Announcement of India Receives a World Bank Loan for Newsprint and an IDA Credit for Irrigation Development on September 17, 1981

. . . FOR IMMEDlATE RELEASr . • - I' ' • • " ~ •World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A.• Telephone: (202) 477-1234 BANK NEWS RELEASE N0.82/Ji,.. lDA NEWS RE.LEASE NO ... 82/6 September 17, 1981 LNDIA RECEIVES A WORLD B,\NK· LOAN FOR NEWSPRINT AND AN lDA CREDIT FOR IRfHGATlON · DEVELOPMENT A loan of $100 million and a credit of SOR 195.2 million ($220 million) to India were approved tod,ay by the World Bank and its affiliate, the lnternationat Development Association (IIDA)o The Bank loan is for construction of a bagasse-based pulp and paper mill in Tamil Nadu state; the IDA credit will assist irrigation developmert in Madhya Pradesh state. Development of lrrsgation An IDA credit of SDR 195.2 million ($220 million) will support the construc- tion of irrigation facilities to develop water resources made available by two large i~rigation syste-,ms utide_r con~~ruction in M_adhya Prad~sh. state. • The $439.2 mi 1~ ion project comprises the five-year investment program-- July 1981 - June 1986--fi::)r two major irrigation schemes: the Mahanadi Reservoir project and the tt'asdeo B;ango project. Canals wi 11 be enlarged t() enable them to meet peak water requirements. Sufficient control structures wil 1 be provided to enabie them to respond to changing seasonal and annual water demands. Preparatory work will also be carried out for the Arpa Irrigation Scheme. Madhya Prade~h is India's largest state, with a population of about 52 million.Over 1970-78, because of population increase and a stagnation in foodgrain production, per capit~ income actually declined by 0.9% per year. Because of the limited rainfall in the state, which comes almost entirely from the erratic southwest monsoon, irrigation development is a prerequisite for a significant increase in agri- cultural production!· With irrigation, the farmer can do his planting on schedule, without guess work, and in amounts sufficient to establish a good seed bed and to ensure good seed ge1"mination and initial growth. The Worlci Bank has been assisting the agricultural development of Madhya Pradesh state since 1974, through loans for agricultural credit, dairy development, ;;ri~ation infrastructure, and strengthening of extension and research services. On farm development is carried out and paid for by the individual NOTE: IDA credits are denominated in SDRs (Special Drawing Rights), which are • valued on the basis of a 11 basket 11 of currencies. The U.S. dollar equivalent of the SOR amount of the IDA credit reflects the exchange rates existing at the time of negotiation of the credit.  - 2 - farmer with the assistance of cr~clit. To increase the ability of small farmers ~ to participate, the area commanded by an irrigation outlet was recently reduced to about 8 hectares, as is the practice elsewhere in India. A $140 million IDA credit to support development of medium-scale irrigation projects in Madhya Pradesh was approved in March, 1981. The IDA credit of SDR 195.2 million to the Governrru~nt of India is for 50 years, with 10 years of grace; the credit is interest-free but carries a 3/4 of 1% service charge to cover IDA administrative costs. Bagasse-Based Paper Mill A $100 million Bank loan will be used for construction of a pulp and paper mi11. This will be the first project in the pulp and paper industry to be financed by the World Bank in :ndia. The $237.5 million project consists of a dual-purpose pulp and paper mill with a capacity of 100,000 tons per year of newsprint, or 80,000 tons per year of printing and writing paper or any combination thereof. It will use bagasse, a by- product of sugar production, which is currently used as fuel in the sugar mills, as primary raw material. The use of this bagasse as a substitute for long fiber pulp, which is in short supply in India, offers an economic means to alleviate India's dependence on imported newsprint. India currently produces about 15% of its newsprint consumption using the traditional long-fiber method of newsprint manufacture. The new mill will be located in the state of Tamil Nadu, on the Cauvery ~ River, about 300 kilometers southwest of Madras. The owner is Tamil Nadu Newsprint and Paper Ltd. The company has signed agreements with five sugarmi11s in the vicinity of the plant for the supply of bagasse. A 15-25% mixture of eucalypL~S fiber will be required, and will be supplied from existing plantations in Tamil Nadu. · To ensure coordination of process design and project implementation, the major equipment package and the basic engineering services for the project will be provided by a consortium of engineers and equipment suppliers headed by Beloit Walmsley Ltd. of the United