India - Chandrapur Thermal Power Project

Document of The World Bank FOR OFMFCIAL USE ONLY Report No. P-4041-IN REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN IN AN AMOUNT EQUIVALENT TO US$ 300.0 MILLION TO INDIA FOR THE CHANDRAPUR THERMAL POWER PROJECT April 24, 1985 This doaeot has a resmyicted distribution rd me bedusedby recipieots Ory in the perforone of | |tbeir officid duis Its contents mny not othewie be d-Lwslosed witbowt World Bailc auhorization.|  CURRENCY EQUIVALENTS (As of April 19, 1985) USS1.O0 - Rs 12.268 Rs 1.00 = US$0.0815 Rs 1 million = US$81,500 The US Dollar/Rupee exchange rate is subject to change. Conversions in the Staff Appraisal Report were, except as otherwise noted, made at the rate of USSl to Rs 11.0. FISCAL YEAR April 1 - March 31 Abbreviations and Acronyms CEA - Central Electricity Authority GOI - Government of India GOM - Governmeut of Maharashtra ICB - International Competitive Bidding LCB - Local Competitive Bidding LRMC - Long Run Marginal Cost MSEB - Maharashtra State Electricity Board NHPC - National Hydroelectric Power Corporation NTPC - National Thermal Power Corporation RER - Regional Electricity Board REC - Rural Electrification Corporation SEB - State Electricity Board TEC - Tata Electric Companies -  FOR OMCIAL USE ONLY INDIA CHANDRAPUR THERMAL POWER PROJECT LOAN AND PROJECT SUMMARY Borrover: India, acting by its President. Beneficiary: Maharashtra State Electricity Board (MSEB). Amount: USS30O million. Terms: Repayment over 20 years, including five years grace, at the applicable rate of interest. Relendinx Terms: Government of India (GOI) to the Government of Maharashtra (GOM): As part of Central assistance to States for development projects on terms and conditions applicable at the time. GOM to MSEB: (a) Bank loan: Repayment over 20 years, including five years- grace, at the current Bank interest rate of 9.29% per annum; (b) GOM loan: Repayment over 30 years, including six years grace, at GOM's current applicable rate of interest. GOI will bear the foreign exchange and interest rate risks. Proiect Description: The project's main objective is to assist in meeting the electricity demand in the Western Region of India through the addition of 1,000 MW of thermal capacity at the Chandrapur thermal power plant in Naharashtra. The project comprises the installation of two 500 MW generating units--including boilers, turbogenerator sets, electrical and mechanical auxiliary equipment, associated civl, works, and common services and facilities. The project also includes a thermal plant rehabilitation program designed to provide for more efficient use of MSEB's thermal stations. There are no risks other than those normally associated with this type of project. All the main equipment items are manufactured in India, and there is adequate understanding of and experience with their installation. This document has a restricted distribution and may be used by recipients only in the performance of their official duties Its contents may not otherwise be disclosed without World Bank authorization.  -ii- Estimated Cost: j] (US$ millions) Item Local Foreign Total Preliminary Works 9.9 - 9.9 Civil Works 138.1 3.8 141.9 Steam Generators, Turbogenerators, Control, and Auxiliaries 187.6 200.5 388.1 Other Mechanical and Electrical Equipment 93.1 81.1 174.2 Transportation, Erection, Insurance, and Testing 47.6 2.5 50.1 Consultancy and Training 3.8 1.5 5.3 Engineering and Administration 50.0 - 50.0 Thermal Plant Rehabilitation 32.4 8.4 40.8 Base Cost 562.5 297.8 860.3 Physical Contingencies 25.4 14.5 39.9 Price Contingencies 113.1 102.9 216.0 Total Project Cost 701.0 415.2 1,116.2 Interest during Construction 100.0 80.5 180.5 Total Financing Requirements 601.0 495.7 1,296.7 Financing Plan: (US$ millions) Local Foreign Total IBRD Loan - 300.0 300.0 GOM Loan 476.0 195.7 671.7 MSEB Internal Resources 325.0 - 325.0 Total 801.0 495.7 1,296.7 1/ Includes taxes and duties of US$117.6 million.  -iii- Estimated Disbursements; (US$ millions) Bank FY FY86 FY87 FY88 FY89 FY90 FY91 FY92 FY93 Annual 37.0 17.0 4U.0 75.0 75.0 32.0 21.0 3.0 Cumulative 37.0 54.0 94.0 169.0 244.0 276.0 297.0 300.0 Rate of Return: About llX. Appraisal Report: No. 5319-IN, dated April 24, 1985.  INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT REPORT AND RECOMMENDATION OF THE PRESIDENT TO TRE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO INDIA FOR THE CHANDRAPUR THERMAL POWER PROJECT 1. I submit the following report and recommendation on a proposed loan to India for USS300.0 million on standard terms to help finance the construction of the third stage of development of the Chandrapur thermal power station in the State of Maharashtra, and a thermal plant rehabilitation program for selected power plants within the State. The project is designed to provide an additional 1,000 megawatts of electricity-generating capacity to supplement the 840 megawatts provided under the first and second stages, and to improve the efficiency, through repair and renovation, of six power plants located in various parts of the State. The Government of India (GOI) will channel the proceeds of the loan to the Government of Maharashtra (GOM) in accordance with GOI's standard terms and arran- gements for financing State development projects. GOM will in turn onlend these funds to the Maharashtra State Electricity Board (MSEB) for 20 years, including five years' grace, at the current Bank interest rate of 9.29% per annum. Additional financing of about US$250 million may possibly be provided from export credits, suppliers' credits, or commercial bank loans to cover the foreign exchange cost of the main equipment items (steam generators, turbogenerators, control and auxiliary equipment). The foreign exchange and interest rate risks will be borne by the Government of India. PART I - THE ECONOMY 1/ 2. An economic report, "Situation and Prospects of the Indian Economy - A Medium Term Perspective" (4962-IN, dated April 16, 1984), was distributed to the Executive Directors on April 23, 1984. Country data sheets are attached as Annex I. Background 3. India is a large and diverse country with a population of about 750 million (in mid-1984) and an annual per capita income of USS260. The economy is dominated by agriculture which employs more than two-thirds of the labor force. However, the land base is not sufficient to provide an adequate livelihood to everyone engaged in agticultural activities, especially those who own little or no land. Growth of value-added in agriculture -- 2.2% since 1950/51 -- has been slower than growth of industrial value-added (5.3% per annum). As a result, there has been a gradual decline in the share of agriculture in GDP (at factor cost) from 52% in 1950/51 to about 33% in 1981/82, while the share of industry rose from 20% to around 26Z. But industrialization has not been rapid enough to absorb the growing labor force, or to bring about a rapid economic transformation, with significantly higher produc- tivity and income levels. As a result economic growth has been slow over the past three decades, averaging about 3.6% per annum since 1950/51. / Parts I and II of the report are similar to Parts I and II of the President:s Report for the National Highways Project (No.P-4U29-IN), dated April 18, 1985.  -2- 4. Nevertheless, there has been steady progress, with per capita income rising by about 1.4% per year in the period 1950 to 1980. Despite the large population base and its relativeLy rapid growth, India has been able to eliminate persistent dependence on foodgrain imports through significant improvements in agricultural production. Savings and investment have increased markedly since 1950/51: the gross national sa-ings rate more than doubled from 10.8% of GDP (at factor cost) to 22.7% in 1983/84, while the gross domestic investment rate rose from 12.5% of GDP to 24.8% in 1983/84. Foreign savings (balance of payments deficit on current account) have never financed a major portion of domestic investment: a peak of about 20% was reached during the early 1960s. Currzntly, foreign savings account for about 8% of investment. External assistance has been Low both as a percentage of GDP and in per capita terms, never rising above 3% of GDP and averaging below 1% for the past five years. Net use of foreign savings has never risen above 3% of GDP, and presently stands at 2.1Z. 5. Before the 1970s, India placed relatively less emphasis on export promotion and more on import substitution. The volume growth of exports between 1950/51 and 1969/70 averaged only 2.2% per annum, while the volume growth of imports over the same period was 4.3%. In the early to mid-1970s, however, India's terms of trade, which had remained roughly constant during the 1960s, deteriorated sharply. In response, the Government introduced various policy measures designed to stimulate exports. As a result, the volume of India's exports grew on average about 7.3% per annum for the 1970s as a whole, a performance which demonstrates that sustained rapid growth is possible. While expanding world markets, particularly in the nearby Middle East, contributed to this growth, liberalized access to imported inputs and more effective export incentives played a major role. 6. Moving into the second half of the 1970s, the Indian economy was buoyed by higher levels of investment and an expanding level of foodgrain output. As a result, growth in real GDP and in agricultural and industrial value-added substan- tially exceeded the historical 30-year trends (paragraph 3) averaging 5.3Z, 3.3% and 8.1%, respectively, during the 1975/76 to 1978/79 period. In 1979/80, however, this momentum was broken when the worst drought in recent years, combined with a doubling of international oil prices and domestic supply shortages, led to a sharp faLl in foodgrain production, a decline in GDP, and the opening up of a relatively large trade deficit. Severe inflationary pressures also emerged after several years of virtual price stability. These setbacks coincided with the preparation of the Sixth Five-Year Plan which laid down a program of adjustment that aimed at improving the trade deficit, removing infrastructural bottlenecks and ensuring price stability with an overall growth of the economy of 5.2% per annum. Recent Trends 7. Despite the effects of two severe droughts in 1979/80 and 1982/83, India's economy in the early 1980s continued to grow at the faster pace of the second half of the 1970s. Between the two droughts (from 1979/80 to 1982/83), GDP growth averaged almost 52 per annum, while between the two recovery years (from 1980/81 to 1983/84), it was 4.5% per annum -- substantially higher than India's long-term growth rate of 3.6%. Continued rapid economic growth has resulted from a develop- ment strategy which includes higher investment levels and liberalized policies on imports, industrial licensing, prices, and commercial borrowing. These policies, by easing constraints on the supply of infrastructure and basic commodities, were a determining factor in the improved performance of the economy and the industrial  -3- sector. This overall improvement in performance, combined with a more restrictive monetary policy in 1981/B2 and 1982/83, resulted in a sharp decline in the rate of inflation. The growth rate of wholesale prices declined from over 18% in 1980/81 to only 2.6X in 1982/83, but rose to over 9Z in 1983/84, mainly due to the effect of the 1982/83 drought on food prices. Further improvements in the policy environ- ment will be required to maintain these higher levels of economic growth and investment without putting undue pressure on the balance of payments or reviving inflationary expectations. 8. Economic growth in the early l980s has not been steady, mainly because of the effect of uneven rainfall on agricultural production during the period. In 1980/81 and 1981/82, the economy substantially recovered from the 1979 drought, with real GDP growing by 7.6% and 5.3%, respectively. While industrial output expanded by 4% in 1980/81 and 8.6% in 1981/82, recovery was particularly robust in agriculture where normal weather helped output to rise by more than 15X and 5.5Z, respectively. The supply of power, coal, and rail transport, already improved in 1980/81, was further expanded in 1981/82, recording growth rates of about 10, 9.6% and 12.5%, respectively. This overall improvement in the Indian economy was halted in 1982/83 by a severe drought in mid-1982 which reduced agricultural production by 4%, brought down the GDP growth rate to 1.8Z, and put further strains on the already difficult balance of payments and domestic resource situation. The timely implementation of various economic policies relating to foodgrain imports, procure- ment and distribution, and the allocation of power to irrigation pumps mitigated the otherwise very distressing effects of the poor monsoon. The economy recovered in 1983/84, led by a robust agricultural sector - GDP grew by about 6.5% to 7% with agricultural production growth in the 9%-10Z range and industrial growth of 4.5%. The major factors contributing to the good economic performance during 1983/84 were the excellent monsoon, combined with adequate agricultural policies and programs, and satisfactory performance of the coal and transport sectors. The power sector, however, emerged again as a constraint on higher growth, especially in industry. 