TERMS OF REFERENCE
FOR FEASIBILITY STUDY OF CAUSTIC SODA/CHLORINE PROJECT
May 2020
PARANTHAN CHEMICALS COMPANY LIMITED
Terms of Reference
Caustic Soda/Chlorine Project
Paranthan Chemicals Company Limited
Terms of Reference for Marketing, Financial, Environmental
Feasibility and Social Safeguard Assessment of the Caustic
Soda/Chlorine Project
A. BACKGROUND
Caustic soda and chlorine are two of the base chemicals needed in the country, which is
currently imported and totally dependent on foreign suppliers. Chlorine is used for water
purification and many other industrial uses. Main use of chlorine in Sri Lanka is for water
purification and the need of local production of chlorine is emphasized by the government to
ensure clean water supply to the nation. Apart from chlorine, the main product of the project
namely caustic soda is a very important base chemical in the country for many industries from
soap manufacture to textile dying. Two of the byproducts of the project are hydrochloric acid
and sodium hypochlorite, which is the main disinfectant used to disinfect surfaces during
Covid-19 pandemic. Hydrochloric acid too is an important product used to manufacture many
other useful industrial chemicals and which are identified as downstream industries of this
project. Few of the downstream industries of the project, which are useful chemicals, are poly
aluminum chloride, ferric chloride and calcium chloride.
Paranthan Chemicals Company Limited, a fully government own company operating under
the purview of the Ministry of Industries and Supply Chain Management has prepared a pre-
feasibility study and its evaluated to be financially viable. However a detailed Feasibility Study
is of utmost importance to make a strong case to attract financial institutions and prospective
strategic partners for implementation of the project. Paranthan Chemicals Company Limited
(PCCL) will be project implementing agency under the guidance of the Ministry of Industries
and Supply Chain Management. Considering the complexity of the project, plant shall be
designed, supplied, erected and commissioned by an international contractor. An EPC
contractor (Engineering, Procurement and Construction contractor) will be selected through
procurement procedure (International Competitive Bidding) for design & supply of equipment,
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erection and commissioning of the plant. While civil contractor/contractors shall be selected
by calling national bids for the civil construction works as per the detail Engineering drawings
provided by the EPC contractor.
B. SCOPE & DETAILED TASKS OF THE CONSULTANCY SERVICE
Objective of the consultancy service is to evaluate the project from the point of view of
commercial success and attractiveness for investment. Further, evaluation process to appraise
the project proposal and pre-feasibility study and ascertain the viability of the project with
respect to marketing, financial, environmental and social Safeguard. The scope of work under
this Consultancy assignment would basically be in following categories but shall not be limited
to those key functions.
B. 1 Marketing Feasibility
1. Analyze the local market demand for the products proposed in the project: Caustic Soda,
Hydrochloric acid, Sodium Hypochlorite.
i. Identify customer base, quality expectations of key customers, procurement
strategies of key customers
ii. Identify market growth potential and provide future market demand projections
for the next 05 years
iii. Any other related market information
2. Analyze the local market demand for the products proposed in the downstream industries
of the project, namely Poly Aluminum Chloride, Ferric Chloride and Calcium Chloride,
Soap Noodles, Sodium Silicate, Bleaching Powder, Chlorinated Paraffin
i. Identify customer base, quality expectations of key customers, procurement
strategies of key customers
ii. Identify market growth potential and provide future market demand projections
for the next 05 years
iii. Any other related market information
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Note: Poly Aluminum Chloride and Ferric Chloride are chemicals used in drinking water
purification and wastewater treatment.
3. Estimate market volume with value of each product for the next 05 years.
4. Any other related market information which may relevant in obtaining financial services
from Banks and approvals from authorities.
