Announcement of One Hundred Two Million US Dollars in a Loan and Credit for the Command Area Development in the Chambal Region and for Fertilizer Production in India on June 20, 1974

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT • 1818 H STREET, INTERNATIONAL DEVELOPMENT ASSOCIATION NW. WASHINGTON D.C.20433 TELEPHONE: EXECUTIVE 3-6360 Bank Press Release No. 74/53 Subject: $102 million in a loan and credit IDA Press Release No. 74/37 for the Conunand Area Development June 20, 1974 in the Chambal Region and for fertilizer production in India. The World Bank and its affiliate, the International Development Associa- tion (IDA) are providing $102 million to finance two development projects in India. An I')A credit of $50 million will assist India's effort to increase fer- tilizer production in the country. Production at the large Trombay unlt near Bombay will be raised by 75,000 tons per year each of nitrogen and phosphate. Par.t of the credit will be applied towards improving the utilization of capacity in existing fertilizer plants. A Bank loan of $52 million will help finance the development of the Command • Area of the existing Chambal irrigation project in Rajasthan State. At full develop- ment, the project will bring major benefits to the State and India. A.'lllual pr.oduction of foodgrains will increase from 140,000 tons to 350,000 tons. IDA credit of $50 million to assist fertilizer production. Fertilizer production in India will be increased considerably under the credit. Production at the large TrL'\fflbay unit near Bombay will be raised by 75,000 tons per year each of nitrogen and phosphate. Other government-owned fer- tilizer plants will also benefit from the credit. The project consists of two parts: $33 million will go toward expanding the capacity of the Trombay unit of the Fertilizer Corporation of India (FC ) • The Trombay plant will expand production of nitric acid by 250,000 tons per year and of nitro-phosphate by 355,000 tons per year. The other $17 million of the credit will provide India with urgently needed assistance to improve operations in other Government-owned fertilizer plants. This is the sixth Bank Group fertilizer project in India, and will help boost domestic supply at a time of rising prices and widespread scarcity • •• Note: Money figures are expressed in US dollar equivalents. /more  - 2 - FCI, which is one of the world's largest companies, has five operating f',:)T"H1;"- 0rd+.~, ~,, f'lf' TJh-tr>h ar .,.. 11 'heing expanded. Another seven are either under 0 • construction or are in the planning stages. When this program is completed by 1979, FCI 1 s fertilizer capacity will have increased about eight times over the 1974 level. Fertilizers and Chemicals, Travancore, Ltd, (FACT) another beneficiary, operates in South India, and is completing a major expansion program this year, The IDA credit is for 50 years including a 10 year grace period, It is interest free except for a service charge of 3/4 of 1% to cover IDA's administra- tive expenses. _$52 m:i.ll~EE..Bank _l_o.an fo:c:_ ..9_~:mma.nd 4Fea development in the Oharnbal region of Rajasthan The loan will help finance the development of the Co.mm.and Area of the existing Chambal irrigation project in Rajasthan State, India, At full development the project will bring major bene.fi ts to the State and India, Annual production of foodgra.ins will increase from 140,000 tons to 350 1 000 tons~ The net value of the additional production will be $13 million. Farm incomes will increase, The project will provide 20,000 additional jobs over the next decade, The Cha:rnbal irrigation project was completed in 1960, It consists essen- tially of a reservoir and a canal system, designed ta serve an area of 229 1 000 hectaresc About 60,000 farm families live in the area, The average farm size is about four hectares and the median size two hectares, About 55% of the far.mars tn the project area a.re within the lowest 40% on India's national income scale. Agri- cultural production in the area has not met earlier expectations due to a lack of • drainage and on-farm development, inadequate roads, maintenance and supporting se~- · vices, The $91.5 million project being financed by the Bank is the first step towards correcting these deficiencies, The project includes the drainage over 167,000 hecta:res; lining of 14 kilo- meters of canals to prevent excessive seepage; increasing the capacity of 850 kilo- meters of canals; improving control structures and tertiary outlet~; on-farm development on 50,000 hectares; construction or improvement of 250 kilometers o! roads; afforest.ation and erosion control; provision of fertilizers to restore fertility of disturbed soil; strengthening of agricultural extension and research and cooperatives, A feasibility study for a second phase project in the Cha.mba.l area will also be undertaken, The Bank loan will cover S7% of the cost of the project. The Governments of India, Rajasthan, and Ma.dllya Pradesh, the Agricultural Refinance Corporation, the Rajasthan Land Development Bank and participating connnercial banks will con- tribute to the balance of the cost. The project is scheduled for completion in 1981. The Food and Agriculture Organization of the United Nations (FAO) joined the Bank in identifying and pre- paring the project under the Ba.nk/FAO Cooperative Program, The Bank loan is for 30 years, including 7 years of grace, with interest at 7~ per annum. • ·- INTERNATIONAL DEVELOPMENT ASSOCIATION TECHNICAL DATA PROJECT: Fertilizer COUNTRY: India TOTAL COST: $103.7 million IDA FINANCING: $50 million, for a period of 50 years, including 10 years • of grace, interest free except for a 3/4 of 1% service charge to meet IDA's administrative expenses . OTHER FINANCING: Government of India IMPLEMENTING ORGANIZATIONS: Fertilizer Corporation of India (FCI) and Fertilisers and Chemicals, Travancore, Ltd. (FACT) PROJECT DESCRIPTION: Construction of additional facilities at FCI's ~lant located at Trombay, Maharashtra, to increase the pro- duction capacity of nitric acid by 250,000 TPY and nitrophosphate fertilizers by 355,000 TPY, and improve- ment of capacity utilization at existing FCI and FACT fertilizer plants, including plants about to be commissioned. PROCUREMENT: Except in cases where restricted bidding is specifically aporoved by IDA, equipment and material packages of US$50,000 or more financed under the credit would be procured through international competitive bidding with domestic manufacturers accorded a preference margin equal to 15% of the c.i.f. cost of competing imports or to the existing rate of duty, whichever is lower. ESTIMATED COMPLETION DATE: 1977 • /more  ... 1 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT • TECHNICAL DATA PROJECT: Chambal Command Area Development, Rajasthan. COUNTRY: India TOTAL COST: $91.5 million BANK FINANCING: $52 million, 30 years, including 7 years of grace, with interest at 7~% per annum. OTHER FINANCING: Governments of Rajasthan, India, Madhya Pradesh, Agricultural Refinance Corporation, participating comrr~rcial banks and the Rajasthan Land Development Bank. IMPLEMENTING ORGANIZATION: Chambal Conunand Area Authority, Rajasthan, India • PROJECT DESCRIPTION: Includes drainage over 167,000 hectares; lining 14 kilo- meters of canal, where seepage is excessive; increasing the capacity of 850 kilometers of canals; building and improving 160 control structures and about 4,000 tertiary outlets; on-farm development on 50,000 hectares; construction and improvement of 250 kilometers of roads; afforestation • and erosion control; provision of fertilizer; strengthening of agricultural extension, research and cooperatives; purchase of equipment; and a feasibility study for a second phase p·:roject. PROCUREMENT: Out of $8 million worth of vehicles and other equipment, $5.4 mil- lion will be subject to international competitive bidding. Civil works for irrigation, drainage and on-farm development will be contracted locally or executed by force account. Fertilizer will be procured in bulk through international shopping. CONSULTANTS: A land development expert will be recruited for a period of two years to advise on the planning, design and consttuction of on-farm develop- ment. ESTIMATED COMPLETION DATE: 1981. - 0 - Note: Money figures are expressed in US dollar equivalents. •