India - Second Power Transmission Project

Report No. P-'917 'FI@ LE COrPY This report was prepared for use within the Bank and its affiliated organizations. They do not accept responsibility for its accuracy or completeness. The report may not be published nor may it be quoted as representing their views. INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO, THE GOVERNMENT OF INDIA FOR THE SECOND POWER TRANSMISSION PROJECT April 14, 1971   INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT ALD FECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE GOVERNMENT OF INDIA FOR THE SECOND POWER TRA]'SMISSION PROJECT 1. I submit the following report and recommendation on a proposed credit to India in an amount in various currencies equivalent to US $75 million. PART I - HISTORICAL 2. The Bank has made 39 loans amounting to US $1,051 million and the Association 30 credits amounting to US $1,294 million (both loans and credits net of cancellations) to India of which eight loans and three credits amounting to US $209 million (net of cancellations) were for power projects. A further credit of US $23 million (Credit No. 89-IN) was approved in 1966 as part of the Bank's contribution to the Indus Basin Settlement of 1960. All of the power projects except one were concerned primarily with the financing of additional generating capacity; the exception was the First Power Transmission Project (Loan No. 816-IN approved in 1965) under which all fifteen State Electricity Boards (SEBs) were beneficiaries and which financed trans- mission and distribution facilities in each of the States. 3. The proposed project would assist in financing power trans- miss-ion development programs as part of the Fourth Five-Year Plan (I196/7h) to be carried out by SEBs in nine States of India and would also support financial reforms being carried out. 4~. This project was first appraised in November/December 1969; the appraisal was updated by a further appraisal in December 1970. At negotiations in March, 1971, the Borrower was represented by Mr. K. A. Dave, Vice Chairman, Central Water and Power Commission (CWPC); Mr. G. V. Ramakrishna, Joint Secretary, Ministry of Finance; and Mr. P. P. Gangadharan, Member (Commercial), CWPC. 5. A summary Statement of Bank Loans and IDA Credits to India as at February 28, 1971, was included in my report on a proposed credit to India for the Fourth Telecommunications Credit Project circulated on April 8 (IDA! R71-17). The total amounts disbursed and undisbursed as at March 31, 1971 for these loans and credits were as follows:  -2- IJndis- Bank IDA bursed Total (less cancellations) 1,051.2 1,294.o 323.0 of which has been repaid to Bank and others 460.7 Total now outstanding 590.5 Amount sold 110.2 of which has been repaid lo8.4 1.8 Total now held by Bank and IDA 588.7 1,294.0 Total undisbursed 94.2 228.8 323.0 6. In that report I also noted other projects we expect to have ready for consideration by the Executive Directors before June 30, 1971 - namely, agricultural credit projects in Tamil Nadu and Haryana, Pochampad Irrigation and Cochin Fertilizer. 7. Since 1957, IFC has made thirteen commitments in India totalling Us $42.3 million, of which US $33-5 million represents loans and US $8.8 million equity. As of March 31, 1971 US $15.6 million of this total had been disbursed and US $14.7 million cancelled or repaid leaving US $12.0 million undisbursed. The largest commitment is one of US $18.0 million to Zuari Agro-Chemicals for a fertilizer plant in Goa. PART II - DESCRIPTION OF THE PROFOSED CREDIT 8. Borrower: India, acting by its President Beneficiaries: The State Electricity Boards of Andhra Pradesh, Bihar, Gujarat, Haryana, Maharashtra, Punjab, Rajasthan, Uttar Pradesh and West Bengal Amount: US $75 million Purpose: To assist in financing the purchase of equipment and materials required to implement poiier transmission development programs in the nine States under the Fourth Five-Year Plan 1969/74. Amortization: In 50 years including a ten-year period of grace through semi-annual installments of