9. Agricultural production rebounded strongly in 1983/84 in response to the monsoon, improved use of inputs and continued expansion of irrigation. Overall foodgrain production rose by l0Z-12Z over the previous year, reaching a new record of 142-144 million tons, a substantial increase over the previous peak of 133 million tons in 1981/82. Corrected for weather variations, foodgrain production continues to grow at a trend of 2.6% per annum--sufficient to maintain a broad balance between supply and steadily increasing domestic demand. Nonetheless, the balance remains delicate, and the need for foodgrain imports to maintain consumer supplies or adequate buffer stocks could arise from time to time. Thus, adequate management of foodgrain stocks and programs to expand irrigation, strengthen exten- sion and encourage the efficient use of other agricultural inputs continue to receive high priority. 10. Basic infrastructure services had a mixed performance in 1983/84, partially because of sluggish demand from industry during the first half of the year but aLso due to a faiLure to maintain the productivity gains of 1980-82. Electricity gener- ation grew only by about 3.7% due to low reservoir water levels during the first half of the year, delays in the commissioning of new capacity, and a deterioration of capacity utilization in thermal plants. As a result, power generation was about 11.5Z below requirements and constituted a major bottleneck in the economy. Key industries which were adversely affected by power constraints included steel, fertilizers, cement, and coal. To improve performance in the power sector, the  -4- Government recently increased incentives for higher labor and management produc- tivity in thermal plants. Railway freight traffic, measured in ton-kms, grew by only 0.5% in 1983/84, reflecting sluggish demand. Coal production increased by about 6.5% in 1983/84 reaching 139 million tons. When combined with stocks already available this level of production was sufficient to meet the relatively slow demand growth. Infrastructural constraints would have emerged much more sharply had the pace of industrial growth and demand been more rapid. It is therefore critically important that India maintain the pace of investment in these key sectors, mobilize sufficient resources to do so, and implement programs to enhance productivity. 11. The Indian economy has reverted from a situation of resource surplus in the late 1970s to an aggregate resource deficit. The gap between gross investment and national savings increased from negligible levels during the late 1970s to an average equivaLent to 2.1% of GDP in 1980-84. India's gross national savings rate, which averaged 22.6Z of GDP in the last four years, is high by any standard, par- ticularly considering India's low income and the large proportion of its population below the poverty line. The scope for a substantial increase in the savings rate is therefore quite limited. If India is to maintain investment at about 25Z of CDP, a major effort will be required to raise additional domestic resources par- ticularly in the public sector. Future increases in savings will depend heavily upon the enhanced profitability of public sector enterprises which would require better utilization of capacity, more efficient operations and adequate pricing policies. This would also allow a marginal decline in the use of foreign savings from the recent 2.1Z-2.3Z of GDP to 1.5Z-1.8Z, to ensure a sustainable external debt service burden. 12. India's external resource position has changed notably since the late 1970s. The current account balance, which recorded surpluses from 1976/77 to 1978/79, reverted to deficits averaging US$3.5 billion and 2.12 of GDP during 1980/81 to 1983/84. Several developments contributed to these relatively larger current account deficits. First, the terms of trade deteriorated sharply in 1979/80 due to the second round of oil price increases and continued to move against India during the first three years of the 1980s. Second, a more liberal import policy towards industrial inputs was pursued. Third, net invisibles declined as travel receipts fell off, workers' remittances stagnated (reflecting slower development activity in the Middle East), and payment of interest on higher levels of foreign debt increased. Faced with severe infrastructural constraints and a deterioration in its balance of payments, India initiated an adjustment program in 1980/81 designed to raise the growth rate from its historical level of 3.6% to 5.2% while adjuscing the country's external balance to the adverse price developments in the world markets. The main elements of this strategy, which is being successfully implemented, are export promotion, import substitution where economically justifiable, implementation of a coherent energy policy designed to meet the energy needs of the economy while curbing the growth of oil imports, and continued movement toward a more liberal import policy aimed at providing producers with access to inputs for higher capacity utilization, greater efficiency, improved technology and capacity expansion. 13. A positive development in India's balance of payments is the reduction in the trade deficit from US$7.7 billion in 1980/81 to US$5.9 billion in 1983/84 despite unfavorable world market conditions and import liberalization. Export volume growth and import substitution of oil and petroleum products, metals and  -5- fertilizers more than offset the substantial increase in "other" imports. These "other" imports consist mainly of industrial imports and capital goods which his- torically have been in chronic short supply and which are of critical importance to capacity utilization, product quality, and plant modernization and expansion. A major factor in the decline of the trade deficit was the lower net import bill for petroleum, which dropped from US$6.7 billion in 1980/81 to US$3.4 billion in 1983/84 in response to a successful oil development program that reduced import needs and allowed crude oil exports, which totalled about US$1.5 billion in 1983/84. These structural changes in the balance of payments are to a significant degree the result of India's development and adjustment efforts over the past three years. It is expected that the balance of payments will continue to be under strain for the next several years, since the adjustment strategy will continue to require high levels of imports. 14. Even assuming a favorable export performance, India will need external capital flows to augment its own resources for the foreseeable future, given the low per capita income level in the country, the already high savings rate, and the structuraL adjustment process. Faced with a growing need for external capital inflows and stagnation in the availability of concessional assistance, India decided at the start of the Sixth Plan to increase borrowings from the International Monetary Fund (IMF) and comercial banks to substantial leveLs. In the period covering the fiscal years 1981/82 to 1983/84, India drew SDR 3.9 billion from the Extended Fund Facility of the IMF. In addition, India borrowed sig- nificant amounts on commercial terms from the Euro-dollar market and increased the use of suppliers' and export credits. In the period 1980-84, India contracted commercial loans totalling over US$6,000 million and suppliers' credits of over US$1,000 million. The bulk of this borrowing has been used for specific develop- ment projects in the public and private sector (mostly for petroleum exploration and development, steel, power, aluminum and shipping). India's favorable debt service position and the nature of its borrowings, for project-related purposes instead of direct balance of payments support, enabled it to tap commercial capital markets at favorable spreads. This larger commercial borrowing and transfer of funds under the arrangement with the IMF has stemmed the use of foreign exchange reserves which had fallen to less than four months of import coverage in 1981/82. Development Prospects 15. The experience of recent years illustrates that India has the capacity to grow and develop at a more rapid pace. Although the industrial sector is small compared to the size of the economy, it nevertheless is large in absolute terms and has a highly diversified structure, capable of manufacturing a wide variety of consumer and capital goods. Basic infrastructure -- irrigation, railways, telecommunications, power, roads and ports -- is extensive compared to many countries, although there is considerable need for additional capacity as well as improvement in the utilization of existing capacity. India also has a wide range of institutions capable of fostering development and is well-endowed with human resources. Finally, India has an extensive natural resource base in terms of land, water, and minerals (primarily coal and ferrous ores, but also gas and oil). With good economic policies and reasonabLe access to foreign savings, India has the capability for managing these considerabLe resources to accelerate its long-term growth.  -6- 16. The Government is currently preparing the Seventh Plan which will lay down the development strategy for 1985/86-1989/90. This strategy is expected to con- tinue the emphasis of the Sixth Plan on agriculture, energy development, export promotion, domestic import substitution where economically justifiable and the removal of infrastructural bottLenecks. Overall Sixth Plan performance has been encouraging, wit'. aggregate real investment projected to be about 30% higher than in the period 1975-80--a creditable performance indeed. The Sixth Plan expenditure targets, however, will not be fulfilled as resource mobilization by the public sector will fall short of the financing requirements of planned public investment. Actual aggregate real investment is projected to be about 7Z below the original target for the period 1980-85, private investment being 5X to 10% higher and public investment about 20% lower in real terms than actually projected. In terms of meeting Plan expenditure targets, the performance of the Central Government is considerably better than that of the State Governments. The Central Government's Plan outlays are likely to reach about 80% to 90% of the original Plan allocation in real terms, while the States' will probably achieve only about 50% of their targets, due principally to shortfalls in resource generation. Bottlenecks in key sectors such as power, transport and irrigation are likely to persist as a conse- quence of real investment shortfalls relative to original Plan allocations. 17. Although Sixth Plan expenditure targets will not be met, India's capital formation rates have increased from 22.6% in 1975-80 to 24.7% of GDP in 1980-84. Recent higher capital formation rates are encouraging for future income growth, but returns to investment have so far been relatively low. Much of this phenomenon relates to India's stage of development, in which a large and growing proportion of investment has been needed to build up basic infrastructure services which have inherently high capital-output ratios. However, there is scope to reduce capital- output ratios through improvements in efficiency. As discussed in greater detail in our recent economic reports, performance in the basic service sectors can be improved through better pLanning and management, thus leading to higher produc- tivity and capacity utilization throughout the economy. At the same time, programs to expand domestic capacity are vital. In the case of tradeable commodities like coal, steel and cement, this is justified on the grounds of comparative advantage. For sectors such as irrigation, power and transportation, expansion of planned capacity in accordance with the requirements of the rest of the economy will be vital for sustained growth. 18. Under the Sixth Plan, India has an ambitious oil development program backed by substantial financial commitment. Performance under the program has been excel- lent with real investment and oil production levels running well ahead of Plan Targets. In 1981, and again in early 1983, resources for exploration and develop- ment were raised by successive price increases for domestic crude and products. While the gap between domestic consumption of petroleum and production remains large, India's dependence on oil imports dropped from 63% of consumption in 1979180 to about 41% in 1983/84 and is expected to decrease to about 33% of consumption by 1984/85. The rapidly expanding level of exploration activity, combined with the possibilities for accelerated offtake from known fields, offers much encouragement for India's longer-term energy prospects. At the same time, the increases in domestic petroleum prices have helped encourage conservation and slow demand growth. 19. India's development prospects over the next few years will hinge on the extent to which the economy can be brought into both internal and external balance,  -7- while at the same time achieving more rapid growth than in the past. This will require the continuation of the current development strategy which assigns high priority to export promotion, public finance discipline, improvement of economic efficiency, and investment in infrastructure, supported by adequate flows of exter- nal borrowing and aid. In the short term, a relatively large level of external borrowing, including an increased emphasis on commercial borrowing, will be neces- sary to cope with the balance of payments consequences of such a growth strategy. However, an important element in providing India with the capacity to adjust flexibly will be adequate flows of concessional assistance since India is still a very poor country with a large rural sector and enormous investment requirements for human development and basic infrastructure. Although India is currently in a position to increase borrowing on commercial terms from the very low levels of the past, there are, of course, limits beyond which India will choose to sacrifice growth objectives rather than accept debt on unfavorable or unmanageable terms. Nevertheless, with a more open trade policy and expanded efforts to remove con- straints on the growth of productive capacity, supported by adequate mobilization of both foreign and domestic savings, India is demonstrating that it can sustain a rate of growth closer to 5.0% per annum than to the long-run trend of 3.6Z per annum. if the rate of population growth can be brought to below 2.0% per annum, a 5.0% growth rate would mean a doubling of the trend rate of growth of per capita income of 1.4Z per annum. Success in these efforts would make a significant dif- ference to the prospects of easing poverty in India. 