Announcement of India to Reduce Power Shortages in Northern Region on March 6, 1989

FOR IMMEDIATE RELEASE iNorld Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A.* Telephone: (202) 477-1234 BANK NEWS RELEASE NO. 89/35 Contact: Richard Kollodge (202) 477-4507 INDIA TO REDUCE POWER SHORTAGES IN NORTHERN REGION WASHINGTON, March 6, 1989 -- India is launching a hydropower project that will provide a reliable source of electricity to 1.3 million new consumers, including industries, farms and households in the country's northern region. The project, supported by a $485 million loan from the World Bank, will enable the country to keep pace with a growing demand for electricity. The Government of India will channel $437 million to Nathpa Jhakri Power Corporation to finance the construction of a 1,500-megawatt power station that includes a 30-kilometer tunnel and an underground power plant that would become one of India's biggest hydropower structures. A diversion dam will be constructed across the Sutlej River in a sparsely populated area of Himachal Pradesh state. The government will resettle about 70 families and will take steps to protect the environment. The government will also channel $43 million to Himachal Pradesh to reinforce and extend the transmission and distribution systems, and to strengthen the financial and management operations of the local electricity board. The project also includes $5 million for training of personnel of India's Central Electricity Authority, Central Water Commission and other government agencies. India's power supply has been increasing for the past ten years but not nearly enough to meet the country's energy demands. The northern region, comprising six states and the union territories of Chandigarh and Delhi, will require a 50 percent increase in power supply by 1995 in order to maintain industrial and agricultural growth. The World Bank loan is for 20 years, including five years of grace, with a variable interest rate, currently 7.65 percent, linked to the cost of the Bank's borrowings. It also carries an annual commitment charge of 0.75 percent on the undisbursed balance. NOTE: Money figures are expressed in U.S. dollar equivalents.