Announcement of India to Receive Three Hundred Fifteen Million Five Hundred Thousand Dollars from the World Bank and IDA on April 2, 1984

FOR IMMEDIATE RELEASE iWorld Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A. *Telephone: (202) 477-1234 BANK NEWS RELEASE NO. 84/61 IDA NEWS RELEASE NO. 84/51 Contact: P.B. Sison April 2, 1984 (202) 477-3573 INDIA TO RECEIVE $315.5 MILLION FROM THE WORLD BANK AND IDA India will use a $242.5 million loan from the World Bank to increase the production capacity of mature oil fields in the State of Gujarat, western India. In another operation, two credits totalling SDR 70.6 million ($73 million) will finance improvements in the water supply and sanitation facilities in the State of Tamil Nadu in south-eastern India. Half of the credits will come from the International Development Association, (IDA), the World Bank's affiliate for concessionary lending, and half from the IDA Special Fund. Cambay Basin Petroleum Project The $954.3 million project will evaluate, through seismic surveys and drilling, the petroleum producing potential of the Cambay Basin, a mature, mostly onshore basin of gas and heavy oil fields in western India. It is the country's first project to rehabilitate existing fields. Operations will be modernized and a program aimed at increasing the production from the field will be formulated. The Oil and Natural Gas Commission, (ONGC), the implementing organization for the project, is a government-owned institution which helps plan the development of the country's hydrocarbon resources. With this project, the Commission will aid India's efforts to increase the efficient use of scarce resources, decrease the country's dependence on imports, and transfer appropriate technology to local institutions. More than 500 wells will be sunk to complete the development of several oil fields; the Cambay gas field, with 14 wells, will be rehabilitated to reverse the decline in current production rates. Well maintenance procedures will be improved to eliminate the backlog of repairs on about 340 existing wells and to upgrade maintenance standards. Three enhanced oil recovery schemes will test alternative technologies for increasing recoverable reserves. NOTE: IDA credits are denominated in SDRs (Special Drawing Rights), which are valued on the basis of a "basket" of currencies. The U.S. dollar equivalent of the SDR amount of the IDA credit reflects the exchange rates existing at the time of negotiation of the credit. - 2 - A substantial increase in the volume of heavy oil produced from the Cambay Basin is expected and advanced planning for the use of this additional oil will be done through an oil utilization study. The project will also set up a field-level staff training program, covering all facets of oil-field operations, including drilling, production, logging, and well stimulation techniques. Additional funding of approximately $245 million will be provided through co-financing. The World Bank loan is for 20 years, including five years of grace, with a variable interest rate linked to the cost of Bank borrowings. It also carries an annual commitment charge of 0.75 percent on undisbursed balances, and a front-end fee of 0.25 percent on the amount of the loan. Tamil Nadu Water Supply and Sanitation Project The $153.3 million water supply and sanitation project will include the construction of intake, treatment, transmission and distribution facilities to increase the supply of piped water by about 300 million liters per day to the cities of Coimbatore, Salem, and Madurai, as well as 31 satellite towns and peripheral rural communities all in the State of Tamil Nadu, south-eastern India. Another 44 small towns with no reliable source of water will be provided with safe drinking water and 14 middle-sized towns will benefit from the installation of low-cost sanitation improvements. By 1989, about 3.3 million people in the project areas and half a million in the surrounding rural communities will have access to safe drinking water, and another 200,000 people will benefit from better sanitary facilities. The problem of providing drinking water at an affordable cost is acute in Tamil Nadu and the capital, Madras, regularly suffers from water crises. A water resources management study will help the state develop appropriate water management strategies to deal with this problem. The Tamil Nadu Water Supply and Drainage Board, executing agency of the project, will organize a staff training program, improve leak detection and meter repair services in the state, and implement accounting and material management systems. The two IDA credits are for 50 years, including ten years of grace; they carry no interest but have small annual charges (0.5 percent on the undisbursed balances and 0.75 percent on the disbursed balances.) The IDA Special Fund for fiscal year 1984 is composed of contributions by some IDA donors, and is additional to regular IDA resources.