20. A large and growing population and severe poverty underline the need to accelerate India's development efforts. The 1981 Census indicated there was no decline in the rate of population growth, which remained about 2.2% per annum in the 1970s despite a measurable decline in fertility rates. The population growth rate failed to decline in the past decade due to a reduction in the infant mor- tality rate and an increase in life expectancy, reflecting larger availability of food and health services. While this is a welcome development, it implies a greater strain on the economy and re-emphasizes the need for continuing efforts to strengthen the health and family planning programs in a broad range of activities and services. These efforts are given high priority in the Sixth Plan, which aims at a rise in the proportion of protected couples in the reproductive age group from its estimated 1979/80 level of about 23% to over 35% by 1984/85. The Government is reviewing its population policy for the Seventh Plan, with indications of a determination to retain the emphasis on the implementation of family planning, health, education and literacy programs aimed at reducing fertility rates. 21. Reduction of poverty remains the central goal of Indian economic and social policy. More than one-third of the world's poor live in India, and more than 80% of the Indian poor belong to the rural households of landless laborers and small farmers. About 51% of the rural population and 40% of the urban population subsist below the poverty line. Significant reductions in poverty will depend primarily on an acceLeration of economic growth, particularly in agriculture, combined with effective implementation of poverty alleviation programs. India's poverty alLevia- tion strategy appropriately recognizes that production-oriented programs, which aim at accelerating the overall pace of economic growth, and poverty alleviation programs, targetted at those least able to participate in the general growth of the economy, can be mutually reinforcing rather than substituting for each other. Major poverty programs operating on a nationwide basis at present include: the Minimum Needs Program (MNP), the Integrated Rural Development Program (IRDP), and the National Rural Employment Program (NREP). The IRDP and WREP are targeted  -8- programs aimed at increasing the incomes of the poor rapidly, either through the transfer of productive assets or direct employment. The MNP, aims at broadening the p.ovision of social infrastructure and basic services which enhance the human capital of the poor and improve living standards. These programs represent a vitaLly important commitment nf the Government to address the needs of the poorest. The scale of the poverty problem in India, combined with the inher_t difficulties in implementing poverty programs in any country, imply the need for continued efforts to enhance the effectiveness of these programs. PART II - BANK GROUP OPERATIONS IN INDIA 22. Since 1949, the Bank Group has made 82 loans and 165 development credits to India totalling US$6,526 million and US$12,268 million (both net of cancellation), respectively. Of these amounts, US$1,524 million has been repaid, and US$6,207 million was still undisbursed as of September, 30, 1984. Bank Group disbursements to India in the current fiscal year through September 30, 1984 totalled US$171 million, representing a decrease of about 40 percent over the same period last year. Annex II contains a summary statement of disbursements as of September 30, 1984. 23. Since 1959, IFC has made 29 commitments in India totalling US$223 million, of which US$34 million has been repaid, US$56 million sold and US$34 million cancelled. Of the balance of US$98 million, US$91 million represents loans and US$7 million equity. A summary statement of IFC disbursements as of September 30, 1984, is also included in Annex II (page 4). 24. The thrust of Bank Group assistance to India has been consistent with the country's development objectives in its support of agriculture, energy and infrastructure. Of particular importance have been investments in irrigation, extension and on-farm development designed to increase agricultural productivity, and efforts to improve the availability of basic agricultural inputs to farmers through credit, fertilizer, marketing, storage, and seed projects. Major elements of the lending program have also been directed at helping to meet the energy needs of the economy while curbing the growth of oil imports, and to ease the infrastruc- ture bottlenecks which have hampered economic growth in India, particularly through power generation and distribution, and railways and telecommunications projects. The Bank Group has also provided financing for a broad range of medium- and small- scale industrial enterprises, primarily in the private sector, through its support of development finance institutions. Recognizing the importance of improving the ability to satisfy the essential needs of urban and rural populations, the Bank Group has supported nutrition and family planning programs, a rural roads project, as well as water supply and sewerage and other urban infrastructure projects. 25. This pattern of assistance remains highly relevant, and consonant with Government priorities, as reflected in the Sixth Plan and in the approach being taken by GOI in the preparation of the Seventh Plan. First, high priority will continue to be given to GOI's agricultural program. While India has made sig- nificant progress in agriculture, productivity growth will have to be sustained to improve the balance between food demand and supply and to contribute to poverty alleviation and employment. Thus, the Bank Group will continue to support irrigation, fertilizer production and distribution, and agricultural extension and credit. Second, alongside GOI's efforts in promoting greater efficiency and faster development of the industrial sector, increased assistance will be provided for  -9- industrial development. Third, the review of performance under the Sixth Plan confirms the high priority that should continue to be given to the expansion and more efficient use of basic infrastructure capacity and to the development of India's indigenous hydrocarbon resources. Accordingly the Bank Group will continue to support the development of the energy, transport and telecommunications sectors to alleviate critical shortages which constrain output in both agricultural and industrial sectors. Fourth, support of urban development and other GOI basic social services programs for the poor will also continue in light of the growth in population which, despite successes in lowering birth and death rates, still increases by about 16 million each year. 26. The need for a substantial net transfer of external resources in support of the development of India's economy has been a recurrent theme of Bank economic reports and of the discussions within the India Consortium. Thanks in part to the response of the aid community, India successfully adjusted to the changed world price situation of the mid-1970s. However, India continues to require a substan- tial level of foreign assistance both to offset the overall deterioration in the world trade environmenL, and to sustain the relatively higher investment and growth rates achieved during the first four years of the Sixth Plan. As in the past, Bank Group assistance for projects in India should aim to include the financing of local expenditures. India imports relatively few capital goods because of the capacity and competitiveness of the domestic capital goods industry. Consequently, the forcign exchange component tends to be small in most projects. This is par- ticularly the case in such high-priority sectors as agriculture and irrigation. 27. India's poverty and needs are such that whenever possible, external capital requirements should be provided on concessional terms. Accordingly, the bulk of the Bank Group assistance to India in the past was provided from IDA. However, IDA lending to India is declining from a peak of US$1.6 billion in FY82, mostly due to funding constraints related to IDA. The amount of IDA funds avail- able to India is likely to remain small in relation to India's needs for external support. Thus, this requirement for additional assistance will have to be met, in part, through larger Bank lending. Given its development prospects and policies, India is judged creditworthy for Bank lending to supplement IDA assistance. A continuation of efforts already underway to achieve growth in productive capacity, trade expansion, higher levels of savings, foodgrains self-sufficiency and a reduc- tion in the rate of population growth should result in continued economic growth and improvement in the balance of payments. India's debt service ratio is estimated at about 15.2% in 1984/85. This ratio is projected to rise to around 20% by 1989/90, mainly due to the hardening structure of India's debt; and to increase slightly over this level through the mid-1990's. Although the projected debt service ratios are considecably above historical levels, they are still manageable and will not adversely affect India's creditworthiness. 28. Of the external assistance received by India, the proportion contributed by the Bank Croup has grown significantly. In 1969/70, the Bank Group accounted for 34% of total commitments, 13% of gross disbursements, and 12% of net disburse- ments as compared with 62%, 33% and 37%, respectively, in 1983/84. In 1983/84, about 19.0% of India's total debt service payments were to the Bank Gcoup. On Karch 31, 1984, India's outstanding and disbursed external public debt was estimated to be about US$26.9 billion, of which the Bank Group's share was US$9.6 billion or 36% (IDA's US$7.8 billion and IBRD's US$1.8 billion). As of September 30, 1984, outstanding loans and credits to India held by the Bank totalled US$17,271 million, of which US$6,207 million remain to be disbursed, leaving a net amount outstanding of US$11,064 million.  -10- PART III - THE POWER SECTOR Background 29. India,s commercially exploitable energy resources consist of coal, oil, gas, hydro, uranium, and thorium. Of the nonrenewable resources, coal is the most abundant. Reserves of thermal coal have been estimated at slightly higher than 100 billion tons, of which 25 billion tons are proven. Although reserves are ample, the quality of coal produced is generally low and is deteriorating. Proven and probable petroleum reserves comprise approximately 530 million tons of oil and 390 million toe of natural gas. Despite recent increases in domestic production, India still imports 35% of its oil requirements, which in 1983/84 cost the equivalent of 40% of its merchandise exports. Consequently, the Government of India has encouraged exploration while attempting to contain the demand for petroleum and natural gas, in particular through limiting the use of natural gas to high-value uses such as petrochemicals and fertilizer. Because it is taking time to develop premium uses of natural gas, substantial volumes of associated gas are being flared. India's hydroelectric potential is about 100,000 MW. At present, only 13,0UO MW have been developed, 4,700 MW are under construction, and a further 23,000 MW are being studied for future development. The prominent role of hydro in regional least-cost development plans prepared in 1982 has led GOI to emphasize the need to accelerate its development; however, progress has been slow because limited resources are available for the simultaneous preparation of a large number of schemes ana because it also takes time to resolve water rights and environmental issues. The countryf,s uranium reserves could support a modest nuclear program (8,000-10,000 MW), and its thorium reserves are enough for a large breeder program. 