Refer Annex 1
B. 2 Financial Feasibility and Investment Appraisal
This feasibility study, is a tool for providing potential investors, promoters and financiers with
the information required to decide whether to undertake an investment, and whether and how
to finance the caustic soda/chlorine project. Financially, the caustic soda/chlorine Project
Investment, an industrial investment defined as a long-term commitment of economic
resources made with the objective of producing and obtaining net gains in the future. The main
aspect of this commitment is the transformation of liquidity-the investor's own and borrowed
funds-into productive assets, represented by fixed investment and net working capital, as well
as the generation of liquidity again during the use of these assets.
With above characterization it becomes evident that financial analysis and final project
appraisal involves the assessment, analysis and evaluation of the caustic soda/chlorine project
input(s), the output(s) to be produced and the future net benefits, expressed in financial terms.
For this purpose, selected firm may apply following methods:
1. Analysis of the reliability of projected data;
2. Analysis of the structure and significance of costs and income projections in order to
identify the critical variables that could have a significant impact on the feasibility of
the Caustic Soda/Chlorine project investment;
3. Determination and evaluation of the annual and accumulated financial net benefits,
expressed as profitability, efficiency and/or yield of the investment.
4. Consideration of the time factor with regard to prices, cost of capital, and decisions
taken in conditions of uncertainty (norm, business risks and specific project risks).
5. Assess the existing assets, liabilities and other resources of the Paranthan Chemicals
Company Limited for this project.
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The above-mentioned transformation of liquid financial resources (funds) into productive
assets (fixed assets and net working capital) corresponds to the financing of the caustic
soda/chlorine project investment. Project financing includes the design of a proper financial
structure, considering the conditions under which funds would be available, and the
optimization of project financing from the point of view of the Paranthan Chemicals
Company Limited and the investors including loan facilitators.
As noted earlier, the conditions for the appraisal of the caustic soda/chlorine project investment
are that a technically feasible solution is also financially feasible, can be implemented within
the socio-economic and ecological environment identified for the investment project (socio-
economic and ecological feasibility), and is likely to continue to be feasible for the minimum
time determined by decision makers as the planning horizon for their decisions.
The scope and objectives of financial analysis are therefore to determine, analyze and interpret
all the financial consequences of the caustic soda/chlorine project investment that may be
relevant to and significant for the investment and financing decisions.
Furthermore, financial analysis and evaluation should ensure that the flow of financial
resources required during the investment, start-up and operational phases is determined, and
the financial resources available at the lowest cost are identified for the time required and used
in the most effective way.
Refer Annex 2
B. 3 Environmental feasibility
Environmental Feasibility Study (EFS) assesses the viability of the proposed caustic
soda/chlorine project from an environmental perspective, identifying potential issues and
threats to the successful completion of the proposed caustic soda/chlorine project. Solutions
and mitigative measures are investigated. The purpose of the EFS is to evaluate potential risks
and liabilities with regards to environmental and health & safety issues such as land
contamination, before any contractual agreements are entered into. This is vital as these risks
may translate into financial liabilities for the parties involved. EFS shall include completion of
EIA/IEE process & CEA approval.
Base line data of ground water quality report.
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Refer Annex 3
B. 4 Social Safeguard shall be carried out with following scope
The Social Safeguards Expert will be responsible for undertaking detailed social safeguard
assessments in relevant project area. Work would include leading survey team for collection
of data relevant to social safeguard.
a) General Social Assessment at the Project Area
Baseline data shall be collected in project area and shall establish the benchmark data of the
project area for future use. The reliability of the baseline data and information shall be ensured
with clear definitions, uniform application of assessment in all cases by all data.
The social assessment shall be covered the impact assessment of the project activities and their
outputs to the Social capital by categorizing anticipated positive and negative impacts. The
project objectives and output focused characteristics could be used as indicators to assess the
achievement of project outputs or impacts, final project evaluation, project performance
monitoring and evaluation and other periodic evaluations.
b) Political Impact and Responses due to Project Implementation
The Expert shall undertake an overall assessment of the political impact on or due to the
implementation of the project. This shall cover addressing the concerns of the relevant
stakeholders in the project. The consultant shall propose necessary responses, if there are any
concerns from the stakeholders.
Final Outputs
- Undertake detailed social safeguard assessments of the project.
