Docormmnt of
The World Bank
FOR OMCLIAL USE ONLY
g<k'.   2            "  /_7 p
Report No. P-4254-IN
REPORT AND RECOMMENDATION
OF THE
PRESIDENT OF THE
INTERNATIONAL BANK FOP. RECONSTRUCTION AND DEVELOPMENT
TO THE EXECUTIVE DIRECTORS
ON A
PROPOSED LOAN
IN AN AMOUNT EQUIVALENT TO US$485 MILLION
To INDIA
FOR THE
COMBINED CYCLE POWER PROJECT
March 10, 1986
This document has a restricted 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.



CURRENCY EQUIVALENTS
(As of March 6, 1986)
US$1.00       = Rs12.32
Rs 1.00       = US$0.081
Rs 1 million = US$81,731
The US Dollar/Rupee exchange rate is subject to change.
Conversions in the Staff Appraisal Report were, expect as
otherwise noted, made at the rate of US$1 to Rs 13.0.
FISCAL YEAR
April 1 - March 31
Abbreviations and Acronyms
CEA     -      Central Electricity Authority
CAIL    -      Gas Authority of India, Ltd.
GOI     -      Government of India
CWh     -      Gigawatt-hour
HBJ     -      Hazira-Bijaipur-Jagdishpur
ICB     -      International Competitive Bidding
LCB     -      Local Competitive Bidding
LRMC    -      Long-Run Marginal Cost
MW      -      Megawatt
NHPC    -      National Hydroelectric Power Corporation, Ltd.
NPP     -      National Power Plan
NTPC    -      National Thermal Power Corporation, Ltd.
REB     -      Regional Electricity Board
REC     -      Rural Electrification Corporation
SEB     -      State Electricity BLard
TOE     -      Tons of oil equivalent



FOR OMCIAL USE ONLY
INDIA
COMBINED CYCLE POWER PROJECT
LOAN AND PROJECT SUMMARY
Borrower:             India, acting by its President
Beneficiary:          National Thermal Power Corporation Ltd. (NTPC)
Amount:               US$485 million
Terms:                Repayment over 20 years, including 5 years' grace,
at the applicable rate of interest.
Onlending Terms:      From the Government of India (GOI) to NTPC, with
repayment over 20 years, including 5 years' grace,
at an interest rate of not less than 13.0Z per
annum. GOI would bear the foreign exchange and
interest rate risks.
Project Description:  The project's main objective is to assist in meeting
the electricity demand in the Northern and Western
Regions of India through the addition of about 1,500
KW of thermal capacity. The project comprises the
installation of three combined cycle power stations
located at Kawas (Gujarat), Anta (Rajasthan), and
Auraiya (Uttar Pradesh), as well as associated
transmission lines for connection to the transmis-
sion grid. This project will introduce combined
cycle operation as a new technology as well as the
use of natural gas as a fuel for power generation in
India. The gas will be provided primarily from the
offshore South Bassein gas field and through the
lazira-Bijaipur-Jagdishpur (HBJ) pipeline. There
are no unusual risks. NTPC is experienced in the
design and construction of generation and transmis-
sion facilities but will receive assistance from
consultants in the engineering and implementation of
the combined cycle units, as these represent a new
technology for both NTPC and India.
Thi document ha a noretricd dtibution and may be used by recpients only in the perfonmance
of their ofici dute Its contents may mo otherwie be disclosednwthout World Bank autwhoution.



Estimated Cost: I/
(US$ Millions)
Local      Foreign      Total
Preliminary and Civil Works                59.9        4.4         64.3
Main Electromechanical
Equipment                               158.9      411.2        570.1
Auxiliary Electromechanical
Equipment                                67.6       80.8        148.4
Fuel Supply Equipment                       4.4        9.0         13.4
Transmission System                       110.1       15.1        125.2
Consultancy and
Technical Assistance                      5.6        5.2         10.8
Engineering and
Administration                           62.2         -          62.2
Base Cost                              468.7       525.7        994.4
Physical Contingencies                     24.2       27.5         51.7
Price Contingencies                        82.8      112.4        195.2
Total Project Cost                        575.7      665.6      1,241.3
Interest during Construction
Bank                                   -          37.4         37.4
Other                                   4.3        3.0          7.3
Total Financing Requirements              580.0      706.0      1,286.0
1/ Includes taxes and duties of US$127.3 million.



(US$ Millions)
Financing Plan                           Local        Foreign    Total
IBRD                                       -          485.0       485.0
GOI/Eexternal Borrowing                  475.2        221.0       696.2
NTPC                                     104.8          -         104.8
580.0       706.0     1,286.0
Estimated Disbursements:
(US$ Millions)
Bank FY                       FY87    FY88    FY89    FY90    FY91    FY92
Annual                       37.0   133.0   150.0    90.0   50.0    25.0
Cumulative                   37.0   170.0   320.0   410.0   460.0   485.0
Rate of Return:                 Northern Region 12%;    Western Region 13Z
Appraisal Report: No. 5831-IN, dated February 28, 1986.



INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPHENT
REPORT AND RECOMMENDATION OF THE PRESIDENT
TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN
TO INDIA FOR THE COMBINED CYCLE POWER PROJECT
1.      I submit the following report and recoramendation an a proposed
loan to India for US$485 million equivalent to help finance a project to
assist in meeting the electricity demand in the Northern and Western
Regions of India through the construction of three power plants in the
States of Cujarat, Rajasthan, and Uttar Pradesh. The loan would have a
term of 20 years, including five years' grace, at the applicable Bank rate
of interest. The proceeds of the loan would be relent to the National
Thermal Power Corporation, Ltd. for 20 years, including five years' grace,
at an interest rate of not less than 13X per annum. Additional financing
for the project, up to an amount of about US$221 million, may be secured
through commercial bank loans or from other sources of cofinancing to help
meet the foreign exchange cost of the major items of equipment.
PART I - THE ECONOMY I/
2.      An economic report, "India:  Structural Change and Development
Perspectives" (5593-IN, dated April 24, 1985), was distributed to the
Executive Directors on May 1, 1985. Couatry data sheets are attached as
Annex I.
Background
3.      India is a large and diverse country with a population of about
160 million (in mid-1985) and an :ierage per capita income of about
US$260. Agriculture continues to dominate the economy, accounting for 36%
of CDP, 23Z of exports and about two-thirds of employment. The steady
increase in population, which continues at a rate of 2.2% a year, has put
increasing pressure on natural resources, in particular cultivable land.
By the mid-1960s, nearly all productive land had been brought under
cultivation. While irrigation continues to increase total cultivable
area, an increasing share of the labor force will have to be absorbed in
non-agricultural activities. Industrial development has not progressed
rapidly enough to provide employment opportunities for the growing labor
force, or to bring about a rapid economic transformation, with sig--
nificantly higher productivity and income levels. As a result the long-
term growth of per capita income has only averaged about 1.4% p.a. and
close to one-half of India's population continues to live below the
poverty line. The pervasiveness and intensity of poverty is such that its
alleviation has been and remains at the core of India's development
strategy.
1/ Parts I and [I of the report are similar to Parts I and II of the
President's Report for the Second Andhra Pradesh Irrigation Project
(No. P-4238-IN), dated February 27, 1986).



