Docimnu of
The World Bank
FOR OmCIL4 USE ONLY
MICROFICHE COPY
Report No. :P- 6073-IN        Type: (PR)                         q    poP603I
Title:  TECHNICAL ASSISTANCE FOR PRIVAo   P-6073-IN
Author: CHASSARD, J
Ext. :81873 Room:G3071 Dept. :SA2EG
MEMORANDUM AND RECOMMENDATION
OF THE
PRESIDENT OF THE
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
TO THE
EXECUTIVE DIRECTORS
ON A
PROPOSED LOAN
IN AN AMOUNT EQUIVALENT TO US$20 MILLIC1
TO
THE POWER FINANCE CORPORATION LIMITED
(WITH THE GUARANTEE OF INDIA)
FOR A
TECHNICAL ASSISTANCE PROJECT
FOR PRIVATE POWER DEVELOPMENT
June 2, 1993
Th. d      hds a ra"mca distribuion aod  y be used by recipiets oly i the performance  Of
thlir ofM"a dties. its contn  may not otherwise be disclosed _ihu Wworl Bank wthorization.



CURRENCY EQUTVALENS
Cuncy unit        =      Rupees(R&)
One Rupee         - =0i036
One USDolar       =      Rs. 30.2
ABBREVIATIONS AND ACRONYMS
GOI               -      Government of India
IPC               -      Investm ent Promotion Cell
IPP               -      Idependent Power Producer
IOI               -      Letter of Invitation
MOP               -      Minitry of Power
MOU               -      Memorandum of Understading
PFC               -      Power Finance Corporation
Lidted
PHD               -      Policy and Human Resource
Development Fund (apan)
PIU               -      Project Implementation Unit
PPA               -      Power Purchase Agreement
SEB               -      State ElectIcity Board
SG                -      State Government
TA                -      Technical Assistance
LUSAID            -      United States Agency for
Interational Development
ISCALYEAR
Aprill - March31



FOR OMCLIAL Use ONLY
INDIA
TECHNICAL ASSISTANCE PROJECr
FOR
PRIVATE POWER DEVELOPMENT
Loan and Project Summary
Borrower:                 Power Finance Corporation Limited (FC)
Beneficiares:            State Electricity Boards and other power utlities
Guarantor:               India, acting by its President
Amount:                   US$20 million equivalent
Terms:                   Repayable over 20 years, including five years of grace, at
the Banlks standard variable Interest rate.
Onlending Terms:         From PFC to the final b    ar  at the prevaling P-c
lending rates for tecnidcal assistance, to be adjusted for
foreign eachange rik
Guarantee fee:           The Govenment of India (GO) would charge a guarantee
fee of not less than 1% on the prlncipal amounts of the
Bank loan wfithdrawn and outstanding.
Fianing Pla              IBRD                US$20.0 milion
PFC                US$ Q5 million
Total              US$20.5 million
Economic Rate of Retumr    Not applicable
Staff Appraisal Report:    Not applicable
This document has a rmsticted distribution and may be used by recipients only in the performance
of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.



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MEMORANDUM AND RECOMMENDATION OF TM PRESIIENT
OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMEN
TO THEECUTIVE DMECTORS
ON A PROPOSED LOAN
TO THE POWE FINANCE CORPORATION LIMTED
FOR A TECHNICAL ASSISTANCE PROJECT
FOR PRIVATE POWER DEVELOPMENT
1.         I submit, for your approval, the following memorandum and
reommendation on a proposed loan to the Power Finane Corporation Limited (PP),
with te guarantee of India, for the equivalent of US$20 milon to help finance a
TechcalAssistance Project for Private Power Development. The lon would be at the
Bankfs sandard variable interest rate and repayable over 20 years, Including five years
of grace.
Country and Sector Background
2.         Quite proninent among the long-term  pediments to economk growth
and Ldusial investment In India are the dincentves and oassociated wifth the
Inadequate supply and reliability of power in the country. Even If substantal effidency
are acieved, sizable investments are needed to mitigate the negadve
Impact of power shortages on the economic Lberalization proamBecause public
utilities are unable to undertake such investments due to a lack of fumds, the
Government of India (GO{) has taWen steps towards opening the sector to ptivate
nvestment with a view to mobilize private finance for power development. The
Electicty (Supply) Act, 1948, was amended in September 1991 to lift many of the
regulatory disincentives to private investment in the power sector, su tly, high-
level promotional efforts were undertaken by the govermment in the spring of 1992.
This Initiative, launched at a propitious time when utilities i developed counties are
looidng for new Investment opportunities abroad, has been quite sInessful in
encouraging private investors, both domestc and foreign, to propose investments In
power projecs About 43 proposals are now under active conslderation by private
entrepreneum; for 38 of them, Memornda of Understanding (MOUs) havebe signed
between various State Electricty Boards (SEBs) and private developers, giving theatter
exlusive rights for the development of their projMect Eight projecs are today at an
advanced stage of negotiation in six diffrent states or union teito
3.         GOrs poliy for private sector ppaton In the power sector focuses
heavily on encouraging Independent power produceM MPs) to set up and operate
power generaing faciities In Idia and has not yet establshed a dear framework for
other forms of prvatization, such as manament contracts for utility operations, the
abilition of existing power plants, or the prvatzatn of distron. Fureme,
the poicy defines the round  les and broad pa s within wic IPPs may
consider investmts in dia, but its ment     has confirmed that there are st a
number of isues to resolve, at the c     and state levels, before actual Investments can
take place under sustainable conditions. This is due, in large part, to the fict that the
power sector is going through a transition period and that the prevailing weakness of
the sector place unuly high risks on private developers. WhUle It is isportant for
GOI to show responsiveness to private investors' concens and recognize that this Is a
transition perlod, It is also ucial at this stage to cary assess the impications fr the
countty as a whole of any new polic decsion that could be take in response to specfic



