Announcement of India Strengthens Electric Power-Networks in Northern States and Bombay on June 28, 1990

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. 90/109 Contact: Leandro V. Coronel (202) 458-1354 INDIA STRENGTHENS ELECTRIC POWER-NETWORKS IN NORTHERN STATES AND BOMBAY WASHINGTON, June 28, 1990 -- India will use two World Bank loans, totaling $583 million, to strengthen the electrical power networks in the Northern Region and in the Bombay area. Northern Region Transmission Project One project, to be supported by a $485 million World Bank loan, consists of the construction of transmission lines and substations, and strengthening of the power-dispatch system in India's Northern Region, which includes the states of Haryana, Himachal Pradesh, Punjab, Rajasthan, Jammu and Kashmir, and Uttar Pradesh and the union territories of New Delhi and Chandigarh. The Northern Region is the largest of India's five regional power systems. Because of a heavily loaded transmission network, the region's power system is difficult to manage and is saddled with high financial losses. The eight year, $1.2 billion project is designed to make the system more efficient and raise the quality of service. The project will also help transmit power from low-cost hydroelectic plants in the Himalayas. More than 2,000 kilo- meters of transmission lines will be constructed, and nine electrical substations, will be constructed or modified. A corporate communication system for the National Hydroelectric Power Corporation (NHPC) will also be established. Consulting services and training will be provided for the design of transmission lines and substations. NHPC and the Northern Region Electricity Board will implement the project. Other financing for the project will be provided by the Government of India and NHPC. Japan is providing a grant to help finance consulting services. Private Power Utilities (TEC) Project India will use another World Bank loan for $98 million to boost the electricity generation capacity of the Tata Electric Companies (TEC), which consist of three private utility companies that have been supplying power in the Bombay area since the early 1900s. The International Finance Corporation will also provide two loans totaling '$60 million for the project. IFC is the World Bank affiliate that supports the development of the private sector in developing countries. -2- The four-year, $274 million project will help meet increasing demand for electricity in Bombay and will reduce TEC's dependence on the state's power network. TEC will be provided with a pumped storage unit at the existing Bhira hydroelectric project, a 220 kilovolt transmission line, a gas-based combined- cycle unit for the Trombay thermal power plant, and a facility to control sulphur-dioxide emissions from the coal and oil burning unit at Trombay, a neighborhood of Bombay. Both the northern region and Bombay projects will comply with government environmental standards and World Bank policies and guidelines. The two World Bank loans are for 20 years, including five years of grace, with a variable interest rate, currently 7.75 percent, linked to the cost of the Bank's borrowings. They also carry an annual commitment charge of 0.25 percent on the undisbursed balances. NOTE: Money figures are expressed in U.S. dollar equivalents.