30. Planning the best use of India's indigenous energy resources for power generation raises a number of issues and highlights several needs. First, the high ash content of coal, which can reach 59%, tends to increase transport costs, as well as power station capital and operating costs. The development of minemouth stations, which is constrained by pollution limitations and the availability of cooling water, helps to solve only the transport problem, and thus priority should still be given to more selective mining and improved coal preparation. Even though a lower ash content might help to alleviate transport problems, they would still persist. Two studies included in the Dudhichua Coal Project (Loan 2393-IN) are designed to help formulate a strategy to deal with these problems: one study will examine ways of improving the linkages between the sources of supply and the demand, and the other will concentrate on methods of improving handling and transportation facilities. Second, with the recent increases in the supplies of both associated and free gas, there is a greater need for a coherent policy on the exploitation of gas. A Bank study planned for 1985 will focus, among other things, on the potential for the economic use of gas in power generation. Third, it hydro development is to accelerate, further resources, including consultants if necessary, need to be deployed to prepare hydro schemes. Furthermore, if water rights and environmental issues cannot be  -11- resolved quickly, GOI should initiate appropriate proceaures to ensure that an adequate number of hydro schemes are available for development. Supply and Demand of Electricity - India 31. Approximately 50Z of India's electricity is generated from coal, 401 from hydro, and the rest from oil, nuclear power, and natural gas. Although a number of large thermal projects are planned for the short term, the share of hydro is expected to increase in the long run. Electricity losses have risen slowly but steadily over the last few years and now exceed 26% of gross generation. The lack of high-quality coal has been at least partly responsible for this trend, and coal stations themselves now consume close to 10% of gross generation against a desirable 5% or 6%. Distribution networks have been overloaded because inadequate attention has been given to systematic analysis and planning of this part of the system. As a result, distribution losses are high by generally accepted standards and, although they are lower than in several countries in the region, they need to be reduced. Under its lending program, the Bank has supported pilot studies to reduce system losses, and it will continue to follow this approach in its future lenoing. Such losses can only be reduced on a State-by-State basis, however, with loss reduction targets reflecting the particular circumstances of each State. 32. Over the past two decades, the consumption of electricity has grown approximately twice as fast as total comme:cial energy consumption and now accounts for more than 30% of the latter. As a result, shortages have prevailed throughout the country and, during the last five years, averaged an estimated 13Z of electricity requirements. The principal sectoral shares of total electricity consumption are: industrial, 56%; agricultural, 19%; and domestic, 12%. Agriculture's share has grown steadily owing to increased electrical irrigation pumping made possible by rural electrification and encouraged by heavy subsidies. Total consumption has grown at an average rate of 102 per annum during the past two decades, and the Central Electricity Authority (CEA) has forecast growth of 9% per annum between 1984/85 and 1989/90. Whether such growth can take place will depend on the utilities success in installing new capacity. SuPPly and Demand of Electricity - Western Regtion 33. The Western Region, in which the proposed project is located, is * principally made up of the States of Maharashtra, Gujarat, and Madhya Pradesh. The principal supply authorities of the Western Region are the State Electricity Boards (SEBs) of these States, the Tata Electric Companies (TEC), Ahmedabad Electric Company, and Surat Electric Company. In addition, a number of small municipalities are engaged in supplying power. At Bombay, the Western Region Electricity Boara has constructed a Regional Load Dispatch Center that will eventually integrate the operation of the generating facilities throughout the Region. The total installed capacity in the Region as of March 19b4 was almost 12,000 MW (excluding an estimated 660 MW of captive plant), of which about 85X is thermal. Projects already committed vould increase installed capacity by 1,571 MW in 1992/93, of which about 6,650 MW (88%) would be thermal. Further new projects identified for study  -12- total 9,411 MW, of which 4,630 MW (49%) is thermal. More than 80% of existing capacity is owned ana operated by the three SEBs, and the remainder is primarily the responsibility of NTPC, TEC, and the Department of Atomic Energy. Although installed capacity has grown by almost 13% per year between 1974/75 and 1983/84, available capacity has grown by less than 9% per year, a rate that indicates substantial deterioration in plant availab:lity. The causes of this decline include the poor quality of coal and the deferral of maintenance due to capacity shortages. Although the Region',s SEBs are interconnected, their operations have not yet been fully integrated. However, the pooling and dispatching arrangements coordinated through the REB are expected to improve substantially with the cOmmissioning of the ne'j load dispatch facility. 34. Maharasbtra accounts for the largest share of the Region',s consumption (54%), followed by Gujarat (282) and Madhya Pradesh (18%). The importance of industry in the Region is reflected in this sector.s share of electricity consumption (62%), compared with national consumption (56%). In contrast, the share of agricultural consumption (14X) is below the national average (19%). However, industrial consumption is becoming less dominant since agricultural consumption is growing more than twice as rapidly as industrial consumption. Between 1974/75 and 1982/83, overall consumption grew by 8% per annum, while sectoral consumption rose 6% per annum for industry, 14% for agriculture, and 12% for domestic use. Because of the critical power shortages in the Region, supply has been severly restricted in all three States, especially in Maharashtra and Madhya Pradesh. Consumption and load shedding are therefore closely regulated throughout the year for all classes of consumers. As a result of the existing shortage of capacity, constrained peak demand has grown at an average annual rate of 7.8% since 1980. Demand for peak capacity is expected to grow at an average annual rate of 8.5% up to 1992/93. The capacity shortage, at present estimated at about 1,280 MW or 16Z ot potential demand, is expected to be eliminated around 1992, according to current plans. Organization ot the Power Subsector 35. Responsibility for the supply of electricity is shared between the Central and State Governments. The State Electricity Boards (SEBs) and the Regional Electricity Boards (REBs) are controlled by States; the Central Electricity Authority, the National Thermal Power Corporation (NTPC), the National iydro-Electric Power Corporation (NHPC), and the Rural Electrification Corporation (REC) are controlled by the Central Government. SEBs were instituted under the Electricity (Supply) Act of 1948 (the Act) to promote the development of the power subsector and to regulate private licensees. Although, in principle, SEBs are supposed to be autonomous in managing their day-to-day operations, in practice they are under the control of State Governments in such matters as capital investment, tarifts, borrowings, pay, and personnel policies. As a first step towara national integration, the SEBs have been grouped into five regional systems, each coordinated by an REB. Coordination responsibilities include overhaul and maintenance programs and determination of generation schedules, inter-State power transfers, and concomitant tariffs. CEA was created in 1950 to develop national power policy and to coordinate Lhe various agencies involvea in  -13- supplying electricity. It is responsible for the formulation of countrywide investment plans for approval by the Central Government, the development of an integrated system operation, the training of personnel, and research and development. It maintains operational, economic, and financial data at both the Central and State levels, and provides consulting support to SEBs. NTPC and NHPC were incorporated in 1975 by GOI to construct and operate large power stations and associated transmission facilities. They sell bulk power to the SEBs for distribution. NTPC has had marked success and has grown rapidly. In contrast, NEYC is still struggling to establish a role for itself. The States own most hydro sites ana are reluctant to relinquish these sources of comparatively inexpensive energy to the Central Government. REC was established in 1969 to coordinate rural electrification and proviae financial and technical expertise for SEB schemes. At present, REC finances more than half of total rural electrification investment. Pricinu and Resource Mobilization 36. Through the 1983 amendments to the Act GOt has set a financial objective for the SEBs to produce an annual return of at least 3% on tneir historically valued net fixed assets, after meeting operating expenses, taxes, depreciation and interest. The 3X return would represent, in terms of the Bank's conventional method of calculation, a rate of return on historically valued assets in the range of 10 to 13%. The Bank considers this objective to be a reasonable minimum but believes that because of their investment requirements, a number of SEBs need to achieve returns higher than this minimum. Higher returns are possible in some cases through tariff restructuring, including the use of a block tariff that would allow a lifeline rate affordable to low income consumers. Additional returns are achievable through tariff increases. Present tariffs are in most cases inadequate, not only in economic terms but also in financial terms, and most SEBs are unable to finance a reasonable share of their investment programs. On average, SEB tariffs are equivalent to only about 50X of the long run marginal cost (LRNMC) of producing power. In contrast, NTPC',s tariff approximates LRIC. Industrial tarifts are almost 90% of LKMC, whereas agricultural and domestic tariffs, which are considered politically sensitive and have been consistently subsidized, are only 27Z and 36Z of LRMC, respectively. State-specific programs that would provide both an increased return on investment and a simpler, efficient and affordable tariff structure, are needed. Such programs will be addressed through the Bank's lending to individual SEBs. Power Subsector Planning 37. Because the demand for electricity has increased rapidly, GOI at present allocates about 20% of public investment to power development. To ensure that the subsector would be developed in the most economic manner, the Bank encouraged GOI to prepare a comprehensive least-cost National Power Plan (NPP), which was completed in September 1982. Although this plan represents substantial progress, further refinement is needed. To support GOI in this task, the Bank has planned a study for FY86 that will review the assumptions and methodology employed in formulating the least-cost plan. There appears to be a need for further national integration and greater coordination  -14- between power and other sectors, especially coal and gas. Since it will not be possible to achieve full national integration immediately, the Bank will continue to ensure that each Bank-tinanced project forms a part of an up-to-date regional least-cost development plan. In due course, the sources of supply considered in the formulation of each regional least-cost plan should be widernd to include the option of importing from neighboring regions. This approach would eventually lead to integrated planning at a national level. A further problem has arisen in the coordination of the long-term NIP with the national five-year plan and shorter-term budgets. Because of inadequate resources, fewer projects have been included in the five-year plan than in the NPP and, as a result of underestimation of project costs and delays in project implementation, still tewer have been executed. Consequently, the shortage of power has become more and more acute, and over the next decade, India expects its power deficit to increase severalfold. This deticit will tend to undermine rational planning because emphasis is likely to be placed on rapid expansion of. supply rather than on least-cost development. Furthermore, it may prompt overinvestment in captive plant and excessive use of high-value energy products in the generation of power. In addition to supporting GOI's efforts to increase the supply, the Bank will continue to stress to GOI the role of pricing in eliminating the deficit and the importance of integrating planning and pricing. Management and Operations 38. SEBs, organization and management practices have become outmoded as supply has expanded. The quality of service, reliability, and financial performance are the principal areas of concern. In general, SEBs have high-quality engineering staff, but lack experienced personnel in the areas of financial planning and control. The relatively poor status and pay of these personnel compared with those in the private sector makes it difficult to recruit competent staff. At present, accounts are maintained principally to track cash receipts and expenditures, and accounting inrormation is seldom used for managerial purposes. GOI has decided that a new and uniform accounting system should be installed in all SEBs. After initial delays, preparations are now proceeding ana implementation is scheduled to begin in April 1985. 