Document of The World Bank FOR OFFICIAL USE ONLY Report No. P-3959-! 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 MAHARASHTRA PETROCHEMICAL PROJECT February 26, 1985 Thb docunmnt hs a restricted distribution and may be uwed bY recipients only in the performance of heir offiec duties. Its contents mty not otherwise be disclosed without World Ebnk authorization. CURRENCY EQUIVALENTS (As of February 20, 1985) US$1.00 - Rs 12.9r5 Rs 1.00 - US$ 0.77 Rs 1 million - US$ 77,000 The US Dollar/Rupee exchange r.te is subject to change. Conversions in the Staff Appraisal Report were, except as otherwise noted, made at the rate of US$1 to Rs 12.0, which represents the projected exchange rate over the disbursement period. FISCAL YEAR April 1 - March 31 ABBREVIATIONS BICP - Bureau of Industrial Costs and Prices C2 - Ethane C3 - Propane EIL - Engineers India Limited GOI - Government of India HDPE - Rig -density Polyethylene ha - Hectare JiB - International Competitive Bidding IPCL - Indian Petrochemicals Corporation, Ltd. km - Kilometer (0.62 mile) kg - Kilogram (2.2 lbs.) LCB - Local Competitive Bidding LDPE - Low-density Polyethylene LIT - Limited International Tendering LLDPE - Linear low-density polyethylene m3 - Cubic meters MIDC - Maharashtra Industrial Development Corp. MSG - Maharashtra State Govermnent ONGC - Oil and Natural Gas Commission PVC - Polyvinyl chloride PP - Polypropylene PS - Polystyrene RBI - Reserve Bank of India tpy - Tons per year FOR OMCAL USE ONLY INDIA MANARASETRA PETROCHEMICAL PROJECT LOAN AID PROJECT SUHMARY Borrower: India, acting by its President. Beneficiary: Indian Petrochemicals Corporation Limited (IPCL) Amount: US$300.0 million.. Terms: Repayment over 20 yearJ, including 5 years of grace, at the standard variable interest rate. Re-lendina Terms: For the petrochemical production complex, GOI vill onlend US$210 million to IPCL for a period of 15 years, including 6 years of grace, at an interest rate of not less than 13.75Z per annum. GOI will bear the foreign exchange risk. For the market development imports component, GOI - will make available to IPCL the foreign exchange equivalent of US$90 million to enable it to import polymers. IPCL will repay these funds to GOI as imports are effected. Proiect The project is designed to increase the domestic Description: availability of polymers (petrochemicals used in the manufacture of final plastic products) in order to help satisfy the large growth in demand for plastic products expected in India. It forms an integral part of the Government's plans for optimal utilization of India's natural gas resources. The project provides for the establishment of a gas-based petrochemical manufacturing facility near Bombay. The facility will consist of process plants for ethylene and polymer production, together with facilities for pover generation, vate. supply, feedstock supply, road and rail transpozt, fire and security systems, and an employee township. The project will also provide US$90 million to GO to help finance the import of polymers needed to develop the i-arket in India prior to plant commissioning. Project benefits include an annual foreign excbhuge savings of approximately US$230 million from import substitution; the creation of considerable employment opportunities through an estimated US$400 million expansion of production/conversion capacity by the This document hus h 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. private-sector processing industry; the provision of improved shelter, clothing, household products; and improved food storage and distribution through the adoption of plastics packaging techniques. The project faces a market risk which will be mitigated through a careful build-up of the domestic market for polymers. Such a build-up is considered feasible given the high benefit/cost ratios for plastics applications in India. The project faces no critical technical risks. Estimated Cost in Constant 1984 Prices:l] (175 millions) Item Local Yorei2u Total Equipment, Materials, and Spares 335.9 237.5 573.4 License, Basic Engineering, and Process Management Services 12.0 47.5 59.5 Detailed Engineering and Project Services 34.0 1.0 35.0 Land, Civil Works, Erection, and Buildings 147.2 9.5 156.7 Infrastructure Facilities 60.7 10.5 71.2 Nanagement and Training 8.3 1.0 9.3 Start-up and Commissioning 16.7 16.7 Base Cost Estimate 614. 307:0 921.8 Ij Includes US$208 million in Taxes and Duties. -lll- (US$ millions) Local Foreign Total Physical Contingencies 61.5 30.7 92.2 Price Contingencies 183.2 89.8 273.0 Working Capital 89.8 59.7 149.5 Total Installed Cost 949.3 487.2 1436.5 . Interest during Construction 97.2 163.4 260.6 Total Financing Required for Petrochemical Complex 1046.5 650.6 1697.1 Pre-production Imports Ij of Polyolefins - 90.0 90.0 Total Financing Requirements 1,046.5 740.6 1,787.1 Financing Plan 'for Petrochemical Complex): Equity GOI 500.1 500.1 IPCL 200.0 200.0 Internal Cash Generation from project gj 145.2 - 145.2 Subtotal 845.3 - 845.3 Lona-term Debt IBRD - 210.0 210.0 GOI/Cofi.nanciers 109.5 440.6 550.1 Debenturei; 91.7 91.7 Subtotal 201.2 650.6 851.8 Bank-financed Pre-production Imports 1/ - 90.0 90.0 Total 1.046.5 740.6 1.787.i 1/ Imports of polyolefins during the years 1985/86 through 1988/89 while complex is being constructed. j/ Project generates some cash during early starting years while construction is still being completed on other process units. - iv - Disburs-ow'ts.5 I86B2 8 FM M EK o Proimet Facilitie: Annual 9.9 14.7 64.9 101.0 17.6 1.9 Cumulative 9.9 24.6 89.5 190.5 208.1 210.0 rtP oual 9.0 18.0 18.0 18.0 18.0 9.0 Cumulative 9.0 27.0 45.0 63.0 tl.0 90.0 of RUtusll: 17.9z AnurAipal 1X=ort: No. 4467-TN, dated Februay 15. 1985. 1PO1T AND RZCMOINDATION oF TIM P11 IDUNT TO TSI EMICUTIVI DIIZCTORI ON A PIOPOSID LOAN TO INDIA FDA THE AIRTRA PTRoECAL PROaCT 1. I mubmit the following report and recosmendation on a proposed loan in an auount of US$300.0 million (equivalent) on standard terms to help finance the conetruction of a major petrochmicals manufacturing facility in the State of Eaharashtra in IndLa and to develop the market for plastces, polymer. and synthetic fibre products. C0I would bear the foreign exchange and interest rate nsa. PART I - THE ECONOMY | 2. An economic report, "Situation and Prospects of the Indian Economy - A Medium Term Perspective' (4962-IN, dated April 16, 1984), vas distributed to the Executive Directors on April 23, 1984. Country data sheets are attached as Annex I. Backaround 3. India is a large and diverse country with a population of about 750 mil- lion (in mid-1984) and ai annual per capita income of US$260. The economy is dominated by agriculture which employs more than two-thirds of the labor force. Hovever, the land base is not sufficient to provide an adequate livelihood to everyone engaged in agricultural 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 (5.3Z 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 33Z in 1981/82, while the share of industry rose from 20S to around 26%. But industrialization has not been rapid enough to absorb the growing labor force, or to bring about a rapid economic transformation, with significantly higher productivity 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. 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 savings 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 24.82 in 1983/84. Foreign savings ) Parts I and II of the report are similar to Parts I and II of the President's Report for the Narmada River Development (Gujarat) Sardar Sarovar Dam and Power Project (No.P-3937-IN), dated February 6, 1985. -2- (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. Currently, 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 3Z of GDP, and presently stands at 2.1%. 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 4.3Z. 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 e-xpanding level of foodgrain output. As a result, growth in real GDP and in agricultural and industrial value-added substantially exceeded the historical 30-year trends (paragraph 3) averaging 5.3%, 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 pres- sures 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, remov- ing 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 5% per annum, while between the two recovery years (from 1980/81 to 1983/84), it was 4.5Z per annum - substantially higher than India's long-term growth rate of 3.6%. Continued rapid economic growth has resulted from a development strategy which includes higher investment levels and liberalized policies on imports, industrial licensing, prices, and commer- cial 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 sector. This overall improvement in performance, combined with a more restrictive monetary policy in 1981/82 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 2.6% in 1982/83, but rose to over 9% in 1983/84, mainly due to the effect of the 1982/83 drought on food prices. Further improvements in the policy environment will be required to maintain these higher levels of economic growth and investment -3- without putting undue pressure on the balance of payments or reviving infla- tionary expectatlons. 