Announcement of One Hundred and Five Million Dollars for Fertilizer Production in India on December 18, 1975

.World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A. • Telephone: (202) 393-6360 IDA NEWS RELEASE NO. 75/75 DECEMBER 18, 1975 $105 MILLION FOR FERTILIZER PRODUCTION IN INDIA A credit of $105 million from the International Development Association (IDA), an affiliate of the World Bank, will help to increase India's fertilizer production. In recent years, consumption of fertilizers has increased in India. But it still remains very low relative to usage in other countries. In 1974/75, consumption stood at 2. 74 million nutrient tons. Although domestic production of fertilizer has grown at an average annual rate • of 16% since 1953/54, and reached a level of 1.5 million tons in 1974/75, it supplies less than 60% of consumption. The level of capacity utili- zation is low, reaching only some 60% of the installed capacity of 2.6 million tons. India has undertaken a major program to expand fertilizer production to meet the increasing needs of the agricultural sector. An important part of that program is to improve capacity utilization in existing plants. The IDA credit of $105 million will allow production in existing facilities to be raised from the present industry-wide average of about 60% of capacity to 85% by 1979. The credit will assist 10 fertilizer plants in removing production bottlenecks, im- proving pollution control and increasing the production of industriai chemicals. The project will help to increase fertilizer production by 253,000 tons per year of nutrients. The IDA credit to India is. for a term of 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 administrative expenses . • Note: Money figures are expressed in US dollar equivalents. Form No. 1121 • (9-75) TE CHNI CAL DAT A PROJECT: Fertilizer Industry COUNTRY: India TOTAL COST: $239 million IDA FINANCING: $105 million, standard IDA terms OTHER FINANCING: Government of India and participating fertilizer enterprises. IMPLEMENTING ORGANIZATION: Department of Economic Affairs, Ministry of Finance, Government of India, New Delhi, India. • PROJECT DESCRIPTION: The project consists of increasing fertilizer output, im- proving pollution control, diversifying production of in- dustrial chemicals and providing technical assistance through 20 sub-projects involving selected fertilizer units belonging to eight companies; and increasing the production of petroleum products, including fertilizer feedstock, by the Hindustan Petroleum refinery. PROCUREMENT: All equipment and materials to be financed by IDA will be procured by international competitive bidding except that critical or proprietary items, duplicate items, a:nc items costing $100,000 or less (estimated to have a total value of a.bout $20 million) may be procured by international shopping following approval by IDA of the items and suppliers .involved. A preference of 15% or the actual customs duty, whichever is lower, will be granted to Indian suppliers for the purpose of evaluating bids after international competitive bidding. ECONOMIC RATE OF RETURN: 32% ESTIMATED COMPLETION DATE: 1979 - 0 - •