39. In the area of operations, one of the main concerns has been the poor performance of thermal plant. Factors that have contributed to this situation are inadequate maintenance (due to capacity shortages), deficiencies in plant manufacture, lack of spareb, and the poor quality of coal; in general, these problems have been recognized by the relevant authorities and corrective steps are being taken. GOI is currently preparing a rehabilitation program for thermal plant that may be financed by the Bank. Until this program is compiled, the Bank will, whenever appropriate, include a thermal rehabilitation component under each of the loans made to the SEBs. Bank Group Participation in the Past 40. The Bank has made 18 loans for Indian power projects amounting to US$1,983 million, and 17 IDA credits totaling USW2,409 million. Seventeen projects financed unaer the following loans ana credits have been completed:  -15- ten generating projects, the Beas Project (Credit 98-IN), the first four transmission projects (Loan 416-IN, Credits 242-IN, 377-IN and 604-IN), and the First and Second Rural Electritication Projects (Credits 572-IN and 911-IN). The Fourth Transmission Project (Credit 604-EN) was completed in 1983, and the Second Rural Electrification Project in 1984. The Singrauli (Credit 685-IN), Korba (Credit 793-IN), and Ramagundam (Credit 874-IN and Loan 1648-IN) Thermal Power Projects are in advanced stages of implementation. The credit for the Second Singrauli Thermal Power Project (Credit 1027-IN) and the credit/loan for the first stage of the Farakka Thermal Power Project (Credit 1053-IN ana Loan 1887-IN) were approved in May and June 1980. Korba II (Credit 1172-IN) was approved in July 1981, Ramagundam II (Loan 2076-IN) in Deceaber 1981, and the Third Rural Electriuication Project (Loan 2165-IN) in June 1982. The Upper Indravati Hydro Project (Credit 1356-IN and Loan 2278-IN) and the Central Power Transmission Project (Loan 2283-IN) were approved in May 1983, and the Indira Sarovar Hydroelectric Power Project in May 1984. The Second Farakka Thermal Power Project (Loan 2442-IN) was approved in June 1984, and the Trombay IV Thermal Power Project (Loan 2452-IN) in June of the same year. The Third Rural Electrification Project is about a year behind schedule. The first five units of the Singrauli Project and the first two units of the Korba project were commissionea on schedule. The Farakia and Ramagundam projects are proceeding satisfactorily, the first unit at Ramagundam having been commissioned four months ahead of schedule. The Third Trombay Project (Unit 5) (Loan 1549-IN) was first synchronized in January 1984, about a year behind schedule; time was lost mainly because parts for the boiler were not delivered on time, and because of delays in its construction. 41. A performance audit conducted in 1980 for the Second Power Transmission Project (Credit 242-IN) concluded that the project has succeeded in helping the nine beneficiary SEBs extend their transmisfion systems and meet their growing power requirements. Utilization of generating capacity in these SEBs has exceeded the appraisal forecast. The upgrading of the SEBs? financial management practices that began under this project vill continue under subsequent projects. The audit highlighted the difficulties of adequately supervising this project (because it consisted of many widely scattered subprojects), and of effecting institutional improvements in the absence of a close working relationship between the Bank Group and the beneficiary SEBs. The Bank has therefore sought more direct involvement with the SEBs through State-specitic projects. Bank Group Strategy in the Power Subsector 42. Over the last ten years the Bank Group has assisted GOI in substantially expanding its centrally owned generation capacity, which is currently being run relatively efficiently. In the past two years, however, the emphasis of Bank Group lending has begun to shift from supporting projects owned and operated by the Central Government to projects owned ana operated by the SEBs. This gradual shift has come about in support oI GOI-.s desire to accelerate the development of India's hydroelectric power resources (most of which are owned by the State Governments), and because of the considerable need to improve the operational and project implementation efficiency and the tinancial viability of the State-owaed power sector  -16- institutions. In parallel with this shift in Bank Group lenaing, sectorwide objectives for power system operation at both Center and State levels--such as improving efficiency in the use of existing power generation, transmission, and distribution systems; strengthening Central and State level sector institutions; improving countrywide power system planning; and increasing resource mobilization within the sector--will continue to be pursued by the Bank Group. More specifically, the principal objectives of the Bank Group's assistance in the subsector are: (a) the better use ot existing facilities--through transmission projects improving regional interconnections ana through rehabilitation of plant, particularly of thermal power stations and distribution networks: these measures will improve the etticiency of energy use and reduce system losses, and thereby help to minimize system capital and operating costs; (b) institution building--although the Bank will continue to maintain an interest in Central institutions, its efforts will be broadened to encompass individual SEBs, where substantial efforts are needed to strengthen management, operations, and finances; Cc) improved planning-particularly by extending the scope of planning from the State through the regional to the national level ana through greater integration of planning with other sectors in the economy, both those that consume electricity and those that supply other forms of energy; and (d) improvea resource mobilization from electricity consumers-- the principal vehicle for this has been and will continue to be tinaucial covenants in relation to beneficiaries; however, tiLe Bank will also continue to stress the importance of relating tariffs to the economic costs of supply. PART IV - THE PROJECT 43. The project was prepared by MSEB and appraised by a mission that visited India in May-June 1984. A Staff Appraisal Report (No. 5319-IN dated April 24, 1985) is being distriDuted separately to the Executive Directors. Negotiations were concluded in Washington in April 1985. GOI, GOM, and MSEB were represented by a delegation coordinated by Mr. A. Thapan of the Department of Economic Affairs. A Supplementary Project Data Sheet appears in Annex III. Proiect Description 44. The primary objective of the project is to help the Government of India meet the electricity demand in its Western Region through the provision of an additional 1,000 MW of tnermal generating capacity at the Chandrapur thermal power plant, located about 6 km trom Chandrapur (a district headquarters in the State of Maharashtra). A turther objective is to increase the etticiency of MSEB's existing thermal plant by tinaucing the  -17- equipment and material required for the rehabilitation of six thermal power stations located in various parts of the State. In addition, the project is designed to contribute to the transfer of new technology to the MSEB system through the training of kSEB personnel in the construction and operation of the 500 MW units (the first units of this size for MSEB), which will enhance the capability and efficiency of the MSEB. The project will also help MSEB improve its financial viability and operation relative to internationally accepted utility practices. 45. The project consists of the following components: (a) a thermal power generation component, involving the construction and installation at the Chanarapur plant of two 500 MW thermal power generating units consisting of two turbogenerator sets, with auxiliary equipment; two steam generators, with electrostatic precipitators and auxiliaries; a circulating water system with cooling towers; coal- and ash-handling plants; a fuel-oil plant; 200-kV and 4UU-kV switchyard ana transmission equipment; a water conductor system; ancillary electrical and mechanical equipment; buildings for the turbogenerators and plant; and other associated civil works; (b) a thermal plant rehabilitation component, involving the procurement and installation of parts, equipment, and materials for the repair, renovation, and improvement of selected existing thermal generating units in the State of Maharashtra. 46. The thermal generation component of the project represents the third stage of development of the Chandrapur plant and will supplement the 840 NW (four units each of 210 MW) of generating capacity provided under the rirst two stages. This third stage of two 500 MW units will bring the plant's total generating capacity to 1,84U MW (final planned capacity is 2,340 MW). The planned fourth stage will comprise a single 500 MW unit. All four units of the first and second stages will be commissioned by the end of 1985; the two 5U0 MW units of the proposed project are to be commissioned in August 1991 and January 1992. This component of the project, which represents the least-cost alternative for the expansion of the Western Regional system, would help to alleviate power shortages in India in general and in the Western Region in particular, where severe shortages of capacity have led to widespread rationing and overloading of existing thermal units. As a result, operation and maintenance costs have increased and forced-outage rates for the existing units in the Region have risen sharply. 47. The thermal plant rehabilitation component will focus on tte repair and renovation of six plants in various parts of the State that contain units of less than 200 MW each. These plants--Koradi, Khaperkheda, Bhusawal, Parli, Paras and Nasik-have a total installed capacity of 1,065 MW. Repair and renovation are expected to bring about a considerable improvement in the utilization and etticiency of these plants; indeea, the benetits from this component (and from a similar program initiated under the Indira Sarovar Hydroelectric project approved in FY84) should further support the case for a  -18- national thermal plant rehabilitation program, which the Bank has been encouraging the Government to undertake. 48. The output from the additional units will enter the Western Regional grid via a double-circuit, 400 kV transmission line linking Chandrapur to Parli and Lonikand, and a single-circuit 400 kV line linking Lonikand to Bombay. These lines, which are not part of the proposed project, are to be commissioned before 1989, in advance of the commissioning of the project units. Contracts for these lines have already been awarded by MSEB. Project Implementation 49. The Maharashtra State Electricity Board will implement the thermal generation component of the project over a period of seven and one-half years, beginning in 1985. MSEB has adequate expertise in the engineering and construction of thermal power plants comprising units of 200 MW. However, since the project would introduce units of 500 KW into the MSEB system for the first time, a consultant has been recruited to assist with the engineering aspects of the plant, under a joint venture contract between Development Consultants Pvt. Limited (India) and United Engineers and Constructors, Inc. (United States). About 500 man-days of foreign consultant support and 1,500 man-days of local consultant support are provided under the contract for project engineering. The consulting services would include a review of the basic engineering and design, preparation of technical specifications, bid evaluation, studies of optimization, inspection of equipment, planning of plant erection, and a review of plant operation and maintenance practices. Specifications for the main contract proposed for Bank financing (which includes the turbogenerator sets, steam generators, and control and auxiliary equipment), have been prepared and reviewed by the Bank and found satisfactory. Bids for major civil works are expected to be invited in August 1985. Upon completion of the project (the first unit is to be commissioned in August 1991 and the second in January 1992), MSEB will be responsible for the operation and maintenance of the plant. The thermal plant rehabilitation component of the project will be implemented over a period of approximately three to four years and will also be carried out by MSEB. A detailed program, including cost estimates, for the thermal plant rehabilitation component has been prepared by MSEB and has been reviewed by the Bank and found satisfactory. 50. Coal for the Chandrapur plant will be supplied by Western Coalfields Limited from the coalfields of the Chanda-Wardha valley, some 15 km from the plant, and will be transported from the mines by a unit train system and aerial ropeway. Most of the coal transportation system is already in place, having been set up during the earlier stages of the Chandrapur development. Coal reserves, recoverable by both open-cast and underground mining, are estimated to be about 847 million tons. Two of the five mines that will supply the plant are already delivering coal, and the remaining three are expected to start production in 1987/88. The coal production from these mines is estimated to be sufficient to supply the 2,340 MW plant for more than 100 years; it is expected to increase from about 1.1 million tons per year in 1984 to 6.4 million tons per year in 1990, and therefore should fully meet the needs of the Chandrapur plant. GOI will ensure that adequate coal  -19- supplies will be made available for the efficient operation of the Chandrapur plant (Section 3.04 of Loan Agreement). The principal features of the contract that will govern the sales of coal by Western Coalfields Limited to MSEB were reviewed ana discussed during negotiations. 51. Cooling water for the four 210 SW units and the first 500 NW unit of the proposed project will be provided from the Erai reservoir. For the second 500 MW unit (and the future additional 500 MW unit), an additional 120 million cubic meters of water per year would be needed. GOX has undertaken to provide this water to MSEB from the Human reservoir, which is currently being constructed by the GOM',s Irrigation Department. GOM has confirmed that an adequate cooling water supply would be made available for the proper operation of the Chandrapur plant, in accordance with the implementation program for the construction of the Human reservoir. GOM will provide the Bank with a copy of the implementation program by June 30, 1985. 