Announcement of Fifty Eight Million Dollars Credit for Fertilizer Production in India on February 1, 1973

• IJ.~ERNATIONAL DEVELOPl\ffiNT ASSOCIATION 1818 H STREET, N.W .. WASHINGTON D. C. 20433 TELEPHONE: EXECUTIVE 3-6360 IDA Press Release No. 13/5 Subject: $58.0 million credit for February 1, 1973 fertilizer production in India A credit of $58.0 million from the International Development Association (IDA), an affiliate of the World Ba.nlc, will help India to increase the production of fertilizers. The project is part of India is program to increase agricultural production through the development and spread of high-yielding seeds which require heavy application of ferti- lizers. The credit, third from IDA in direct support of fertilizer production in India, will help to expand the cap:i.city of the Nangal unit of the Fertilizer Corporation of India (FCI), the largest producer of fertilizers in the country. When completed in late 1975, the $106 million project will enable the Nangal plant to produce an additional 152,000 tons per year of nitrogen in the form of urea. The plant, located in the State of Punjab, has at present an annual capacity of 80,000 tons per year of nitrogen in the form of calcium ammonium nitrate. • An effort to expand India's fertilizer production rapidly was launched in 1965 simultaneously with the introduction of a new agricultural strategy emphasizing the development and spread of high-yielding seeds requiring irrigation and heavy applica- tions of fertilizers. Despite recent increases in capacity and new capacity planned, production of fertilizers still lags behind consumption. In 1971/72, for instance, India had to import some 820,000 tons of nitrogen, almost half of total consumption, at an estimated cost of more than $100 million in foreign exchange. Estimates are that the deficit will continue through the end of the decade. The Nangal project will help +.o fill part of the gap between domestic production and demand. FCI, which is owned by the Government of India, accounts for about 30% of the country's nitrogen and 10% of its phosphate ca.p._~city. The Nangal unit began operations in 1961 and has been FCI's most profitable plant. The IDA credit will be extended to the Government of India for a period of 50 years, including a 10-year period of grace. It will be interest free, but a service charge of 3/4 of 1% will be made to cover J])A's administrative costs. The Government will relend the proceeds of the credit to FCI at~. Two J])A credits totaling $30 million, extended in 1971, are assisting the eXJ)ansion programs of two public sector units -- the Fertilisers and Chemicals, Travancore Ltd., and the Gorakhpur unit of FIC. Investments by the Bank's other affiliate) the International Finance Corporation, are helping to finance two priva.te sector fertilizer enterprises in Utta.r Pradesh and Goa • • - 0 -  • February 1, 1973 TECHNICAL DATA PROJECT: Fertilizer Production COUNTRY; India TOTAL FINANCING: $106 million equivalent. IDA F'IN.ANCING: $58.0 million, 50 years, 10-year grace period, 3/4 of 1% service charge. OTHER FINANCING: About $48 million equivalent from Government of India as equity. IMPLEMENTING ORGANIZATION: PROJECT DESCRIPrION: Fertilizer Corporation of India (FCI), New Delhi, India. Construction of ammonia/urea plant at FCI's plant located at t~::mgal, Punjab, ~o increase total des1.3n cai_::::r;ity by aou~1t 152,000 TPY of nitrog€n in the form of urea fertilizer. Pa:rt of new acmonia produc- • tion to replace existing power-in~eusive ammonia production. PROCUREMENT: Except for $2.5 million worth of equipment from proprietary sources, equipment and materj.als fi.nanced under the credit will be procured through internation~l cm:1p~titive biciding with domestic . manufacturers accorded a preference margin equal to.15% of the c.i.f. costs of competing imports or to the existing rate of duty, whichever- is lower. CONSULTANTS: Fr. Uhde (Federal Republic of Germany) and Montedison (Ita.ly) . . ESTIMATED COMPLETION DATE: December 1975 - 0 - • ..l~ _,-... ~.- ·-·"'""'·' .,, .... -~ .\ ........ "-·-,