-3.
demands put forward by individual project proponents, as any concession rade in
respect of one particular project could set aprecedent for ote.
4.         Furthermore, the process by which the policy is being implemented raises
a mber of concr: for the most advanced projects, negotations of power purhse
agreements (PPA) between SEBs and private developers have  a stage where
the SEs have serious apprehensions about the nature and extent of the rs volved i.
the proposed tractions and the long-term liabbities embedded in the draft
agreements. This is due not ordy to the novelty of the process and the SEW' lack of
fimiliarity wift some key contractual provisons but first and foremost to the fact that
SEWs have little basis to compare with; as the signing of MOUs has taken place mainly
on a first-come first-served basis, and thus no real competition has taken place among
project sponsors, most SBBs find themseves in a situation where they have no assurance
hiat they are getting the best offers. The proposed technical assistance would help
addres these various issues in a timely and consistent manner.
Past Bank Involvement
5.         Bank support to GOrs private power develoment Initiative has been
Limted so far to: (O assistnce in arranging a grant from the PHRD fundl in early 1992,
to help establish two private power projects in the state of Maharshtra, and (H)
provision, in the Second Maharashtra Power Project Lx 3498-IN), approved in June
1992, of additional consultig services to assist the Government of Mihaashtra (GOM)
and the Mah a Stat Electriety Board (MSEB), in completng the contracting
proess for these projects. The grant has enabled the Bank to quidy resond to the
Indian authorities' request for assistance in evaluating an uno    project proposal
submitted by Enron, USA, for a 2,000-MW LNG-based power plant at Dbhol, and
develop documentation for two other Mal     projects. A second PHRD grant was
approved in late 1992 to provide dsilar assistance to other states.
6.         The Bank's support has been inumental in ntfying the polky issues
and the weaknesses of tie Implementation process. It has also helped the various
agencies involved in the program recognize the complexities Inherent In private power
development, and the need, given the size of the program, to stegthen the existing
Institutional setup and access spedallzed consultancy services on a much larger se, to
ensure that the objectives of the private power initiative are fuly meL Expert advisory
services have already been engaged by WSEB to assist in their ongoing negotiations with
Enron, under fhandng from the above-mentioned loan.
Bank Srategy in the Power Sector and Rationale for Expanded Bank Involvement
7.         The Country Asistance Strategy seeks and supports renforms by GOI to
address the fndamental operational, financi and institutional sues in the power
sector. The reform process in the power sector has ond just begun and much remains to
be done, particularly at the state level The Bank's lenig pram wlll be used to
condnue the dialogue and provide some of the incentives needed to make the required
diffiult decsions I addition, the Bank will continue to use the management of the
existing portfolio to support the needed refom. Bank lg    focused on: (
p ting domestc and forign private Investments; (b) supporting GOrs agt of
reform, Pi, the National Thermal Power Corporation   P), and the Power Grid
Corporation of Idia (POWEID), and (c) assisting SEBs whih perform In a
Polcy and Human Resoure Depment Pund, establsed by the Governmet of
Japan.



-4-
satisfactory manner or have started Implementing cedie plas underwritten by their
states to improve their performance and finances. Prepantory work is underway on an
SEB Restucturing project to assist states willing to undertake up-front refoms towards
the corporatzation of their SEBs and the establishment of a more transparent regtlaqy
framework.
&           Witin this overall strategy, the proposd projedt ;m at facilitating the
implementation of private power projects by establshing adequate administtive
processes for solidp and evaluatingepfrlc   ls. and provkding e de durin
negotiations with proct developets. tl  wo   ensure Inter alia that possible future
Bank involvement In the finanng of sudc projects is based on sound and dearly
defined selection procedue  GOI has also nicated that the Bank's involvement in the
implementation of the private power initiative would help to ensre the technal
qualty and independence of policy advice and project reviews.
Project Objeetives
9.          The overall purpose of the proposed TA project is to emure that the basic
objectives of the private power Initiative are achieved, Le., that additional investment
capital and management exptise are mobUized and that the potential effidency gains
n power supply are fuly realized and passed on to the final consmer  In the short
em, the project would help to marnge the implementation of the private power pohcy
during the present transition period, but would also set the stage for the introduction of
market mechanisms In the sector as a whole. To that effect, assistance would be
provided to state electicity boards and other public utilities for (O) the review by private
power speialists of the offers currently under consideration (par 2) to ensure that the
projectsbelng negotiated are ececuted under accepfble and sustainable conditions; 01)
the introduction of competitive bidding for the selecion of roject sponsor; and WV the
preparation of other privatlzation projects in response to GOFs efforts at promotng
other forms of private sector partidpation, in addition to IPP project (pam. 3).
Project deciption
10.         The proposed project will cover technical asistance activities to be
essentially canied out In the form of advisory servces extended to SEBs and other
power utilities planning to enter into agreements with private parties for the purche of
power, the takeover of distribution activities or the maragement of existing facilities
They will inude inter alla the provision of f   lega and techmical advisory
services to review outstanding project proposals and assist in conact negotiations, and
assistance to SEBs to enable them to prepare and "package" new projects wel enough for
them to invite meaninghfl bids, and help them in the biding, evaluation, selection, and
negotiation process. The latter would focus on insilling to the extent possible some
degree of competition among project developers, and on assisting in the implementation
of other forms of private sector partdipation. A Technica Annex provides a full
descrption of the project as well as details on the implemaon arrangemets
11.        In parallel with the implementation of the project, GOI will pursue a
program of policy and institutional development under which advisory services will be
provided to refine the existing policy fmnework for IPP projects and extend it to iude
other forms of private sector partcipation, provide general guidance to those entities in
the states that are actually Implementing the policy, establis the prope conditions for
private developers to mobilize the required resources, review fuel supply policies,
contribute to the formulation of a proper regulatory fcamework In the sector, and
enhance the calpabilities of the vrous Institutions in charge of coordinating and



