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

l~ . ' 11 :e ·. FOR IMMEDIA Tf RELEASE -World Bank 1 181,.8 H Street, N.W., Washington, D.C. 204~3, U.S.A.• Telephone: (202) 477-1234 . BANK NEW'S RELEASE NO. 82/1~ lDA NEWS RELEASE NO ... 82/6 September 17, 1981 lNDIA RECEIVES A WORLD BANK·LOAN FOR NEWSPRINT AND AN IDA CREDIT FOR'IRRIGATION DEVELOPMENT A loan of $100 million and a credit of SOR 195.2 million ($220 million) to India were approved today by the World Bank and its affiliate, the International Development Association (IDA). The Bank loan is for construction of a bagasse-based pulp and paper mill in Tamil Nadu state; the IDA credit will assist irrigation development in Madhya Pradesh state. Development of Irrigation An IDA credit of SDR 195.2 mi 11 ion ($220 mil lion) wi 11 support the construc- t ion of irrigation fact lities to develop water resources made available by two large ...irrigation .• . systems under construction ~ ~ .... in Madhya ... -~ ,, . Pradesh.. -- . state. ./ The $439.2 mi 11 ion project comprises the ·five-year investment program-- July 198·1 - June.1986--J~r two major.irrigation schemes: the Malianadi Reservoir ·project.and the Hasdeo Bango project.· Canals will be enlarg~d to enable.them to meet peak water requirements. Sufficient control structures will be provided to enable them to respond to changing seasonal and annual water demands. Preparatory work will also be carried out for the Arpa lrrtgation Scheme. Madhya Pradesh 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,a 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! WJth irrigation, the farmer can do his planting on schedule, without guess W<'rk, and in amounts sufficient to establish a good seed bed and to ensure good seed germination and initial growth. The World Bank has been assisting the agricultural development of Madhya Pradesh state since. 1974, through loans for agricultural credit, dairy development, irrigation 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 credit. 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 IOA credit to support development of medium-scale irrigation projects in Madhya Pradesh was approved in March, 1981. • The IDA credit of SOR 195.2 million to the Government 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 ~y the World Bank in India. 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 wi11 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 sugarmills in the vicinity of the plant for the supply of bagasse~ A 15-25% mixture of eucalyptus 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 International. 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 - •  T E C HN I CA L DA T A Tamil Nadu Newsprlnt COUNTRY: lndla TOTAL COST: $237 .5 mil Hon BANK·FINANC ING: .$100 mil lion, for 20 years, including five. years.'. grace., at 10.6% per year OTHER FINANCING: · G_c;,ve_r~~l'.lt ~f Tami 1 Nadu, Seshasayee Paper and Boards Ltd., P.~-r~i.ci_p~tin_g___ !U9~! mills, and Indian fin~ncial institutions coordi~ated by the Industrial Develop~nt Bank of India \: . . •; . \\ IMPLEMENTfNG ORGANIZATION: <:~::::~~ Tamil Nadu Newsprint and Papers Limited CTNPL} LLA Building -" Anna Salaf Madras 600002, lndia PROJECT DESCRIPTION: Construction of a dual-purpose. pulp and paper mlll with the ·capacity to produce 100,000 tons per yea;~ (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 engi.neering 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 loan wl 11 be procured by international competitive bidding, fol lowt·ng World Bank guide• ;1 \ ' ines, except for critical or proprietary imported items, and items costing less than · $100,000 (up to a combined maximum of $5 mi 11 ion), which wi 11 be procured by international shopping!" Indian manuf~~turers 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 to. 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 ·consortlum includes a consulting engineering firm (Reed International of the UK) which wil 1 be responsible for baste engineering as well as supervision of local engineering firms which will · undertake detailed engt~eering. ECONOMIC RATE OF RETURN: About 19% EST IMATED COMPLETION DATE: 1985 - 0 -  T E C ff N I C A L D A T A· PROJECT: COUNTRY: . Madhya Pradesh Major l~r.igation India • TOTAL COST: $439.2 mil lion IDA FINANCING': SOR 195.2 mil lion ($220 nill li.on}, on standard LOA terms OTHER FINANCING:· Madhya Pradesh State (Mp), $219.2 mil lion IMPLEMENTING ORGANIZATION: Irrigation Department, Government of Madh.y~ Pradesh- Bhopal lndia PROJECT DESCRIPTION: It comprises: a ftve ..year time-slice beginnlng.Jul,y.1981-· · 'for the development of two major irrigation .'schemes. tn Madhya Pradesh: the Mahanadi Reservoir Project and the Hasdeo Bango Project... Construct ton of the storage reservoirs is already underway and will be continued. Canal capacities wt11 • ·· enlarged to meet peak wate··r requirements, and s1.1fficient control structures will be pro-- vided :so that the cana·l systems can respond to changing seasonal and annual water de,nands.~ The project will further provide surveys and investigations for the future Arpa Irrigation Scheme and improve the implementation and management capabilities of MP 1 s irrigation department. PROCUREMENT: Conir~cts totaling $94 million for dams and main canals in excess of $6 million per contract will be let following inter- national competitive bidding. Similar works will be packaged for bidding where practical, with the bid 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 million 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 lrrtgation Department to provide general planning ass·istance and to undertake the survey, planning~ and design of the irrigation and drai·nage systems below the dtstrtbutary •• canal head regulators. ECONOH I~, RATE OF RETURN: 21 % ESTIMATED COMPLETION DATE: 1986 - 0 -