Ceylon - Mahaweli Ganga Development Project

I~~~~~~~~~~ I SMP ICT RESTRICTED CIRCULATING COPY Report No. P - 770 TO BE RETURNED TO REPORTS DESK IN CENTRAL FILES This report was prepared for use within the Bank and its affiliated organizations. They do not accept responsibility for its accuracy or completeness. The report may not be published nor may it be quoted as representing their views. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN AND DEVELOPMENT CREDIT TO THE GOVERNMENT OF CEYLON FOR THE MAHAWELI GANGA DEVELOPMENT PROJECT January 7, 1970  INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOP1ENT INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN AND DEVELOPMENT CREDIT TO THE GOVERNMENT OF CEYLON FOR THE MAHAWELI GANGA DEVELOPMENT PROJECT 1. I submit the following report and recommendation on a proposed Bank loan in an amount in various currencies equivalent to US$14.5 million and on a proposed credit from the Association in an amount in various currencies equivalent to US$14.5 million, both to the Government of Ceylon, for the Mahaweli Ganga development project. PART I - HISTORICAL 20 The importance of the multi-purpose Mahaweli Ganga project for Ceylon's economic development was identified by a Dank mission in 1961. In July 1961, a study of a trans-basin diversion scheme was financed by the U.S. Government. Following a second Bank mission in May 1962, which recommended supplementary investigations both on technical and economic aspects, a comprehensive irrigation and hydro-power study of the Mahaweli Ganga basin and of Ceylon's north-central provinces was undertaken by UNDP/FAO. This study resulted in the formu:lation of a M,'iaster Plan to be implemented in three phases over a 30-year period, and a feasibility study for the first stage of development. The Government approached the Bank group for financial assistance for this first stage and the project was appraised in February 1969. Negotiations took place in Washington between December 8 and December 12, 1969. The Government delegation included Mr. David Loos, Director of External Resources in the Ministry of Planning and Economic Affairs, and Mr. T. Sivagnanam, Senior Assistant Secretary of the Ministry of Lands, Irrigation and Power. 3. Previou'ekdFikGroup assistance for agriculture and power in Ceylon includes two IDA credits, aggregating $h.5 million, for lift irrigation and land reclamation and drainage, and four Bank loans for power, totalling $61.5 million, of which the first three have been disbursed.  -2- 4. The following is a summary statement of Bank loans and IDA credits to Ceylon as of November 30, 1969: Loan or Amount (US$ million) Credit No. Year Borrower Purpose Bank IDA Undisbursed 101-CE 1954 Government of Ceylon Power 15.9 - _ 209-CE 1958 Government of Ceylon Power 7.3 - - 283-CE 1961 Government of Ceylon Power lh.1 - - 520-CE 1967 Development Finance Industrial Corporation of Ceylon Finance 4.o - 2.6 121-CE 1968 Government of Ceylon Irrigation - 2.0 1.8 569-CE 1968 Government of Ceylon Highways 4.9 - 4.9 133-CE 1968 Government of Ceylon Highways - 4.9 *L.9 634-CE 1969 Development Finance Industrial Corporation of Ceylon Finance 8.0 - 8.0 636-CE 1969 Government of Ceylon Power 21.0 - 21.0 168-CE 1969 Government of Ceylon Land Reclamation - 2.5 2.5 Total (less cancellations) 75.2 9.4 of which has been repaid to Bank and others 11.L Total now outstanding 63.8 Amount sold 3.3 of which has been repaid 2.6 0.7 Total now held by Bank and IDA 63.1 9.h Total Undisbursed 36.5 9.2 L5.7 5. Ongoing projects are generally progressing satisfactorily. Orders are about to be placed for equipment financed under the highway loan and credit approved in 1968, and disbursements under the 1968 lift irrigation credit (121-CE) have begun. 6. No other lending operation in Ceylon is expected to be presented in this fiscal year. A power transmission project will probably be appraised in the