Announcement of Credit Granted to India for Electric Power Development on May 24, 1963

• INTERNATIONAL DEVELOPMENT ASSOCIATION 1818 H STREET, NW, WASHINGTON 25, D. C. TELEPHONE EXECUTIVE 3-6360 IDA Press Release No. 63/6 Subject: Credit for electric power May 24, 1963 in India The International Development Association, an affiliate of the World BankJ to· day extended a credit equivalent to $20 million to India for electric power develop- ment in the State of Andhra Pradesh. The credit will cover about half the cost of building a 120,000-kilowatt steam power station at Kothagudem, a reservoir to supply cooling water and a 150-mH.e transmission line to connect the station with other power facilities. The project is part of a program being carried out by the State to relieve the chronic power shortage which has for many years hampered the develop- ment of industry and agriculture. • And..11.ra Pradesh, with an area of about 107,000 square miles and a population of some 36 million, is the fifth largest Indian state in area ann the fourth in popula- tion. Progress in the development .of electric power there was begun with the launching of India's First Five-Year Plan. During the 10 years of the first two Plan periods, installed generating capacity was increa5ed from 43,000 to 213,000 kilowatts, and the number of communities receiving electricity rose from 212 to 3,213, out of a total of 26,500 for the whole State. Per capita power consumption in Andhra Pradesh is however still well below the national average. Construction of the Kothagudem power project is one of' a series of steps being taken by the State during the Third Plan period to increase capacity by about 380,000 kilowatts. It is estimated that demand in the State will reach 500,000 kilowatts by 1966; the present rate of increase is expected to continue thereafter. With this rapid growth in prospect, the Kothagudem station has been designed to allow for a • doubling of capacity in the next sta.;;e of development and for an ultimate capacity of 1,000,000 kilowatts or more. Over two-thirds of the demand is expected to come from industry, among which are plants producing iron and steel, ferro manganese, tex- ti~es, jute, rayon, rubber, fertilizers and chemicals, and engineering industries.  - 2 - The new thermal power station will be located near Kothagudem in the c,enter of the large Singareni coal fields in northern Andhra Pradesh. Low grade coal will be • transported from existing collieries over an aerial ropeway. Make-up water to com- pensate for evaporation losses in the cooling towers will come through a six-mile canal from a reservoir formed by an earth dam to be built on the nearby Kinnerasani River. A double-circuit transmission line 150 miles long will be built to connect the Kothagudem station with the Ramagundam station to supply power to the western part of the State. It will also supply power to the industrialized coastal region through its connection with the State grid. The project will be built and operated by the Andhra Pradesh State Electricity Board, which will be assisted by consultants during the construction period. The Kinnerasani dam will be built by the State Government, which is responsible for public works of this kind. All equipment will be purchased on the basis of inter- national competitive bidding. The total cost of the project is estimated at the equivalent of $41 million and it is scheduled for completion in 1966. ., The IDA credit to India is for a term of 50 years. Repayment of principal will begin on December 1, 1973. Thereafter 1% of the principal will be repayable annually for 10 years and 3% will be repayable annually for the final 30 years. The credit is free of interest, but a service c~arge of 3/4 of' 1% per annum on the amount withdrawn and outstanding will be made to meet IDA's administrative costs. The Government of India will relend the proceeds of the IDA credit to the State of Andhra Pradesh in accordance with its usual method of financing power and other major projects; repayment is expected to be over a period of 20 yea.rs, after a grace period corresponding to the construction period, at an interest rate of 4i% annually. The State Government will in turn make the proceeds available to the State Electri- city Board on the same terms with an additional 1/2!1/o charge. lion. Today's credit increases the total amount of IDA credits to India to $300 mil- The projects financed have been for the development of' port facilities, high- ways, railways, telecommunications, electric power, irrigation, drainage and flood protection. •