-2-
4.      During the 1950s and 1960s, India'.s economic performance was
generally characterized by slow economic growth, moderate inflation and
a sustainable external position. GDP rose at about 3.5%, witfi agriculture
and industry growing at 1.8% and 4.82 respectively; imports increased by
4.6Z and exports by 5.8% a year. India was able to reduce its dependence
on foodgrain imports from a peak of 14% of total foodgrain consumption in
1966/67 to 4.5% by 1969/70 through improvements in agricultural
production, but progress in poverty alleviation was slow mainly because of
continued high population growth.
5.      In the early to mid-1970s, in response to a sharp deterioration in
India's terms of trade, the Government introduced various policy measures
designed to stimulate exports. This resulted in a large increase in
export growth to about 7.3X per annum in the 1970s compared with only 2.2%
per annum between 1950/51 and 1969/70. While expanding world markets,
particularly in the Middle East, contributed to this growth, liberalized
access to imported inputs and more effective export incentives played a
major role. The success in the export expansion effort coupled with
continued import substitution, particularly of foodgrains resulted in a
surplus on current account between 1976/77 and 1978/79, which was further
enhanced by increased concessional aid flows. India was thus in a rela-
tively favorable position to deal with the increases in international oil
prices, the'sharp deterioration in the terms of trade and a series of poor
harvests. The comfortable foreign exchange position also played a major
role in the Government's decision to initiate import liberalization.
6.      Towards the end of the 1970s, India again faced considerable
domestic difficulties. In 1979/80 it experienced one of the country's
worst droughts which caused a large reduction in agricultural production.
In addition, industrial production, plagued by labor unrest and a vicious
circle of supply shortages (coal, power and transportation), failed to
expand. These events coincided with a second round of international oil
price increases. As a result, the current account reverted to a deficit
position and the remarkable price stability that the Indian economy
enjoyed after 1975 came to an abrupt end. The Government responded by
mounting an adjustment program, which was embodied in the Sixth Five Year
Plan (1980/81 - 1984/85). The program aimed at raising the GDP growth
rate from its historical level of 3.6% to 5.2Z per annum while adjusting
the country's external balance to the adverse price developments in world
markets. The major elements of the program were alleviation of
infrastructure and supply constraints, increased energy independence,
improved efficiency in resource use, promotion of exports and efficient
import substitution.
Economic Performance Under the Sixth Plan
7.      Overall the Government's adjustment program has been effective
despite the severe drought in 1982/83 and a worsening of the external
environment in the early 1980s. During the Sixth Plan period, GDP grew by



-3-
5.1X per annum, 1I/ well above India's long-term growth rate of 3.6%.
However, overall growth during the first half of the 1980s has not been
steady, mainly because of the effect of uneven rainfall on agricultural
production. In 1980/81 and 1981/82, the economy substantially recovered
from the 1979 drought, with real GDP growing by 7.6Z and 5.3Z,
respectively. The recovery was particularly robust in agriculture where
normal weather helped output to rise by more than 15X in 1980/81 and 5.5Z
in 1981/82. A severe drought in mid-1982 brought the economic recovery
to a halt. Agricultural output declined by 4Z, which in turn reduced GDP
growth to only 1.8%, and put further strains on the balance of payments
and domestic resource situation. The timely implementation of various
economic policies relating to foodgrain imports, procurement and
distribution, and the increased allocation of power to irrigation pumps
mitigated the adverse effects of the poor monsoon. An excellent monsoon
combined with satisfactory performance of the infrastructure sectors, in
particular coal and transport, led to a recovery of the economy in
1983/84. Agricultural output rose by 9Z, industrial output by 4.5Z and
overall GDP by 7.4Z. The power sector, however, emerged again as a con-
straint on higher growth, especialLy in industry. In 1984/85, despite a
mediocre monsoon and difficult political circumstances, the aggregate
growth of the economy is likely to range between 4 and 4.5Z.
8.      During the Sixth Plan period, foodgrain production continued to
grow at an average annual rate of 2.6% a year sufficient to maintain a
broad balance between supply and steadily increasing domestic demand. The
progress achieved is an indication of the effectiveness of programs to
expand irrigation, strengthen extension and encourage efficient use of
other agricultural inputs which are being implemented. Bountiful harvests
have led to record foodgrain stocks in recent years. Over the past year,
Government held stocks have increased by more than 40%. Kaintenance of
ample, balanced operating stocks to ensure smooth operation and even
expansion of the public distribution system remains a top priority of
Indian agricultural policy. Yet, the financial cost of foodgrain storage
and subsidies represent a rapidly growing burden on the budget.
9.     Growth of the industrial sector during the Sixth Plan period was
slow and uneven. Industrial growth averaged about 3.4Z a year--below the
growth rates achieved in the 1960s and 1970s. An inadequate policy
environment, coupled with depressed domestic demand, power and raw
material shortages, as well as labor unrest are the main causes for the
slower than anticipated growth of the industrial sector. After the severe
drought in 1979/80, manufacturing output grew at 1.7% in 1980/81 and 3.3%
1981/82. The drought in 1982/83, which led to widespread shortfalls of
agro-based raw materials and a sharp drop in the demand for consumer
durables, combined with a prolonged textile strike in Bombay, reduced the
1/ Actual GDP growth rate during the 1979/80-1984/85 period was 5.1Z
per annum.  However, this figure overstates the trend in recent years
because of the relatively low base year (1979/80). The 4.5Z GDP
growth per annum and 3.3% annual agricultural growth between
1980/81-1983/84 (two "normal" years) are more representative of the
growth rates during the period.



-4-
growth of industrial output to 1.7% in that year. Following the excellent
monsoon in 1983/84, industrial output gained momentum and grew by 5.0%.
Preliminary estimates place the growth of the manufacturing sector at
about 5.5Z in 1984/85.
10.     The performance of the infrastructure sectors was mixed under the
Sixth Plan. While electric power generation, coal production and railway
traffic grew by 8.7%, 6% and 2.5% a year respectively, oil and gas produc-
tion increased by 22.6%. The rapid expansion of domestic oil production
is largely the result of India's oil development program. Backed by
substantial financial commitment, performance under the program has been
excellent with real investment and oil production levels running well
ahead of Plan targets. In 1984/85 domestic oil production is estimated to
have reached 29.4 million tons. While the gap between domestic consump-
tion of petroleum and production remains large, India's dependence on oil
imports dropped from 63% of consumption in 1979/80 to 30% in 1984/85.
About two-thirds of current output comes from offshore fields around
Bombay High. As most of these fields have now reached their mature stage,
further increases in domestic oil production will have to come mainly from
new discoveries.
11.     India's economy has reverted from a situation of a resource
surplus in the late 1970s to an aggregate resource deficit during the
Sixth Plan period. The gap between gross investment and national savings
increased from negligible levels to an average of 2.1% of CDP in 1980-85.
Cross domestic capital formation increased from an averige of 22.6Z of CDP
in 1975-80 to 24.7% in 1980-85 while gross qational savings remained
constant at an average of 22.6% of GDP in both periods. The increase in
capital formation mainly resulted from an increase in the public invest-
ment rate, but it was largely a financial rather than a real phenomenon
since prices of investment goots increased considerably faster than the
general price level.
12.     The basic thrust of fiscal policy during the Sixth Plan was to
provide sufficient resources for growth and planned investment while
maintaining inflation under control. However, the Sixth Plan period was
characterized by significant budgetary resource constraints. Despite
massive additional resource mobilization efforts, public sector deficits
exceeded 7% of GDP as compared to only 4-5% of GDP during the mid-1970s.
The shortfall was met by additional market borrowings, both domestically
and from abroad and by deficit financing. Major reasons behind the large
deficits were continued losses by most departmentally-run undertakings,
unsatisfactory performance of the two major non-departmental undertakings
of the States (the State Electricity Boards and the State Road Transport
Corporations), and the increasing importance of subsidies which are
estimated to have reached 2.8% of GDP in 1984/85. Of these, fertiLizer
accounted for more than 0.8Z of CDP, and food subsidies nearly 0.5% of
GDP.
13.     Developments in the savings-investment balances were mirrored in
the balance of payments. Thus, India's current account balance, which had
recorded surpluses between 1976/77 and 1978/79, reverted to deficits
averaging US$3.5 billion and 2.1% of GDP during 1980-85. Several develop-
ments contributed to these relatively large deficits. First, the terms of



