Announcement Coal Mining and Urban Development Projects in India Approved on April 23, 1987

... ,,fOR IMMEOIA TE RELEASE World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A. BANK NEWS RELEASE NO. 87/53 Contact: Pastor B. Sison IDA NEWS RELEASE NO. 87/59 (202) 477-3653 COAL MINING, URBAN DEVELOPMENT PROJECTS IN INDIA APPROVED WASHINGTON, April 23 -- The World Bank has approved two projects for India -- one a $340 million loan for coal mining and coal quality improvement, and another for urban development in the State of Uttar Pradesh. The latter project is being financed by a Bank loan for $20 million and a credit of SOR 106.3 million ($130 million) from the Bank's concessionary lending affiliate, the International Development Association (IDA). The main objectives of the coal mining and coal quality improvement project are to increase the supply of thermal coal to the power and industrial sectors and coking coal to the steel sector and to improve the quality of coal available to consumers. Coal continues to be India's most abundant energy resource. In 1985/86, coal production reached 153 million tons, making India the sixth largest coal producer in the world. Coal presently accounts for about 60 percent of all commercial energy produced in the country, and it is expected to remain at □ore than 50 percent over the next decade. The project includes development of the second phase of the Gevra open-pit mining complex and construction of the Sonepur-Bazari open-pit mining complex, including infrastructure such as workshops, training institutes and coal-handling plants. Environmental protection measures provide for air and water quality protection, erosion control, reforestation and land reclamation. The project supports the institutional development of government-owned Coal India Ltd. by strengthening its manpower planning and organization, improving training, and improving the maintenance of equipment through modernization of workshops. The project also includes importing about three million tons of low-ash coking coal to make up the shortfall in domestic supplies and to improve the average quality of coking coal supplied to steel mills. In addition to the Bank loan, Coal India Ltd. is financing $53 million of the project cost and the Government of India $250 million. The project is scheduled to be coapleted in 1994. As for the second project, there is a growing realization in India that urban development is an important part of economic development and that past efforts to limit urban growth not only have had limited impact but may, in fact, have been counterproductive. Increasing attention is therefore being given to the (more) NOTE: Money figures are expressed in U.S. dollar equivalents. IDA credits are denominated in SDRs (Special Drawing Rights), which are valued on the basis of a "basket" of currencies. The U.S. dollar equivalent of the SDR amount of the IDA credit reflects the exchange rates existing at the time of the negotiation of the credit.  -2- development of more appropriate urban sector policies and to the strengthening of sector institutions. Uttar Pradesh is the fourth largest state in area in India but the most populous. About one million people a year are being added to the state's urban population, which could exceed 52 million by the year 2001. About 240 million people -- or 37 percent of India's total population -- live in the Ganga basin. Of these, about 20 percent live in more than 600 urban centers, and people who live in about 100 cities in the region discharge liquid and solid waste directly into the Ganga River. Thus, the second project comprises two programs. The first is the Uttar Pradesh Program which supports sector management, technical assistance and training, sites and services, slum upgrading, area development, water supply, sewerage and sewage treatment, drainage, low-cost sanitation, solid waste management, maintenance management, and traffic engineering in about 12 urban areas in the state and low-cost sanitation investments in another 18 towns. The Ganga Program is the second program, and it provides consulting services, studies, training, priority rehabilitation and pollution control works, and equipment for sewer cleaning operations and river monitoring to reduce pollution of the Ganga River. The Bank loans are for 20 years, including five years' grace, with a variable interest rate, currently 7.92 percent, linked to the cost of the Bank's borrowings. It also carries an annual commitment charge of 0.75 percent on the undisbursed balances. The IDA credit is for 50 years, including 10 years of grace; it carries no interest but has annual charges (0.5 percent on the undisbursed balances and 0.75 percent on the disbursed balances). #