Announcement of India to Launch Two Power Projects with Help of World Bank Loans, and Bank Loan and IDA Credit to Improve Water and Sewerage in Madras on June 19, 1987

FOR IMMEDIATE RELEASE World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A. BANK NEWS RELEASE NO. 87/91 Contact: P.B. Sison IDA NEWS RELEASE NO. 87/96 (202) 477-3652 INDIA TO LAUNCH TWO POWER PROJECTS WITH HELP OF WORLD BANK LOANS; BANK LOAN AND IDA CREDIT TO IMPROVE WATER, SEWERAGE IN MADRAS WASHINGTON, June 19 -- India is launching two power sector projects with the help of World Bank loans totaling $860 million, and a third project, which aims to improve water supply and sewerage in the city of Madras, with another Bank loan of $53 million and a credit of SDR 12.5 million ($16 million) from the International Development Association (IDA). IDA is the World Bank's concessionary lending affiliate. The first power project, supported by a $485 million World Bank loan, will help improve the quantity and reliability of electricity supplied to New Delhi, the nation's capital. In addition, the project is expected to make more efficient use of assets in the power sector, identify economic opportunities for improving the quality of coal used in power generation, implement reforms in the Delhi Electric Supply Undertaking (DESU), and reduce pollution from power generation. The project includes construction of a coal-fired power station at Dadri, rehabilitation of the power station at Badarpur, construction of a transmission line and substations, and consulting services for the National Thermal Power Corporation, Ltd. (NTPC). Additional financing for this $1.54 billion project will come from the NTPC ($965.2 million) and DESU ($91.9 million). The second power project, which is being supported by a $375 million World Bank loan, is the first phase of a 3,000-megawatt power generation complex for the states of Bihar, West Bengal and Orissa in eastern India, one of the poorest parts of the country. The project will increase power generation capacity and alleviate power shortages in the area, introduce "tower boiler" technology, which is suited to (more) Note: IDA credits are denominated in SDRs (Special Drawing Rights), which are valued on the basis of a "basket" of currencies. The U.S. dollar equivalent of the SDR amount of the IDA credit reflects the exchange rates existing at the time of the negotiation of the credit. Money figures are expressed in U.S. dollar equivalents. • - 2 - the abrasive high ash coals prevalent in the country, and improve the operational performance of NTPC by providing on-line communications between power stations and NTPC headquarters in Delhi. Additional financing will be provided by the Government of India ($657.3 million) and NTPC ($343 million). The third project will help increase water supply by about 35 percent to the city of Madras, India's fourth largest city. In addition, the project is expected to make the water supply more reliable. Sewage collection and treatment systems will be improved and expanded, and a program of low-cost sanitation will be initiated. The project is also expected to help make better use of water resources and assist the Madras Metropolitan Water Supply and Sewerage Board (MMWSSB) to develop a plan to address the medium- and long-term water supply needs of the city, recover a greater proportion of the costs from beneficiaries through improved billing and collections and increased fees, reduce costs through greater operational efficiency, and strengthen its institutional capacity to determine priorities for the sector and conduct water policy formulation and analysis. In addition to Bank-IDA support, additional financing for the project will be provided by the MMWSSB ($39 million) and the Government of Tamil Nadu ($4.2 million). The terms of the World Bank loans are for 20 years, including five years of grace, with a variable interest rate, currently 7.92 percent, linked to the cost of the Bank's borrowings. They also carry an annual commitment charge of 0.75 percent on the undisbursed balances. The IDA credit is for 50 years, including 10 years of grace; it carries no interest, but has annual charges (0.5 percent on the undisbursed balances and 0.75 percent on the disbursed balances). #-#-#