-5-
trade deteriorated sharply in 1979/80 due to the second round of oil price
increases and continued to move against India during the first three years
of the 1980s. Second, a more liberal import policy towards industrial
inputs was pursued. Third, net invisibles declined as travel receipts
fell off, workers' remittances stagnated (reflecting slnwer development
activity in the Middle East), and payment of interest on higher levels of
foreign debt increased. Fourth, export growth was sluggish partly due to
growing domestic demand, and, perhaps most significantly, due to depressed
foreign markets and prices. Faced with a growing need for external capi-
tal inflows and stagnation in the availability of concessional assistance,
India drew SDR 3.9 billion from the Extended Fund Facility of the IMP and
borrowed significant amounts on commercial terms from the Euro-dollar
market and increased the use of suppliers' and export credits.
14.     Price performance during the Sixth Plan period has been mixed.
The overall improvement in economic performance in the early 1980s, com-
bined with more restrictive monetary policies in 1981/82 and 1982/83,
resulted in a sharp decline in the rate of inflation. The growth rate of
wholesale prices declined from 18% in 1980/81 to only 2.6% in 1982/83.
The lagged effects of shortages of foodgrains in 1982/83 and of other
agricultural products and industrial goods in 1983/84 coupled with a rise
in the domestic cost of imports and rapid liquidity growth, gave a boost
to inflationary pressures towards the end of 1983/84. The annual average
growth of wholesale prices rose to over 9% in 1983/84, and the rate of
growth of consumer prices exceeded 12%. In September 1984, the Government
took a number of measures to dampen pressure on prices including increased
imports of important agricultural commodities (sugar, jute, coconut oil
and others), releases of sugar stocks for distribution through fair price
shops, and a reduction in wheat prices for flour mills. These measures,
together with a decline in cereal prices as a result of the bumper crop in
1983/84 and a generally restrictive budgetary policy, led to a slowdown in
the rate of increase of wholesale prices to about 7.1% in 1984/85.
15.     Developments in the Indian economy during the Sixth Plan under-
score the progress that has been made in recent years towards accelerated
GDP growth, external adjustment, and increased investment. The experience
of recent years illustrates that India has the capacity to grow and
develop at a more rapid pace. It is a tribute both to the fundamental
soundness of key policies and programs, particularly in agriculture, and
to the strength and effectiveness of public administration, that neither
the serious political disturbances in Punjab, nor the assassination of
Prime Minister Indira Gandhi, resulted in significant disruptions to the
performance of the economy in the last year of the Sixth Plan. But the
results during the Plan period also highlight the disappointing perfor-
mance of industry, the continuing shortfalls in electric power generation,
the rising public sector deficits, the importance of regaining and sus-
taining momentum in export growth and the need for continued prudent
economic management so as to avoid a resurgence of inflation while gener-
ating adequate resources for development. This mixture of achievements
and challenges provides the context for an assessment of development
prospects and policies.



-6-
Development Prospects and Policies
16.     To deal effectively with its dual challenges of alleviating per-
vasive poverty and expanding employment opportunities for a growing labor
force, the Seventh Plan is expected to aim at sustaining an annual rate of
growth of CDP of at least 5Z. The Seventh Plan which will lay down the
development strategy for 1985/86-1989/90 is also likely to continue the
emphasis on agriculture, energy development, export promotion, domestic
import substitution where economically justifiable and the removal of
infrastructural bottlenecks.
17.     Achieving a CDP growth of around 52 a year will place heavy
demands on policy adjustment and entail major challenges. India will need
to: (a) maintain the recent higher rate of expansion of agricultural
production; (b) accelerate industrial production and export growth through
policy changes which enhance competition and efficiency; (c) expand supply
capacities in the economy by improving basic infrastructure services and
the availability of energy; (d) imprcve the efficiency with which resour-
ces are used, including particularly the existing capital stock in
infrastructure and industry; and (e) further improve the already high
resource mobilization effort.
18.     Agriculture.  Despite an impressive performance under the Sixth
Plan, Indian agriculture faces many challenges in the second half of the
decade. As possibilities for extending cultivated acreage shrink,
agricultural growth will depend on finding new ways of increasing the
productivity of land through further development of irrigation, better
water management, more intensive use of new technology, efficient delivery
of inputs and services, and appropriate pricing policies. High priority
must be given to the expansion of the country's irrigable area through
completion of ongoing irrigation projects, as well as selective investment
in new undertakings. Besides creating new irrigation potential, the
efficiency of irrigated farming will have to be enhanced through the
improvement of water management practices in existing irrigation systems.
Greater emphasis should also be given to obtaining higher yields under
rainfed and dryland farming conditions. Finally, even greater efforts
must be made to build and strengthen institutions to ensure the efficient
delivery of agricultural services, input supplies, credit and technology.
19.     Industry and Trade.   Prospects for raising India's GDP growth
rate will, to a large extent, depend on more rapid industrial production
and export growth to be attained through improved productivity and
efficiency. A key requirement will be greater competitive pressure on
industry than has been the case in the past. The size and domestic orien-
tation of the Indian economy make it necessary that this competitive
pressure come mainly from within the domestic economy. An important
complement, however, will be greater exposure to foreign trade to stimu-
late domestic competition as well as to induce technological innovation
and modernization.
20.     To increase domestic competition, domestic policies will need to
allow freer entry and exit of firms in the industrial sector and greater
reliance on market price signals. While the G3vernment has taken various
initiatives in the above directions during the past several years, the



-7-
most significant were announced in the context of the 1985/86 Budget.
These include the broadening of licensing categories for certain
industries, delicensing for others, increases in the size limits for
MRTP 1/ and small-scale industries, reductions in the incentive for small-
scale industries to stay small and various initiatives to stimulate effi-
cient indigenization of 'sunrise' industries (energy exploration
equipment, computers, telecommunication equipment, motor vehicles and
parts, general electronics). These are significant advances that need to
be sustained in future years.
21.     Changes in external trade policy will also be required to stimu-
late export growth which is essential not only for current financing of
imports, but to enhance borrowing capacity, to service debt, to provide an
impetus to the economy from the demand side, and to expose entrepreneurs
to the quality-consciousness of competitive external markets. While some
changes have been recently introduced, there remains a need to:
(a) provide greater access to imported inputs and capital goods through
continued import liberalization (b) review tariffs, eliminating anomalies
and lowering their overall level; and (c) modify trade policies in such a
way that the net impact of incentives is more neutral between exports and
import substitution.
22.     Infrastructure Sectors.  Investments in these sectors currently
constitute about one-third of total investment in India, and the
efficiency with which these investments are managed has an important
bearing on the efficiency of total investment and the growth rate of the
entire economy.- There is substantial evidence that better planning and
management of public investments in power, coal, railways and irrigation
could improve returns and lower the current capital-output ratios. For
example, more efficient use of investment could be achieved by better
water management in irrigation projects, improved load factors in thermal
power generation, better capacity utilization in the fertilizer industry
and improved efficiency in railway transport.
23.     Resource Mobilization.  India's gross national savings rate (22.6%
in i980-855 is already high for a country at India's level of income.
Nevertheless, the investment required to sustain the relatively high GDP
growth rates realized during the Sixth Plan period--while holding foreign
savings as a share of GDP at prudent levels--will require some further
increase in the aggregate savings rate especially in public savings.
Because there will continue to be well-founded demands for expansion of
current and capital expenditures in the public sector, the burden for a
reduction in the savings investment gap has to be put on the revenue side.
Increasing tax rates beyond their current high levels would be counter
productive. Thus, economically efficient pricing policies in public
enterprises, supported by improvements in their operational efficiency,
are to be preferred over tax increases as vehicles for increased public
resource mobilization. The sheer size of past and present public
enterprise investment indicates that if proper returns were made even only
a part of them, an increase in revenues of about 3Z of GDP would be
1/ Monopolies and Restrictive Trade Practices Act, 1969.



-8-
attainable. In a number of sectors, e.g. thermal power, railways, and
fertilizer, concerted efforts are being made--with Bank assistance-to
increase efficiency and reduce costs. These efforts need to be improved
and expanded into new areas.
24.     Balance of Payments.  A policy of sustained GDP growth of 5  per
annum will need to be complemented by measures which assure a viable
balance of payments position. Acceleration of industrial growth will lead
to a substantial increase in import requirements, even after allowing for
continued import substitution of key bulk commodity items. Bank staff
estimates place the export volume growth necessary to support these grow-
ing import requirements without excessive increases in external borrowing
at about 8% a year over the Seventh Plan period. Prospects for India to
attain the needed higher export growth rates appear to be reasonably good
because India's share in total world exports in value terms is only about
0.4%, leaving ample room for growth. Furthermore, India's exports are
relatively less sensitive to fluctuations in demand in the OECD industrial
countries because exports are well diversified with respect to both
products and markets. Nevertheless, success in India's export drive will
depend heavily on changes in domestic policy to improve the supply and
profitability of exports.
25.     Even assuming favorable export performance, India will continue to
need substantial external capital flows to augment its own resources for
the foreseeable future. Even with 8% export growth, the 5% GDP growth
implies an increase in gross capital inflows from US$17.5 billion to
US$34.5 billion between the Sixth and Seventh Plan periods. In the past,
the bulk of this financing was provided in the form of official develop-
ment assistance. In more recent years the availability of concessional
assistance to India has declined. Total bilateral grants and concessional
loans declined from a level of about US$1.3 billion per annum over the
years 1979/80-1981/82 to US$1 billion in 1983/84. Moreover, there was a
large deterioration in the terms of aid from multilateral sources. For
example, while total lending from the Bank Group continued to increase
in nominal terms, the grant element declined from 71% to 41X as new com-
mitments of IDA declined from a peak of $1,535 million in FY80 to $673 mil-
lion in FY85.
26.     In the event that official development assistance does not
increase significantly from recent levels, nearly the full additional
financing required would have to be provided from additional non-
concessional borrowing from official and commercial sources. This will
increase India's debt service ratio from the present level of 15.5X to
21.62 by 1989/90. Provided India can in fact, expand export earnings
along the lines described earlier, and provided India's past record of
prudent borrowing and debt management continues, the country should be
able to raise the projected amounts. While its foreign resource require-
ments would be manageable, the increase in its external debt exposure
would leave it with little cushion to deal with unfavorable eventualities
and with the risks of policy change.
27.     In the short term, a relatively large level of external borrowing,
including an increased emphasis on commercial borrowing, will be necessary
to cope with the balance of payments consequences of the growth strategy



