Announcement of a Sixteen Million Dollar Loan to Tata Companies of India for Power Project on November 19, 1954

. · . FOR IMMEDIATE RELEASE ; • INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT <WORLD BANK) 1818 H STREET, N.W., WASHINGTON 25, 0.C. TELEPHONE: EXECUTIVE 3-6360 PRESS RELEASE NO. 379 sUBJmT: $16.2 Million Loan to Tata Companies Friday, November 19, 195h of India for Power Project The World Bank today made a l.oan of $16,2001 000 to finance the foreign exchange costs of a thermal electric power plant in Bombay. The plant will be one of the most modern and efficient in India, and will help relieve the acute power shortage in Bombay and the surrounding area 1 a major indus·trial center. The National City Bank of New York has agreed to participate in the loan, without the World Bank's guarantee, to the extent of $1.,364.,000. • This amount represents the first four maturities of the loan, which fall due semiannually beginning October 15, 1958, The borrowers are The Tata Hydro-Electric Power Supply Co., Ltd., The Andhra Valley Power Supply Co • ., Ltd., and The Tata Power Co., Ltd, These companies are privately evmed and form part of the large group of Tata enterprises which have a long record of successful ope~~tions in many different 'industries in India. The companies are three separate legal entities, owning and opera.ting three hydro- electric plants; their operations are coordinated by a single managing company, 'l'ata Hydro-Electric Agencies Ltd. They are the sole suppliers of power in bulk in the city of Bombay and the surrounding area. The area is best known for its teJ<..'tile industry, but it 1~· also 2Jnong India's leading producers of heavy chemicals, rayon, soap., glass, nmtches, automobiles • (both assembling and manufacturing), bicycles, asbestos sheets, plastic and tobacco  . ' . ... ( .. 2 - • products, processed !ood and electrical goods. In recent years, there has been r---o-::\ considerable expansi.on in most of these industries; in addition, two oil refineries, l, .-- /) a rayon factory and new port facilities are under construction. Th.i S,i industrial expansion, combined wi. th increasing danands for power for commercialf tmd residential purposes, has nfi:-7essi tated severe restrictions on the ',. I I I, conswnption of power. Further growth in demand is expected for many yea!rs to come, so tha. t the additional capacity of the new plant is urgently needed. Furthermore, the present system., being largely hydroelectric, is highly vulnerable to shortages of rainfall such as occurred in 19.51. The additional thermal electric capacity will be Enough to balance not only the present system but also the hydroelectric facilities which the Bombay State Government intends to install at Koyna, about 140 miles south of Bombay. The power project consists of a gen(~,::,ating st.ation to be situated on Trombay • Island near Bombay, underground cable and overhead transmission lines, and a substation. The station will h~ve two turbo generators., each with a maximum capacity of 62,500 kilow~tts. The boilers are designed to operate at steam pressure of 1,250 pounds per square inch - hi.$,er than any other steam plant in India - at a· temperature of 950 degrees Fahrenheit, and to burn refinery waste products., fuel oil., and pulverized coal. It is plann~d to use waste products from an adjoining refinery as the 1tain fuel. Work on the plant be~n in 195:l and the first unit is schedu1ed for operation in October 19.56. The whole Trombay project should be complete by the end of 19570 I The total cost of the plant is estimated at the equivalent of $27.5 million. The Bank's loan of $16.2 million ·will cover all the foreign exchange requirements. The Tata companies have already raised the equivalent of $6.2 million of the • rupee cr~ts through the issue of share capital, and 1'i~ll obtain the remainder from futther issues of share capital, borrowings and tpeir orm resources. i ' ,. ' - 3- • • 4-3/4% • The loan is for a tenn of 20 yea.rs an:l bears interest of per annum, including the 1% statutory connnission charged by the Bank. Amortization will begin October 15, 1958. The loan is guaranteed by the Government of India, and is secured by a Trust Deed, with Baring Brothers & Co., Limited of London, as trustees. This is the third loan made by the Bank for the development of electric power in India; two earlier loans were made for multi-purpose projects in the Damodar Valley which included power plants. Other loa.ns have been made for railway rehabilitation, agricultural machinery and for the expansion of iron a.nd steel production facilities. Today's loan is also the second made to private concerns in India; the other was to the Indian Iron and Steel Company, Limited. The net total of the six Bank loans for projects in India is now $ll6. 7 million. After having been approved by the Bank's Executive Directors, the loan documents were signed today by His Excellency, G. L. Mehta, Ambassaflor of India • in Washington, on behalf of the Government of n1dia, by Mr. J. D. Choksi, Director of Tata Hydro-Electric Agencies Ltd., on behalf of the three Tata power companies., and by Mr. Eugene R. Black., President, on behalf of the International Bank • •