overseeing the implementation of the program as well as those that are implemeti  it.
Ths program will be caried out under th-e umbrela of the Ministry of Power (GOD,
with the nvestment Promotion Cell MPC) of the Ministry acthig as coordinating agey
hnded out of gnts evectd to be made avaflable by the Govement of Japan (PHRb
fund) 2 and USAID, for a total amount of US$7.5 million.
Agreements reached
12.        Agreement has been reached with PPC on the folowing major actonst
(1)    A Project Implementation Unit (PI), under the Dirctor, Institutional
Development, will be set up at PFC to admilister and mmage the
activities supported by the projectJ Undertadings have also been
reached on the scope of operations of the cell, the staff posions to be
created, their level, and the related reruitment plan;
(ii)    PFC will have Its annual accouzts, Induding the special account and the
statement of expeditr for the project, if any, audited and submt the
audito?s report to the Bank wiftin six months of the end of each finandal
year. In addition, PPC will submdt to the Bank its unaudited financal
satements withn two months of the end of each fitadal year;
(I3)    Model documentation accepable to the Bank will be utilzed for the letter
of invitation aWI) and for consultant' contracts by the final be es
13.        In addition, an understanding was reached during negotiations that, to
ensure adequate coordination between the acvites carded out under the project and
those undertaken In paralel by GOI (para. 11), the operation of the PIU along wft the
he poicy and institutional development program to be supervised by IPC wfll be
monitored by a Steerng Commttee to b constituted by the Mnisy of Power.
Environmental Aspects
14.        Plans and designs for private power projects reviewed and prepared
under the proposed proe will fully incorrate environmental considerations, To this
end, G0I environmental standards will guide the epon of pre-feasibit studies
and design work for individual projects at the proect develomt stage. In addition,
an undersg will be sought from sOI at gotiations thiat the scop of the
environmental impact assessments that may be carred out for selected projects under
the second component would broadly cover the range of Issues that are considered In
siilar studies prepared for Bank-financed projects PPs P EnvironrmentW Monitoring
Unit whose establisment has benefitted from the Banlc<s guidance under the ongoing
Power Utilities Efficiency Improvement Project (Ln. 3436-IN) would be primarily
responsible for monitoring compliance with such provisions.
Spec  Operational Emphases
15.        The proposed project would support the Bank's emphasis on premoting
the role of the private sector in the Indian economy in general and in the provision of
inrastructure services in partcular.
2    A US$2 million funding proposal was submdtted to the PHRD fumd by the Barn in April
1993, with OIrs concuren.



-6-
16.         The proposed project would ensure that the private power development
Initiative launched a year ago by GOI moves quicldy, witi a f&mrework that fostes
not only greater efficency In the procurem t and maagement of ower faiklities, but
also the mobllizatbn of additional finance for the development of the power sector. It
wM also set the stage for developing indigeneous capadties for the evaluation of private
powerproct proposals, Including their finacal structure, and negotiations of
contractual agreeents with private investors.
Pect Risk
17.         One of the main risks may arise from  ndla's taditional reluctne to use
loan fundw to finance tedhnical assistance, and from the SEWs' lmited experience with
engaging externl advisors, except in extenaly funded projects in which the consultnt
costs are generally met through grants or concessional f g. Such risk, If not
addressed upfront, would traste into slow disbursementa To mitigate this isk,
pro   preparation has focussed extnsively on gaining a dear understanding from GOI
and selected state governments and electricity boards of their needs for tecl
assistance, the nature and objectives of it. In partcular, it was emhasized that the
proceeds of the loan would finance high-value services that will iiltmrately either be
passed on to the private developers as development costs (e.g., in the case of pre-
esi         or envirornmental Impact studies), or help ensure that the long-term supply of
private power is provided at a reasonable and sustainable cost, not only to the
purchaser, but also to the country as a whole.
18.         Another risk relates to PPCs mixed performance record under the
ongoing Power Utilities Efficency Improvent Project. A fu evaluation of PPCs
performance has just been carried out as part of the supervision of the above-metioned
project and the Bank is satisfied that GOI, through MOP, is taking the necessary
measues to correct the deviations from the Corporation's Operational Polkiy Statement.
Furthennore, extnsive and detailed discussions have taken place during negotiations
on the institutional anangements that will be put in place at PlC to implement the
technical assistance project Progress nade In strengthening PFCs institutional
capabilities wil be dosely monitored under both project
19.         A final risk stems from the fict that, in Its efforts not to be seen as a
delaying factor In the conclusion of power purchasgements currently under
negotiations, GOI makes policy decisions without thebenefit of a full assesmet of their
long-term Implications, thus undermining the ratiorale for bringing in experts to help
finalize new policy undeings or contacal comments To address ths, the aink
has already Initiated some of the TA activities under the project to serve as a
demonstration effect and has maintained a dose dialogue with GOI on some key factors
affecting the Implementation of private power projects.



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Recommedaon
20.         I am satsfied that fhe proposed loan would comply with the Articles of
Agreement of the Bank and I recommend that the Executive Directors approve the
proposed loan.
Lewis T. Preston
President
Attachments
Wasgton,. DC
June3, 1993



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INDIA
TECHNICAL ASSISTANCE PROJECr
FOR
PRIVATE POWER DEVELOP1IENT
Technical Annex
A. Insttutlional Settig
1.          The private power Iniiative was launched by the Government of lnia
(GOI) in September 1991, when amendment to the Electricity (Supply) Act, 1948, were
promulgated settig out a scheme to promote "greater partidpation by private
enterprises in electiity genration, supply, ard dtribston' The molifations
Introduced h the fnncial, administrative and legal environment aim at making
investments more attractive and at encouraging private enterprises to consider new
projecs in the power sector, either as licensees for the generation and dsibutton of
eecticity within a predetmined geogphical area, or by establishing generating
companies forsupply of power to the grid3 Detadled guidelines for detemining the
tarf for sale of eltr  by generating companies were subsewently publised by
;OI in March 1992. An Investment Promotion CeU (IPC) was established in the Ministry
of Power (MOP), to directly interface with prospective private investors In the power
sector and help them In obtaining all required dearances. In additon, a High Powered
Board, under the cIa p  of the Cabinet Secetary (GOI) and comprised of
Secrtares of the concerned goverment ministries, was set up to monitor the Issue of
clearances and resolve any ousanding issues pertaining to clearnces as well as foreign
investmet
2           While the overall policy famework emanates to a large extent from the
central govenmment, responsibility for actually Implementing the polic rests maily
with the states and the state electicity boards SE) sice lecrt, in he
Constitution, Is on the concunent list As a result, it is up to the states and the SEBs to
select new projects and ivite proposals from private developers, establsh the partdcular
nrles under w      the projects may be implementt 4, and enter Into contacts with the
developes The Power Finance Corporation was established as a development fance
institution to strengthen the operations of public power utilities and pbys a central role
in the development of the power sectorin India as one of the mn flndersofthe state
elecWtrity boards.
B. Project Description
3.          The proposed project would aim at providng the SEBs and other public
power utilities with adequate means for implementing GOrs plrivate power
development policy in an infomed manner. Ts assitance is consiered crucial at this
sage, to bulup the skis and expertise that are required from the SEBs and other
publc utilities to negotiate with private developerm More spedfcally, private power
expers would be hired direcly by these agencies to provde advice in the following
areas (this is further summarie in thieattached matrix):
3     The new scheme provides inter alia for a guaranteed rate of return on Investment, the
settng of tariffs on the basis of standard operadonal noms, 100 % frIgn ownrsip,
miimum financing strct, etc.