52. About 973 hectares of land for the main power station complex (which should be sufficient to meet the requirements of the ultimate 2,340 MW capacity of the plant), and about 336 hectares for the residential colony for construction, operation, and maintenance staff have already been acquired by MSEB. In addition, 1,800 hectares are being acquired for the ash-disposal area, the water-conductor system, and the unit-train system. No problems are anticipated in the acquisition of this land, and GOM will ensure tbat it is acquired in a timely manner. In addition, any population displaced by this process will be resettled in accordance with principles, objectives, and institutional arrangements satisfactory to the Bank (Section 2.05 of Project Agreement). 53. GOI's Department of the Environment and GOM ,s Pollution Board have approved the construction of the Chandrapur plant to its eventual capacity of 2,340 MW. MSEB is complying with all environmental quality standards prescribed by the Indian authorities for the design, construction, and operation of the power plant. Bank standards for sulfur dioxide, nitrogen oxides, and dust will also be observed. The Chandrapur plant is a pit-head station far from any urban area. Therefore no problems are envisaged other than the need to ensure the health and environment of nearby villages and of the operating statf who will be housed in a residential area 4-5 km from the plant. Appropriate measures will be taken during the design of the third stage of the plant to minimize potential adverse ecological effects. These measures include stack emission control through the use of electrostatic precipitators, heat dissipation in the cooling water, and appropriate ash-disposal facilities. Occupational safety standara3 will be strictly enforced. Proiect Costs and Financing 54. The total cost of the project, including contingencies but excluding about US$118 million in taxes and duties, is estimated at about US$998 million equivalent, of which about US$415 million (42X) represents the estimated foreign exchange costs. Interest during construction adds about US$180 million to the financing required. The principal cost components, net of physical and price contingencies, taxes, and duties, are; steam  -20- generators, turbogenerators, and auxiliary equipment, US$286 million; poaer station civil works, US$142 million; ancillary mechanical and electrical equipment, US$91 million; engineering and administration, US$50 million; coal handling and transportation equipment, US$44 million; thermal plant rehabilitation, US$41 million; transmission equipment, US$24 million; land and preliminary works, US$10 million; consultancy services and training, US$5 million. These estimates of project costs are based on June 1984 actual prices for similar equipment, material, and works. Price contingencies, amounting to about 25% of base cost, are based on expected inflation rates of 7Z for 1984/85, 8X for 1985/86 and 1986/87, and 6% yearly thereafter for local costs; and 8% for 1985, 9% for 1986 through 1988, 7.5% for 1989, and 6% thereafter for foreign costs. Physical contingencies of about 10% on civil works and 5% on electrical and mechanical equipment have been allowed; these amount to about 5% of base cost. 55. The proposed Bank loan of US$300 million will finance 60% of the total foreign exchange financing requirement of about US$496 million, and will cover about 30% of the total project cost net of taxes and duties. The balance of the funds required, aggregating about US$997 million equivalent (including about US$196 million in foreign exchange, of which about US$81 million represents interest during construction), is to be provided from COM loans (US$672 million) and MSEB's internally generated funds (US$325 million). The project provides opportunities for cofinancing and GOI has indicated that it may consider these. There is a possibility that external cofinancing may be obtained for the main contract (comprising steam generators, turbo generators, control, and auxiliaries) in an amount of up to US$250 million, particularly if the successful bidder provides an acceptable financing proposal. In the event that arrangements for such cofinancing are successfully concluded, GOM's contribution to project financing will be reduced accordingly, and the Bank will seek to reallocate its contribution toward the financing of this contract to other items in the project, as appropriate. 56. The proceeds of the proposed loan will be channeled by GOI to GOM as part of its normal assistance to States for development projects on terms and conditions applicable at the time. In turn, GOM will relend the Bank funds, together with its own contribution, to MSEB. Repayment of the Bank loan by MSEB will be over 20 years, including five years' grace, at the current Bank interest rate of 9.29% per annum. Repayment of COM's contribution will be over 30 years, including six years' grace, at GOM's current applicable rate of :nterest for its lending to MSEB (Section 2.01(b) of Project Agreement). The average inflation rate is not expected to exceed 8% per annum over the next five years. COM's onlending rate to MSEB for Bank funds is therefore expected to remain positive in real terms. The foreign exchange and interest rate risks will be borne by the Government of India. Procurement and Disbursement 57. Procurement arrangements are summarized in Annex IV. Contracts for civil works under the project, except for some preliminary works carried out by GOM and MSEB, will be awarded on the basis of local competitive bidding (LCB) under procedures acceptable to the Bank. Procurement of the major  -21- items of equipment-turbogenerator sets; steam generators; power cycle equipment; instrumentation and control equipment; and the data acquisition system, which, together with coordination and supervision services, are combined under a single contract (US$403.6 million); and certain equipment items under the thermal plant rehabilitation component (US$1.5 million)--will be subject to international competitive bidding (ICB), in accordance with Bank guidelines. Prequalification of potential bidders for the main contract is underway; bidding documents have already been reviewed by the Bank and found satisfactory. Other items of equipment-such as coal- and ash-handling equipment, water-treatment plant, fuel-oil plant, switchyard and transmission equipment, and miscellaneous electrical and mechanical equipment (US$223.3 million) together with transportation, erection, insurance, and testing (US$70.5 million), and most of the equipment and materials under the thermal rehabilitation component (US428.8 million)--will be procured through LCB under procedures acceptable to the Bank. The thermal plant rehabilitation component also includes certain items of a proprietary nature. A sole source of supply for these items will be acceptable to the Bank, provided it is satisfied that prices are reasonable. Foreign suppliers would not be precluded from participating in LCB. Local manufacturers are expected to be competitive for all equipment contracts. Local manufacturers competing under ICB will be allowed a margin of preference of 15% of the c.i.f. bid price of imported goods, or the actual customs duties and import taxes, whichever is less. MSEB has already entered into a contract for consultancy services with a consulting group formed by Development Consultants Pvt. Limited (India) and United Engineers and Constructors, Inc. (United States). All contracts costing US$200,000 or more will be subject to the Bank's prior review. 58. The proceeds of the loan will be disbursed over a seven-year period (FY86-93) and, except for goods required for the thermal plant rehabilitation component, will cover 100% of the c.i.f. cost of imported goods or of the ex-factory cost of goods manufactured in India. For the rehabilitation component, disbursements will be made against 100% of the c.i.f. cost of imported goods and 50% of the cost of items procured locally. By the end of the sixth year, about 92% of the proceeds of the loan will have been disbursed. The Maharashtra Electricity Board 59. MSEB, which was established in 1954 under the Electricity (Supply) Act of 1948, is responsible for the generation, transmission, and distribution of electricity throughout the State. It constructs and operates generating stations and transmission and distribution networks to supply ultimate consumers and licensees with electric power. However, MSEB is not fully autonomous in executing these responsibilities since it is controlled, according to statutory power, by the State Government in matters of staffing, borrowing, and tariff setting. MSEB's capital investment program is determined within the overall State and nationaL planning framework. 60. MSEB is a corporate body consisting of a full-time Chairman and three full-time members for accounts, administration, and generation. Two technical directors-one oversees transmission and distribution operations, the other generation projects--are directly accountable to the Chairman.  -22- Transmission and distribution responsibilities, including commercial activities, are carried out by six regional chief engineers who supervise 24 districts, each headed by a superintenditig engineer. MSEB LJecutes a considerable part of its development program, particularly transmission lines and sub-stations, from within its own organization. 61. At the end of 1983/84, MSEB had about 91,800 regular employees and about 18,000 skilled workers employed on a daily basis. About 6,100 of the regular labor force and all the daily wage workers are engaged in construction activities. Operations and maintenance staff total about 85,000 employees. All the sanctioned positions at the top and middle management levels are filled, and vacancies at lower levels are around 3% of the sanctioned posts. MSEB has an active Training Department (headed by a chief engineer), at Nasik, the site of a thermal plant of 870 MW. Eight training centers have been established to provide training in power generation, transmission, and distribution. Training programs are also conducted in finance and administration. Training for MSEB operators for the 500 MW units to be installed under the project will be provided on 500 MW simulators owned by Tata Electric Companies. Details of the training arrangements provided by MSEB to the Bank are satisfactory. 62. By introducing a number of system improvements MSEB has been able to reduce transmission and distribution losses in the State from about 17% of the available energy in 1978/79 to about 15% in 1982/83. Although further reductions are desirable, the scope for achieving significant improvements is limited. At the Bank's request, MSEB prepared a system improvement plan designed to reduce system losses to about 14% by 1992/93. Although an earlier achievement of this target would be preferable, the Bank recognizes the limited scope for a rapid reduction in system losses in Maharashtra and consequently considers this objective reasonable. Accordingly, MSEB will take measures as appropriate to reduce its transmission and distribution losses to a level of 14% of its available energy by 1992/93 (Section 3.05 of Project Agreement). 63. Under the Indira Sarovar Hydroelectric project, approved in FY84, GOI agreed to carry out a study of metering practices in a number of selected States. In view of the relatively high number of unmetered electricity connections in Maharashtra (458,000 connections, which represent 11% of the total consumers) and COM's practice of providing the option of metered or unmetered electricity every three years to agricultural consumers, further study of metering practices in Maharashtra is appropriate. Accordingly, GOI will include MSEB in the group of SEBs participating in the metering study, which is scheduled for completion by May 1986. MSEB Finances 64. The financial operations of the SEBs are regulated by the Electricity (Supply) Act. In August 1983, the Act was amended to enable GOI to prescribe financial objectives and a uniform accounting system for the SEBs. These amendments came into effect from April 1, 1985, the start of GOI's 1985/86 financial year. In parallel with these developments, GOI has prepared a uniform commercial system of accounting that is to be introduced into the  -23- SEBs from April 1, 1985, in accordance with agreements reached under previous Bank-Supported projects. In conjunction with GOM, MSEB will recruit consultants to introduce the new accounting system and to assist and train MSEB's financial and accounting staff in itq implementation (Section 3.03 of Project Agreement). 