8. Economic growth in the early 1980c has not been steady, maiuly because of the effect of uneven rainfall on agricultural production during the period. In 1980/S1 and 1981/82, the economy substantially recovered from the 1979 drought, with real GDP growing by 7.62 and 5.32, respectively. While industrial output expanded by 42 in 1980/81 and 8.6Z in 1981/82, recovery vas particularly robust in agriculture where normal weather helped output to rise by more than 152 and 5.52. 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%. 9.62 and 12.52, respectively. This over- all improvement in the Indian economy was halted in 1982/83 by a severe drought in mid-1982 which reduced agricultural production by 42. brought dow the CDP growth rate to 1.82, 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, procurement 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% vith agricultural production growth in the 9%-10% range and industrial growth of 4.5Z. The major factors contributing to the good economic performauce during 1983/84 vere the excellent monsoon, combined with adequate agricultural policies and programs, and satisfactory performance of the coal and transport sectors. The pover 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 102-122 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 2.6Z 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 extension 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 generation 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 11.5% below requirements and con- stituted a major bottleneck in the economy. Key industries which were adver- sely affected by power constraints included steel, fertilizers, cement, and coal. To improve performance in the power sector, the Government re ently increased incentives for higher labor and management productivity 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 avail- able this level of production was sufficient to meet the relatively slow demand -4- 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 betveen gross invest- ment and national savings increased from negligible levels during the late 1970s to an average equivalent to 2.1Z of GDP in 1980-84. India's gross national savings rate, which averaged 22.6% of GDP in the last four years, is high by any standard, particularly considering India's low income and the large proportion of its population below the poverty line. The scope for a substan- tial increase in the savings rate is therefore quite limited. If India is to maintain investment at about 252 of GDP, a major effort will be required to raise additional domestic resources particularly 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 2.1%-2.3% of GDP to 1.5Z-1.8%, 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 2.1% 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 adjusting 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, implemen- tation 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 fertilizers more than offset the substantial increase in "other" imports. These "other" imports consist mainly of industrial imports and capi- tal goods which historically have been in chronic short supply and which are of critical importance to capacity utilization, product quality, and plant modern- ization 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 -5- 1980/81 to US$3.4 billion in 1983/84 in response to a succssweal oil develop- ment program that reduced import need. and allowed crude oil experts, which totalled about UG$1.5 billion in 1983/84. Theme structural changos in the balance of payments are to a significant degree the result of India's develop- ment 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 flown 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 commercial banks to substantial levels. In the period covering the fiscal years 1981/82 to 1983/84, India drew BDR 3.9 billion from the Extended Fund Facility of the I1F. In addition, India bor- rowed significant 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 development projects in the public and private sector (mostly foz 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 mouths of import coverage in 1981/82. Develoyment 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 vith 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. 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 continue 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, with aggregate real investment projected to be about 30Z higher than in the period 1975-80-a creditable performance indeed. The Sixth -6- Plan expenditure targets, however, will not be fulfilled as resource mobi- lization by the public sector will fall short of the financing requirements of planned public investment Actual aggregate real investment is projected to be about 7% below the original target for the period 1980-85, private investment being 5% to 10% higher and public investment about 20Z lower in real terms than actually projected. In terms of meeting Plan expenditure targets, the perfor- mance 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 sectorn such as power, transport and irrigation are likely to persist as a consequence of real invest- ment shortfalls relative to original Plan allocations. 17. Although Sixth Plan expenditure targets will not be met, Indir's capi- tal 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 plan- ning and management, thus leading to higher productivity and capacity utiliza- tion 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 excellent with real investment and oil production levels running well ahead of Plan Targets. In 1981, and again in early 1983, resources for exploration and development 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 o= oil imports dropped from 63Z of consumption in 1979/80 to about 41Z 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, 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, improve- ment of economic efficiency, and investment in infrastructure, supported by adequate flows of external borrowing and aid. In the short term, a relatively large level of external borrowing, including an increased emphasis on commer- cial borrowing, will be necessary to cope with the balance of payments conse- -7- quences of such a growth strategy. However, an important element in providing India with the capacity to adjust flexibly will be adequate flown of conces- sional assistance since India is still a very poor country with a large rural sector and enormous investment requiremeuts for human development and basic infrastructure. Although India is currently in a position to increase borrow- ing 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 constraints 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 5.02 per annum than to the long-run trend of 3.6% 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 grovth of per capita income of 1.4% per annum. Success in these efforts vould make a significant difference 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 mortality rate aud an increase in life expectancy, reflecting larger availability of food aud 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 plann'ing, 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 alleviation 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 fo- 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 NREP are targeted 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 provi- sion of social infrastructure and basic services which enhance the human capi- tal of the poor and improve living standards. These programs represent a vitally important commitment of the Government to address the needs of the poorest. The scale of the poverty problem in India, combined with the inherent -8- difficulties in implementing poverty programs in any country, imply the need for continued efforts to enhance the effectiveness of these programs. PART II - BANK GROWP 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 state- ment 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 repre- sents 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 efrorts 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 infrastructure 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 enterpris's, primarily in the private sector, through its support of