g9.
"~~~~~~~~~~~~~~~~~- - - - - - - - --
(I)   £   M JgUM uimk: Te proposed assstace wbhic
would vaty depeidng on th degree of progress made so far In the conideation
of Individual prect proposa, would enble the SEs to obtain e pert advice
from fil, legal and tehna specalists to evaluate the propo aIs, review
the proposed    a    ements and negotiate power puae
agreements and any o   agreement that may need to be entered Into with the
developer. Such advice from private power experts would bring some balnce
Into the negotatig proc  that has bee so far largely driven by the devdeopers,
and give a certain degree of suan  that the agreements to be entered Into are
fair, that they meet t bsc objectives of the govenmuent poligy, and that the
assodated obligations of the SEBs, SGs and GOI are reasonable and susnable.
(U)     ar o            eenerlin rgjgec: The assistance to be provided for new
geeration projectis for which the solitation process has not yet formay started
would help Instil a greater degree of competition In the selection of ptivate
developes To this end, it would focus extensively on the preparation and
"packaging" of prjecs to a stage where most of the rgulatory and statutory
are oted and whre the SEB can invite meaningful proposal
from private developes This would acknowledge the fict that, becaue of the
raintes InIerent  the development of powerprojects in Inda, some of the
pepatory work that would normally be taken up by a project developer woud
need to be borne by the mD to reduce the developdes sks This w     Iude
inter alia the idenfcation of sites (and their control as the case nuy be), fte
prepaation of pre-easiblltiy studies and premi    environental impact
aseSents and the proceing of "in princpl - If not final - clearances. Once a
project Is cosiered ready for competftive baddin& assitan  would be
provided to deternine prficaon critera, firalize the request for proposals,
evalate the proposal, seect the best bid and negotiate with the seleted
developer.
)  Project preparon fo oter form o p iA n: To promote the succe of other
frms of private sector pa pation in the power sector, assistan  from
fnancial, legal and technical experts wouldbe provided to ensure carhl
preparation of projects, partcularly Important If competition is to drive the
Implementation process. Depending on the type of privatizatlon envisaged,
consultants would be engaged to assist In such tasks as the valuation of assets to
be privatzed, the preparation of bidding documents, the drftng of contacts,
the evaluation of offers, and negotiations with the selected bidderS.
4.          n paralel, GO will cay out a program of policy and Insttutional
deveilopment to complemen the activities undertaken in the states under the project.
lIndeed, while Gos policy for private sector partation the power sector has
defined the ground rules and broad parametr wit  which private investors may
consider seting up new power projects, the implementation of the policy has confirmed
that there are still a n   of key Issues to resolve before actual investments can take
place, under suswtainable conditions. Under a technical asistance program financed by
4     The eht priority projects to be reviewed first are those Identified by IPC as being on a
fast ck given thir advanted stage of negotiatons. About 13 addional projecs have
been sted by tPC as "wserious" proposal and would be considered ina second round.
A piority candidate would be the Delh Electric Supply Underalng reponsible for
power dstribution in the capital and which the govement has dedded to privati



-10-
Covernment of Japan and USAID, advisory services wll be provided to the Investmert
Promotion Cell (IPC) and other government ageFrcie to address th  iues,
recommnd Improvements to the overal policy famework and formuate additional
guidelines that may be requied for its implementation by the sta te govements and the
state dectridty boards. 7ore spcifcaly, consultant services wil be provided on the
followi: (a) a review and, if warranted, the revision of the incendve framework and
te prepartion of clearr poicy guidelines for use by SGs and SEBs In their negotiations
witfi project developers; (b) geneal guidance to SGs and SEBs for solicitin& evaluating
and negotiang project proposals; (c) the caying out of a program of insttution
buflding and in   ; (d) an evaluation of the resource mobilization issues for private
poweprO ; (e) an assessment of the adequacies of India's fuel supply polies to the
new  alites of private power development; (0 the deve'opment of pdvate sector
particpation alternatives; and (g) an assessment of the present rtory framework to
the changing environment.
Proect Administration and Implementation
5.          The project wiNl be managed by PFC. For that purpose, PPC wil establsh
ai Project Implementation Unit (PlU) under the Dicor, nistitutional Development, to
adminster and manage the activities supported by the project. The unit would commit
a core of proenally qalified staff who would mnage the TA huds, L.e, review
s or eclmical assistance submitted by the final beneficaries, pi vlde guidance to
them on the type of sevces they should engage, mordtor th-ke  if ants,
ensure cross-fetlization among beneficaies. The scope of operations of the P1U,
the staff positons to be created, their level and tmetable for their recndtment was
agreed at ngotiations. In addition, because of the specialized and relatively novel
nature of the techndcal as_siane to be provided under the proposed project, PFC wil
engage Immediately the servkies of anexrenced constuta - for a period of about six
months - to launch the TA progam an  evelop the required expertise within PlC
Finally, MOP will establish a Steering Committee to monitor the operation of the unit as
well as the policy and institutional development program unde    by IPC. This wi
ensure cross-fertlization and maintain cosistency o advic    een the two project
components.
Onlending arrangements
6.         PFC would onlend the proceeds of the loan to SEBs and other power
utilites under financial angets to be entered into between the respective parties,
on terms and condons acceptable to the Bank Although the onlending terms have not
yet been finaized byP$Cs 8oard, the proposal is to app  te  that reflect FCs cost
of resources and woiuld be close to those approved for the Pre-Investment Fund
established under the Power Utilities Efficiency Improvement Project (A 3436-IN). The
issue remaing to be resolved is whether the foreign exchange risk would be entreley
passed on to the final beneficiaries.
Poect Cost
7.         The overall project cost is estimated at about US$20.5 million equivalen
of which about US$3.1 mMon would be in local cuny. The proposed loan would
fnamce the following items (a) salaries (ncluding sodal benefits), overheads, fees and
reimbursable expse of consulting firms or individual consdutants retained by the
utilities (salaries, socal benefits, and overheds of govenment-owned consltant
oranizations, govenlent consultants or tUi's staff are not eligible for Bank
findng but reimbursable expens are); and (b) purchase of spcialzed office