-9-
described earlier. Although India is currently in a position to increase
borrowing on conmercial terms from the very low levels of the past, there
are, of course, limits beyond which India will choose to sacrifice growth
objectives rather than accept debt on unfavorable or unmanageable terms.
While therefore a greater volume of both official concessional and non-
concessional assistance is warranted, concessional assistance, in
particular, will be invaluable in moderating the build-up in India's debt
service burden.  Apart from'the quantitative arguments for concessional
aid, there remains the imperative to assist India in addressing the
problems of pervasive poverty. While India is now better placed than
other poor countries to tackle its development problems, the mobilization
of additional resources to address poverty problems is heavily
constrained. goncessional assistance can also play a very important role
in relieving this constraint.
28.     Summary.  India has demonstrated that it can sustain a rate of
growth closer to 5.0% per annum than to the long-run trend of 3.6Z per
annum. If the rate of population growth can be brought to below 2.0% per
annum, a 5.0% growth rate vould mean a doubling of the trend rate of
growth of per capita income of 1.4% per annum. Success in these efforts
would make a significant difference to the prospects of easing poverty in
India. Development prospects over the next few years will hinge on the
extent to which the economy can be brought into both internal and external
balance, while at the same time achieving more rapid growth than in the
past. This will require the continuation of the current development
strategy which assigns high priority to export promotion, public finance
discipline, improveme:t of economic efficiency, and investment in
infrastructure, supported by adequate flows of external borrowing and aid.
PART II - BANK GROUP OPERATIONS IN INDIA
29.     Since 1949, the Bank Group has made 91 loans and 182 development
credits to India totalling US$8,487 million and US$13,753 million (both
net of cancellation), respectively. Of these amounts, US$1,544 million
has been repaid, and US$7,360 million was still undisbursed as of
September 30, 1985. Bank Group disbursements to India in the current
fiscal year through September 30, 1985 totalled US$179 million, repre-
senting an increase of about 5 percent over the same period last year.
Annex II contains a summary statement of disbursements as of September 30,
1985.
30.     Since 1959, IFC has made 35 commitments in India totalling
US$301 million, of which a total of US$168 million has been repaid, sold,
terminated or cancelled. Of the balance of US$133 million, US$126 million
represents loans and US$7 million equity. A summary sLatement of IFC
disbursements as of September 30, 1985, is also included in Annex II
(page 5).
31.     The thrust of Bank Group assistance to India has been consistent
with the country's development objectives in its support of agriculture,
energy and infrastructure. Of particular importance have been investments
in irrigation, extension and on-farm development designed to increase
agricultural praductivity, and efforts to improve the availability of
basic agricultural inputs to farmers through credit, fertilizer,



-10-
marketing, storage, and seed projects. Major elements of the lending
program have also been directed at helping to meet the energy needs of the
economy while curbing the growth of oil imports, and to ease the
infrastructure bottlenecks which have hampered economic growth in India,
particularly through power generation and distribution, and railways and
telecommunications projects. The Bank Group has also provided financing
for a broad range of medium- and small-scale industrial enterprises,
primarily in the private sector, through its support of development
finance institutions. Recognizing th'e importance of improving the ability
to satisfy the essential needs of urban and rural populations, the Bank
Group has supported nutrition and family planning programs, a rural roads
project, as well as water supply and sewerage and other urban infrastruc-
ture projects.
32.     This pattern of assistance remains highly relevant, and consonant
with Government priorities, as reflected in the the Seventh Plan. First,
high priority will continue to be given to GOI's agricultural program.
While India has made significant progress in agriculture, productivity
growth will have to be sustained to improve the balance between food
demand and supply and to contribute to poverty alleviation and employment.
Thus, the Bank Group will continue to support irrigation, fertilizer
production and distribution, and agricultural extension and credit.
Second, alongside GOI's efforts in promoting greater efficiency and faster
development of the industrial sector, increased assistance will be
provided for industrial development. Third, in line with the stress which
the Seventh Plan gives to the expansion and more efficient use of basic
infrastructure capacity and to the development of India's indigenous
hydrocarbon resources, the Bank Group will continue to provide substantial
support to the development of the energy, transport and telecommunications
sectors to alleviate critical shortages which constrain output in both
the agricultural and industrial sectors. Fourth, support of urban
development and other GOI basic social services programs for the poor will
also continue in light of the growth in population which, despite succes-
ses in lowering birth and death rates, still increases by about 16 million
each year.
33.     The need for a substantial net transfer of external resources in
support of the development of India's economy has been a recurrent theme
of Bank economic reports and of the discussions within the India
Consortium. Thanks in part to the response of the aid community, India
successfully adjusted to the changed world price situation of the mid-
1970s. However, India continues to require a substantial level of foreign
assistance both to offset the overall deterioration in the world trade
environment, and to sustain the relatively higher investment and growth
rates achieved during the Sixth Plan period. As in the past, Bank Group
assistance for projects in India should aim to include the financing of
local expenditures. India imports relatively few capital goods because of
the capacity and competitiveness of the domestic capital goods industry.
Consequently, the foreign exchange component tends to be small in most
projects. This is particularly the case in such high-priority sectors as
agriculture and irrigation.
34.     India's poverty and needs are such that whenever possible, exter-
nal capital requirements should be provided on concessional terms.



-11-
Accordingly, the bulk of the Bank Group assistance to India in the past
was provided from IDA. However, IDA lending to India is declining from a
peak of US$1.5 billion in FY80, mostly due to funding constraints related
to IDA. The amount of IDA funds available to India is likely to remain
smalL in relation to India's needs for external support. Thus, this
requirement for additional assistance will have to be met, in part,
through larger Bank lending. Given its development prospects and
policies, India is judged creditworthy for Bank lending to supplement IDA
assistance. A continuation of efforts already underway to achieve growth
in productive capacity, trade expansion, higher levels of savings,
foodgrains self-sufficiency and a reduction in the rate of population
growth should result in continued economic growth and improvement in the
balance of payments. India's debt service ratio is estimated at about
15.2% in 1984/85. This,ratio is projected to rise to around 20% by
1989/90, mainly due to the hardening structure of India's debt; and to
increase slightly over this level through the mid-1990's. Although the
projected debt service ratios are considerably above historical levels,
they are still manageable and will not adversely affect India's
creditworthiness.
35.     Of the external assistance received by India, the proportion
contributed by the Bank Group has grown significantly. In 1970/71, the
Bank Group accounted for 22% of total commitments, 11% of gross
disbursements, and 10% of net disbursements as compared with 68%, 38% and
47%, respectively, in 1984/85. In 1984/85, about 26.3% of India's total
debt service payments were to the Bank Group. On March 31, 1985, India's
outstanding and disbursed external public debt was estimated to be about
US$26.5 billion, of which the Bank Group's share was US$11.1 billion or
42% (IDA's US$8.9 billion and IBRD's US$2.2 billion). As of September 30,
1985 outstanding loans and credits to India held by the Bank totalled
US$20,696 million, of which US$7,360 million remain to be disbursed,
leaving a net amount outstanding of US$13,336 million.
PART III - THE POWER SECTOR
Commercial Energy Resources
36.     India's principal commercial energy sources comprise coal, oil,
gas hydro and nuclear energy. Of the nonrenewable resources, coal is the
most abundant. Reserves of thermal coal have been estimated at slightly
more than 100 billion tons, of which 25 million are proven. Although
reserves are ample, the quality of coal produced is generally low and is
deteriorating. The high ash content, up to 50Z, increases power station
capital and operating costs and exacerbates the problems that Indian
Railways has in moving the volume of coal required for power generation.
GOI's policy of concentrated development of pithead stations helps to
address the transport problem but does not reduce the other costs
associated with poor coal quality. In any case this policy is constrained
by pollution and water availability. GOI appointed the Fazal Committee to
examine th- problems of coal supply to thermal power stations. This
committee, which reported in October 1983, made a large number of
recommendations, affecting all aspects of supply from coal preparation to
railway operations; the great majority of these recommendations have been



