Announcement of IDA Approves One Hundred Ninety Million Dollars for Indian Railways on November 13, 1978

FOR IM.MEDIATE RELEASE •World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A. • Telephone: (202) 393-6360 IDA NEWS RELEASE NO. 79/22 November 13, 1978 IDA APPROVES $190 MILLION FOR INDIAN RAILWAYS The International Development Association (IOA), the World Bank's affiliate for concessionary lending, today announced the approval of a $190 million credit for a railway modernization and maintenance project in India. This project forms a part of Indian Railways' investment covering the period 1978/19-1982/83, which amounts to about $3,750 million and provides for the acquisition of workshop machinery and equipment, construction of a wheel and axle plant at Yelahanka in the State of Karnataka, and support for an improvement program for the Indian Railways' manufacturing units, including technical advisory services and overseas staff training. Indian Railways is the nation's largest undertaking with about 1.7 mill ion employees. It operates a system of over 60,000 route-kilometers and owns three factories which manufacture diesel and electric locomotives and passenger coaches. It also supports a central research and development or- ganization. In 1977, the railways carried about 246 million tons and 311 billion passengers. Growth in traffic over the coming five years is projected to be about 4% annually for both freight and passengers. The IDA credit is the fourteenth in a series of Bank/lDA operations with Indian Railways, and, with this credit, total lending to Indian Railways amounts to $1,086.5 million. Previous lending operations have contributed to high engineering standards and to the present managerial and financial strength of Indian Railways. The present project is designed to improve the operational efficiency of Indian Railways by ratfonal izing and modernizing maintenance, removing existing bottlenecks in manufacturing capabilities, and support research and development activities related to improvement in motive power. •~ NOTE: Money figures are expressed in U.S. dollar equivalents. FORM NO. 1121 (5-76) T ECHNI CAL DA T A PROJECT: COUNTRY: TOTAL COST: Rai lv,~;· Modernization and Maintenance India $459 mi 11 ion • I DA FINANCING: $190 million, standard IDA terms OTH~R FINANCING: Government of India tMPLEMtNTING ORGANIZATION: lndi~n Railways (IR) Ra i 1,way Bhawan New Delhi, India Cable: RAILBOARD PROJECT DESCRIPTION: It will help the Indian Railways reduce manufacturing and maintenance costs of locomotives and rolling stock and to improve their performance and availability. The project provides for: (i) acquisition of workshop machinery and equipment, together with necessary parts and components for implementation of a unit exchange maintenance system; (ii) construction at Yelahanka in the State of Karnataka of a wheel and axle plant, with an annual rated manufacturing capacity of 70,000 wheels and 23,000 axles, and supply of about two years 1 requirements of imported wheels, tires, axles and wheel sets; and (iii) development support for a product improvement program for IR's manufacturing units, including technical advisory services and overseas staff training. • PROCUREMENT: All items financed under the credit will be procured by IR through international competitive bidding and limited tender from established manufacturers in accordance with Bank/I DA guidelines, except for: (i) contracts for equipment and materials of $100,000 or less, which would be too low fn value to warrant the administrative complications and cost of competitive bid- ding procedures, with a total value of not more than $5 million; and (ii) contracts with an aggregate value of up to $8 mill ion for proprietary items to be installed at the wheel and axle plant at Yelahanka. Due to proprietary technical know-how and patents applied to certafn critical plant components, procurement of these items through international competitive bidding is not feasible. The aggregate value of contracts for the workshops modernization component and the wheel and axle plant com- ponent which will be awarded on the basis of 1 imited tenders from established manu- facturers is estimated to be at $21 mill ion. Indian suppliers will be granted a preference margin of 15% or the current rate of import duty, whichever is less. ECONOMIC RATE OF RETURN: ESTIMATED COMPLETION DATE: 23% 1984 •• - 0 -