Announcement of India's Petroleum Industry to Get Boost from World Bank Loan on March 12, 1987

FOR IMMEDIATE RELEASE World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A.• Telephone: (202) 477-1234 BANK NEWS RELEASE NO. 87/ 43 Contact: Pastor B. Sison (202) 477-3653 INDIA'S PETROLEUM INDUSTRY TO GET BOOST FROM WORLD BANK LOAN WASHINGTON, March 12 -- India, in an effort to decrease reliance on imported oil and to accelerate development of indigenous oil and gas resources, is being aided by a $140 million World Bank loan. Two public sector companies currently undertake petroleum exploration and production activities in the country. The smaller of the two companies, Oil India Limited (OIL), is the project recipient. Specifically, the project comprises (a) application of production improvement schemes; (b) implementation of a gas reinjection scheme and associated gas supply network in the partially depleted Assam oil fields; (c) exploration in OIL's new (and gas-prone) exploration area in Rajasthan and for deep gas in the Kumchai area of the State of Arunachal Pradesh, involving acquisition and interpretation of high seismic data and drilling of about 10 exploratory wells; and (d) strengthening OIL's technical and institutional capabilities through technical assistance, training and the purchase of equipment for research and development. Concerned about the adverse impact of energy shortages on economic growth, the Government of India has nearly doubled the energy sector's share of public investments in little more than a decade. And, at the same time, the country has been able to reduce its reliance on imported oil from 66 percent to about 25 percent. The project will cost about $584 million overall, with OIL providing $384 million and cofinancing providing $60 million. The project is expected to be completed in 1994. The World Bank loan is for 20 years, including a five-year grace period, with a variable interest rate, currently 7.92 percent, linked to the cost of the Bank's borrowings. It also carries an annual commitment charge of 0.75 percent on the undisbursed balances. NOTE: Money figures are expressed in U.S. dollar equivalents.