Announcement of Twenty-Five Million Dollars Electric Power Loan to India on April 8, 1959

' FOR IMMEDIATE RELEASE WORLD 1818 H STREET, N.W., WASHINGTON 25, D. C. TELEPHONE: EXECUTIVE 3-6360 PRESS RELEASE NO. 581 April B, 1959 SUBJOOT: $25 million Electric Paver Loan 'Ihe World Bank today made a loan equivalent to $.25 million to India for the Koyna hydroelectric power project in the State of Bombay. The project will have an initial capacity of 240,000 kilowatts and most of the power from the new plant will be fed into the power system which supplies the Bombay-Poona area., where industrial growth has created a continuing need for more par1er. The project is bemg constructed on the Koyna river about 130 miles southeast ., of Bombay. The Koyna river rises in the Western Ghats, one of India's main water- sheds, and flows eastward toward the Bay of Bengal. The main features of the project are the construction of a dam on the Keyna and the diversion of the waters of the reservoir westward through the mountains to a powerhouse about 40 miles fran the Arabian Sea. The Bank loan will help to finance the first stage of this project consisting of the dam, the tunnel system, the underground powerhouse installed with four 60 1 000-kilowatt generators and associated transmission facili- ties. The transmission system will bring power to the Bombay ,,,area and to several towns and communities in the Maharashtra region in the vicinity of Keyna. Successive stages in the Koyna development, to be phased to meet the expected increases in power demand, will increase generating capacity to 570,000 kilowatts and provide water storage for irrigation. The Keyna hydroelectric development is one of the projects included in • India's Second Five-Year Plan. The area around Bombay and Poona has an integrated power system and power from Koyna will supplement the supply to this system.  II i'c.· !I • - 2 - Power for the area has been supplied chiefly by the privately-owned Tata power canpanies, which sell power wholesale. In 1958 the Tata system distributed about 18% of all the power sold in India al though the area served contains not much more than 1% of the country's total population. While the per capita annual consumption in the ,country is about 24 kwh, the consumption in the Bombay-Poona area, ·which is pr:imarily industrial, is about 390 kwh per capita. In 1958 about a quarter of the sales were made to textile mills and a fifth to diversified large industries, with the remainder going to the Central Railways and to distributing compani.es for retail sale. The Bank has made two loans totaling $24 million to the Tata power companies for the Trombay thermal power plant at Bombay which will have a capacity of 187,500 kilowatts by 1960. Even with this additional power there will be a • shortage of firm capac·ity in the Bombay .,area until the first stage of the Keyna project is completed in 1964. Thereaf·ter, additional capacity 1dll have to be provided by either the second stage of Koyna or additional thennal capacity. The Koyna project is being executed by the Bombay State Govel'nment. Upon completion of construction, the project will be turned over to the Bombay State Electric:i ty Board, a corporate body which promotes power development and regulates the electric util~ty industry in the State of Bombay. The total cost of the first stage of',/ttle Koyna project is estimated. at the equivalent of $118 million. Tne Central Government of India will provide all the fi..~ancing for the project through long-term loans to the Bombay State Government. The World Bank loan of $25 million included in these fulXis will cover m.ost of the foreign exchange requirements. The World Bank loan is for a term of 25 years and bears interest of 5-3/4% :~• including the 1% commission which is allocated to the Bank's Special Reserve. 1,f?:' ~-,--,·,•·· _., ''• • Amortizationwil1 begin in May 1965. - 3 - The Bank has now made 21 loans totaling ~.532 million for development projects in India. In addition-to electric power for Bombay., earlier loans were made for flood control, irrigation and electric power plants in the Damodar Valley., for improvement and expansion of the railways and the ports of Calcutta and Madras, for the expansion of iron and steel production, for the purchase of commercial jet aircraft and for an institution to promote private industry. After having been approved by the Bank's Executive Directors, the loan documents were signed by His Excellency Mahomed Ali Currim C"nagla, Indian Ambassador in Washington, on behalf of India, and by Mr. s. G. Ba.rve., Secretary to the Bombay State Government • • •