-11'
e ment, computer hardware and softwae, environmental equipment, equiment
reqired for fleld investigation of projects, etc. The cost estimats for consulancuy
services reflect th costssimilar contacts presently under implementation. The types
of assignments selected for fanng under the loan and the qualty of the Inputs
necessar will determine the fees and man-months to be used. PFC's share in the project
cost would mainly be in kind In the forn of counterpart staff, and in facilities and
services provlded to manage and Implement the project.
Procurement
&           The consultants financed under the proposed loan would be selected in
lne with the Bask's Guidelhtes for the Use of Consultants. Consuting contracts costing
US$100,000 equivalent or less will be subject to post review by the Ban& Model
documentation acptable to the Bank wil be utilized for the letter of Invitation (LOD
and for consunts' contracts, based on the Sample LOI of the Consltants' Handbook
and the Sample Form of Contract for Consultants' Services (March 1989). The contract
v-alue for indNuldual purchse of equipment is not liy to exceed US$200,00
Therefore, such equipment could be procured following load competitive bidding
procedures; local shopping could be used for the procurement of Items, the contract
value of which would not exceed US$50OOO.
Disbursements
9.    Disbursements of the proposed loan is based on the assumption that it will
become effective by the first quarter of FY94. It is expected that the loan will be
completely disbused by December 31,1995. To facilitate disbursems, a Speci
Account would be established with an authorized allocation of US$2 million, wic is
equivalent to two months of average disbursements, and 10% of the loan amount
isbursements for equipment contracts valued at less than US$20,  per contract
would be on the basis of Statements of Expenses (SOE). Documentation of SOB would
be retained by PFC and made available for review by Bank supevion missions. All
other disbusements would be made against full documentation.
Accountng and Auditing
10.        PFC wil maintain separate project accounts in a form satisfactory for
annual audit. These accounts will be audited annually as part of the annual audit of
PFCs accounts, but will be the subject of a specific report. PFC's statutory auditor is a
private firm appointed by GOI on the advice of the Comptroller and Auditor General,
who may also elect to carry out his own audit Agreent has been reached at
negotiations t}at PPC will submit to the Bank, nolater than two months after the end of
each ffial year, unaudited financial statements and project accounts, and no later than
six montsafter the end of ithe fisca year, copies of said financl statements and project
accounts cerified by an independent auditor acceptable to the Bank acmpanied by an
auditors report.



INDIk TECHNICAL AS8ISTANCE PROJECT FOR PRIVATE POWER DEVELOPMENT
P    A*Aft (PF.
PIM  OUI Ldkg P-''  I ' 11 11 Wl - -Ap --   IM      -   1-  1  -----/owwf                PoiC
Rn_i                                      8dK aid CMoYol>_W1_kth  un
* ~
*     Pqof    .    g prcd pmNa 1248 moun                       Sb /OEf rpb                  PF
*     Ris,aW~ bgU.md .osy         uuUlOma
dpwasg pmpe                                             *# IV      EU
*     Caonivammam e  m u  s
*     IGSWIV/Malu Oppmbtifls for PEs Saedor    12-4 m No
*     PmcsRoom    d  smioss
. *         _      qslblyus
*     Pre        _n-My B mulH MA
*     PreparNiWaiond _as o bldhg d aunlo
*     RmaneW. b aKnd ndgay WA= for lnduilI
d popoe
*     OoWa _ eglfln
"a e5X d Plbn
*     Mal _VScifb                              1230 Mmnl
*     P_aparmioN aa of bklkdhi doeomu_mwl
*     Flwow  Is ce and sauWy 1 do, rW  wuaUlon
Cd ptopo o
*     CooWrt eglal



- 13 -
TBCHM CALASSTSFANC  PROJECr
FOR
PRIVATE POWER DEVELOPMNT
istlated Costs andf   ngaPla
US$ milion
Uslimated Poect Costs W
- Preparati of Outnding Proposals      0.5          6.5                7.0
- Pepartion of New Gener. Prowt        0.7          63                 7.0
- Prject Pre1. for Ohr Foms
Of PrvaJvzaf1mion                  -L_
Subtot                           2.2        16.8                19.0
Nqulmmt                                0.9          0.6                1.5
s~~~~~~~~~~~9i
IBRD                                   2.6         17.4               200
PFC                                    0.5                             0.5
Total                                 JL           17A               2MA
a/ Induding taxes and duties equiWvalent to U$ OA mMion



- :t4 -
Page 1 of 2
INDIA
TECHMCAL ASSISTANaE PROJECT
FOR
PRIVATE POWER DEVELOPMENT
Frcuiment
US$ moon
Pn,ueet  Metod #
Prmiop Element                    MW   wiwsbl    LCD   Other   Tota
C ntancy sices for
project deveopent                    19X)                        19.0
(19.0)                      (19.0)
Equipmt                                              0.S     0.7     1S
(0.8)   (0.2) C   (1A0)
Toal                             190          08      0.7    20.5
(19.0)       (0.8)   (02)   (20.0
4giwes ix parenthes are the respectiveamouns financed by the Bank.
b/W  rld Bank guideines for ithe use of consultants
c/ Localshzoppin