dev '1i- ment finance institutions. Recognizing the importance of improving tie aA.Lity 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. Continuation of the Bank's Group current priorities can be strongly justified on the basis of the approach that is being taken by GOI in the preparation of the Seventh Plan. First, continued support of GOI's agricultural program is warranted. While India has made significant 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, we will continue our support to irrigation, fertilizer production and distribution, and agricul- tural extension and credit. Second, the review of performance under the Sixth Plan confirms the high priority that should continue to be given to the expan- sion and more efficient use of basic infrastructure capacity and to the development of India's indigenous hydrocarbon resources. Accordingly, the Bank will continue to supp--rt the development of the energy, transport and telecom- munications sectors to alleviate critical shortages which constrain output in both agricultural and industrial sectors. Third, support of urban development and other GOI basic social services programs for the poor must also continue in -9- light of the growth in population which, despite successes in lowering birth and death rates, still increases by about 16 million each year. Finally, the major departure from our previous strategy will be a substantial increase in the Dank's assistance to India's industrial development substantially aimed at supporting COI's efforts in promoting greater efficiency and faster development of the industrial oector. 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-1970". However, India continues to requlre a substantial level of forsign assistance both to offset the overall deterioration in the world trade environment, 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 foreign exchange component tends to be small in most projects. This is particularly 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. Hovever, 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 available 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 sup- plement 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 reduction 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 estimsted 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 con- siderably 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 con- tributed by the Bank Group has grown significantly. In 1969170 the Bank Group accounted for 34% of total commitments, 13% of gross disbursements, and 12% of net disbursements 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 Group. On March 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 PETROCHEMICAL SECTOR The Petrochemical Industry - An Overview 29. General Characteristics. The two main categories of petrochemical raw materials are olefins (ethylene, propylene, and butadiene), produced through the cracking of naphtha, gas oil, or natural gas; and aromatics, (benzene, toluene, and xylene) derived from liquid fractions, generaly as part of refinery operations. Although both olefins and aromatics are used as "building blocks" to make polymers, synthetic rubber, detergents, etc., the most important raw material is ethylene, which is used to produce about one-third of all petrochemicals. Demand for petrochemicals is usually stated in terms of derived ethylene demand and, by this measure, world production of ethylene increased at an average rate of 11.2% per annum between 1960 and 1980. 30. Olefins and aromatics are used to make six principal plastic polymers: low-density polyethylene (LDPE); linear low-density polyethylene (LLDPE); high-density polyethylene (HDPE); polypropylene (PP)-these four being termed polyolefins; and polyvinyl chloride (PVC); and polystyrene (PS). Plastic polymers are, in turn, used by the plastics conversion industry to manufacture end-products with applications in virtually every sector of the economy. Thus, they substitute for increasingly scarce and expensive traditional materials such as wood, metal, leather, glass, cork, and natural rubber. In most cases, plastic substitutes tend to be stronger, more resistant to corrosion, more easily fabricated, and less expensive than similar items made from natural materials. In addition, their manufacture requires significantly less energy than that needed for competing traditional products-the energy savings range from about 30X in the case of polyolefin packaging films used in lieu of paper products to more than 80Z in the case of polyvinyl chloride (PVC) pipes used in lieu of cast iron pipes. 31. Since the crude oil price increases of 1973 and 1979, natural gas has become the preferred feedstock for the production of petrochemicals in most situations. The choice of feedstock, however, is dictated by availability. Ethylene is produced from natural gas principally in the United States, the Middle East, and Canada, where supplies of natural gas are relatively abundant. In Latin America, Eastern and Western Europe, and Japan, ethylene is produced almost solely from naphtha or gas oil 1/. In 1980, the United States, Western Europe, and Japan, the three largest 1 Naphtha and gas oil are by-products or "cuts" of the primary distil- lation of crude oil. -11- petrochemical producers, together had nearly 802 of the world ethylene production capacity. Because petrochemical producto can be utilised in a wide variety of ways, the value added to a barrel of crude oil, or its equivalent in gas, is several times greater when it is used as petrochemi- cal feedstock than when it is used as fuel. 32. World ConsumXtigon Production and Price. Between 1970 and 1983 the world consumption of polyolefins increased at an average rate of 8.8S per annum, from 8.5 million tons to 25.3 million tons. Plastics consump- tion over the last ten years has grown at a faster rate (1t4 per annum) in the developing regions than in developed areas (52 per annum). Nevertheless, at the end of 1983, developed countries accounted for a significant, though declining, 69% of total demand. The Bank expects future world demand for polyolefins to grow from 25.3 million tons in 1983 to 35 million tons in 1990; the average rate of growth is forecast at 3.5Z per annum in developed countries and 7.2Z in developing countries. Between 1990 and 1995, total growth is expected to grov at a slover pace- about 3Z per annum. 33. Total production capacity world-wide of polyolefins increased by an annual average of more than 7.52-from 12.5 million tons in 1970 to 31.7 million tons in 1983. However, market constraints and capacity additions occasioned by overly-optimistic industry expectations have kept plant capacity utilization at an average of about 74Z during the past decade. This overcapacity coupled with the virtual stagnation in the demand for polyolefins during the period 1980-82 (due primarily to the worldwide recession), has triggered a rationalization within the industry. As a result, small (mostly naphtha-based) uneconomic units have had to close down, some existing plants have been modified to allow the produc- tion of a wider range of products while others have been rtresmlined to improve capacity utilization. In the light of this capacity rationaliza- tion and increased demands in 1983 and 84, average industry capacity utilization rates reached 832 in 1984 and are expected to rise to about 901 ovex the next few years. Future polyolefin production capacity should increase at a rate of 2.5Z per annum from 1983 to 1990, compared with a projected demand growth of 52 per annum. 34. Demand for polyolefins is expected to increase considerably from current levels as the international economy improves. World demand and supply are expected to come into balance in about 1986 for PP,and 1990 for EDPE, LDPE, LLDPE. A global supply deficit of nearly 1.5 million tons of polyolefins is projected by 1990. This deficit will increase to 6.9 million tons in 1995 and will require the creation of substantial new production capacity. 