TANZANIA AGRICULTURAL DEVELOPMENT BANK LIMITED
EXPRESSION OF INTEREST FOR ESTABLISHMENT OF A TEA PROCESSING PLANT IN KILOLO DISTRICT, IRINGA
Expression of Interest
Expression of Interest is requested by the Tanzania Agricultural Development Bank Limited (TADB) from interested investors to implement a Tea Development Project in Kilolo District in Iringa, Tanzania. The arrangement entails supplying and commissioning of a set of suitable solution package for tea processing and related undertakings. The ideal solution package will be a complete system (factory building, machinery and workshop equipment) and related facilities, and will be complemented by investment in green leaf collection centres, village-based tree seedling nurseries and rehabilitation of feeder roads to be implemented by Kilolo District Council. The tea processing plant will have the capacity to process at least 30,000 kilograms of green leaf per day for 300 days. Additionally, the investor will rehabilitate an existing 184 ha tea estate and invest in its expansion and/or develop new estates.
Preamble
TADB is a state-owned development finance institution established under the Companies Act, 2002 and licensed under the provision of the Banking and Financial Institution Act No 5 of 2006 and the Banking and Financial Institution s (Development Finance) Regulations to provide short, medium, and long-term affordable credit facilities for achieving inclusive agriculture sector development in Tanzania. As part of TADB’s overall financing approach, the Bank has adopted the Clustering and Value Chain Financing approach which has identified eight (8) clusters and value chains of focus based on which TADB interventions are being implemented. One of the identified value chain of focus is tea which feature in the Southern Highlands Zone. Nonetheless, the tea sub-sector faces a range of challenges which have culminated into a downwards spiral in terms of smallholder production. As such, existing processors are unable to get sufficient green leaf throughput, operate below capacity and fail to optimize costs leading t offering low prices to farmers, a disincentive to investment in productivity enhancing practices (application of fertilizers etc.). Despite the many challenges, produced year round, tea is a high impact crop in terms of guaranteeing farmers of a regular source of income and lowering their vulnerability to weather shocks. It is the 4th largest export crop which employs over 30,000 smallholder farmers who collectively produce about a third of the country’s total output.
Project Overview
Recognizing the opportunity in the tea sub-sector in the country, TADB is supporting implementation of a Tea Development Project in Kilolo District, Iringa Region promoted by Kilolo District Council, Dabaga Tea Growers Association (DATEGA) and Kilolo Tea Company (KTC). Members of DATEGA jointly own 3,600 hectares of land with title deeds with potential for tea
block farms, establishment of tea estates, green leaf processing plant and fuel wood plantations. There is also over 10,000 hectares of land owned by smallholder farmers in 26 villages with potential for developing smallholder green leaf production and investing in expansion of tea
plantations. Specifically, the project has the following key components;
Component 1: Input supply and green leaf production
i. Establishment of village-based nurseries for tea clonal seedling production, including working with various partners (research institutions, private sector and NGOs)
involved in seedling production;
ii. Rehabilitation and expansion of the existing 184 hectares of tea estate;
iii. Development of tea block farms and estates on the available 3,600 ha titled land owned by DATEGA, KTC and smallholder farmers;
iv. Development of smallholder tea growers to tap the opportunity for increased throughput from the current 170 hectares of planted tea to reach the potential of 13,600 hectares; and
v. Facilitating establishment and operationalization of contract farming/nucleus farming arrangements for green leaf production
Component 2: Mechanization
i. Promoting mechanization in green leaf production by facilitating access to mechanized technologies (tractors, and related implements) by smallholder farmers, block farmers and estates1;
ii. Facilitating the adoption of simple green leaf harvesting technologies (mechanized plucking) for smallholder farmers, block farmers/KTC and estates with the view to increase productivity and optimize costs; and
iii. Procurement of transportation facilities to facilitate off-taking of produce from green leaf collection centres to the processing facility
Component 3: Infrastructure development
i. Construction of green leaf collection centres2;
ii. Rehabilitation of feeder roads across green leaf production areas3;
iii. Construction of three (3) Grade A Residential Houses for the scheme’s managerial personnel;
iv. Construction of tea processing facility (factory building, machinery, and workshop equipment) with the capacity to process 1.8 million kilograms of green leaf per annum and with direct linkages to estates, block farms and smallholder farmers;
Component 4: Capacity building
i. Recruitment and training of extension staff in tea husbandry alongside provision of working tools to serve each of the eight (8) sub-schemes;
ii. Building the capacity of different players in the scheme particularly smallholder farmers through training and other interventions; and
iii. Development of model farmers in each of the twenty six (26) villages under the scheme;
iv. Facilitating increased production of green leaf through improved access to finance and related services to smallholder farmers, block farmers and estates. To this end, the Bank will work with Kilolo District Council, DATEGA, KTC, investors, and smallholder farmers in Kilolo district.