- 15 -
Page 2 of 2
TECHNICAL ASSISTANCE PROJECr
FOR
PRIVATE POWER DEVELOPMET
Allocailon of the Proposd lank Loam
US$ miian
Cat                              Amount       Exenituvs to befinxcd
Consltantservices                 180         100% ofexndituree
Equipment                          10         100% of foeign epeditures
and lo% of local expenditurse
(ex-factory cost); and 80% of
local expenditures for other
itenm procured localy
Unalocated                         1.0
TOta                        20.0
Etmaed Disbursem
US$ milion
IBRDFisc Year                                 94    95    96
Annual                                        7.0   10.0   3.0
Cumulative                                    7.0   17.0  20.0



- 16 -
INDIA
TECHNCAL ASSISTANCE PROJECr
FOR
PRIVATE POWER DEVELOPMENT
Timetable of Key Project Prensing Events
Time taken to prepare the project            5 months
Prepared by:                                 MnLstiyof Powerand Power finance
Corporation Ltd.
Fhst Bank mssdon:                            Februi   3
AppraisaL                                    Aprfl 1993
?4egotllons                                 hMay 1993
Planned date of effectiveness:              Septmber 15, 1993
List of reevnt FCRs and PPARs:.              NA



_ 17 -
PAGN 1 of 5
213 61*25 Of MMN  MMos OpAuhzC    IN 38A
A. 8UMM Of SN LOAN D 1DA CRSS
(As of Ketch 31, 199)
(or  . . llati )
Loan o   liooel Yea   -----------
11    96 LoanaI                                                     7213.4
11      162 ¢Siceta flly diaba.aIolo.A                                        1314.5
1336-IN   1963  Upper Udravati N$ro Poer                              -        170.00         16."
2393-IN   1964   Dudblobus Coal                                     109.00       -            16.50
2442-1N  1984   arakka SU Thermal power                             276.60       -            36.62
1496-ZX   1964  Oujarant MKadius Zerstio                              -        156.30         31.49
OV-20-ZN  194   Indir 8ara  ver Nsydcelotrut                         -         13.64         17.35
2416-IN  1984  IndLra Sartvsg Sydrclectatc                           17.4S       -             S.53
2415-IN   1984  Madhy Prods.h Pentlser                              167.10       -             0.94
2387-IN   19#4   Shfa  Shove Pert                                   250.00       -            19.26
61-16-IN  1984  P riyza Vaeai. SS Irr"atlzo                           -         17.50          7.33
1426-ZN   1964  Populatles m                                          -         70.00          1.06
2417-ZN   1984  NalIwys Nleotraeioatlon                             279.20       -            12.67
1424-ZN   1984    iafSed Aas Vaterabad Dov.                           -         25.52         10.91
1434-ZN  1964  Tama XdA. Vat.¢ Supply                                 -         36.50         19.04
31-12-1N  1984  Sl..l Wadu Water Supply                                         36.50         10.93
1483-ZN  1984  Uppet canms Irclstin                                   -        105.45         28.94
1544-ZN   1985  Bombay Usban Dev.lopm t                               -        100.92         25.75
2544-IN  1985  Chandrspur 2hem l,ovew                               280.00       -            87.18
1613-1N   198    Radix. Isrov= Nydroeleotrl                           -         12.20         17.21
2498-ZN  1965  Jhsrma Coking Co"l                                    57.70       -            2.42
2562-ZN   1985  Nsfal. powe r                                       176-00       -          124.22
1514-IN  1985  ZOa $0GI&I orerstrlY                                   -         27.12         3.14
2497-IN   1985   Norda (Oujaxat) DO nad Pawn:                      *200.00       -           165.54
1523-IN  1985  Natienal 56:1.. Xatensimn X                            -         33.02         0.42
2534-Z   1985  Natinal guava"ys                                     133.00       -            40.46
1611-Z8   1985  Ntlonal Sc4ial Forstry                               -        154.09         0.11
2555-ZN   1985  Ribund Pover 2ramamilslon                           202.00       -            6.61
15e9-S1   1985   8eon Ntiona Anloultutal Nt.                          -         45.          16.56
1665-IN   1986  Andha Prdsh    Iesa                                   -        140.00       103.84
2661-ZN   1966  Andlza Padesh U trigatlm.                            41.00       -           41.00
2660-ZN   1986  Cement InduStrY                                     145.00       -            35.71
2674-ZN   1966  Cemblad Cle Pow.00                                               -           15.25
2730-IN   1986  Coopeative Frtllis                                  111.06       -            7.58
1643-ZN   1986   "Jazat Urba                                          -        50.34         20.85
2"1-I8   1966  1C0C0  - Cement Industry                              35.00       -           10.92
1622-IN   16"   locala Water Supply ad Saitati                        -        21.0           7.n
1621-ZN   1986   1ahsasbtra Cnposlt. Iruiatiae                        -        160.00       169.40
1631-ZN   1966  Natiel 4r1oultural R_oeh SS                           -        59.66         25.02
1619-N   1966  West seDgpl Minor IrlgatiLn                            -         40.17        63.25
1623-IN   1984  Vest Dengal Population                                -         4.65         11.23
1737-1Z  1987  $Lhar tubevells                                        -        22.29          7.69
1750-ZN   1987  Imuabay Water Supply L Se& rage  U                    -        145.00        62.44
2769-ZN   1987  Bombay Water Supply * Sewrae lIZ                     40.00       -           40.00
2796-ZN   1987  Casl MlnIn.g * Qualtt Xl ravnsat                    340.00       -           96.59
1757-ZW   1987  Onisjat Romal Rods                                    -        119.60        61.70
2827-18  1987  Kacmataks Power                                      260.00       -          180.52
1646-IN   1987  Mdras Water Supply                                   53.00       -           32.97
1754-IN   1987  National Astic. NzteAsIon In                          -         70.16        31.35
2844-ZN   1987  Natanil Capital lover                               425.00       -          155.21
1770-IN  1987  National Voter  _smnt                                  -         114.00       62.3
27853-1   1987  O11 XaMl  Petzoleun                                 140.00       -           15.0S