35. The considerable short-term fluctuations in polyolefin prices that have occurred reZlect market conditions and feedstock prices. After the 1981 and 1982 price slump caused by the world recession and the excess capacity of polyolefins, prices recovered in 1983 and early 1984 up to US$890, US$79O, aud US$900, per ton for LDPE, EDPE, and PP, respectively, but were still below the levels at which a reasonable return on new -12- investment can be obtained. Future price levels will depend on the production costs of efficient producers when demand and supply are in equilibrium.l/ For evaluation of the proposed project, equilibrium prices- -the prices prevailing at the time demand outstrips supply-are calculated to be US$1100 and US$1250 per ton for LDPEILLDPE/1DPE and for PP in con- stant 1984 dollars, respectively, and were derived by examining the long- term marginal costs of production of efficient suppliers and assuming that prices would prevail at that time which would permit those suppliers to achieve a 15-20% rate of return before tax on new investments. The sen- sitivity of the project economics to changes in prices is shown in paras 66-67 below. The Indian Petrochemical Industry 36. India's industrial sector is large in absolute terms, highly diversified, and capable of manufacturing a wide range of consumer and capital goods. Manufacturing accounted for 16.3Z of GDP in 1982-83. Within the intermediate goods subsector, the production of chemical products has grown at an average rate of 6.7Z per annum between 1970 and 1982 (compared with 3.41 per annum for the iutermediate goods sector as a whole and 4.1% per annum for total manufacturing output). Thus, its share of total manufacturing output increased from about 13% in 1970 to more than 18% by 1982. 37. The production of basic petrochemicals in India began in 1966 with the establishment of a small ethylene cracker of 20,000 tons per year (tpy) capaciry. In 1973, production increased considerably with the establishment of a large aromatics plant at Baroda in Gujarat State; this plant is owned and operated in the public sector by the Indian Petrochemicals Corporation, Ltd. (IPCL). This was followed in 1978 by the commissioning of an integrated olefins production facility vith an ethylene production capacity of 130,000 tpy and associated downstream plants, all owned and operated by IPCL. Both private (about 40Z of estimated total production in 1984-85) and public sector (60Z of total production) polyolefins plants in India are currently operating at high capacity utilization rates, averaging about 110 in the private sector and 95% in the public sector. When facilities currently under construction are included, India-s present capacity for the production of polyolefins totals approximately 200,000 tpy, which constitutes about 0.6% of world production capacity. Some existing production units in the private sector are old and inefficien-. A number are expected to close down as the naphtha feedstock procLas becomes uneconomical or the plant becomes too old to warrant renewal. The remaining plants will be able to compete, price-wise, with the proposed project, since all plants are old enough that their production costs are no longer burdened with debt repayments. 1! Equilibrium is assumed at 90% capacity utilization in developed countries and 85% in developing countries. -13- India's Develonment Strateml in the Sub-Sector 38. The Government believes that there is significant scope for promoting the production and use of petrochemical products in India, and considerable economic and social benefits are to be derived therefrom. In recognizing this, the Sixth Five-Year Plan (1980-85) contained a decision to accelerate plastics production and consumption and the Seventh Plan (1986-90) endorses that decision on the basis of a number of factors: the offshore gas and oil reserves in the Bombay High and South Bassein areas assure India of a large supply of natural gas vhich is now the preferred petrochemical feedstock (these large supplies vill enable India to estab- lish optimally sized petrochemicals production facilities which is among the most economic means of utilizing gas resources); the energy content of most plastic end-products is considerably lower than that of competing products made from traditional materials and the Government recognizes the increasing role of petrochemical products as substitutes for traditional ray materials such as steel, cement, vood, glass, and non-ferrous metals, which are often imported and are becoming more costly or more scarce; there is a large, untapped market with high benefit/cost ratios for agricultural, industrial and domestic applications of plastics in India: and there are also significant social benefits to be derived from the use of plastics in providing low-cost shelter, household goods and footwear to a large segment of the population. Furthermore, the plastics processing and recycling field is an active and labor-intensive small-scale industry totally operated in the private sector with significant potential for further development and employment creation. 39. Current Government policy encourages both private and public ovnership in all phases (primary and secondary) of petrochemical manufacture. Before GOI established its aromatics complex in 1973 and its ethylene cracker complex in 1978, the entire petrochemical industry in India was privately owned. GOI's decision to place the proposed project in the public sector (with which the Bank agrees) recognizes the scarcity of private financing for a vorld-scale petrochemical complex in the present context of India's capital markets, and reflects its desire to establish the project as quickly as possible given the need for optimal utilization of India's natural gas resources. In addition, it has taken into account the demonstrated efficiency of Indian Petrochemicals Corporation Limited (IPCL) in project construction, production, marketing and distribution. The private sector will play a complementary role in the proposed project through the investment of approximately US$400 mil- lion for the expanaion of manufacturing plants in the Bombay area and the development of the downstream secondary plastics conversion capacity. 40. Demand and Supply Proiections Per capita consumption of polymers in India grew at an average rate of 14% per annum between 1965-66 and 1983-84. Nevertheless at 0.45 kg per year, it remains among the lowest in -14- the world. 4 Because plastics have significant economic and technical advantages over competing products in a wide range of applications, they are likely to penetrate the markets held by competing products even further. The base case demand forecast projects an 1lZ annual grovth rate from 1983-84 to 1992-93. The estimate of the future supply-demand balance takes into account production from existing petrochemical facilities and planned future expansions, including the proposed project. According to this forecast, demand exceeds supply for all project products (LDPE, LLDPE, HDPE, PP) in all years. 41. Export Potential and Nanyower Requirement The plastics conversion industry in India processes polyolefins into final products. It has growa rapidly since 1970 and at present employs about 100,000 workers in more than 7,000 separate processing units. If the conversion industry is to handle the additional output from the proposed project, it will need to expand further by 1990 and employ about 66,000 more workers. A number of private and public sector organizations throughout India, including plas- tics manufacturers themselves, provide training and technical assistance to the processing industry. These various programs should be coordinated to provide a unified basis for manpower development in the future. The Bank has discussed with GOI the need to establish, together with the training institutes, plastics producers, the processing industry, and the Government, a small unit to act as a clearing house for information on technical developments, provide technical assistance, coordinate training at the national level, and pursue an information dissemination campaign. To meet this need, GOI would establish by April 1, 1986, and thereafter maintain, a training and technical assistance unit (Schedule 4 to the Loan Agreement). 42. India exports plastics end-products for use in the consumer and industrial sectors. Thus far, exports have been modest, reaching about US$61 million during 1980-81. This volume of exports has been achieved in the absence of any major incentive programs or institutional support to the processing sector. India has a comparative advantage in the produc- tion of plastics for export because of its favorable geographic location with respect to its primary customers (the USSR, UAE, Nigeria, Kuwait, Bangladesh, Saudi Arabia, and Hong Kong), the availability of technical know-how, and low labor costs. To exploit this advantage and develop India's substantial export potential, GOI would carry out, by December 31, 1985, a study of the export market potential for selected finished products, under terms of reference agreed with the Bank, and shall consult with the Bank on the implementation of the findings of the study (Schedule 4 to the Loan Agreement). 