- Conduct meaningful public consultations.
- Consult all relevant stakeholders in assessing impacts and preparing relevant safeguard
documents.
- Population distribution & density within 2 km radius using google map etc.
- Work closely with and support other experts of team as relevant.
- Provide other relevant inputs and guidance to the Employer.
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- Other outputs as required for Employer project processing.
Social Safeguard assessment documents and reports meeting the Social safeguard
requirements. The report shall also cover the areas of Stakeholder Consultations and
Engagement, Results of the Social Impact Assessment (SIA).
Refer Annex 4
C. SUMMARY OF MAJOR OUTPUTS AND ACTIVITIES
Table 1.0 -Summary of Major Outputs and Activities
Major Activities Expected Completion Major Outputs Expected Completion
Date Date
Award of Contract 08/08/2020 Inception Report 31/08/2020
Interim Marketing Feasibility Report 01/10/2020
Interim Report of Financial
Calculations (Profit & Loss forecast,
Cash Flow, Sensitivity Analysis) 15/10/2020
Financial Feasibility Report 21/10/2020
Environment Feasibility Report 02/11/2020
Social Safeguard Report 02/11/2020
Marketing Feasibility Report
For Downstream Products 02/11/2020
Draft Final Report 09/11/2020
Final Report & Presentation 23/11/2020
*Consultant shall provide a presentation with each interim report.
D. CONSULTANCY SERVICES
The consultants will be procured according to Quality Based Selection (QBS) method and
based on the proposals submitted in the EOI process. The time frame for the entire consultancy
service is three and a half months. However, the financial feasibility is expected to complete
within two months. The intention is to negotiate with the strategic partners and financial
institutions. CVs for the key experts must be provided and they will be evaluated.
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Consulting Services Requirement of Key Experts
Positions Person-Months Required
National (Experts)
Team Leader 3.0
Marketing Specialist 2.0
Financial Specialist 2.0
Environment Specialist 2.0
Social Safeguard Specialist 2.0
Total 11.0
Non-Key Experts
Marketing Assistant 2.0
E. QUALIFICATION AND EXPERIENCE REQUIRED FOR KEY EXPERTS
UNDER THE ASSIGNMENT
Table 2.0: Required Key Experts & Staff for the Assignment
Position/Person Qualification & General Experience Experience in Similar
Months Assignments
Team Leader Shall be a Professionally Qualified Minimum of 15 years of
(03 MM) Chartered Engineer in experience preferred to be in
Civil/Mechanical/Chemical or relevant similar assignments.
discipline with at least 20 years of Preferably minimum of 3
experience in reputed organizations. years of experience should be
Membership of a Professional Institution as a Team Leader of a
is preferred. Preferably having MSc/PG Consultancy group.
qualifications in Project Management &
Finance or relevant discipline
Marketing Preferably be a Marketing Manager, Preferably 10 years of
Specialist Market Research Analyst or in relevant experience should be in similar
(02 MM) discipline with at least 15 years of assignments particularly
experience in reputed organizations. Post familiar with Marketing
graduate qualifications equivalent to Assessment/ Market Research
master’s degree in Marketing Studies related to
Management or equivalent. Membership national/international projects.
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in a recognized Professional Marketing
Body is preferable.
Financial Preferably be a professionally qualified Preferably 10 years of
Specialist Finance Manager (Chartered or CIMA), experience should be in similar
(02 MM) Accountant or relevant discipline with at assignments particularly
least 15 years of experience in in reputed familiar with Financial
organizations. Post graduate Assessment/ Financial
qualifications equivalent to master’s Feasibility Studies related to
degree in finance or equivalent. national/international projects.
Membership in a recognized institution is
preferable.
Environmental Preferably be an Professionally Qualified Preferably 10 years of
Specialist Chartered Engineer, Environmental experience should be in similar
(02 MM) Specialist or relevant discipline with at assignments particularly
least 15 years of experience in in reputed familiar with environmental
organizations. Post Graduate assessment and preparation of
qualification equivalent to master’s Environmental Management
degree or above in the disciplines of Plans (EMPs) for
Environmental Engineering,
implementation of
Environmental Management or
national/international projects.