_ 18-
PACs2 of S
ft f eallatlon)
Credt m..f ApM   Urose                                           Zen       IDA It MdLebwaed 21
2845-ZI   1987  taloSer S1ain                                    575.00       -          243.04
81s-ZN   1967  !.ltaaManlotlom  ZN                               168.00      -             8.83
1780-N   1987    tet Pradsh Urban Development                      -        120.95        62.44
191-=   18   Bombay &  Ad*as P1pulatc                              -        57.00         16.54
292-Z   1988  Zudns. PIa. a Tech. Ahat.                          540.00      -            50.70
2938-u   1968  K Aat"k Power U                                   220.00      -           176.31
40S9-Z   1988  National DaIrt U                                    -        160.00         0.69
2695-ZX   1986   4t%Lemnl Dairy Uz                               200.00       -          200.00
2935-ZN   1986  RlIway Xodevolsettee   ZZ                        270.00       -           $4.15
2925-ZN   1966  TSI 5 adn Ugba 3w.                                 -       269.69        146.95
3093-ZN   1989  Slectreaono  Industr Dev.                          8.00       -            7.50
30568-1   1989  Niport Developsent                               120.00      -            27.27
5094-ZN   1989  1CIC0 - JleOatrnLA  2nd. Dev.                    101.00      -            41.12
3059-ZN   1989  iCiCI - Zaport Development                       175.00      -             3.S4
3095-ZN   1989  205? - NlectronLas Id. Dw.                       101.00      -            75.65
5096-ZN   1989  Kahabmahara Paver                                554.00      -           912.82
3024-ZN   1989  Natbtp Jbhzui Power                              485.00      -           446.29
1952-Z   1989  iatIenal Seeds III                                  -        150.00        62.78
2022-ZN   1989  Natlinal Serlcultue                                -        147.00       102.19
2057-ZN   1989  It'l. nMmiy Welfare Tre.                           -        113.30        94.63
5044-ZN   1989  Petrolem Tranaport                                50.00      -            15.00
2994-IZ  1989  States lads                                       170.00      -           170.00
1959-Z   1989  States Roads                                        -        80.00         23.94
2010-ZN  1989  upper UXS"a 2rt1to t K?                             -        160.00        9.71
3050-ZN   1989  Upper rslhna IrrigatLon Ut                        85.00      -            85.00
2008-ZN   1989  VoeetIonal Training                                -       211.02        164.60
5196-I   1990  Cemet Zuduetry Uat   _uas                         500.00      -           213.26
2115-IN  1990  Nydrabad Water Supply                               -        79.90         56.31
2064-ZN   1990  Indutrial Technoloy DeveloPment                    -        55.00         50.25
5119-ZN   1990  Idautvial toehnology Development                 145.00      -            98.69
257-ZN   1990  Northern RIqin TSanmnlaeln                        485.00      -           449.97
2155-ZN   1990  PopulatILn traInln8 VS I                             -      81.92         68.41
5259-ZN   1990  PrLVte lve r UtUites I (nCo)                      98.00      -            75.56
2076-ZN   1990  Punjab XrrxLsationDr alae                                   : -  145.26  121.23
2158-ZN   1990  Tamil Vadu iategratd Nutition U2                   -        86.15         77.06
2130-1N  1990  Techniclan  dtucatLi  I                             -       210.74        169.56
2100-Z0  19O  Watershed D4velepment (BIls)                         -        75.00         65.95
2151-ZN  1990  Watershed    lopmnt (Plalos)                        -        55.00         52.62
5260-Z   1991  A.P. Cycloe hmergnoody  4onstructian               40.00      -            40.00
2179-ZN   199   A.P. Cyclone ErSgenoy RecenStruction               -       170.00          9.20
2241-Z   1991  Dsm Safety                                          -       130.00        122.68
3325-ZN   1991  Dom Safety                                        25.00      -            25.00
3354-ZN   1991  Gas Plaring R ductlan                            40.00       -           262.16
2175-ZN   191  ICOS I (Orto" & An&hea Pzadesa)                     -        96.00         83.45
3354-ZN   19   IndustrIal Pollutien Control                      124.00      -           107.04
2252-1   1991   Idustrial Pollutlon Contol                         -         1.60         50.48
2254-ZN   1991  Hher 1ashta Rural Wat  SOpplY                      -       109.90         95.51
5259-ZN   1991  Pet9oceMiAls 2U                                  2SS.00      -           15.74
3256-1Z   1991  Petroohmmicals U                                  12.00      -            11.00
5344-ZN   1991  Prvat        e Pae UtIlIties1 (USES)             200.00      -           141.61
2215-ZN   1991  Taml S  e Agrc1ultural Devlopment                  -        92.80         74.88
$300-ZN   1991  TSl  ad4u AgrIltuxal Devlopment                   20.00      -            20.00
2225-ZN   1991  technicIa  Iducatlon 2                             -        507.10       271.55
2300-ZN   1992 Gbtl4 SOVIva Mt 8ate Ntlod                          -       214.50        176.01
2394-N   1992  lsty Welfare (Urban lu) *                           -        79.00         80.09
2526-Z1   1992  Maharashtra  oestxy                                -       124.00        116.4
2350-N   1992    ationl AD  Control                                         84.00         73."
3456-N 19    lower UtlimtIes NfflencY                            265.00      -           250.98
3498-ZN   1992  Secoad Na ta Po" *                               3 350.00    -           S50.00
$470-X11  $992    llgelea l  El155.00                        -          153.00
5470-Z1   1992   Soond National  JWbay                             -       153.00        150.77
2565-ZN   199   Roo    at                                          -        85bw13.00     650.59
2329-ZN   1992  ShrImp and i  Culture                    -.0                               3.
2341-ZN   1992  Weet Sgall orety                                   -        34.00         28.35
2435-ZN   19S  Agricultuexl Developmet ljasth                      -       106.00         96.45
24S9-21   1993  Hha Platea DeVelopmnt                              -       117.00        106.00