-12-
accepted.by GOI. The Bank is supporting GOI's efforts in this area
through its lending to the coal sector. The Dudhichua Coal Project
includes studies to examine coal linkages and identify potential improve-
ments in handling and transportation facilities. Coal quality is also
being addressed, particularly through the inclusion of appropriate quality
incentives in coal supply contracts.
37.     Proven and probable petroleum reserves comprise approximately 510
million tons of oil and 390 million toe of natural gas. Despite recent
increases in domestic production, India still imports about one third of
its oil requirements, which in 1983/84 cost the equivalent of 40% of its
merchandise exports. GOI has therefore given high priority to oil and gas
exploration and, at the same time, has implemented measures, including
economic pricing, to restrain the rapidly growing demand for oil products,
particularly middle distillates. In the past, GOI has generally limited
natural gas to premium markets such as petrochemicals and fertilizer;
however, delays in the construction of gas infrastructure have resulted in
substantial volumes of gas being flared. The Bank has encouraged GOI to
develop the necessary infrastructure and to allow other economic uses of
gas including power generation. In response, GOI has begun to invest in
pipelines and has recently revised its policy on the use of gas for power
generation.
38.     India's hydroelectric potential is equivalent to about 100,000 MW.
At present only 14,000 MW have been developed, 4,700 MW are under con-
struction and a further 23,000 MW are being studied for future
development. The prominent role of hydro generation in regional least-
cost power development plans has led GOI to emphasize the need to
accelerate hydro development; however, progress has been slow owing to the
lack of financial resources of States with the greatest hydro potential,
the time required to resolve water rights and environmental issues, and
the limited technical resources available for the simultaneous preparation
of a large number of hydro schemes. Attempts to address these issues
through increased central sector involvement have so far met with limited
success (para 46).
39.     The country's uranium reserves could support a modest nuclear
program (8,000 - 10,000 MW), and thorium reserves are enough for a large
fast breeder program. India's nuclear power generating capacity is cur-
rently 1,095 MW.
GOI's Strategy in the Power Subsector
40.     In essence, the Five-Year Plan constitutes the only formal state-
ment of GOI's energy and power policies. Although formalization of power
policy, in particular, is made difficult by the constitutional arrangement
in which responsibility for power is shared between Center and States
(para 46), the Seventh Plan nevertheless reflects a broad consensus of the
objectives of energy and power policies. The principal objectives of
GOI's energy policy may be sunmmarized as to:  (a) develop energy supplies
economically at a rate commensurate with growth in the economy and social
needs; (b) substitute indigenous energy resources for imported petroleum
wherever this is both technically and economically feasible; and (c)
encourage the rational and efficient use of energy resources. Although



-13-
power policy is governed by essentially the same objectives, alleviation
(or at least containment) of acute power shortages suffered nationwide
dominates GOI's short-term strategy. Over the longer term, achievement of
Least-cost development assumes greater importance. In addition to the
initial steps of its long-term strategy, GOI's short-term strategy
provides for a number of specific measures to address power shortages,
including:
(a) rehabilitation of thermal plant - a program involving some 30 plants
is currently being finalized;
(b) accelerating the implementation of ongoing projects - a recent
reorganization of Government created a new ministry specifically
to monitor and improve implementation of public sector projects;
(c) permitting industries to invest in captive generation;
(d) permitting the construction of shorter gestation gas or oil-fired
plants; and
(e) improving the quality and reliability of coal supplies, through
implementation of the majority of the recommendations of the Fazal
Comittee.
41.     GOI's long-term strategy requires a blend of policies designed to
address investment, organizational/institutional and financial issues.
With respect to investment policy, resource constraints will severely
limit the quantum of investment available to the power subsector. The
Seventh Plan allocation is almost exactly half the sum sought by the
Working Group on Power, a sum which was itself inadequate to eliminate
power shortages. However, broad agreement within India has been reached
on qualitative aspects of long-term investment policy which will
emphasize:
(a) accelerated hydro development;
(b) an increased proportion of investment in transmission and
distribution;
(c) the formation of a national grid;
(d) coal beneficiation to improve both quality and homogeneity;
(e) diversification of the modes in which coal for power generation
is transported, possible examples in_lude the introduction of
coastal shipping or slurry pipelines;
(f) diversification of the fuels used for power generation, GOI now
recognizes that gas fired plant, especially combined cycle, has
an economic role to play in system development; and
(g) steady growth in the development of nuclear power.



-14-
42.     Long-term organizational/institutional and financial issues are
more controversial and GOI still needs to identify clearly defined
strategies in these areas. GOI recognizes the institutionaL and financial
weakness of many of the SEBs but constitutional constraints limit the rate
at which the Center can bring about improvement. Measures which GOI is
following include:
(a) increasing the role of efficient central sector institutions,
particularly NTPC;
(b) implementation of a uniform system of commercial accounting for
all SEBs;
(c) requiring, through recent amendment of the Electricity
(Supply) Act, that SEBs earn a rate of return of 3Z after all
expenses and interest--a significantly more stringent financial
requirement than hitherto; and
(d) a more receptive treatment of private sector proposals for power
generation, particularly when it can be demonstrated that such
developments are mobilizing resources which would not otherwise
be available to the public sector.
In addition, GOI is contemplating the formation of a Power Finance
Corporation as a financial intermediary serving the subsector. Funds lent
by the Corporation would be attractive to SEBs because, at least in part,
they would be additional to agreed plan outlays. However, loans would be
subject to conditionality designed to improve the efficiency and financial
strength of beneficiaries.
43.     GOI recognizes that the development and operation of an integrated
national grid will be difficult to achieve with the present organization
of the subsector and, as noted below (para 46), GOI is contemplating the
formation of a separate body with responsibility for the grid. However,
many commercial and institutional problems remain and, as yet, GOI has no
strategy for their solution; although, under the Rihand Power Transmission
Project, GOI has accepted that these aspects of grid development need to
be addressed.
Electricity Supply and Demand
44.     Almost 60% of India's eLectricity is generated from coal, 34% from
hydro, and the rest from oil, nuclear energy, and natural gas. Although a
number of thermal projects are planned for the short-term, the shares of
hydro and nuclear are likely to increase in the long run. Electricity
losses have risen slowly but steadily over the last few years and now
exceed 26Z of gross generation. The deteriorating quality of coal has
increased station use and the large expansion in very low load density
rural electrification, together with otherwise inadequate investment in
transmission and distribution, has increased system losses. The Bank has
stressed the importance of balanced investment to reduce system losses and
will continue to support transmission and distribution investments
designed to achieve this objective.



-15-
45.     Over the past two decades, the consumption of electricity has
grown approximately twice as fast as total commercial energy consumption
and now accounts for more than 30% of the latter. Even though the power
subsector receives 20-25% of total public investment, electricity supply
has not kept pace with demand and shortages have been prevalent throughout
the country. During the last five years, shortages have been estimated
at, on average, about 13X of electricity require,nents. The principal
sectoral shares of total electricity consumption are: industrial, 51Z;
agricultural, 182; and domestic, 9%. Agriculture's share has grown
steadily owing to increased electrical irrigation pumping made possible by
rural electrification and encouraged by heavy subsidies. Total consump-
tion has grown at an average annual rate of 8% during the past two decades
although the increasing severity of power shortages suggests that poten-
tial demand has grown more rapidly. The Central Electricity Authority
(CEA) has forecast demand growth in the range 10-11% per year between
1984/85 and 1994/95. However, actual growth will continue to be supply
constrained.
Organization of the Power Subsector
46.     Responsibility for the supply of electricity is shared between the
Central and State Governments. The State Electricity Boards (SEBs) and
the Regional Electricity Boards (REBs) are controlled by States; CEA is
administered by the Department of Power within the Ministry of Energy, and
the National Thermal Power Corporation (NTPC), the National Hydro-Electric
Power Corporation (NHPC), and the Rural Electrification Corporation (REC)
are central sector corporations responsible to the Department of Power.
SEBs were instituted under the Electricity (Supply) Act, 1948 (the Act),
to promote the development of the power subsector and to regulate private
licensees such as the Tata Electric Companies. Although SEBs are supposed
to be autonomous in managing their day-to-day operations, in practice they
are under the control of State Governments in such matters as capital
investment, tariffs, borrowings, pay, and personnel policies. As a first
step towards national integration, the SEBs have been grouped into five
regional systems, each coordinated by an REB. Coordination respon-
sibilities include overhaul and maintenance programs, generation!
schedules, interstate power transfers and concomitant tariffs. CEA was
created in 1950 to develop national power policy and to coordinate the
various agencies involved in supplying electricity. It is formally
responsible for vetting investment proposals, providing consulting support
to SEBs, assisting in the integration of supply systems, training of
personnel, and research and development. However, in its execution of
these responsibilities, CEA has been severely limited by shortages of
skilled staff and other resources. Without any direct responsibility for
the provision of finance it has been unable to assume a very positive roLe
in the development of the subsector. In view of this, GOI is contemplat-
ing the formation of a Power Finance Corporation to complement CEA in
fostering development of the subsector. NTPC and NHPC were formed in 1975
to construct and operate large power stations and associated transmission
facilities. They sell bulk power to the SEBs for distribution. NTPC has
had marked success and has grown rapidly. In contrast, NHPC is still
struggling to establish a role for itself; the States control water rights
and are reluctant to relinquish hydro sites to the Center. This has
prompted GOI to explore joint ventures between the Center and States for



