Announcement of Twenty Million Dollars Credit for Fertilizer Production in India on August 2, 1971

• INTERNATIONAL DEVELOPMENT ASSOCIATION 1818 H STREET, N.W .. WASHINGTON D. C. 20433 TELEPHONE: EXECUTIVE 3-6360 IDA Press Release No. 71/33 Stiliject: $20.0 million credit for August 2, 1971 fertilizer production in India The International Development Association (IDA), an affiliate of the World Bank, has approved a credit of $20.0 million to help India to increase the production of fertilizers. The project is an imI,,urtant element in the Government of India's strategy to sustain the momentum of growth in the country's agricultural sector by increasing the supply of fertilizers and other modern farm inputs. The credit, the first from IDA in support of fertilizer manufacturing in India, will finance the second stage of an expansion program of The Fertilisers and Chemicals, Travancore Limited (FACT), a public sector company, located in • Cochin, Kerala. The $47.9 million program, when completed in mid-1974, will enable FACT to manufacture annually 485,000 tons of granulated NPK fertilizers and 7,500 tons of cryolite, an indust r:i.al chemical. It will help India save about $16 million a year in foreign exchange and improve the supply of fertilizers in the four South Indian States of Andhra Pradesh, Kerala, Mysore and Tamil Nadu. A major goal of Indian economic development is self-sufficiency in agriculture and fertilizer. An effort to expand India's fertilizer production rapidly was launched in 1965 simultaneously with the introduction of the new agricultural strategy, emphasizing the development and spread of high-yielding seeds requiring irrigation and heavy applications of fertilizers. Since that time, India has in- creased its nitrogen fertilizer production capacity to about 1.4 million tons per year. New capacity totaling almost a million tons per year of nitrogen is under construction, and long-range plans are for a fourfold increase over existing capacity. Despite the recent increases and planned new facilities, internal production of both nitrogen and phosphate has not met demand in the past and will not be able to meet the rising demand over the next decade. India has been spending about • $150 million a year on the import of fertilizers. The FACT project will help to fill part of the gap between domestic production and demand. /more IDA P.R. No. 71/33 -- India -- fertilizer - 2 - FACT carried out the first phase of its expansion (a plant to produce 330,000 tons of urea annually) with financial assi.stance from Italy. IDA is assisting the • second phase of the project consisting of three units (a sulfuric acid plant, a phosphoric acid plant and an NPK granulation plant) for the production of NPK fertilizers and a plant to manufacture cryolite, a chemical used in the manufacture of aluminum. The project als" includes associated facilities, services and port improvements. The cryolite plant offers the additionai adv2ntage of reducing a possible pollution problem by recovering fluorine from the manufacture of phos- phoric acid during the production process. The IDA credit will finance the expected foreign exchange costs and some local currency expenditures. The balance of the cost, amounting to $27.9 million equivalent, will be met by funds from the Government of India. The project will be carried out by Fact Engineering and Design Organisation (FEDD), the planning and engineering arm of FACT. The IDA credit will be extended to the Government for a period of 50 years, including a 10-year period of grace. It will be interest-free, but a service charge of 3/4 of 1% will be made to cover IDA's administrative costs. ment will re-lend the proceeds of the credit to FACT at ~%. The Govern- • The credit is the first industrial operation for the Bank or IDA in India's public sector. Two investments by the Bank's other affiliate, the International Finance Corporation, are helping to finance two private sector fertilizer enter~ prises in Uttar Pradesh and Goa. - 0 - •