43. Pricing in the Petrochemicals Sub-Sector. The present Government policy allows each petrochemical plant to set its own prices. Current 1/ Polymer consumption in Korea, Brazil, and Portugal by contrast, is 19.2 kg, 7.7 kg, and 17.4 kg per year, respectively. -15- ex-factory prices are higher than international (CIF, border) prices owing to the unusually depressed international prices and the historical use of high-priced naphtha in India as the basic feedstock. Customs duties on imports have been set periodically by the Government both to raise revenues and to provide protection to domestic producers, other than IPCL, whose costs have remained high because of their sa'l size. Customs duties are generally set at levels that equalize landed prices of imports and ex-factory prices plus excise duties. However, because international prices have fluctuated considerably in response to changes in world demand and supply, landed prices of imports in recent years have differed sub- stantially from domestic ex-factory prices plus excise duties. As inter- national prices rise to their equilibrium levels through the 1980s and domestic prices continue to be positively influenced by the efficient operation of India's larger plants, including the proposed project, the economic climate will support GOI initiatives to allow tariff levels to fall. 44. As the proposed project will be the largest single petrochemical producer in the country, it will have a significant influence on the domestic prices of petrochemicals. The project will enable India to have a highly competitive source of polyolefins for the first time and will make it possible for the downstream conversion industries to produce low-cost, and low-energy-using plastic products for the local market. It is important that this large market be developed efficiently and that pricing and taxation policies do not inhibit the preproduction market development phase or the production phase. GOI has recognized how cru- cial this matter is and has commissioned the Bureau of Industrial Costs and Prices (BICP) to carry out, by March 1986, a study of the future alternative for pricing, fiscal and trade policies for petrochemicals and their substitutes in India under terms of reference which are acceptable to the Bank. Assurances have been received that the Government will take into account the Bank's comments in undertaking the study and that it is committed to ensuring that, prior to commissioning of the petrochemical complex, the domestic industry is efficient and competitive and will implement appropriate recommendations in an adequate timeframe. Further, it will refrain from taking any action which would unduly inhibit the development of the local market (Schedule 4 to the Loan Agreement). Bank Group Involvement in the Petrochemicals Sub-Sector 45. The proposed project would be the Bank Group's first operation in the India's petrochemical sub-sector. The IDA-financed Hazira Fertilizer Project (Credit 1125-IN, October 1981) is also designed to use natural gas from the Bombay High and South Bassein gas fields as feedstock. Both projects support the Government's strategy for maximizing the utilization of the country's burgeoning natural gas resources. The Hazira project finances the construction of a fertilizer -anufacturing facility in the State of Gujarat designed to produce about 1.3 million tpy of urea. Construction is proceeding on schedule, and the facilities are expected to begin operating in late 1985. As part of the Bank's continuing support of the Government's gas utilization plans, additional projects in fertilizer -16- production and distribution, and LPG marketing and distribution systems based on natural gas feedstock are under consideration. PART IV - THE PROJECT 46. The project was initially appraised in October-November 1982, and post-appraised in July-August 1984. A report entitled, "Staff Appraisal Report: Maharashtra Petrochemical Project" (No. 4467-IN, dated February 15, 1985) is being circulated separately to the Executive Directors. Negotiations took place in Washington, D.C. in January 1985. The Government of India and IPCL were represented by a delegation coor- dinated by Mr. P. Singh, Director, Department of Economic Affairs, Ministry of Finance. Proiect Description. Sectoral StrateRv. and Rationale for Bank Involvement 47. The Government has announced its intention to improve the industry sectoral environment. Inter-alia, it is calling for the design of a policy framework which would take account of the need to shift from administrative controls to market controls in the recognition that many sub-sectors would benefit from increased competition in terms of enhanced productivity, quality and reduced costs and a strengthening in the country's balance of payments. In the petrochemicals sub-sector specifically, the Bank, through its involvement in this project, is sup- porting the Government in these efforts. The proposed project will be India's first petrochemical complex to be based on natural gas as its feedstock and will approximately double the production of petrochemicals in India. Thus, it will play a prominent role in furthering the Government's strategy for developing India's petrochemical sector that involves (a) establishing large-scale plants of international size and thereby achieve cost competitiveness; (b) meeting the demand for petrochemical products (which is expected to grow rapidly); and (c) expanding the development of the downstream, privately-owned, plastics processing industry. The project will substitute for imports of both thermoplastics and competing finished products and thus will also save foreign exchange. In supporting the project, the Bank has played, and will continue to play a significant role in helping to define and develop an improved strate-y for the future development of India's petrochemical sector. It is also helping to address major sectoral issues, specifically pricing and tariff policies, market development, export promotion, capacity expansion and training. 48. The petrochemical complex vill be located about 120 km south of Bombay, near the village of Nagothane in Maharashtra's Raigarh District (See Map 16882R). The site was chosen by a Government-appointed committee from among six potential locations because it offers an optimal solution to the following site selection criteria: (i) reasonable proximity to natural gas supplies and to the merchant ethylene market in Bombay; (ii) a sparsely populated area where the adverse social and environmental effects -17- on the existing population should be minimal; (iii) consistency with the Maharaahtra State Government's policy of encouraging industrial develop- ment in the most backward areas of the State; and (iv) the availability of abundant water supplies and necessary transport facilities. The 567 ha of land required for the project are being acquired and the 290 families are being resettled according to the provisions of the Maharashtra Resettlement of Project Displaced Persons Act, 1976, vhich is acceptable to the Bank. Physical possession of all land for the project is a condi- tion of effectiveness of the proposed project (Section 6.01, Loan Agreement). 49. The petrochemical complex will have an initial production capacity of 300,000 tpy of ethylene and 63,000 tpy of propylene. Approximately 50,000 tpy of the ethylene will be sold to existing private sector plas- tics producers in the Bombay area. The remainder vill be processed within the project to produce 80,000 tpy of LDPE, 135,000 tpy of LLDPE and EDPE, 60,000 tpy of PP, 50,000 tpy of ethylene glycol (EG) and 5,000 tpy of ethylene oxide (EO). These intermediary products will then be sold to the privately-owned secondary manufacturing plants located throughout India. The principal facilities include the main process plants, feedstock, utility and infrastructure facilities, and offsite and general facilities. 