DATE PROCESSING PLANT, D.I. KHAN
Company’s Name Dhakki Dates Processing Plant (Pvt) Limited
Sponsors Ministry of Commerce through PHDEC & Government of
Khyber Pakhtunkhwa through Agriculture Department
Project Scope A processing facility for fresh dates including storage, fumigation, cleaning & washing, drying, curing, sorting, grading and packing.
Location 2.0 acres of land provided by Government of Khyber Pakhtunkhwa is available in Ratta Kulachi, D I Khan.
A private limited company had been formed to implement and operate the project. The Board of Directors consists of the nominees from PHDEC (2), Agriculture Department Khyber Pakhtunkhwa (2), growers (2) & representative of DI Khan Chamber of Commerce & Industry (1). Secretary Agriculture, Government of Khyber Pakhtunkhwa is chairman of the Board while Director Agriculture (Marketing) Khyber Pakhtunkhwa is working as its CEO. The project is to be established as a joint venture / public-private partnership in order to run it in a
more efficient and effective manner. The Board would be restructured when a private party becomes a partner in the project.
The scope of this project includes processing of fresh and semi-fresh dates. There is a huge demand for processed dates in the local and international markets.
Pakistan ranks third in date production in the world. The province wise production data shows that Sindh produces 46% of the country‘s dates followed by Balochistan. The major date producing district in KPK is D I Khan. The dates of the area are comparable with the well known international brand Majoul Dates. However, there has been no processing facility in the area.
Almost 93% of the exported dates comprise of dried dates (chohara) while remaining 7% are exported as fresh. Pakistan receives lower price due to improper handling. The average export price per unit of fresh dates is almost double the price of dried dates. There appears to be good potential for fresh dates exports, provided proper cleaning, grading and packing facilities are created.
History / Current Status
The implementation of the project was delayed because of various reasons, mainly late release of funds and changes in location by the provincial government which was finalized in start of 2008. Tenders for civil works were floated and opened on 25-03-2008. The lowest bid was higher than available funds, therefore tender was cancelled. Due to delay and rise in cost of construction materials, the project cost had increased considerably.
Based on discussions with stakehokders in Khairpur/Karachi and financial calculations, it is assessed that the plant with a processing capacity of less than 1.0 ton per hour may not be financially feasible. Such a plant with a medium size cold store would cost around Rs. 80-90 million.
DRAFT TERMS & CONDITIONS FOR JOINT VENTURE
DHAKKI DATES PROCESSING PLANT
M/s Dhakki Dates Processing Plant (Pvt) Limited - DDPPL, has been incorporated for the establishment of a Processing Plant for Fresh Dates in D. I. Khan.
WHEREAS, DDPPL intends to establish a Date Processing Plant mainly for fresh dates. The project scope includes storage, fumigation, sorting, washing, drying, curing, grading & packing and a cold store;
WHEREAS, DDPPL wishes implementation of the said project on the basis of Partnership /Joint Venture with investment by private sector;
DDPPL & Private Sector Partner will collectively synergize their energies & resources to establish the above referred Date Processing Plant through a mechanism of partnership / joint venture. The broad terms & conditions of the envisaged cooperation are proposed to be as follows:
A) The parties agree to join hands for establishment of a processing facility mainly for Fresh Dates in D. I. Khan on the basis of Public Private Partnership / Joint Venture.
B) The project would be executed through already existing private limited company - M/S Dhakki Dates Processing Plant (Pvt) Limited.
C) The Board of Directors of the proposed Company shall be reconstituted in proportion to the investment or the criterion mutually agreed between the parties. The Chairman of the Board shall be from Public Sector (Government side) while Chief Executive Officer from the Private Partner.
D) The project will be managed by the private sector partner and Chief Executive Officer will be the representative of the private party. However, for day to day affairs of the project, a team of professionals would by hired by the management from the job market.
E) The Project Cost is estimated at around Rs. 80-90 millions, against which Rs. 34 millions are available with the company in addition to two acres of land in Ratta Kulachi, District D I Khan.
F) The remaining part of the project cost would be met through investment by public sector. The private partner will arrange the balance amount, out of which at least Rs. 32-33 millions will be in the form of equity (paid-up capital).
G) The investor will contribute its share in the form of cash or land/building and cash.
H) In case of equity contribution by Private Sector Partner in the form of physical assets, its value shall be determined by an independent evaluator appointed by public sector. The assets would be properly transferred in the name of the Company (DDPPL) and shall become its property.
I) The processing facility shall mainly include storage, fumigation, sorting, washing, drying, curing, grading, packing, solar dryers and a cold store.
J) The project shall be run as Commercial Venture mainly for fresh dates and private sector investor would ensure that operations are carried out for at least 90 days a year.
K) The parties shall be liable to the extent of their paid-up capital and loans/advances by the private partner shall be sole liability of the company. However, in case of profits, the same shall be distributed among the partners according to their contribution in paid up capital / equity.
L) In case of loan by any of the party to the project, the same shall carry a mark-up rate fixed by the Board of Directors keeping in view the financial market.
M) The bank accounts of the proposed Company, particularly during implementation, shall be operated jointly with one signatory nominated by each party.
N) The private sector partner shall be responsible to keep all the assets in tact and shall ensure their identity, safe custody and soundness.
O) Any of the authorized representatives of PHDEC/Agriculture Department, Khyber Pakhtunkhwa shall have free access to the premises of the project and shall be facilitated in carrying out inspection of assets and operations as and when so desired.
P) The company shall be an independent corporate entity which shall be respected and maintained all the time.
Q) The private sector partner would not remove, modify or alter any of the assets like plant/ machinery, equipment, installations, fixtures, etc. from the project’s premises without approval of the Board of Directors.
R) The parties agree to make efforts to bring the project in operational condition within a period of twelve months from the date of signing of this agreement.
S) The parties may jointly hold seminars/trainings for awareness of the public, growers, exporters and service providers in date palm/horticulture sector.
T) The provisions of Understanding (MOU) / Agreement between the parties could only be amended, modified or waived only in writing executed and mutually agreed by each Party hereto. It will remain valid unless otherwise agreed by the parties and will be binding along with Memorandum & Articles of Association of the proposed private limited company.
U) The validity of the agreement shall be continuing. However, each of the party can terminate this contract subject to an advance notice of at least three (3) months and only on the basis of some breach of contract by other party.
Disputes arising out of interpretation or implementation of this MOU/Agreement shall be resolved through mutual discussions/consultations.