-16-
the development of hydro schemes. REC was established in 1969 to coor-
dinate rural electrification and provide financial and technical expertise
for SEB schemes. Currently, REC finances more than 70% of totaL rural
electrification investment. At present there is no organization with
responsibility for the development of a national transmission grid,
although GOI is contemplating the formation of such a body.
Finance and Pricing
47.     Although four SEBs are estimated to have made a profit in 1984/85
the SEBs as a whole are estimated to have made a combined loss in that
year of approximately Rs 11,230 million (US$ 935 million) exclusive of
subsidies, corresponding to a return on historically valued net fixed
assets-of +2.3% before interest and -8.1% after interest. Internal cash
generation, which was equivalent to only about 2.7% of capital expenditure
in 1984/85, has been corresponuingly poor. Almost all SEB capital expen-
diture is financed by debt, primarily loans from State governments.
Recognizing the unsatisfactory state of SEB finances GOI has, through an
amendment to the Act notified in April 1985, required SEBs to earn an
annuai return, after meeting operating expenses, taxes, depreciation and
interest, of at least 3% on their historically valued net fixed assets
(GOI does not accept the principle of revaluation of assets). The Bank
supports this initiative by GOI and has, under the Chandrapur Thermal
Power Project (Loan 2544-IN), changed the form of its financial covenant
to reflect this. Although in terms of the Bank's conventional method of
calculation, the return specified in the Act corresponds to a modest
return on revalued assets in the range of 4% to 62, it, nevertheless,
represents a very substantial improvement on current performance. Many
SEBs, particularly those of the poorer States, are expected to experience
considerable difficulty achieving this level of performance. NTPC's
tariffs are approximately equal to its long-run marginal costs (LRMC);
however, as is to be expected from their current financial performance,
SEB's tariffs do not adequately reflect LRMCs. An analysis of 1981 SEB
tariffs indicated that they were on average only 52% of LRMC. While
adherence to the stipulated rate of return would improve the overall level
of the tariff, the structure is still unsatisfactory. Tariffs are fre-
quently excessively complex and very little has been done through tariffs
either to achieve load management or to tap selectively consumers' will-
ingness to pay, where this substantially exceeds existing tariff levels.
At the instigation of the Bank, LRMC tariff studies were carried out for
almosL all of the States in the late 1970s. However, these studies were
generally of poor quality and the Bank has since endeavored to agree with
GOI on a methodology for LRMC tariff studies. Progress has been slow as
GOI continues to oppose economic pricing of power for reasons associated
with social and agricultural objectives. In lending to individual SEBs
the Bank will continue to address State-specific programs to improve
resource mobilization, for example, by developing financial programs
capable, as a minimum, of achieving the rate of  :-turn specified in the
Act. Where higher returns are both feasible and desirable the Bank will
press State governments to use their discretion under the Act to notify a
higher rate of return. So far as tariff structure is concerned, the Bank
will continue to require tariff studies wherever tariff structures appear
to be badly distorted, in order to impress on the relevant authorities the
true costs of cross-subsidization. This has been done under both the



-17-
Chandrapur Thermal Power Project and the Kerala Power Project (Loan
2582-IN). However, resistance to economic pricing is such that progress
in pricing reform is likely to be slow.
Power Subsector Planning
48.     The Bank has consistently encouraged GOI to pursue integrated
planning and coordinated operation of the country's electricity supply
systems. In response, GOI has prepared a set of regional least cost
development plans, published as the National Power Plan (NPP) in 1983.
Although the NPP represents a good first step towards integrated planning,
it needs further refinement and regular updating. In addition, such a
plan can only lead to effective improvements if complemented by measures
to bring about coordinated system operation. At present only the Northern
Region is achieving this. GOI is encouraging States to reach the neces-
sary agreements on operating parameters but progress is likely to be slow
so long as severe power shortages exist. Even if coordinated intra-
regional operation is achieved, inter-regional transfers will be very
difficult without the use of direct current facilities to overcome
problems of frequency control. The first such facility, a link between
Northern and Western Regions, is being financed by the Bank under the
Central Power Transmission Project (Loan 2283-IN). A second direct cur-
rent link has been included in the Rihand Power Transmission Project (Loan
2555-IN). To facilitate further integration GOI has agreed, under the
latter projects to undertake a study of the long-term development of a
national transmission system and to examine related institutional and
commercial issues. Disparities between the long-term NPP, national five-
year plans, short-term budgets and actual performance have been
substantial. Owing to the lack of resources, fewer projects have been
included in the five-year plans than in the NPP and, as a result of inade-
quate allowance for escalation and delays in project implementation, still
fewer have been executed. Consequently, the shortage of power has become
more acute and, over the next decade, India expects its power deficit to
increase substantially. This deficit has undermined rational planning by
encouraging rapid expansion of supply rather than least-cost development;
for example, shorter gestation thermal plant has been favored at the
expense of lower cost hydro. Furthermore, it has prompted overinvestment
in captive plant, a second best measure leading to excessive use of high-
value petroleum products for power generation. In addition to supporting
GOI's efforts to increase the supply of power, the Bank will continue to
stress to GOI the role of pricing and load management in eliminating the
deficit, and the importance of integrating planning and pricing.
Management and Operations
49.     In contrast to the good performance of NTPC, the SEBs' management
and operational capabilities have not kept pace with the expansion of
supply. In general, SEBs have adequately qualified engineering staff, but
lack experienced personnel in financial planning and control. The rela-
tively low status and pay of these personnel exAcerbates the already
significant pay differential between the pubLic and private sectors and
makes it difficult to recruit competent staff. Management practices are
generally outmoded and inadequate. Accounts have been maintained prin-
cipally to track cash receipts and expenditures, and there has been little



-18-
use of accounting information for managerial purposes. Consequently, the
Bank has encouraged GOI to develop a new uniform accounting system for
SEBs. After initial delays, implementation is now proceeding. In
addition, the Bank will continue to support institutional development
programs through lending to individual SEBs.
50.     The operations of many SEBs are hampered by the poor condition of
their plant and equipment. Factors that have contributed to the poor
state of thermal plant include inadequate maintenance (due to capacity
shortages), deficiencies in manufacture, lack of spares, and the poor
qiuality of coal; in general, these problems have been recognized by the
relevant authorities and corrective steps are being taken. Distribution
systems have suffered from inadequate maintenance and overloading owing to
inadequate investment. Rehabilitation, particularly of thermal plant and
distribution networks, appears to be a very cost-effective way to improve
efficiency and system capacity. GOI is currently preparing a rehabilita-
tion program for thermal plant but is less able to effect improvements in
distribution. The Bank will continue, whenever appropriate, to include
rehabilitation components under loans made to SEBs.
Bank Group Strategy in the Power Subsector
51.     The Bank supports the elements of GOI's strategy identified above
but feels that, while each of these elements is desirable, they do not
address all of the serious deficiencies in the subsector. In particular,
additional efforts are needed to address problems in the areas of
planning, pricing/load management, institutional development and finance.
The prevalent nature of these problems suggests that a sector-wide
approach should be sought. However, the comparative autonomy of the
States/SEBs from the Center makes it difficult to achieve progress in this
way. With the exception of the introduction of uniform commercial
accounting in SEBs, few improvements at the State level have been realized
through umbrella projects coordinated by CEA or REC, primarily owing to
the very weak control that these institutions are able to exe-cise over
SEBs. Consequently, the Bank is changing the mix of its lending to the
subsector away from umbrella projects, coordinated by CEA or REC, towards
a more direct involvement with individual SEBs, where State-specific
programs can be designed to address areas of deficiency. Initial
experience with individual SEBs suggests that the prospects for improve-
ment are encouraging in most areas except pricing. Despite espousing
energy prices "which reflect true costs" in both the Sixth and Seventh
Plans, GOI and the States have, until now, opposed the principle of
economic pricing of power, for reasons associated with social and agricul-
tural objectives. The Bank will continue to press for improvements in
both pricing and the other areas identified above, e.g. through financial
recovery and institutional development programs tailored to the require-
ments of individual SEBs. However, as indicated earlier, there is con-
siderable resistance to financial reforms within the sector. While the
Bank Group will continue to encourage the Central and State Governments to
improve the financial performance and viability of the SEBs, it is
beginning, as a matter of strategy, to work only with those SEBs that are
prepared to introduce measures to bring about improvements in their finan-
cial condition and performance.