50. Feedstock. Utilities, and Infrastructure Facilities (a) Gas Suvplv. The volume of C2/C3 (ethane/propane) gas frac- tion required as feedstock for the project will be supplied from the Bombay High and South Bassein fields. So that project requirements can be met, the Oil and Gas Natural Commission (ONGC) has agreed to establish additional facilities fet C2/C3 separation at the existing LYran terminal. GOI would take adequate measures to ensure that the offshore gas develop- ment plans are carried out in a time frame consistent with the require- ments for the supply of associated and free gas to the project and that physical facilities for feedstock separation and supply to the project shall be established (Section 4.03 of the Loan Agreement). Furthermore, Indian Petrochemicals Corporation, Limited (IPCL) would, by June 30, 1988, enter into long-term supply contracts satisfactory to the Bank, for the supply of feedstock and fuel gas for the project (Section 3.04, Prrject Agreement). (b) Utilities and TransDort The petrochemical complex will require about 15 million gallons of water per day under arrangements agreed with the Naharashtra Government and with the Maharashtra Industrial Development Corporation (MIDC), which is the State organization respon- sible for the creation of industrial estates and the provision of utilities and infrastructure facilities to these estates. The project power supply arrangements include a captive 73 MW of generating capacity. To provide for balance requirements and to serve as a necessary backup, IPCL will make suitable arrangements with the Maharashtra State Electricity Board for the additional supply of 20 MW of power from the Kondalgaon Station to ensure steady and uninterrupted service. To connect the project site with the Bombay-Goa highway, a new road and bridge access -18- will be constructed. Indian Railways is currently constructing a line through Nagothane village to provide a rail link with Bombay. A deep- vater jetty has been completed about 50 km from the project site, and will be used for receiving heavy consignments, and the road link from the jetty to the project site is being upgraded by the State Government to handle heavy loads. IPCL would make arrangements, satisfactory to the Bank, with the appropriate agencies and authorities for the provision of adequate and timely supply of water and power and adequate transport infrastructure facilities for the complex (Section 3.05, Project Agreement). Environmental and Safety Considerations 51. So that any adverse effects on the surrounding environment will be minimized, contaminants in the effluents and air pollutants from the project will be treated in accordance with the appropriate Indian stand- ards which are acceptable to the Bank. Following treatment, liquid effluents will be disposed at a safe point in the sea. IPCL will imple- ment and operate the project in accordance with environmental and safety standards satisfactory to the Bank (Section 2.06, Project Agreement) and assurances have been received that qualified consultants will carry out a Safety Audit prior to commencing the project in close consultation with the Bank. Proiect ManaRement and Implementation 52. The project will be owned and operated by the Indian Petrochemical Corooration Limited (IPCL), an existing public sector company incorporated in March 1969 under the Indian Companies Act of 1956. IPCL is registered in the State of G-ujarat and its head office is located in Baroda. It is managed by a Board of Directors-appointed by the Government of India-that has extensive povers to conduct the company s affairs. The projecL will be implemented and managed by a separate division within IPCL. The Division's head, a Director in the Board of IPCL, will report to the Company-s Chairman and Managing Director. Duxring the implementa- tion phase, the Division head, acting under the title Executive Director (Project), will be assisted by a General Manager (Project) and a Chief Financial Controller (Project). 53. TILe Executive Director (Project) and the General Manager (Project) have already been identified and appointed. Appointment of the Chief Financial Controller (Project) is imminent. These three key positions are endo-wed with sufficient executive powers to ensure the efficient execution of the Project. In the event of a vacancy in any of these positions, IPCL will provide the Bank the qualifications and experience of the proposed nominee prior to making appointments to these positions (Section 3.06, Project Agreement). The project team will include about 75 senior staff members at the peak of construction activities. When the project is fully operational, it will directly employ about 3,000 persons, including 1,025 supervisory staf% No difficultie-s are expected in attracting and retain- ing appropriately qualified staff. -19- 54. The foreign project-related services envisaged for the project consist of the provision of process technologies, basic engineering, and supervisory assistance for the main gas cracker unit and the downstream plants. The project will use the latest proven techrologies available and the license agreements provide for the exchange of information between IPCL and the licensors on improvements in technology. The procedures used in the selection of the process technologies and associated foreign con- sultancy services conformed to Bank procedures and their costs would be financed under the Bank loan. 55. Engineers India Limited (EIL) will be the General Contractor for construction of the petrochemical complex. With assistance from the licensors, it will be responsible for detailed engineering, procurement services, construction tpc-niiion and complete project management. To carry out the work, EIL will form a full-time project task team headed by an experienced senior project manager. A resident construction manager, reporting to the senior project manager, will head the site construction team and supervise and manage the construction subcontracts. These arran- gements are similar to those that have been successfully carried out by IPCL and other large industrial firms in India in implementing and commis- sioning large, complex projects using EIL services. The selection of EIL is acceptable to the Bank and the cost of its services will be eligible for Bank financing. All process units are expected to be mechanically completed in September 1989 and commercial operations are expected to start by the end of December 1989. Market Development 56. Over the last five years, IPCL, the largest petrochemical producer in India, has built up an extensive and highly efficient marketing network for polymers and is well placed to handle the proposed project output, which will approximately double the current domestic production of polymers. Although the Bank's demand forecast for polymers is considered conservative and achievable, this demand potential will not be realized unless an active marketing effort is launched to develop new end-use applications for plastics, and to encourage the increased use of plastics products to replace traditional goods. However, the current domestic production of polymers in India is fully absorbed and, in order to gener- ate demand at the higher level, the market development effort required during project implementation will have to rely on significant imports of polyolefins over the next five years until the proposed project begins production in late 1989. Such market development efforts will be based on imports of the type and grade of polyolefins to be manufactured by the project, and would provide the necessary impetus to the plastics conver- sion industry to undertake the investments necessary by 1988 to fully process the project's expected output. 57. In recognition of the importance of market development prior to project commissioning, GOI would make available to IPCL the necessary foreign exchange, import licenses and other facilities required by IPCL to carry out said import program (Section 3.04, Schedule 4 to the Loan -20- Agreement). The Bank will provide an amount of US$90 million (repre- senting approximately 202 of the costs of the imported products) to help finance, througb 1989, imports of LDPE, LLDPE, RDPE, and PP, under arran- gements satisfactory to the Bank as to the level of such imports. The US$90 million vould be disbursed in agreed annual tranches following the Bank's review and agreement of IPCL's annual market development plans. Accordingly, IPCL would, by January 31 each year, furnish to the Bank its market development plan for the following fiscal year and shall implement said program in such form as shall be agreed upon between the Bank and IPCL (Section 2.07, Project Agreement). IPCL's market development efforts vill concentrate on the use of plastics in agriculture, irrigation, and water management, particularly vhere cost/benefit ratios are high and there is great potential for market growth. An established high-level national committee is emphasizing development and promotion of plastics in these fields, and IPCL will coordinate its activities with this group in planning future marketing strategies. Proiect Costs and Financing 58. Total cost for the petrochemical processing complex is estimated at US$1697 million. Foreign exchange costs are estimated at US$651 milliolL, or about 39Z of project costs. Physical contingencies were calculated at un average rate of 10% of base cost, and are considered adequate in view of the highly detailed methodology used in estimating project costs. Price contingencies, which total 27% of the base cost and physical coutingencies, were calculated on the basis of annual escalation rates of 8Z in 1983-84, 3.5% in 1984-85, 8% in 1985-86, 9% for the yeesrs 1986-87 and 7.5% for 1989-90. 