Announcement of Ten Million Dollars Credit for Fertilizers in India on December 23, 1971

i," 1',l,O ,.,,, ' ~ ', (~) • INTERNATIONAL DEVELOPMENT ASSOCIATION TE.LEPHONE: EXECUTIVE 3-6360 1818 H STREET. N.W .. WASHINGTON D. C. 20433 IDA Press Release No. 71/49 Subject: $10.0 million credit for December 23, 1971 fertilizers in India A credit o.f $10.0 million from the International Development Association (IDA), will help to increase production of fertilizer, a~ important input essential to sustain the expansion of India's agricultural output. The IDA credit, the second to finance directly the manufacture of fertilizer in India, is for the expansion of the Gorakhpur.unit of the Fertilizer Corporation of India (FCI), the largest fertilizer producer in the 411 country. When completed in 1974, the $16 million project will enable the Gorakhpur plant to produce 314,000 tons of urea per year -- an increase of 134,000 tons from its present capacity. It will save about $6.5 million in foreign exchange annually. A major goal of Indian economic development is self-sufficiency in food-, grains. In 1965 steps were taken to .encourage the development and distribution of high-yielding seeds requiring intensive irrigation and heavy applications of fertilizers, while increasing manufacturing capacity for fertilizer at the same time. Since then India has more than doubied its production of phosphate fertili.zers. New capacity totaling almost a million tons per year of nitrogen and 400,000 tons per year of phosphate is under construction. Despite ihe recent increases in capacity and new capacity planned, • production of both nitrogen and phosphate is tmlikely to meet the rising demand over the next decade. India has been spending about $150 million a year on /more  , ' IDA P.R. No. 71/49 -- India -- fertilizers - 2 - • the import of fertilizers and- fertilizer raw materials. The Gorakhpur project will help to fill part of the gap between domestic production and demand. Its output will be sold largely in northern India. FCI, which is owned by the Government of India, accounts for 30% of the cGuntry's nitrogen and 10% of its phosphate capacity. The Gorakhpur plant, which began operations in 1968, is one of the best operating divisions of FCI. Finan~ed with Japanese credit and f_u:nds from India, the plant was built by Toyo Engineering Corporation of Japan, which will provide engineering and design .. as.sistance for the e:q,ansion now to be started. Substantially all equipment will be procured on the basis of international competitive bidding. The credit is the second industrial operation for the Bank or IDA in India's public sector. An IDA credit of $20 million is assisting ·the second stage of an expansion program of the Fertilisers and Chemicals, Travancore • Limited, a public sector company, located in Cochin, Kerala. In~stments by the Bank's other affiliate, the International Finance Corporation, are helping to finance two private sector fertilizer enterprises in Uttar Pradesh and Goa. The IDA credit will be extended to the Government of India for & _p·eriod of 5.0 years, including a 10-year grace period. It will be interest-free except for a 3/4 of 1% service charge to cover IDA's administrative expenses. - 0 - • • \ • • December 2 3, 19 71 TECHNICAL DATA PROJECT: Urea fertilizer p~oduction COUNTRY: India TOTAL COST: $16 million IDA FINANCING: $10.0 mil.lion equivalent, 50 years, 10-year grace period, 3/4 of 1% service charge. OTHER FINANCING: $6 million equivalent from Government of India eqtd.ty contribution. IMPLEMENTING ORGANIZATION: Fertilizer Corporation of India, New Delhi, India. PROJECT DESCRIPTION: To increase production capacity at Gorakhpur, Uttar • Pradesh, from 180,000, tons to 314,000 tons a year • PROCUREMENT: IDA-financed items will be procured on the basis of interna- tional competitive bidding, plus a small amcnm~ of equipment to be duplicated through proprietary designs. The foreign exchange component of the project is expected to be approximately $8.7 million. CONSULTANTS: Toyo Engineering Corporation of Japan to assist in carrying out engineering and design. ESTIMATED COMPLETION DATE: Augus-t 1974. - 0 - •