-19-
52.     In parallel with lending to individual SEBs the Bank proposes
continued support for expansion of the central sector, because:
(a) increased reliance of the States on central sector generation appears
to be the best way to encourage decisions at the State level consistent
with the national interest; and (b) a high proportion of central sector
generation sold at economic tariffs will help to improve tariffs to final
consumers. The difficulties that OI has experienced in bringing hydro
projects into the central sector mean that NTPC will continue to be the
main vehicle for the Bank's support of the central sector. NTPC's record
to date is impressive. However, it is still far from being a mature
institution and, owing to its rapid development, it will continue to face
problems in which it could benefit from Bank support. As far as CEA is
concerned, the Bank feels that a review of its organization and functions
would now be timely and, in its dialogue with GOI, the Bank will discuss
the possibility of such a review, coupled with technical assistance to
improve CEA's capability to meet its responsibilities, which may require
redefinition as a result of the review.
53.     In addition to addressing areas in which GOI's strategy appears
deficient, it is appropriate that the Bank shouLd focus on aspects of the
strategy already adopted, where the Bank can do most to catalyze progress.
In this respect specific aspects identified include:
(a) the formation of the national grid - the Bank will continue to
support projects such as the Central and Rihand Power
Transmission Projects; the latter will afford the Bank the
opportunity for an active involvement in studies of long-term
transmission development;
(b) accelerated hydro development - by broadening lending operations
to encompass individual SEBs the Bank is able to support hydro
projects and, where the additionality of the Bank's funds to
plan outlays is crucial, it is able to bring about developments
which might not otherwise take place; and
(c) elements of strategy that involve concerted action by
organizations, both inside and outside the power subsector - the
Bank can coordinate its own lending operations within the
different subsectors in order to improve intersectoral
cooperation. Priority examples concern improvements in coal
quality and transportation, and the use of natural gas for power
generation.
Bank Group Participation
54.     The Bank has made 21 loans (US$2,709 million) and 17 IDA credits
(US$2,409 million) for Indian power projects. Nineteen projects have been
completed: 12 generation, 5 transmission, and 2 rural electrification.
Projects currently under implementation include 11 generation, 2 of which
are hydro, 2 transmission, 1 rural electrification, and the Kerala Power
Project, the most recent project to be approved by the Bank, which
includes a broad spectrum of generation, transmission and distribution.
With respect to NTPC projects, the first-phase projects at Singrauli,
Korba, and Ramagundam were commissioned on or ahead of schedule. The



-20-
second-phase extension at these sites, the Farakka and the Rihand Power
Transmission Projects are proceeding satisfactoriLy. The Third Rural
Electrification Project, which has suffered significant procurement
problems, is about two years behind scbedule.
55.     A performance audit conducted in 1980 for the Second Power
Transmission Project (Credit 242-IN) concluded that the project succeeded
in helping the nine SEBs extend their transmission systems to meet their
growing power requirements. Utilization of generating capacity in these
SEBs exceeded the appraisal forecast. However, the audit highlighted the
difficulties of effecting institutional improvements in the absence of a
close working relationship between the Bank and beneficiary SEBs.
Disbursements
56.     The rate of loan and credit disbursement under Bank-financed
projects in the power sector has been unsatisfactory in recent years. At
the beginning of FY86, the undisbursed balance for Bank Group-financed
power projects was US$2.6 billion. First-half data for FY86, annualized
over the entire year, indicate that FY86 disbursements in the sector would
lie within a range of about US$190 million-250 million. Disbursements in
general have lagged considerably behind appraisal estimates, primarily
because of procurement-related problems but occasionally because of delays
in loan and credit effectiveness. The procurement delays have arisen from
delays in the award of major contracts, additional time required for the
preparation of bidding documents and for bidder prequalification, and time
required to resolve disputes among suppliers on the larger contracts. For
a number of ongoing projects in the sector, major contracts have now been
awarded or are expected to be awarded in early 1986, so disbursements
should improve significantly during the second half of the fiscal year.
GOI will nevertheless need to take steps to improve the general unsatis-
factory disbursement performance in the sector, if the Bank is to continue
lending for power sector projects in India. The disbursement situation
will be closely monitored in the ensuing months to ensure that actions are
being taken to address this problem.
PART IV - THE PROJECT
57.     The project was prepared by NTPC and appraised by a mission that
visited India in May 1985. A Staff Appraisal Report is being distributed
separately to the Executive Directors. Negotiations were held in
Washington in Februar-r 1986. GOI and NTPC were represented by a delega-
tion with Mr. Bose of the Department of Economic Affairs as coordinator.
A Supplementary Project Data Sheet is attached as Annex III.
Project Objectives and Rationale for Bank Involvement
58.     The primary objective of the project is to help meet the demand
for electricity in the Northern and Western Regions of India by providing
additional power generation capacity of about 1,500 MW using combined
cycle technology, which is new to India and would provide an efficient,
reliable, and economic source of power. A secondary objective of the
project is to diversify the fuels used in power generation through the use
of gas or liquid fuels in regions that are short of hydro and coal



-21-
resources. The increase in recent years in the number of coal-fired
stations has placed a severe burden on both the coal industry and the
railways; the project will relieve pressures on these sectors. The
development of the large South Bassein and satellite gas fields, together
with the associated gas available from the Bombay High field, could triple
or quadruple natural gas production in the next decade and thus provide
considerable economic opportunity to extend the uses of gas. Use of such
gas for power generation would be attractive for some areas of the
Northern and Western Regions that are remote from the coal fields in the
eastern parts of India. To provide the inf1astructure necessary for the
use of gas in industrial and power plants, COI has decided to construct a
1,700-km gas pipeline from Hazira to Jagdishpur--the HBJ pipeline--which
will traverse the States of Gujarat, Madhya Pradesh, and Uttar Pradesh,
with a spur into Rajasthan. Although the initial purpose of the pipeline
was to supply gas to six fertilizer plants and a number of liquid
petroleum gas plants, the prevailing power shortages in both regions and
difficulties in coal transport make short gestation, high efficiency, gas
or Liquid fueled combined cycle plants attractive. In light of this, GOI
has agreed to allow the use of gas for power generation and has sanctioned
the construction of three combined cycle stations, with a total capacity
of about 1,500 NW.
59.     Through its participation in the project, the Bank would be sup-
porting GOI's objectives and efforts to alleviate power shortages in
regions that are currently suffering acute power shortages. Through its
support of the use of gas and liquid fuels for power generation, the Bank
would continue to encourage GOI to diversify fuel supply to the power
subsector, to develop natural gas resources, and to expand the use of gas
beyond fertilizer manufacturing. This diversification in fuel use will
also help relieve pressures on the raiLway and coal sectors. The intro-
duction into India of the combined cycLe technology will not only provide
a reliable, flexible, and economic means of power generation, but will
also provide an opportunity to acquaint Indian engineers with this type of
equipment. Support will also be provided to NTPC under the project
through measures to improve its financial position (accounts receivable)
and through a study to address aspects of NTPC's tariffs that will require
attention as the institution expands.
Project Description
60.     The project comprises the following components:
(a) three combined cycle power stations-at Kawas (Gujarat), Anta
(Rajasthan), and Auraiya (Uttar Pradesh)- comprising combus-
tion turbogenerators, heat recovery boilers, and steam
turbogenerators, with a total installed capacity of about
1,500 MW; electrical and mechanical auxiLiary equipment; and
the provision of associated civil works and ancillary
facilities;
(b) about 950 km of 220-kV and about 375 km of 400-kV single-
circuit and double-circuit transmission lines, connecting:
the Kawas station with Navsari, Baruch, and Valthan in
Gujarat; the Anta station with Bhilwara and Dausa in