59. The proposed Bank loan will provide US$210 million for financing equipment and engineering services for the petrochemical processing complex, and US$90 million for financing imports of plastics for the pre-production market development component. The US$210 million repre- sents approximately 12Z of the cost of the petrochemical facility and 32% of the foreign exchange costs of the complex. The Bank loan will be made to GOI for 20 years, including 5 years of grace at the standard, variaole interest rate. The Government will onlend US$210 million to IPCL under a Subsidiary Loan Agreement at an interest rate of not less than 13.25% per annum, with a repay,ent- period of 15 years, including 6 years of grace. The repayment terms reflect the lengthy start-up period for such large projects and IPCL's debt servicing capacity after production commences. The 13.252 interest rate should remain positive in relation to domestic rates of inflation, which are not expected to exceed 9X annually in the near future. Execution of a Subsidiary Loan Agreement between IPCL and GOI on terms satisfactory to the Bank and physical possession of all land required for the petrochemical complex will be conditions of effectiveness of the Bank loan (Section 6.01, Loan Agreement). The US$90 million to be used for preproduction imports purchases will be channelled from GOI to IPCL, which will repay the amounts to the Government as disbursements against imports are effected. -21- 60. In addition to the US$210 million Bank loan for the petrochemical complex, US$642 million of debt financing for the complex will be provided by GOI, supplemented by financing from domestic financial institutions and foreign exchange loans. Suppliers' credits, official development assistance, and comercial foreign exchange loans are currently bein' considered for the foreign exchange portion of the debt financing (amount- ing to U8$441 million). Equity financing of US$845 million vill be provided by IPCL (US$200 million) through internal cash generation in the first two yeats of the gas facility's partial operation (US$145 million), and by GOI (US$500 million). Procurement and Disbursement 61. Equipment financed by the Bank loan vill be procured by interna- tional competitive bidding (ICB) procedures in accordance with Bank guidelines, except for equipment proprietary to the design process, items essential to the efficient and timely execution of the project. These items may be procured through Limited International Tendering (LIT) from qualified suppliers from at least three Bank member countries, according to lists of goods which have been agreed vith the Bank in an aggregate amount of not more than US$26.5 million equivalent. Furthermore, small packages costing less than US$200,000 each will also be procured using these LIT procedures in an aggregate amount not exceeding US$5 million. For bid evaluation under ICB, qualified local suppliers of goods shall enjoy a preference margin of 15Z or the applicable customs duty, whichever is less. Preproduction imports of plastics for market development financed by the Bank loan will be procured in economic shipping lots in accordance vith the Bank's ICB procedures modified to permit bidding by telex, with a validity period of 10 days and provision that, if in IPCL's judgement, procurement must be postponed, fresh bids may be called at an appropriate time. This procedure is in consideration of the very volatile market situation prevailing in the commodities market. Disbursements for this project component will be phased over the period through September 1989 under drawdown arrangements agreed with the Bank. Annex IV sum- marizes the procurement arrangements for the project. Funds made avail- able to the project from cofinancing sources will be used to finance equipment and foreign engineering costs in accordance with the respective cofinancier's procurement procedures. IPCL and GOI financing will cover the costs for the rest of the equipment, engineering, civil works, and erection services, which are to be procured under local competitive bid- ding procedures being used in India, which are acceptable to the Bank. 62. The Bank loan of US$300.0 million will be used to finance US$180 million of equipment, materials, and spares; US$20 million of foreign and local license and engineering services; US$90 million for pre-production polyolefin imports; and US$10 million will be unallocated. Loan proceeds will be disbursed against 10OZ of foreign and 100X of local (ex-factory' expenditures for equipment, materials and spares, 100X of foreign expendi- tures for engineering services and plastics imports. Disbursements are expected to be completed by September 30, 1990, a disbursement rate that is in line with the disbursement profile for similar projects in other -22- countries. Withdrawals in an aggregate amount of US$5 million may be made on account of payments made for expenditures incurred after August 12, 1984. Financial Asnetts 63. A. mentioned above (para 44), pricing levels for the project's products vill be determined in conjunction with a pricing and tariff study to be conducted by BICP. Nevertheless, GOI would not take, or permit to be taken, any action with respect to pricing of inputs and outputs that would prevent IPCL from: (i) covering its costs, (ii) meeting its debt service requirements, and (iii) earning a reasonable return on investment, under efficient operations (Section 4.02, Loan Agreement). 64. At the sale price levels assumed (para 35), project revenues, in current terms, are expected to increase from about Rs 1 billion in 1989-90 to over Rs 8 billion in 1992-93, when project operations ar2 expected to reach 95% capacity utilization. Operating profit is projected to increase from Rs 178 million to Rs 2,598 million over the same period, so that the expected loss of Rs 148 million in the first year of operations will be turned into a net profit after tax of Rs 1,594 million in 1992-93. The debt service coverage ratio is also expected to remain above 1.7, while the debt-to-equity ratio will steadily decrease from 55:45 in 1989-90 to 28:72 by 1994-95. Thus, the project should remain in a secure financial position and be able to pay substantial dividends. The Gover,ment's equity investment of US$500 million should be fully recovered by 1996-97, and the present value of net resource flows to the Government during the project's economic life is estimated to be about Rs 5.2 billion (at a 12% discount rate). 65. To ensure satisfactory financial performance of the project, IPCL will follow prudent financial practices, and, except as the Bank shall otherwise agree, will: (a) ms.Lntain at all times a long-term debt/equity ratio of 60:40 or better; (b) maintain a current ratio of at least 1.3 at and after project completion; tc) not incur additional debt if by so doing the projected debt service coverage ratio would fall below 1.4; and (d) not prepay any debt if, as a result thereof, the current ratio were to fall below 1.5 (Section 4.04 of Project Agreement). IPCL will also submit regular progress reports and financial statements on the project within 30 days from the end of each reporting period and submit its annual audited reports within six months from the ending of its fiscal year, in a form satisfactory to the Bank (Section 4.02, Project Agreement). 66. The base-case financial rate of return (FRR) for the project is estimated at 11.4%, and the project is not expected to encounter financial difficulties. The relatively low FRR (compared with the economic rate of return of 17.9%), results from the imposition of duties and taxes amount- ing to Us$208 million-20% of the project base cost estimates. A 25Z increase in product prices would increase the FRR to 16.9%. Conversely, a 10% decline would reduce the FRR to 8%. The return would decrease from 11.4% to 9.8% if capacity utilization were to be reduced by 10%, but -23- estimates of demand for the project's product and IPCL's excellent perfor- mance make this scenario unlikely. If feedstock prices were to increase by 101, the FRR would be 10.62 which is acceptable. An increase of capi- tal costs by 101 would bring the FRR down to 10.21. If, simultaneously, feedstock prices and capital costs increased by 10X, and capacity utiliza- tion dropped 10X, the FRR would fall to 7.9X, but these events are con- sidered highly unlikely to occur simultaneously. Economic Justification and Risks 67. The base-case economic rate of return (ERR) is calculated at 17.92. It is most sensitive to fluctuations in product prices. If the equilibrium international prices were not to prevail until 1995, 5 years later than assumed in the base-case analysis, the ERR declines to 13%, which is still acceptable. The ERR would remain at about 1OZ if the price stayed at the current levels for the life of the project-implying a 331 drop below the base case. An increase in energy costs of 10 would cause the ERR to fall marginally to 16.9%. This increase, given the cost struc- ture of the proposed plant, is equivalent to a 201 drop in the price of crude oil--to US$25/bbl., or its natural gas equivalent. If product prices stay constant and if energy prices were to increase by 101 the ERR wculd fall to a level of 92. The project will provide approximately US$233 million average annually in foreign exchange savings). While some 60,000 new jobs will be created in the petrochemical complex directly and in the downstream conversion industry, it is not possible to determine the number of jobs that will be displaced by the use of synthetic fibres in lieu of natural products-cotton, rubber, etc. In this context, however, it is noted that not only is the project substituting for imports but also demand for new products is being created and met under the project- situations which will not displace existing jobs in India. 