Announcement of Eighty-Three Million Dollars Credit for Shipping in India on September 27, 1972

', • • INTER.NATIONAL DEVELOPl\ffiNT ASSOCIATION 1818 H STREET. N.W., WASHINGTON 0. C. 20433 TELEPHONE: EXECUTIVE 3-6360 IDA Press Release No. 72/48 Subject: $83.0 million credit for September 27, 1972 shipping in India India's capacity to meet the growing demand for transport services from au increasing domestic oil refinery capacity and rising consumption of refined petroleum products will be expanded with the help of a credit of $83.0 million from the International Development Association (IDA), an affiliate of the World Bank. The credit will enable India to buy four oil tankers, each of about 80,000 deadweight tons, for carrying crude from the Persian Gulf ports to feed ~he Hal 6! ~i and Barauni refineries and two refined oil products tankers, each of 20,000 0wts ~ for the import~ export and coastal distribution of refined petroleum products. The credit is the first direct lending by the Bank Group for ocean-going ships in a developing country. The previous direct lending for ships by the Bank was in the Netherlands in 1948 dun.ng the post-war reconstruction phase of the Bank's work. The shipping industry in developing countries, however, has been indirectly assisted by Bank Group commitments to development finance companies. Shipping is an important industry in India. The Indian merchant fleet r.an.k~ fifteenth in tonnage in the world and comprises 250 ships totaling 3.8 million I dwt. India's shi.ps carry about 15'7. of her overseas trade and about 5% of her crude oil imports. The demand for oil tanker services has been increasing in India. Import cf • crude oil is expected to increase to 23 million tons by 1976 from its present level of 11.6 million tons. Indian demand for refined products is expect·ed to /more  IDA P.R. No. 72/48 - India -- Shipping - 2 - g~ow from the present level of 18 million tons to 32 million tons. In addition, -~ exports and coastal movement of refined petroleum products are expanding. The project being assisted by IDA, which forms part of India's Fourth Five- Year Plan (1969-74), will provide some of the ships required. The four crude oil tankers to be purchased will be able to transport about 4.8 million tons a year, meeting the initial demand for crude oil delivery at Haldia for use at the two refineries located at Haldia and Barauni. The produc ta tankers will be able t" transport about 1.2 million tons ~r year, about soi of the estimated import demand for refined petroleum products in 1976. The Indian Government is improving the navigation. channels up the Hooghly River·to Haldia. This involves deepeni.Dg the water at the Haldia pier and in tl:le. turning. area and dredging .the· Hcoghly estuary to permit deep-draft vessels. • ·nutil these. projects are completed in 1980, lighterage will be required. This is ·being -met by: the provision of one or more crude oil transfer vess~ls totaling a.l>out 16,,000 toos. at Haldia.. The Gownn.ent will iJnl,rove shore facilities and provide pollution control equipment -at. Haldia, Cochin and other ports handling oil. The Government of India will relend the proceeds of the credit to the Shipping Corporation. of. India (SCI) through the Shipping Development Fund Committ.ee· (SDFC), a statutory agency creAted ,by the Government to promote the growth of the shipping industry through long-term loans. SCI is publicly owned and is the largest Indian shipping· enterprise, owning· and ·operating ships totaling 1.4 million dwt. SCI "'.Jill own and .operate the six. tankers to- be purchased with the IDA credit. These t:ank.ers w.ill b~ chartered to the Indian Oil Corporation, a public enterprise which • owns and operates.several refineries, including Barauni refinery and one under ·conat.ruction at .Baldia. /more t IDA !i'.R. No. 72/48 - India -- Shipping - 3 - The IDA credit to the Government of India will be for 50 years including a 10-year grace period. It will be free of interest, but carries a service charge of 3/4 of 1% to ~over the administrative costs of IDA. The Government of India's loan to SDFC is repayable in 17 years and carries interest of 7 1/2%. The SDFC loan to SCI will be repayable over the same term at 8 1/2%. The tankers will be purchased on the basis of international competitive bidding. Payment for the tankers is expected to be completed by December 1974. The project brings the total of Bank and IDA conmitments for the develop- ment of India's transport -- railways, roads, ports, ships and civil aviation -- • to $936.6 million. In addition, IDA has financed local manufacture of commercial vehicles through six industrial imports credits made between 1964 and 1970. - 0 - •  ",· September 27, 1972 ~HNICAL DATA PROJECT: Shipping BORROWER: Government of India TOTAL COST; $84.4 million IDA FINANCING: $83.0 million credit, 50 years, 10 years of grace, no interest, but a service charge of 3/4 of 1% OTHER FINANCING : Balance of the coat being provided by the Government of India (shore facilities and pollution control) and the Shipping Corporation of India (crude oil transfer vessels). • IMPLEMENTING ORGANIZATION: The Shipping Corporation of India (SCI), Bombay, India, (:lROCUREMENT : Purchase of four crude oil tankers in the 80,000 dwt class for use between the Persian Gulf and Haldia; pur- chase of two refined oil products tankers in the 20,000 dwt class for the import, export and coastal distribu- tion of refined products; improvement of shore facili- ties and installation of pollution control equipment in oil-handling ports; and one or more oil transfer vessels totaling 16,000 dwt for use at Haldia. Tankers w:i.11 be purchased on the basis of international competitive bidding. CONSULTANTS: None ES'.CINATED COMPLETION DATE: December 1974 •