Project Data Sheet

Project Data Sheets (PDS) contain summary information on the project or program: Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.

PDS Creation Date 14 Feb 2007
PDS Updated as of 23 Feb 2007

Project Name Tea Development Project
Country Sri Lanka
Project/Program Number 29600-013
Status Approved
Geographical Location All tea-growing areas covering 13 districts in the southwest region of Sri Lanka: Kandy, Galle, Matara, Ratnapura, Badulla, Nuwara Eliya, Kegalle, Matale, Kalutara, Hambantota, Monaragala, Colombo, and Kurunegala.
In preparing any country program or strategy, financing any project, or by making any designation of, or reference to, a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.
Sector and/or Subsector Classification Agriculture and natural resources
/ Agricultural Production and Markets
Thematic Classification
Gender Mainstreaming Categories

Financing

Type/Modality of Assistance Approval Number Source of Funding Approved Amount (thousand)
Loan1639-0
TOTAL US$ 0

Safeguard Categories

For more information about the safeguard categories, please see http://www.adb.org/site/safeguards/safeguard-categories

Environment B

Summary of Environmental and Social Issues

The smallholders and private estates enjoy higher productivity and profitability than plantations. However, about 50% of their land is tilled under old seedling tea that requires replanting. The replanting rate (1%) at the time of appraisal was insufficient to maintain the yield and, if left alone, would have had serious ramification to over-all tea productivity and the competitiveness of Sri Lanka relative to other tea producing countries. In addition, poor tea industry performance can have serious social implications given the large number of people dependent on it.

Environmental Aspects
Involuntary Resettlement
Indigenous Peoples

Stakeholder Communication, Participation and Consultation

During Project Design
During Project Implementation

Description

The Project aims to increase the income of tea smallholders and private estates on a sustainable basis and to improve the environment at the same time. To fulfill the objectives, the Project will (i) undertake institutional reforms to improve the effectiveness of tea-related institutions and rationalize the cess rebate to benefit the smaller holdings; (ii) provide credit financing for replanting and infilling on smallholdings and private estates, establishment of nurseries, rehabilitation of tea factories, and handling of green leaf; and (iii) improve social infrastructure such as workers' housing and rural feeder roads as well as afforestation. The Project is expected to replant 9,600 ha and infill 35,800 ha of tea; establish 455 tea nurseries; rehabilitate 85 tea factories; improve 5,000 workers' housing and sanitation facilities; improve 250 km of feeder roads; and afforest 1,000 ha of degraded land.

Project Rationale and Linkage to Country/Regional Strategy

The tea smallholder and private estates subsector contributes 56 per cent of total tea production and 70 per cent of export earnings of tea. The 206,000 holdings provide a livelihood for 1 million family members and 100,000 workers. Although the smallholders and private estates enjoy higher productivity and profitability than the plantations, about 50 per cent of their land is still under old seedling tea that requires replanting. The current replanting rate of less than 1 per cent is not sufficient to maintain the yield and, if allowed to continue, will have serious implications for the productivity of the subsector and competitiveness of Sri Lanka vis-a-vis other tea-producing countries. Any decline in the tea industry will have serious social implications in view of the large number of people dependent on the subsector. The Sri Lanka Tea Development Project (STDP) was designed to arrest the decline through provision of financing for replanting and new planting on smallholdings, factory rehabilitation, and nursery establishment. The STDP was only partially successful in introducing credit to the smallholders because of implementing limitations, but the experience gained serves as lessons useful for the formulation of the Project. The Project will address the weaknesses in the institutional framework to provide an environment conducive to the development of the smallholder subsector. The legislative and institutional framework of the tea industry dates back to the time of public ownership of plantations and is not responsive to the needs of both smallholders and privatized plantations. The Boards of the tea-related institutions lack private sector representation. The institutions are subject to the same control and terms of employment as in public agencies and administrative staff. Legislative changes and rationalization of the administrative expenditure will ensure efficiency of the institutions and allow more cess funds to be directed to replanting on smallholdings.

Development Impact

Project Outcome

Description of Outcome
Progress Towards Outcome

Outputs and Implementation Progress

Description of Project Outputs
Status of Implementation Progress (Outputs, Activities, and Issues)
Status of Development Objectives
Material Changes

Business Opportunities

Date of First Listing 2007 Feb 14
Consulting Services
A total of 10 person-months of international consultants and 46 person-months of domestic consultants will be engaged individually by the Project Management Unit in accordance with the Bank's Guidelines on the Use of Consultants and other arrangements satisfactory to the Bank.
Procurement
Goods and services for implementing the Project will be procured in accordance with the Bank's Guidelines for Procurement. The portion of the loan earmarked for credit will follow procurement procedures applicable to Bank loans for development finance institutions. Civil works will be undertaken through local competitive bidding in accordance with procedures acceptable to the Bank.
Procurement and Consulting Notices
http://www.adb.org/projects/29600-013/business-opportunities

Timetable

Concept Clearance
Fact-finding 30 Mar 1998 to 21 Apr 1998
Management Review Meeting 28 May 1998
Approval 10 Nov 1998
Last Review Mission

Milestones

Approval No. Approval Signing Effectivity Closing
Original Revised Actual
Loan 1639 10 Nov 1998 28 Jan 1999 10 Jun 1999 30 Jun 2005 31 Dec 2005 10 Apr 2007

Utilization

Date Approval Number ADB (US$ thousand) Others (US$ thousand) Net Percentage
Cumulative Contract Awards
20 Apr 2014 Loan 1639 33,380 0 98.00%
Cumulative Disbursements
20 Apr 2014 Loan 1639 34,233 0 100.00%

Status of Covenants

Covenants are categorized under the following categories—audited accounts, safeguards, social, sector, financial, economic, and others. Covenant compliance is rated by category by applying the following criteria: (i) Satisfactory—all covenants in the category are being complied with, with a maximum of one exception allowed, (ii) Partly Satisfactory—a maximum of two covenants in the category are not being complied with, (iii) Unsatisfactory—three or more covenants in the category are not being complied with. As per the 2011 Public Communications Policy, covenant compliance ratings for Project Financial Statements apply only to projects whose invitation for negotiation falls after 2 April 2012.

Approval No. Category
Sector Social Financial Economic Others Safeguards Project Financial Statements
Loan 1639

Contacts and Update Details

Responsible ADB Officer Marzia Mongiorgi-Lorenzo (mmongiorgi@adb.org)
Responsible ADB Department South Asia Department
Responsible ADB Divisions Environment, Natural Resources & Agriculture Division, SARD
Executing Agencies The Central Bank of Sri Lanka
Mr. W.M. Karunaratne

Ministry of Plantation Industries (MPI)
J. Abeywickrama

Links

Project Website http://www.adb.org/projects/29600-013/main
List of Project Documents http://www.adb.org/projects/29600-013/documents