N[    t  -.     -               .              tg  { {*
'1   lt 1111   1
t t~~~~~~  jt  ig  |                     W  E:     ,,   ,; jwi.
,r L . fjW           K ax  ^  i *  :sa 
! -2ttg       §i   i1Xo;;11
F?i!!i2 F~5                                 |NFI
1Xt~                      ! -.§;11                          t



PAS 4 W S
8. 8IAU8M  ow RC Uvzsuuuu
(As of 1arch 31, 199)
iaca Yea            CMWaL LO=    Equlty    SettL
19S9           epublic Foxv CempaW Ltd.                               1.50       -       1.50
19S9-92      Xirloka* Oil EasIa Lte.                                  0.85       -       0.85
1960         Assam SLiA'ste Ltd.                                      1.36       -       1.36
1lf1           P.aw.P     Ltd.                                        0.21       -       0.21
196-"        Precision. BSerng India Ltd.                             0.65     0.38      1.03
19"          Fort Gloatr Industries Ltd.                              0.81     0.40      1.21
1964         Leb1 m)i hch4n5 Wo  Ltd.                                 0.96     0.56      1.3
1964-5-G79/90  Mahindra ugiu  Steel Co. Ltd.                         11.81     2.8      14.65
1967          Indian Bxpleoives Ltd.                                  8.60     2.86    11.46
lfft         Jayshre Coemicals Ltd.                                   1.05     0.10      1.13
1969-70       Zunl Aro-Chmicals Ltd.                                 15.15     3.76    18.91
1977-87       Escorts Liited                                         15.55       -      15.55
1978-87191199 louslig Development linac.. Corp.                     106.32     2.10   108.42
1980182187t89 Deepak feztLIUuer and Petrvobemicals Corporatima Ltd.   7.S0     4.23    11.7$
1981-62      agaarjna Coated tubeS  Lt4.                              1.50     0.24      1.74
19814S2      Egarjuma Steels Limited                                  2.88     0.24      3.12
191-8-89    Tats Iron and stel Company Ltd.                          72.14    24.50    96.64
1981-90193    Nahindra a Mahindra Ltd.                               29.71     9.90    39.01
1982         hAhok Leyland LsIited                                   26.00       -      2.00
1982          Coromandel ertlisUezs Llmlted                          15.88       -      15.88
1982         The cbubay   eng and MadufacturLng Co. Ltd.             18.80       -      18.80
1982-87       IS s81node                                              2.99     1.01     4.00
1983-87      2he Tndlni Rayon C°rp. Ltd.                             14.57       --    14.57
1983         Pharat Forg Company Ltd.                                15.90       -      15.90
198-4         The SSellor Rayon SiLk Muifacturng (WeavIng) Co. Ltd.    15.95     -      15.f9
1985     B    aj.j Auto Ltd.                                         23.9        -      23.93
1985         mtdl Comeat                                             15.05       -      13.053
1985-86190-91 Indal Las Deelopment Ltd.                               8.50     0.78     9.26
1985191      Blhar spone"                                            15.24     O.66    15.92
1986          Saa TSempo Liudte4                                     30.54       --    30.54
19B6I93       Indl- EquIpenet Leasing Ltd.                            5.50     0.30     5.80
1986          Larsen sad Toubre Ltd.                                 21.78       -     21.78
1986-87       The Grat Eastern Shipping Company Ltd.                  8.00    13.89    21.69
1987           xport-Import Bank of India                            14.34       -     14.38
1987         Gujarat Fusin Glas Ltd.                                  7.52     1.70     9.92
1987         Gujarat Wawsda Valloy Fertilizer                        38.07       -     38. 7
1987         Bero RBad. Motors Ltd.                                   7.74       -      7.'
1987         Hindustan Motors Ltd.                                   S9..4       --    39.14
1987         The  ujiarat Rural Rousing Fl neo Cop.                     -      0.19     0.19
1987         Vlmo Limlted                                             4.70       --     4.70
1987-89190    Titan Watches Limited                                  22.02     1.08    23.10
1968         Invel Trenamisuans Ltd.                                    --     1.07     1.0?
1989         Ahoedabad Electricity COpanyw Ltd.                      20.83       -     20.83
1989         V21 Adavedt Tecbnology                                     --     0.20     0.20
1989-90       leltrM TSlephoeS Istrumnts, Ltd.                          -      0.56     0.56
1989-92      GuJerat Stte tertililsr                                 40.42       -     40.42
1990          JSB India Secutities Virus                                       0.37     0.37
1990    UCOL Ful Systems Ltd.                                           -      0.65     0.63
1990-91        ats, Electric                                        111.88             111.88
1991   * S IC Industxies ERport Finance                               0.28              0.26
1991         BoSbay El etrlo                    68.00                                  66.00
1991         CESC Ltd.                                               22.34             22.34
1991         Export Fiuam"e - ATM0                                    0.35              0.35
1991         serdia OieS ad Elaectroncs Ltd.                            -      0.29     0."9
1991          Indust. Crdit a Investment Corp. of IiA                   -     26.60    26.60
19911"93        frstruature Leaing a Finanl service                  15.00     4.64    19."
1991          FD101 Development rinance compane                         -      2.05     2.05
1991          Srivei Pool 0talrdrul Ltd. (FPIL)                         --     o.9      0.93
1991         VArUn Trasport. Storn   & C_f   -  eL                   17.04     S.06    20.10
1992         Arvid Mlls                                              22.13     7.01    29.96



_ 21 -
PAGE 5 Or S
rue" le             ca o                                               LO=                e
1992          51eea W-08-IY                                              --     6.20      60
1992          m=                                                         --     1.01      1.01
*9           letak x bla. "                                                       --      G."
19#           SuAft be=r                                              40.00     5.77    45.77
192       8    w Ue.zla                                               11.50       --    11.50
1993          Cr"dtoptVi  '                                              --     0.51      0.51
1903          lltlCO                                                   3.00     0.25      3-*
2o028. O68 .a      S                                  1024.14   134.89  15.03
Lest O.oetiea. s *mngen, Nmas
Mjuatnmt&*, Repsymmats, bitst!i an S"lox                     502.42    28.7    31.39
amv eid by WC                                             521.72   103.92   027.64
Undisbzrsd                                                125.21    31.29   15.50