65. Dur!ng negotiations for this project GOI and the Bank agreed that in future the measure of an SEB's financial performance would be based upon the recently incorporated earnings provisions in the Act. These provisions require than an SEB's total revenues produce a surplus of not less than 3% of the SEB's net fixed assets in service at the beginning of the year, after meeting all expenses properly chargeable to revenues, including operating, maintenance, and management expenses; taxes on income and profits; depreciation; and interest payable on all debentures, bonds, and loans. On the basis of agreed definitions of the terms involved in the calculation of the surplus, the minimum target of 3% would yield acceptable levels of financial performance. Accordingly, MSEB will ensure that, beginning with financial year 1985186, it will achieve the required 3% annual return (Section 3.04 of Project Agreement). This level of return would imply average annual tariff increases to 1992/93 of about 9Z, an average annual conventional rate of return on historically valued assets of about 12.4%, and an average annual self-financing ratio of about 36Z. 66. MSEB has about 4.2 million consumers, of which about 657,000 (16%) are industrial and commercial consumers, 2.7 million (65%) domestic, 770,000 (19%) irrigation pumps, and 36,000 miscellaneous consumers. In 1982/83 about 95% of MSEB consumers were billed regularly, and about 86% of the revenues came from bulk and industrial consumers. Accounts receivable during the last three years have been less than the equivalent of 2.5 months' sales, an acceptable level of arrears in India. MSEB's accounts receivable will be maintained at this level (Section 3.06 of Project Agreement). 67. In the past, MSEB tariff increases have favored agricultural and household consumers, with the result that between 1978/79 and 1982/83, industrial tariffs increased at an average annual rate of 11% in real terms, whereas low-voltage tariffs decreased in real terms. In 1982/83, the average tariff for bulk and industrial consumers, which represented about 67% of total consumption, ranged between 55% and 75% of the long-run marginal cost of electricity, while the tariff for low-voltage consumers, who account for about 33% of total consumption, was about 25% of the long-run marginal cost. Although projected tariff increases between 1984/85 and 1989/90 would offer the opportunities to correct some of the distortion in low-voltage pricing, further steps need to be taken toward restructuring the low-voltage tariff. Consideration has been given to the establishment of a basic minimum ("life-line") level of consumption at prevailing tariff levels, and consumption in excess of this life-line level is to be charged at higher tariffs. Such an arrangement might enable GOI and GOM to overcome some of the existing difficulties with respect to low-voltage tariffs. Beginning in January 1986, MSEB will carry out a study on the restructuring of low-voltage tariffs, and will provide the Bank with the results of the study following its completion in June 1986. COM's views and decisions on the recommendations of the study will be provided by September 1986. In this  -24- connection, GOI will also provide to the Bank by June 30, 1985 its views on the Bank's proposed methodology for calculating long-run marginal costs of electricity for the SEBs, as a necessary input to defining the scope of the study. 68. MSEB's financial requirements for the period 1984/85 through 1991/92 (the project construction period) are estimated at Rs 83,755 million (US$7,614 million). MSEB will have to borrow about 71% (Rs 59,406 million) of this amount from COM or other institutional sources. Such funds will be made available to MSEB in respect of capital expenditures sanctioned by GOI under the Seventh Five-Year Plan. Project Justification and Risks 69. The proposed project is justified as part of the least-cost expansion program for the Western Region. The economic rate of return for the program is about 11%, using benefits based on incremental revenues at average retail tariffs and quantifiable industrial consumers' surplus. The actual rate of return is likely to be considerably higher if full consumers' and producers' surplus or industrial output made possible by the alleviation of power shortages is taken into account. Moreover, the project would not only alleviate power shortages in the Western Region by adding to installed capacity but would also, through the rehabilitation component, substantially increase production from existing facilities. 70. Project risks are no greater than can normally be expected in operations of this type. The main equipment items needed are manufactured in India, and there is adequate understanding of, and experience with, their installation and ultimate operation. The assistance of consultants experienced in working with similar power plant facilities and units of 500 MW capacity will minimize problems in the engineering and design stage. The fact that a number of 500 kW units will have been in operation in India for some years before the project is commissioned will reduce the possibility of operational difficulties during start-up and the early stages of operation. The training of MSEB operators on 500 MW plant simulators well before plant commissioning will facilitate MSEB's transition from 210 MW to 500 MW units. PART V - LEGAL INSTRUMENTS AND AUTHORITY 71. The draft Loan Agreement between India and the Bank, the draft Project Agreement between the Bank and GOM, and the Report of the Committee provided for in Article III, Section 4(iii) of the Articles of Agreement of the Bank are being distributed to the Executive Directors separately. 72. Special conditions of the project are listed in Section III of Annex III. 73. I am satisfipd that the proposed loan would comply with the Articles of Agreement of the Bank.  -25- PART VI - RECOEDATION 74. I recomnend that the Executive Directors approve the proposed loan. A. W. Clausen Preuident9 April 24, 1985  ANEIX I Page 1 of 5 T A B L E 3A INDIA -SOCIAL INDICATORS DATA SHIET INDIA RERUBC GROUPS (WEIGHTED AVRAGES MOST (HOST RECENWr ESTIMATR) /b DECINT Law IE HIDDES INC I96otk iotk E'ST,INAELb ASIA & PACIFIC ASIA A PAcIric AA (TNOUSAD INa) TOTAL 3237.6 3287.6 3287.1 AGRICIILV'RAL 1763.5 3780.5 1112.3 CNP PM CArPTA (US) 60.0 100.0 260.0 278.6 W09I.2 wRino l cNSaumnu MR CAPITA (KILOAMS oU OIL EQUIVALENT) 79.0 113.0 IS.0 272.0 561.3 POPUILATION aO VITAL STATISTIC POPULATIUN.HIID-YKAR (THOUSANDS) 434R49.e 547569.0 716985.0 URBAN POPULATLUN (2 OF TorAL) 38.0 19.8 24.1 23.7 34.7 POPULATION PROJECTtoNS POPULATION IN YUAR 2000 (MILL) "4.4 STATIOXART POPULATION (HILL) 1707.2 POPULATtON MOMENTuM 1.7 POPULATION DENStIT PER S. IDI. 132.1 166.b 213.4 36b.6 261.9 PER SQ. lIa. ARiO. LAND 246.6 307.5 387.3 345.5 1735.1 POPULATION AGE STRUCTURE (xl 0-14 YftS 40.9 42.7 39.3 35.6 39.0 31-A4 YRs 54.5 5h.2 37.6 59.8 57.6 65 AND AMOVE 4.6 1 3.1 *.3 3.3 POPULATION CROWTH RATE (2) TOTAL 3.6 2.3 2.2 1.9 Z.1 URBAN 2.5 1.3 3.9 4.1 6.3 CRUDE BIRTH RATE (PER rHWtS) 47.7 41.4 34.2 27.7 30.1 CRUDE DEATH RATE (PER TNwU5) 23.8 37.8 32.7 10.1 9.5 CROSS REPRODUCTION RATE 2.9 2.8 2.2 1.6 2.0 FAMILY PANISINC ACCEPTORS, ANNUAL (7HOUS) 64.0 3782.0 6826.0 USERS (Z OF HARRIED MaeN) .. 3L.7 28.0 .. 52.7 FOOD AND RGTU INDEX OF FOOD PROD. PER CAPITA (1969-71-100) 98.0 102.0 101.0 112.8 123.0 PEr CAPITA SUPPLY OF CALORIES (Z OF REQUIREMENTS) 96.0 91.0 86.0 97.7 114.4 PROTEINS (cRAMS PER D3AY) 54.0 50.0 66.0 56.B 57.0 or WelcH ANImAL AND pusSE 17.0 15.0 13.0 /c 14.9 14_1 CHILD (AGES 1-4) DEATH RATE 26.2 20.7 11.0 9.8 7.2 HEALTH LIFE EXPECT. AT DIRTr (YEARS) 42.5 47.5 54.6 60.0 60.4 INFANT OlRT. RATE (PER TSOUS) 165.0 139.0 94.0 83.8 66.3 ACCESS TO SAFE wATER (2Po1) TorAL - 37.0 33.0 Id 32.9 37.0 mw. ., 60.0 83.0 Id 70.9 54.8 RURAL .. 6.0 20.0 Id 22.1 26.4 ACCESS TO EXCRETA DISPOSAL (2 OF POPULATION) TOTAL .. I.0 20.0 /l 18.1 41.3 URBAN .. 85.0 87.0 7 72.8 47.4 RURAL . 3.0 2.0 7I 4.6 33.3 POPULATION PER PHYSICLAN 4850.0 4890.0 3690.0 If 3484.2 7749.4 POP. PER NURSING PERSON 10980.0 /a 7420.0 s46 0 Tf 4793.1 2660.4 POP. PER HOSPITAL BED TOTAL 2180.0 1650.0 1290.0 ff 1066.5 1044.2 URBAN . .. 370.0 Id 298.0 651.2 RURAL .. .. 10410.0T7 5993.4 2594.6 ADMISSIONS PER HoSPITAL BED .. .. .. . 27.0 AVERACE SIZE OF HOUSEHOLD TOlrAL 5.2 5.6 5.2 te URBAN 5.2 5.6 4.8 77 RURAL 5.2 5.6 5.3 T.c AVERAG NO. OF PERSONStROCU TorAL 2.6 2.8 URBAN 2.6 2.8 RURAL 2.6 2.8 ACCESS TO ELECT. (I OF UWELLIXGS) TOTAL , .. M .. .. RURAL ,. .. . ..  ANNEX I Pge 2rof 5 TAILS 3A SINIDA -SOCIAL INDICATO DATA NM INDiA REPEREICK 080131 CUKIONED AVIRA W p=4 1,6~~ 197OLk HOST (MOST 32033? ESTIMATE)1 =ECET LOW DICOME N5DDU L 1960&! 197 YTSTINATLk. AUSA A PACSPSC AIA PASC ADJUSTED ENRLIJET RATIOS PRINARYa TOTAL 61.0 73.0 79.0 97.4 102.0 ALZ 60.0 90.0 93.0 110.5 105.9 FPUW. 40.0 56.0 64.0 83.7 98.2 JECONDIARl TOtAL 20.0 26.0 30.0 35.9 46.0 HALE 30.0 36.0 39.0 44.6 48.7 NLZ 10.0 15.0 20.0 26.3 43.1 VOCATONAL (2 or secONDAy) 2.8 1.0 0.7 /a 2.2 17.3 PUPtL-TEACE RTIO P8IK*RY 46.0 41.0 54.0 38.5 31.8 SECONDARY 16.0 21.0 .. 18.7 23.5 ADULT LItEACY RATE (2) 27.6 34.1 36.2 53.4 72.9 PASSENGQR CARS/THOUSIAND POP U.6 1.1 1.4 fh 0.9 10.1 RADtO RECEZIVRS/TROUSAID POP 4.9 21.5 43.6 112.1 113.6 TV 3ZCEIVERS/TNOUSAND POP 0.0 0.0 1.7 15.7 50.1 NEWSPAPER ("DAILY GENERAL INTEREST) CDCULATION PEIL THOUSAND POPULATION 10.6 16.2 19.4 A 16.2 53.9 CUXRIA ANIL ATTENIANCE/CAPITA 3.2 6.2 3.7 A 3.6 3.4 TOTAL LAlO FORCE (THOUS) 185951.0 219194.0 282169.0 TrAL (PERCENT) 30.7 32.5 31.8 33.3 33.5 AaICULTURE (PERCEN) 74.0 74.0 71.0 69.6 52.2 IXUSTRY (PERCENT) 11.0 11.0 13.2 15.8 17.9 PARTICIPATION RATE (PERCENT) TOTAL 42.6 40.0 39.4 42.6 38.7 HAZ 57.0 52.4 52.0 54.7 50.9 FWALE 27.3 26.9 25.9 29.8 26.6 ECON0HIC DEPENDENCY RATIO 1.1 1.1 1.1 1.0 1.1 PERCENT OF PRIVATE INCOME RECEIVED IT RICHEST 52 OF HOUSEHOLDS 26.7 26.3 jj 22.2 Ie 22.2 22.2 HICHEST 202 OF HOUSEHOLDS 51.7 48.9 /I &9.4 7; 48.0 48.0 LOWEST 202 OF HOUSEHOLDS 4.1 6.7 71 7.0 7 6.6 6.4 LOWEST 40S OF HOUSEHOLDS 13.6 17.2 7i 16.2 11 %S5 15.5 m mA7r -RM ESTRIATED ABSOLUIE POVERTY INCaNE LEVEL (USS PER CAPITA) URBAN .. .. 132.0 /h 133.9 168.6 RURAL .. .. 114.0 7 111.6 152.0 ESTDIATED REILATIVE POVERTY INCOSE- LEVEL (USS PiR CAPITA) Una5* .. .. .. .. 177.9 RURAL .. .. .. .. 164.6 ESTIKATED POP. BELOW ABSOLUrE POVERTY IUCOE LEVL (Z) URBAN .. .. 40.3 th 43.6 23.4 RURAL .. .. 50.7 7-W 51.7 37.7 NOT AVAILABLE SOT APPLICABLE NOT E S Ia The group averages for each lndicator are populatian-weghted aritheetLc means. Coverage of contries mng the indicators depends an availability of data and Is not uniform. lb Unless otherwise noted. "Data for 1960" refer to any yer between 1959 end 1961; "Data for 1970" between 1969 and 1971; and data for Maet Recent Entimate" between 1980 and 1982. /c 1977; /a 1976; Le 1975; /f 1978; /R 1962; /h 1979; /i 1964-65. JMME, 1984  AMNE I ______________ Page 3 of 5 bLuE 0ill Sb IL LI deaft ILL .me. ~esSy jL Lbv t l ameamablattL, .e nLtat.. It ebLId .IA Ilb LULd LILA LIy gau men ILAIaiAI I.AIabnS. Lb k L ru LI .SueS eftLItInad leamp,. ae lw dlL....l agadigg A. gelalILe aft dhu- Wbm.L. LLLL...do .flA S. ILmyLI "anLE of uIL me.. 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LI bLI (Ab Ot.uE- ALA- isA me 6S WLL ma m m tbu nime "I uLk eeIIAmeaflbA AlAS-mal. 1110. deme.(I me (US din..-" LI I P.. ttona LA. m...LLmmin I A..L.L1 IAL . ,A je, Ikm byIL0 ,LILS. -LCum A - bAAgo-LI (AulALILA LAILL. -,.meA me.-U. -d - ...~~L,.'I..8 IL1, (aemumedmu) - PLALLI..A m .pLI .u C."L. ILilliLILIif.Lfl m_ILL) b- LImeby !GMLI ILkL LSA. LI*1* SOam ~AdIL mem ILLALA. lb. ~ 1LIELb L.I.: -Nw trU1 . b ne I-M ft "D - A- IA AI0 C e,LIIe A-A k .1 dali. LIbLILALA.um lft-dIIIH dgw glatl, W -A -.W- LLLA9A -L ." -a M.- I&- meam iA,...L .a4i1.. I LIlA. nt- VuL n4ee-L mu ft- ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ "u - b.---*F LL- d-Ab- b.e.1) a--AAL-A Welle, . eaL LLZ empallbu lIn -91 ame 1:1i am Oa.. f _1-. hInb1.11 4.0 - - ow.-0 . cnadIm _ - e"ui mgpl "A.t ammuv. u-CAmm mes..umeuIm . L,bme..eS-U . LUI m A em .uLLdILmA.. A1e!m m .A P-P" Llb L -I 0 ,L~ ILf SLL uLALLI LA I.". lAn k m I 6Fn -ta, Wme ar . an " ww"a AtLb  mosnc uiwsonwr DM oI u CAW 11 1111 038290 j2 camO IUTm Ic PUO8CT IN 19821/181 ARS RAT! QP CR39 C. Cante Price. / 1955/56-1959/60 1960I61-1i64/63 1963566-1959/70 1970171-1974/75 1975176-1P79?90 US Din. S CDP at ecrkat Price 170.74 100.0 3.7 3.6 3.7 2.9 4.1 Crag Domeatic lnveotamt 41.99 24.6 Cra. Nationa Eavin 39.12 22.3 Carrent Account Deao_ 3.37 - 2.3 OUTPUT. LABOR PORM AND RO6PDCUCTIT 3S 1981 Va adted (at fator Lobor Porc. Pa V.A. Per hork U55 U7 XZ5 2 at National Averuae Agriculture 51.7 35.1 172.7 70.6 299 50 Induatry 35.2 23.9 31.6 12.9 1114 115 Service 60.6 41.0 40.3 16.5 1504 Z49 Total/Averap 17 U.5 iWI. !Ur irr - r i CDVEmInr InMIaE Cenral Coverament */ Cetral Cowarnt Ra. Din. Z of CDP M. Un. Z of GDP 1982/83 1982T83 S97B/79-1982/S3 1982/83 ISIR183 1979/79-19927W Current Receipte 333.34 20.3 19.5 175.61 10.7 10.5 Curret Ibpndituree 340.09 20.7 19.0 188.59 11.3 10.8 Curret Surplua/Deficit - 6.75 - 0.4 0.5 - 12.98 - 0.3 - 0.4 Capital Dependitur e.f/ 131.28 8.0 8.1 95.13 5.3 5.7 bctenal Asmiatance (net) d1 19.30 1.2 1.0 MONEY. C TT AMD PRICKS 1970/71 1975/76 197717 19711/79 1979/80 198/81 1981/52 19F2e3 rbrar 1933 Fbruay 19B4 BRe Billion outstding at end of perid) Honey d quas Haney 109.8 224.8 329.1 401.1 472.3 555.5 624.9 723.8 711.7 845.7 Dnk Credit to Covar_nat (not) 54.6 106.3 137.3 159.3 200.1 257.2 309.1 352.4 353.5 406.6 Dsak Credit to Coaercial Sector 64.6 156.2 212.2 255.3 310.1 363.5 430.5 504.5 487.7 576.4 (Percentage or Index Number.) Apr-Feb 1982/83 Apr-Fob 1983/94 Haney and quasi aney -s a Z of CUP 27.3 30.3 36.7 41.1 44.1 43.6 42.0 44.0 Wholeale Price Index (1970171 - 100) 100.0 173.0 185.8 185.3 217.6 257.3 281.4 288.6 298.1 314.8 Annal percentage change. ln: Uholesale Price Index 7.7 -1.1 5.2 - 17.1 15.2 9.4 2.6 2.3 9.3 Dank Credt to Covert (net) 15.0 22.7 16.3 16.0 25.6 28.5 20.2 14.0 21.0 18.9 h/ Denk Credit to Comarcil sector 19.4 22.7 12.6 20.2 21.5 17.2 18.4 17.2 15.5 j/ 17.9 h/ aI The per capita c r e stite ie at marka price. aseig world Dank se hodology. baa. period 1979-1981. All other converaions to doller. in this table are at the average anebane rate prevailing durin the period covared. bi Quick Eretiate. Central Statistical Organization. 