68. The project is not expected to face any serious technical risks because the technologies to be used are commercially proven and will be supplied by internationally recognized process licensors. The risk that the start-up of operations will be delayed is also considered minimal as experienced IPCL project staff will be assisted by staff from the interna- tional licensor firms ard other chemical subsector companies and thus will be experienced in corstruction and start-up of similar complex projects. A potential risk is that ONGC may be unable to provide adequate gas sup- plies to the project when needed but this is not considered serious as the project's feedstock requirements constitute only 31 of the expected production from the Bombay High and South Bassein fields, and satisfactory measures are being taken by GOI and ONGC to ensure adequate gas supply arrangements. 69. The most significant project risk is a market risk. The project will virtually double domestic production of thermoplastics, but it cannot be assumed that domestic demand will rise to such levels unless measures are taken to promote the demand potential. Hovever, the marketing risk for the project is considered acceptable because of the high growth poten- tial for plastics use in India, IPCL's Experience in marketing, and the -24- measures GOI and IPCL will take with respect to market development and pricing (paras 56-57), especially with respect to the use of pre- production imports. PART V - LEGAL INSTRUMENTS AND AUTHORITY 70. The draft Loan Agreement between India and the Bank, the draft Project Agreement between the Bank and IPCL, and the draft Report of the Committee provided for in Article III, Section 4(iii) of the Articles of Agreement are being distributed to the Executive Directors separately. 71. Special conditions of the project are listed in Section III of Annex III. The signing of a Subsidiary Loan Agreement between GOI and IPCL and physical possession by IPCL of the land required for the petrochemical complex would be conditions of loan effectiveness (Section 6.01, Loan Agreement). 72. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Bank. PART VI - RECOMMENDATIONS 73. I recommend that the Executive Directors approve the proposed loan. A.W. Clausen President by Ernest Stern February 26, 1985 AMNNE I Page 1 of 5 TA LE IS INDIA - SOCIAL IDICATONS DATA SNRifT INDlA- EPREnWc GROUPS (wElUITE AVE9RWAUEJ HOST (MOST RECENT ESTIMT) RECENT IS INCUR HIDER 2300 19600! L9?d0b RiSI"MAtL ASIA A PACIFIC ASIA & PACIFIC A t T_I Sq. -) - TOTAL 3237.6 3267.6 3221.6 AGRICULTURAL 1763.5 1780.5 1812.3 SP R ciTA (Cus) 60.0 100.0 260.0 278.6 1091.2 -i ouoN PM CAPITA (RILOAMS O OIL EQUIVALENT) 79.0 113.0 153.0 272.0 567.3 PUATIEN M VITAL STATISTICS FOPUIATION*MID-YRAR (THOUSANDS) 434349.0 547569.0 716985.0 (2 1121AM POPULATION CE Or TOTAL) 16.0 19.6 24.1 23.7 34.7 POPULATIONI PROCTt1NS POPULATION IN 'EAR Z0O (WILL) 994.4 STATIONARY POPULATION CHILL) 1707.2 - POPULATION HUEEIIH 1.7 POPULATION DENSM PER SQ. Km. 132.3 166.6 213.4 166.6 261.9 PER SQ. KM. ACGI. LAND 246.6 307.5 387.1 345.5 1735.1 POPULATION AM STRUCTURE (Z) 0-14 YRS 40.9 42.7 39.3 35.6 39.0 15-64 YtS 54.5 54.2 57.6 59.6 57.6 65 AND A3OE 4.6 3.1 3.1 *.3 3.3 POPULATION GROT NATE t7) TOTAL 1.8 2.3 2.2 1.9 2.3 UAN 2.5 3.3 3.9 4.1 4.3 CRUDE BIRTH RtATE (PIE TMS) 47.7 41.4 34.2 27.7 30.1 CRUMI DEATH PATE (PM THOS) 23.8 17.6 12.7 M0.3 9.5 GROSS REPRODUCTION RATE 2.9 2.8 2.2 1.6 2.0 FAMrLY PLANNING ACCCPTORS. ANNUAL VENOUS) 64.0 3782.0 6826.0 USERS (Z Or MAD WMEN) * 11.7 28.0 . 52.7 INDEX OF FOOD PROD. PER CAPITA (1969-71-100) 98.0 102.D 101.0 112.3 123.0 PER CAPITA SUPPLY OF CALORS 41 OF REQUIREMENTS) 96.0 91.0 86.0 97.7 114.4 PRTINS (CAMS PER DAT) 54.0 50.0 46.0 56.3 57.0 OF WHICH ANIMAL AND PULSE 17.0 15.0 13.0 Ie 14.9 14.1 CHILD (AGCS 1-4) DULH RATE 26.2 20.7 11.0 9.3 7.2 EALTH LIFE EXP8CT. AT BIRTH (TEASM) 42.5 47.5 54.6 60.0 60.4 rWANr noRT. M (PM THOS) 165.0 139.0 94.0 63.8 66.3 ACCESS TO SAIE MATER (EPOP) TOTAL . 17.0 33.0 /d 32.9 37.0 URBAN 60.0 83.0 7r 70.9 54.0 RURAL 6.0 20.0 7;i 22.1 26.4 ACCESS TO EETA DISPOSAL (I OF POPULATIO) TOSAL - 18.0 20.0 le 16.1 41.3 URIAN .. 65.0 37.0 77 72.8 47.4 RURAL .. 1.0 2.0 7r 4.6 33.3 POPULATION PER PYSICXIA 4850.0 4390.0 3690.0 if 3464.2 7749.4 POP. PEI NURSING PERSON 10980.0 I 7420.0 5460.0 7 4793.1 2460.4 POP. PER HOSPITAL DED TOTAL 2180.0 1650.0 1290.0 If 1066.5 10"4.2 URBAN .. .. 370.0 7r 298.0 651.2 RUIAL .. .. 10610.0 77[ 5"3.4 2594.6 AIISSIONS PU HOSPITAL BD .. . 27.0 AVECRAE SIZE OF HOUSEHOLD TOTAL 5.2 5.6 5.2 1Z uRN 5.2 5.6 4.6 7;. RURAL 5.2 5.6 5.3 T. AVERAGE NO. OF PERSONSIEOO TOTAL 2.6 2.8 URN 2.6 2.6 RUlRL L6 2.8 ACCESS 70 ELECT. ( or OWELLINGS) TOML .. .. mL .. .. RUA .. .. . .. ANNEX I Pa 2 of 5 llS- 0WC.L INDICATOSS DAA INm _R mST (MOST Ua T RL zK,ecENT LW N MIlDW Xis Igo& 197oik ITAzhik ASIA & PACIFIC ASIA I PACIFIC ADJUSTED INROLID RATIOS PUINRYs TOTA 61.0 73.0 79.0 97.4 102.0 MAIN 80.0 90.0 93.0 110.5 105.9 PUZALK 40.0 56.0 64.0 83.7 91.2 SZcONDATmn TOTSL 20.0 26.0 30.0 35.9 46.0 MALS 30.0 36.0 39.0 44.6 48.7 FUAI 10.0 15.0 20.0 26.5 43.1 VOCATIONAL (t oE WCONDAXR) 2.6 1.0 0.7 i 2.2 17.5 PUPIL-URACNIER RATIO TRIRY 46.0 41.0 54.0 38.5 31.3 SEONDY 16.0 21.0 .. 18.7 23.5 ADULT LlITRC RATE tS) 27.6 36.1 36.2 53.4 73.9 PASSESZ CARS/THOUSAND POP 0.6 1.1 1.4 ^ 0.9 10.1 RADWO ECEIVERS/TUOUAND PP .9 21.5 43.6 112.1 113.6 TV RBCUV3/SIDNOUSD POP 0.0 0.0 1.7 15.7 0. 1 NEXWSPAPER ("DAILY cENEAL INTEREST") CIRCULATION Pn TIOUSAND POPLlATION 10.6 16.2 19.4 /h 16.2 53.9 CINISA ANNA ATZT SDACECAPITA 3.2 6.2 3.7 ; 3.6 3.4 :O aM TOT LABO FORCE (THOIUS) 185951.0 219194.0 2P169.0 PaUS (PIRCENT) 30.7 32.5 31.8 33.3 33.5 ACRICULTMS (PECENT) 74.0 74.0 71.0 69.6 52.2 INlUIJIUY (SPERcE) 11.0 11.0 13.2 15.8 17.9 IANTCIPATION RATZ (MRCEO) TOTAL 42.8 40.0 39.4 42.6 3L7 NM 57.0 52.4 52.0 56.7 30.9 FrNAIE 2z3 26.9 25.9 29.8 26.6 ECONOMIC DEPENDC RaTw 1.1 1.1 1.1 1.0 1.1 IRCORS -X PERCENT or PVATS INCOS lIZ:ZCD BY NIGHEST 5S or NOUSEHOLDS 26.7 26.3 A 22.2 22.2 2L2 RICHEST 202 OIP NOUSEOLUS 51.7 48.9 A 49.4 4 48.0 68.0 LOzEST 20S oF HOwsO 4.1 6.7 7.0 6.4 6.6 LOWEST 460SO Or ousRR 13.6 17.2 A 16.2 A 15.5 15.5 RICeT C STDWSAIED ABSOLUTE POVERTY ICME LEVEL (USS PER CAPTA) URAN .. .. 13LO h 133.9 18U.6 URAL .. .. 114.0 111.6 152.0 ESTDUATD RATV POVERTY INCOME LEL (USS PER CAPITA) u .. .. .. .. 177.9 RuRAL ,. . .. .. 164.6 A ESTIMATED POP. PlEw ABSOLUIE POVTY NCOM LL (C) URBN ". .. 40.3 63.8 23.4 RURAL , . .. 50.7 4 51.7 37.7 NOr AVAILULE NOT APPLICAII N O T E S / To group averegem for aea Indlcator are popwlclon.wUbted eritlttic seea. Coerep of eomntrUe amo the lndicatore depend on evalabillty of dat and fis not unifom Ub nles otherule noted, "Das for 1960" refor to ay yea betwee 1959 and 1961; "Data for 1970" betwen 1969 end 1971; and data for 'Maut Recent Etitee" betmen 1980 ad 1982. /c 1977; /d 1976; i 1975; /f 1978; a 1962 lb 1979; IL 196-65. nE, 1936 ANISE I _____________ ~~~~~~~~Page3 of 5 Nmess stO%moa ml bees a dugee lPM esomme a.ereuei, geapi lb. -l1 oaskveelee as Stee61le. Ce ell Welm t. iSSd hloeke lbeP as he tasImlmel;l es-.inI. kgdme lee tan1. 59 eleetdees ceilelel Ns eamps. med mr dguises mails Is ientemu ao due. la do. en. gca110leee. mdcfl me in eSh gibe, SN meeiiede iMslee lat,d uS aensutiee sonlsis eels glteimm e kis Galie. 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Groupe de la Banque mondiale · Memorandum & Recommendation of the President
India - Maharashtra Petrochemical Project
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Memorandum & Recommendation of the President
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