Kingdom. The consortium includes Reed International as consulting engineers responsible for basic engineering. Detailed engineering will be undertaken by Indian engineering firms under the supervision of Reed Internat i ona 1 • The $100 million loan to the Government of India will be for 20 years, including five years of grace, at an interest rate of 10.6% per year. - 0 - • . . ft FORM ~O. 1121 (5-76) T E C HN I CA L DA T A • PROJECT: Tamil Nadu Newsprint COUNTRY: lndta TOTAL COST: $237.5 million BAt-:K FINANCING: $100 million, for 20 years, tncludlng five yearsl grace, at 10.6% per year OTHER FINANCING: Governmal'.lt of Tamil Nadu, Seshasayee Paper and Boards Ltd., p~.rticipatin.9 .. ~uga_r mills, and lndian financial institutions coordinated by the Industrial Develop~nt Bank of India IMPLEMENTING ORGANIZATION: Tamil Nadu Newsprint and Papers Limited lTNPL} LLA Building Anna Salai Madras 600002, lndia P~OJECT DESCRIPTION: Construction of a dual-purpose pulp and paper mill with th.e capacity to produce 100,000 tons per year (tpy) of. newsprint or 80,000 tpy of printing and writing paper (or any combination thereof} from bagasse, a • by-product of sugar production, and from Eucalyptus wood fiber • PROCUREMENT: Excluding the major engineering and equipment package, already procured under a contract with the Beloit Walmsley/Reed con- sortium, the balance of the goods and services required by the project and financed by the Joan will be procured by international competitive bidding, following World Bank guide~ lines, except for critical or proprietary imported items, and items costing less than $100,000 (up to a combined maximum of $5 million), which will be procured by international shopping. Indian manufacturers competing under international competitive bidding will be eligible for a preference margin of 15%, or the applicable customs duty, whichever is lower. Civil works and erection will be carried out by Indian contractors tQ be selected under competitive bidding procedures. CONSULTANTS: The major equipment package and the basic engineering services for the project will be provided by a consortium of engineers and equipment suppliers headed by Beloit Walmsley Ltd. of the UK. The consortium includes a consulting engineering firm (Reed International of the UK) which will be responsible for basic engineering as well as supervision of local engineering firms which will undertake ~etailed engineering • • ECONOMIC RATE OF RETURN: About 19% ESTIMATED COMPLETION DATE: 1985 - 0 - FORM NO. 1121 (5-,76) T E CHN I CA L DA T A PROJECT: COUNTRY: TOTAL COST: Madhya Pradesh. Major lrr.igation India $439.2 million • IDA FINANCING: SOR 195.2 mi 1lion ($220 nH 11 ion), on standard l.DA terms OTHER FINANCING: Madhya Pradesh State (MP), $219.2 million IMPLEMENTING ORGANIZATION: Irrigation Department, Government of Madhya Pradesh Bhopai ln<lta PROJECT DESCRIPTION: It comprises: a five~year time-slice beginning July 19a1· for the development of two major irrigation ·schemes tn Madhya Pradesh: the Mahanadi Reservoir Project and the Hasdeo ~ango Project. Construction of the storage reservoirs is already underway and will be continued. Canal capactties wtll. enlarged to meet peak water requirements, and sufficient control structures will be pro- vided so that the cana 1 sys terns can respond to chang tng season a 1 and annua 1 water demands... The project wi11 further provide surveys and investigations for the future Arpa Irrigation Scheme and improve the implementation and management capabilities of MP's irrigation de pa rt men t • PROCUREMENT: Contra~ts totaling $94 million for dams and main canals in exces!i of $6 mil 1ion per contract wi 11 be let fol lowing inter- national competitive bidding. Similar wotks will be packaged for bidding where practical, with the bJd package designed to allow bidding for all or any part of the works. Indian contractors will be entitled to a 7.5% preference in bid evaluation. Because the remaining civil works ($228 million) are individually small, scattered over large areas, and carried out intermittently, $151 mill,on worth of these works will be carried out by local con- tractors on the basis of standardized competitive bidding procedures and guidelines develop- ed by India's Central Water Commission. The balance of the civil works ($77 million) involve technical constraints which make them impractical for tendering, and they will be carried out under small piece-work contracts or by departmental forces. CONSULTANTS: Local consultants will be retained by the Irrigation Depqrtment to provide general planning assistance and to undertake the survey, planning, and design of the irrigation and drai·nage systems below the distributary canal head regulators. ECONOMIC RATE OF RETURN: 21% ESTIMATED COMPLETION DATE: 1986 - 0 - •