAve TANZANIA -Vico-pon ~/ RWANDA . 02- 3)=cRWAN DA 32 .'nI0 I2 N. 2

IMAGING

*Report No: 15481Type: ICR

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