Scope of the investment required
Under the proposed arrangement, the investor(s) are expected to undertake activities as per the Build-Own-Operate modality described below;
Operational Modality
Build-Own-Operate (BOO) by Investor(s) (green leaf supplied by Dabaga Tea Growers Association (DATEGA) and smallholder farmers)
Under the Build Own Operate (BOO) arrangement, the investor(s) will take the responsibility to supply and commission the plant and related facilities. Subsequently, the party shall extend operation and maintenance services of the plant and related facilities on going concern.
More specifically, the investor’s obligations will include, but will not be limited to the following;
i. Contributing equity to the tune of at least 30% of the project value – comprised of subcomponents listed under Scope of the investment required;
ii. Sourcing, through a formal application to TADB, long term funds (up to 70%) in excess of equity contribution for financing the proposed project and related costs;
iii. Conducting feasibility study and market analysis for establishment of a tea processing plant and related facilities;
iv. Land acquisition & development for tea processing facility i.e. factory building, machinery, and workshop equipment;
v. Designing, supplying & installation of a tea processing plant and related facilities, including transportation facilities;
vi. Commissioning of tea processing plant, estate(s) and related facilities;
vii. Rehabilitation and expansion of the existing 184 hectares of tea estate;
viii. Construction of green leaf collection centres to complement the 7 collection centres to be constructed under DADPs;
ix. Establishing contract farming/nucleus farming arrangements for green leaf production by DATEGA and smallholder farmers;
x. Procurement of transportation facilities to facilitate off-taking of produce from collection centres and transporting the same to the processing plant;
xi. Creation of storage facilities as required;
xii. Handling operations and maintenance of the tea processing plant and related facilities, including sourcing working capital for financing operations;
xiii. Conduct all marketing activities to penetrate existing and establish new markets for made tea including arranging logistics for transportation and shipping;
xiv. Ensuring security of all facilities and plant(s);
xv. Creation of requisite utilities; and
xvi. Ensuring compliance to all statutory rules & regulations.
Qualification Criteria
The Interested investor(s) must fulfil a minimum of the following criteria to become eligible for implementing the proposed project:
i. Be a tea processing company and must have built and/or operated at least 1 medium or large scale tea processing plant and facilities as explained above in the last 10 years in any part of the world; or
ii. Be a company with experience of providing at least one (1) BOO / BOOT services to a tea processing company in the last five (5) years and should have ties with a reputable tea processing plant manufacturer/solution/service provider, coupled with;
iii. Possessing demonstrated experience in managing tea estates, processing plants, and successfully marketing tea and related products particularly penetrating existing markets and establishing new ones.
Note: Interested investors/companies should submit documentary evidence related to the above-mentioned qualifications along with audited financial statements for the past five (5) years.
Submission of Expression of Interest
Interested Firms must provide information indicating that they are qualified to perform the services by submitting the company’s profile, description of similar assignments, experience in similar conditions, availability of appropriate skills among staff or any other information which assist selection process.
Interested investors/companies may obtain further information from the office of the Director of Credit and Business Management, Tanzania Agricultural Development Bank (TADB), 3rd Floor Acacia Estates, Plot No. 84, Kinondoni Road, P. O. Box 63372, Dar es Salaam from 0800 hours to
1600 hours from Monday to Friday inclusive except on Public holidays.
Shortlisting
A shortlist of eligible companies will be prepared on the basis of Expression of Interest submitted to TADB and will be communicated to all shortlisted firms in writing. The shortlisted companies will be scrutinised in line with TADB lending procedures.
Expressions of Interest (EoI) must be delivered to the address below before Monday, March 25, 2019:
Managing Director,
Tanzania Agricultural Development Bank (TADB),
4th Floor Acacia Estates, Plot No. 84, Kinondoni Road,
P.O Box 63372, Dar es Salaam.
Late Submission
Late Expressions of Interest (EoI) shall not be accepted for evaluation irrespective of the
circumstances.
MANAGING DIRECTOR
TANZANIA AGRICULTURAL DEVELOPMENT BANK LIMITED (TADB)