Equivalent. Membership in a recognized
institution is preferable.
Social Safeguard Preferably be a Social Scientists or Preferably 10 years of
Specialist Community Development Specialist or experience should be in similar
(02 MM) relevant discipline with at least 15 years assignments particularly
of experience in in reputed organizations. familiar with planning and
Post Graduate qualification equivalent to conducting social safeguard
master’s degree in the disciplines of assessment for implementation
Sociology, Anthropology or Applied of national/international
Social Science. Membership in a
projects.
recognized institution is preferable.
Note: Updated CVs shall be submitted with the proposal for the above professional staff
categories indicating their availability for the assignment as well. Those categories are listed
as the basic minimum requirement but the Consultant organization could have flexibility to
suggest any other additional necessary staff categories for satisfactory completion of the
detailed tasks under the assignment.
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F. INFORMATION AVAILABLE TO CONSULTANTS FOR PREPARATION OF
REPORTS:
1. Extracts of Pre-feasibility Study report prepared by Paranthan Chemicals Company
Limited “Pre-feasibility Study of Caustic Soda/Chlorine Project”
2. Pre-feasibility Study report prepared by Paranthan Chemicals Company Limited on
“Paranthan Eco-friendly Industrial Park”
Soft copies can be provided on request.
G. CLIENTS INPUT AND COUNTERPART PERSONNEL:
PCCL shall provide the consultants with all documents, drawings, maps and other contract
related documents that are available. All the requirements needed to carry out the
consulting services, unless otherwise mentioned in these TOR, shall be the responsibility
of the consultants. No PCCL staff will be deployed to work under the consultants.
H. SUBMISSION OF REPORTS:
Unless otherwise agreed, all deliverables are to be submitted as drafts for review and
comment by the Consultant Procurement Committee and Paranthan Chemicals Company
Limited, and thereafter amended and submitted as final versions. Other occasional
deliverables may be required from time to time on an informal basis. All deliverables listed
below will be submitted to CPC in 5 copies. In addition, electronic copies will be provided
for each document and the consultants will maintain an electronic safe backup of all
contract related documentation.
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Table 3.0: Time Schedules & Submissions
Category Type of Report Timing No. of
Copies
Feasibility Inception Report Within 3 weeks after 05
Study of commencement of the
Caustic assignment
Soda/Chlorine Interim Report Marketing Within 7 weeks after 05
Project commencement of the
assignment
Interim Report of Financial Within 9 weeks month after 05
Calculations (Profit & commencement of the
Loss Forecast, Cash Flow assignment
Statement, Sensitivity
Analysis)
Marketing Feasibility Within 10 weeks after 05
Report for caustic commencement of the
soda/HCl & hypochlorite assignment
Financial Feasibility Within 10 weeks after 05
Report commencement of the
assignment
Environmental Feasibility Within 11 weeks after 05
Report commencement of the
assignment
Social Safeguard Report Within 11 weeks after 05
commencement of the
assignment
Marketing Feasibility Within 12 weeks after 05
Report for downstream commencement of the
products assignment
Final Report Within 3.5 months after 05
commencement of the
assignment
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I. PAYMENT TERMS:
Table 4.0: Payment Schedule
No Stage of Contract Milestone
1 Interim Report of Financial Calculations/ Profit & Loss 10% of Contract Sum
Forecast
2 Submission of Marketing Feasibility Report 15% of Contract Sum
3 Submission of Financial Feasibility Report 15% of Contract Sum
4 Submission of Environmental Feasibility Report 15% of Contract Sum
5 Submission of Social Safeguard Report 15% of Contract Sum
6 Submission of Final Report 30% of Contract Sum
Note: Advance Payment of 20% of the Contract sum could be arranged on request with
the submission of recognized bank guarantee equivalent to the amount.
Above payments are made with the acceptance of the reports by the employer.
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