4I Conuted fron trend 1lAn of CGP at factor cost eries. including one obeervation before firat yer and one obervation after bat year of listed period. d./ World Bank estimates of net disbur _mnt of conc-nion-l oad and ISRD. e/ Trmafers betnm Centre ad Stte have bee ntted out. f/ All loane and advene to third partiem bave been netted out. j/ Penage barn fr and-Kareh 1982 to and-February 1983. h/ Percentage eange from end-Harch 1983 to end-February 1984. i/Total Labor Force And parcentae breakdown frcn 1981 Cansu. xccludes data for Ass.  i 31*t 5 DALSCI or PAKMm 1gmo/Is 198SI2 19aguuus1 IgoiSW ewtCss WMUTS (AVOWS 1973180-12/13) 9/ (gUS Kin-.)1y UNV NI.. 2A Reports of Coa ,/ 8.5 ,5319 68001 .46 LS Goods r 9S0 12 Imports :I Googd -/ -16.204 -15,500 -14.149 -14.412 Te 45 5 6 Trae aance - 7.700 - 6.9BI - 6.248 - 5.946 Gam 779 9 Nps (net) 1.363 974 940 856 Clothing 573 7 Leather end Leather product. 480 6 Resource "lance - 6.335 - 6.007 - 5.308 5.090 Juts Manufactures 333 6 fran Or. 360 5 ILterest Inco_ (nt) A/ 600 2U6 - 415 - 648 Cotton extile 328 6 Net Tramfere l * 2.771 2.318 1,I49 1.790 lgs r6 1 Other. 3.849 4 Dllance on Current Account - 2.964 - 3.403 - 3.874 - 3.948 Offcil Loans & Grants Totel B3243 100 Groas Disoursemnts 2.651 2.570 3.064 3.441 SIllS. CDT. OM, 51. 1963 Amortization - 700 - 674 - 701 - 783 IlS$ billion Transcation with DIF (not) 1.035 690 1.980 1.295 Outstanding en Disbursed 19.6 All Other Items o/ - 367 - 1.581 12 531 UnDihbureed 11.1 Outstandin includins Undshbured 30.7 Increae in Reserves C-) 345 2.398 - 503 - 536 Cross Reseervee (end ycar) ~I 6.859 4.461 4.964 s.soo ncr gsani: RATIO M0R 1982/83 j1 !Y 10.1I per cent Net Reserves (end year) */F 6.532 3.497 2.06S 1.49 nd/IID& LEMNG. MARr1 31. 1984j1 Fuel sod Related Materials aports (PetroLm) S/ 6.672 5.590 4.613 3.393 1USD o li Outstanding nd Dieburerd 1.826 7.924 Undibur ed 2.061 4,331 Outstanding includinS Undisbursd 3.907 12.255 RATE OF exoAJrE June 1966 to sid-becember 1971 US$1.00 - Re 7.50 Re 1.00 - DSSO.13333 Mid-Decmber 1971 to end-Jnon 1972 USSI.00 - Re 7.27927 Rs 1.00 - UI50.137376 After end-Junm 1972 Floating Rate Spot Rate end-March 1983 US$1.00 - Rs 10.0301 Rs 1.00 - USSO.0997 Spot Rate end-March 198 USS1.00 - Rs 10.7181 Re 1.00 - USS0.0933 .t Eatla ted Figure given cover alt invstet inoe (oat). Major payments are interest e foreign loans and charge paid te DIV. and ajor recsipts Is interest earnd on foreign assets. jI Figures gven include workers' remittances but exclude official grent iassitance which is inluded within offfirel lons nd grant. and non-rtsident deposits which are inclded within all other item. m/ Exclude nt un of IM credit. n Aortization nd interest pyeants n foregn loan as a percentage of total urrent rtceipts. o l/ Icudes exchange rate adjustmnts to the valuatioo of reserve and fiosocng of imbalances in rupee trade. tI Ecludng gold. 3/ Net of crnde petrolem exports. rl Including iron end steel.  ANNEX II Page 1 of 4 TIE STITUS OF BANK GROUP OPERATIONS IN INDIA A. STATEMENT OF BANK LOANS AND IDA CREDITS (As of September 30, l984) US$ million Loan or Fiscal (Net of Cancellations) Credit Year of No. Anoroval Purpose Bank IDA jJ Undisbursed 3J 50 Loans/ 2,164.0 - - 93 Credits fully disbursed - 5,535.2 - 482-IN 1974 Karnataka Dairy 30.0 8.15 610-IN 1976 Integrated Cotton Development - 18.0 0.03 1251-IN 1976 Andhra Pradesh Irrigation 145.0 - 24.94 1273-IN 1976 National Seeds I 25.0 - 11.19 1335-IN 1977 Bombay Urban Transport 25.0 - 1.17 680-IN 1977 Kerala Agzic. Development - 30.0 8.45 682-IN 1977 Orissa Agric. Development - 20.0 1.65 690-IN 1977 West Bengal Agricultural Extension & Research - 12.0 7.32 1394-IN 1977 Gujarat Fisheries 14.0 - 2.62 720-IN 1977 Periyar Vaigai Irrigation - 23.0 1.52 728-IN 1977 Assam Agricultural Development - 8.0 1.34 747-IN 1978 Second Foodgrain Storage - 107.0 52.65 761-IN 1978 Bihar Agricultural Extension & Research - 8.0 4-93 1511-IN 1978 IDBI Joint/Public Sector 25.0 - 1.72 1549-IN 1978 Third Trombay Thermal Power 105.0 - 3.60 788-IN 1978 Karnataka Irrigation - 117.6 37.38 793-IN 1978 Korba Thermal Power - 200.0 30.11 806-IN 1978 Ja3 u-Kashmir Horticulture - 14.0 9.91 815-IN 1978 Andhra Pradesh Fisheries - 17.5 8.40 816-IN 1978 National Seeds II - 16.0 4.86 1592-IN 1978 Telecommunications VII 120.0 - 15.10 824-IN 1978 National Dairy - 150.0 43.85 842-IN 1979 Bombay Water Supply II - 196.0 141.11 844-IN 1979 Railway Modernization & Maintenance - 190.0 25.05 848-IN 1979 Punjab Water Supply & Sewerage - 38.0 5.28 855-IN 1979 National Agricultural Research - 27.0 14.06 862-IN 1979 Composite Agricultural Extension - 25.0 2.94 871-IN 1979 National Cooperative Development Corporation - 30.0 0.83 1648-IN 1979 Ramagundam Thermal Power 50.0 - 50.00 874-IN 1979 Ramagundam Thermal Power - 200.0 10.71 889-IN 1979 Punjab Irrigation - 129.0 38.32 899-IN 1979 Maharashtra Water Supply - 48.0 6.72 911-IN 1979 Rural Electrification Corp. II - 175.0 4.45 925-IN 1979 Uttar Pradesh Social Forestry - 23.0 2.24 954-IN 1980 Maharasbtra Irrigation II - 210.0 42.74 961-IN 1980 Gujarat Community Forestry - 37.0 6.51 963-IN 1980 Inland Fisheries - 20.0 16.07 981-IN 1980 Population II - 46.0 27.63  ANNEX II Page 2 of 4 US$ million Loan or Fiscal (Net of Cancellations) Credit Year of No. Apnroval Purpose Bank IDA jj Undisbursed Z/ 1003-IN 1980 Tamil Nadu Nutrition - 32.0 19.48 1011-IN 1980 Gujarat Irrigation II - 175.0 94.88 1012-IN 1980 Cashewnut - 22.0 16.11 1027-IN 1980 Singrauli Thermal II - 300.0 159.67 1028-IN 1980 Kerala Agricultural Extension - 10.0 7.56 1033-IN 1980 Calcutta Urban Transport - 56.0 17.76 1034-IN 1980 Karnataka Sericulture - 54.0 30.32 1046-IN 1980 Rajasthan Water Supply & Sewerage - 80.0 49.09 1843-IN 1980 Industry DFC XIII 100.0 - 5.37 1887-IN 1980 Farakka Thermal Power 25.0 - 25.00 1053-IN 1980 Farakka Thermal Power - 225.0 113.52 1897-IN 1981 Kandi Watershed and Area Development 30.0 - 20.31 1072-IN 1981 Bihar Rural Roads - 35.0 14.38 1078-IN 1981 Mahanadi Barrages - 83.0 42.64 1082-IN 1981 Madras Urban Development II - 42.0 19.49 1108-IN 1981 M.P. Medium Irrigation - 140.0 85.73 1112-IN 1981 Telecommunications VIII - 314.0 89.58 1116-IN 1981 Karnataka Tank Irrigation - 54.0 37.68 1125-IN 1981 Razira Fertilizer Project - 400.0 117.86 1135-IN 1981 Maharashtra Agricultural Ext. - 23.0 13.92 1137-IN 1981 Tamil Nadu Agricultural Ext. - 28.0 17.08 1138-IN 1981 M.P. Agricultural Ext. II - 37.0 28.05 1146-IN 1981 National Cooperative Development Corp. II - 125.0 70.25 1172-IN 1982 Korba Thermal Pover Project II - 400.0 273.61 1177-IN 1982 Madhya Pradesh Major Irrigation - 220.0 154.99 2050-IN 1982 Tamil Nadu Newsprint 100.0 - 18.15 1178-IN 1982 West Bengal Social Forestry - 29.0 19.92 1185-IN 1982 Kanpur Urban Development - 25.0 15.13 2051-IN 1982 ICICI XIV 150.0 - 57.70 2076-IN 1982 R-magundam Thermal Power II 300.0 - 269.54 2095-IN 1982 ARDC IV 190.0 - 0.43 1219-IN 1982 Andhra Pradesh Agricultural Ext. - 6.0 4.69 2123-IN 1982 Refineries Rationalization 200.0 - 96.43 2165-IN 1982 Rural Electrification III 304.5 - 274.48 2186-IN 1982 Kallada Irrigation 20.3 - 20.00 1269-IN 1982 Kallada Irrigation - 60.0 30.57 1280-IN 1983 Gujarat Water Supply - 72.0 60.11 1286-IN 1983 Jammu/Kasbmir and Haryana Social Forestry - 33.0 24.97 1288-IN 1983 Chambal Madhya Pradesh - - Irrigation II - 31.0 19.65 1289-IN 1983 Subernarekha Irrigation - 127.0 105.96 2205-IN 1983 Krishna-Godavari Exploration 165.5 - 140.52 2210-IN 1983 Railways Modernization & Maintenance II 200.0 - 197.04  ANE ItI Page 3 of 4 U8S million Loan or Fiscal (Net of Cancellations) Credit Year of No. ADproval Purpose Bank IDA 1J Undisbursed g/ 1299-IN 1983 Railways Modernization & Maintenance II - 200.0 177.00 2241-IN 1983 South BasBein Gas Development 139.3 - 133.71 1319-IN 1983 Haryana Irrigation II - 150.0 114.38 1332-IN 1983 U.P. Public Tubewells II - 101.0 89.79 1356-IN 1983 Upper Indravati Rydro Pover - 170.0 148.38 2278-IN 1983 Upper Indravati Hydra Pover 156.4 - 156.01 1369-IN 1983 Calcutta Urban Development III - 147.0 132.10 1383-IN 1983 Maharashtra Water Utilization - 32.0 26.95 2308-IN 1983 Maharashtra Water Utilization 22.7 - 22.64 2283-IN 1983 Central Power Transmission 250.7 - 250.07 2295-IN 1983 Himalayan Watershed Management 46.2 - 45.89 2329-IN 1983 Madhya Pradesh Urban 24.1 - 24.04 1397-IN 1984 Orissa Irrigation II - 105.0 83.20 1424-IN 1984 Rainfed Areas Watershed Dev. - 31.0 29.37 1426-IN 1984 Population III - 70.0 66.23 1432-IN 1984 Karnataka Social Forestry - 27.0 25.57 2387-IN 1984 Nhava Sheva Port 250.0 249.38 2393-IN 1984 Dudhichua Coal 151.0 150.62 2403-IN 1984 Cambay Basin Petroleum 242.5 241.90 2415-IN 1984 Madysa Pradesh Fertilizer 203.6 203.09 1483-IN 1984 Upper Ganga Irrigation 125.0 117.38 1496-IN 1984 Gujarat Medium Irrigation 172.0 164.14 2417-IN 1984 Railways Electrification* 280.7 280.70 2442-IN 1984 Farakka II Thermal Power* 300.8 300.80 Total 6,526.3 12,268.3 of vhich has been repaid 1.350.8 173.0 Total now outstanding 5,175.5 12,095.3 Amount Sold 133.8 of vhich has been repaid 133.8 - Total now held by Bank and IDA j/ 5,175.5 12,095.3 Total undisbursed (excluding t) 2,712.69 3,494.35 j] IDA Credit amounts for SDR-denominated Credits are expressed in terms of their US dollar equivalents, as established at the time of Credit negotiations and as subsequently presented to the Board. Undisbursed amounts for SDR-denominated IDA Credits are derived from cumulative disbursements converted to their US dollar equivalents at the SDRI/US dollar exchange rate in effect on September 30, 1984. i/ Prior to exchange adjustment. * Not yet effective.  ANNEX II Page 4 of 4 B. STATEMENT OF IFC INVESTMENTS (As of September 30, 1984) Amount (yC@$ million) Fiscal Year Company Loan Equity Total 1959 Republic Forge Company Ltd. 1.5 - 1.5 1959 Kirloakar Oil Engines Ltd. 0.8 - 0.8 1960 Assam Sillimanite Ltd. 1.4 - 1.4 1961 K.S.B. Pumps Ltd. 0.2 - 0.2 1963-66 Precision Bearings India Ltd. 0.6 0.4 1.0 1964 Fort Gloster Industries Ltd. 0.8 0.4 1.2 1964-75-79 Mahindra Ugine Steel Co. Ltd. 11.8 1.3 13.1 1964 Laksbmi Machine Works Ltd. 1.0 0.3 1.3 1967 Jayshree Chemicals Ltd. 1.1 0.1 1.2 1967 Indian Explosives Ltd. 8.6 2.9 11.5 1969-70 Zuari Agro-Chemicals Ltd. 15.1 3.8 18.9 1976 Escorts Limited 6.6 - 6.6 1978 Housing Development Finance Corporation 4.0 1.2 5.2 1980 Deepak Fertilizer and Petrochemicals Corporation Ltd. 7.5 1.2 8.7 1981 Coromandel Fertilizers Limited 15.9 15.9 1981 Tata Iron and Steel Company Ltd. 38.0 - 38.0 1981 Mahindra, Mahindra Limited 15.0 - 15.0 1981 Nagarjuna Coated Tubes Ltd. 2.9 0.3 3.2 1981 Nagarjuna Signode Limited 2.3 - 2.3 1981 Nagarjuna Steels Limited 1.5 0.2 1.7 1982 Ashok Leyland Limited 28.0 - 28.0 1982 The Bombay Dyeing and Manufacturing Co. Ltd. 18.8 - 18.8 1982 Bharat Forge Company Ltd. 15.5 - 15.5 1982 The Indian Rayon Corp. Ltd. 8.1 - 8.1 1984 The Gbalior Rayon Silk Manu- facturing (Weaving) Co. Ltd. 3.7 - 3.7 TOTAL GROSS COMMITMENTS 210.7 12.1 222.8 Less: Sold 53.0 3.4 56.4 Repaid 34.0 - 34.0 Cancelled 33.0 1.4 34.4 Now Held 90.7 7.3 98.0 U=isus==4.= 44=1 Undisbursed 44.1 - 44.1 3S= -= ==-  ANNEX III Page 1 of 2 INDIA CHANDRAPUR THERMAL POWER PROJECT SUPPLEMENTARY PROJECT DATA SKEET Section I: Timetable of KeY Events (a) Time taken by the Borrower to prepare the proiect About two years. (b) The agencv that has prepared the Project Maharashtra State Electricity Board. (c) Date of first presentation to the Bank and date of the first mission to consider the proiect The project was first presented to the Bank in December 1983; a preparation mission visited India in March 1984. Cd) Date of departure of appraisal mission May 5, 1984. Ce) Date of completion of negotiations April 23, 1985. (f) Planned date of effectiveness September 30, 1985. Section II: Special Bank Implementation Actions None. Section III: Special Conditions (a) Assurance of provision of adequate coal supplies by GOI and cooling water supplies by GOM (paras. 50, 51); (b) Provision by GOM of compensation f-- g&-.4.rty acquired and alternative means of sub_istence for population displaced by the project (para. 52);  ANNEX III Page 2 of 2 (c) Reduction of MSEB's transmission and distribution losses (para. 62); (d) Participation of NSEB in ongoing metering study (para. 63); (e) Introduction by MSEB of the commercial accounting system prepareQ by GOI (para. 64); (f) Achievement of 3% revenue surplus by MSEB from 1985/86 (para. 65); and (g) Carrying out of a study by MSEB, by January 1986, on the restructuring of low-voltage tariffs, (para. 67).  ANNEX IV PROCUREMENT ARRANGEMENTS (USS Millions) Procurement Method Total Proiect Element ICA LCB Other N.A. al Cost A. Civil Works: - 196.2 - 8.9 205.1 B. EquiDment: 1. Steam Generators, Turbogenerators, Control and Auxiliaries 403.6 - - - 403.6 (284.0) - - - (284.0) 2. Other Mechanical and Electrical Works - 223.3 - - 223.3 3. Transportation, Erection Insurance and Testing - 70.5 - - 70.5 C. Consultancv Services - - 5.3 - 5.3 D. Enaineerina and Administration - - - 50.0 50.0 E. Thermal Plant Rehabilitation 1.5 28.8 10.5 &/ - 40.8 (l ,5) (14.5) _ _ (16.0) 405.1 518.8 15.8 58.9 998.6 (285.5) (14.5) - - (300.0) 3=__ =___ ==c -_ _m m- Note: (1) Figures in parentheses indicate amounts financed by the Bank. (2) Amounts are net of duties and taxes. aj Not subject to commercial procurement. b Items of a proprietary nature.  I-~~~~~~L -j~~~~~~~~~~~~~~~~~~~~~~~~~~~- ILCU  IBRD 18387R MADHYA PRADESH I, r W-0. 0~~*u.Tuma ilh~~~~~~~~~~~~~ N.tZ ri: PSg&od "-.t \ M.h. D A aw.- V... sin~~~~~~~~~~~~~~~~~~~~~~G.pW AD~~~~~~~~~~~~~~~~ -- -- 6huS.,nl NAGPU R uNG dhchn u 0Pd.rn t.I..ng..Iu. Ap ot. -* on Elar * / X $ Pos.dhili tw /. K|*l > op g b g. l Go-..~ ~ ~~~G.- 3on // <\ tANDHRA PRADESH 5 K..d. Y b. I r TD S ID pchB_ .