-22-
Rajasthan; and the Auraiya station-with Agra and Ballabgarh
in Uttar Pradesh; together with new or extended substations
and associated auxiliaries; and
(c) technical assistance for the engineering, testing, and com-
missioning of the combined cycle power stations.
Project Implementation
61.     The project will be implemented over a Zive-year period
(FY87-FY91) by NTPC, as part of the ongoing power development program.
NTPC will construct, own, and operate the generation and transmission
facilities included in the project. NTPC has had considerable experience
in installing and operating thermal power stations and associated high
voltage transmission systems. However, the installation of combined cycle
units will introduce a new technology, and the corporation does not yet
have the appropriate expertise. NTPC has prepared the bidding documents,
but will need assistance in defining performance criteria, evaluating
bids, finalizing the design proposed by the selected bidder, and in
monitoring the manufacture, testing, and comissioning of equipment. NTPC
would engage consultants to assist in performing these tasks. NTPC has
adequate experience in the design and construction of 220-kV and 400-kV
transmission lines.
62.     The stations at Kawas and Auraiya will be located close to the HBJ
gas pipeline. Because of water supply requirements, the Anta station will
be located some distance from the HBJ pipeline and thus a spur pipeline of
about 16 km will have to be constructed to connect it to the HBJ line.
Cooling water will be supplied from irrigation canals; pondages will be
constructed to ensure water availability during the periods of annual
closure for maintenance. In order to reduce water consumption, the sta-
tions will be equipped with cooling towers. The three stations will be
located close to major roads and railways, which will facilitate transport
of equipment, materials and liquid fuels, if required, during operation.
63.     The power stations that comprise the project will burn primarily
gas but will be constructed with provision for the use of liquid fuels in
order to maximize flexibility. Gas supplies will come principally from
the South Bassein field which has reserves of about 205 billion cubic
meters. The field is connected to the mainland at Hazira, the site for
the gas treatment plant, wh:_ch is close to the proposed Kawas power
station. From Hazira, gas will be transported by the HBJ pipeline to
inland consumers which include six fertilizer plants and the proposed Anta
and Auraiya power stations. The HBJ pipeline is to be implemented and
operated by the Gas Authority of India Limited (GAIL), a public sector
corporation responsible to the Ministry of Petroleum. GAIL has awarded
contracts for the supply of pipes and tenders have been received for a
turnkey contract for all associated equipment and pipeline construction.
GAIL expects to award this contract shortly. The planned construction
timetable is consistent with NTPC's schedule for the three combined cycle
units. In order to ensure coordinated development of the HBJ pipeline and
the combined cycle units, award of the contract for the pipeline construc-
tion will be a condition of effectiveness for the proposed loan. In
addition, contracts between NTPC and the appropriate authorities for the



-23-
supply of gas will be concluded at least six months prior to the commis-
sioning of the first combustion turbine under the project.
64.     To date GOI has not made a formal decision on the principles that
will govern the pricing of gas for power generation. However, during
appraisal of the HBJ pipeline, GOI has indicated that the price of gas for
uses other than fertilizer would be based on fuel oil parity, which at
that time was approximately Rs 1,800 per thousand cubic meters, and has
confirmed this in respect of the piaposed project. At least in the medium
term, a price related to fuel oil would adequately cover the estimated
economic opportunity cost of gas and, in so far as this price may exceed
the opportunity cost, it would not cause significant economic distortion
(higher plant availability would still leave gas as the preferred fuel)
and would be desirable for reasons of resource mobilization.
65.     In light of its plans for fertilizer development, COI can guaran-
tee only four million cubic meters per day (mmcmd) of gas for the project
plants, as against the six mmcmd required for full gas operation.
However, the requirements of gas for the fertilizer facilities may Lsve
been overestimated and it is likely that the full szx mucmd will be avail-
able for power generation. However, in view of the possible shortfaLl,
provision will be made for liquid fuel operation. Operation of the plarts
on liquid fuel, in the absence of gas, would be economically justified.
In any event, provision for liquid fuel operation is desirable in order to
cater for possible interruptions to gas supplies. GOI will ensure that at
least four mmcmd of gas will be made available for the proposed project,
and, to the extent that the required six mucmd of gas are not available,
will ensure that liquid fuels are provided. Environmental clearance for
the project has been obtained for both gas-based and liquid-based opera-
tion of the plants. NTPC will ensure that the execution and operation of
the project is carried out with due regard to ecological snd environmental
factors and will comply with GOI's environmental quality standards.
66.     To ensure prompt decision making and effective coordination, NTPC
is establishing a new division responsible for the implementation of the
proposed project. However, design and procurement for the project would
be carried out by specialized groups in the respective functional divi-
sions of NTPC. Construction would be supervised and coordinated by resi-
dent engineers with the assistance of consultants where necessary. NTPC
will arrange for the timely training of operations and maintenance staff
either in conjunction with the equipment procurement or with utilities
operating similar plants.
67.     Owing to NTPC's satisfactory construction performance, most of the
eleven 200-MW generating units and transmission lines commissioned since
the beginning of 1982 have been completed within the planned construction
period. Any delays that have arisen in NTPC's projects have been due
primarily to delays in ordering major equipment items (boiler and
turbogenerators) rather than in actual construction. NTPC's transition
from its construction phase to an operational phase is also being carried
out successfully. NTPC has prepared, with the assistance of Central
Electricity Generating Board (U.K.), detailed procedures for plant
commissioning, operation, and maintenance. Major emphasis has been placed
on the introduction of maintenance planning using computers and standard



-24-
work procedures. Generating units under operation have achieved satisfac-
tory generation levels. A Research and Development unit has been estab-
lished to carry out applied research and to assist in plant outage
analysis. In 1982 the corporation adopted an organizational structure
that made regional headquarters units responsible for the construction and
operation of generation and transmission facilities within the region. As
a result, most of NTPC's operations have now been decentralized, and five
regional headquarters have been established. With decentralization, the
corporate headquarters is progressively limiting its role to design,
policymaking and providing functional guidance to the Regions. The prin-
cipal corporate functions are finance, personnel and administration,
planning and monitoring design, procurement, and commercial. Recruitment
is progressing satisfactorily to meet NTPC's expanding operational needs.
NTPC places special importance on the training of engineers, supervisors,
and operating staff as well as managerial and administrative staff, and
detailed programs have been developed to meet the training needs of all
categories of staff.
Status of Project Preparation
68.     NTPC has completed the basic design for the proposed project and
is preparing the bidding documents. Land acquisition is proceeding
satisfactorily. Bids for the major equipment package (combustion
turbogenerators, heat recovery boilers, and steam turbogenerators) were
invited in February 1986, and the award is expected to be announced in
December 1986. The project is expected to be completed in 1990.
Project Cost and Financing
69.     The total cost of the project, including contingencies but exclud-
ing about US$127 million in taxes and duties, is estimated at about
US$1,114 million equivalent, of which about US$666 million (60Z) repre-
sents the estimated foreign exchange costs. Interest during construction
adds about US$45 million to the financing required. The principal costs,
net of physical and price contingencies, but including taxes and duties,
are: civil works, US$64 million; main electromechanical equipment for the
combined cycle units, US$570 million; auxiliary equipment, US$148 million;
fuel supply equipment, US$13 million; associated transmission system,
US$125 million; engineering and administration, US$62 million; consultancy
and technical assistance, US$11 million. The estimates of project costs
for the civil works and main items of equipment and materials related to
the auxiliary and transmission facilities are based on the most recent
price quotations for similar projects, and on manufacturers' indicative
price quotations for the combined cycle units. These prices have been
adjusted for estimated inflation to end-1985 levels. Price contingencies,
amounting to 20% of base cost, are based on expected annual inflation
rates of 7% for 1985/86, 7.52 for 1986/87 through 1989/90, and 5% there-
after for local costs, and 7.52 for 1985/86, 8% for 1986/87 through
1989/90, and 5% thereafter for foreign costs. Physical contingencies of
10% on civil works and 5X on equipment have been allowed, amounting to
just over 5% of base cost.
70.     The proposed Bank loan of US$485 million will finance about 69% of
the total foreign exchange financing requirement of about US$706 million,



-25-
and would cover about 43Z of the total project cost net of taxes and
duties. The balance of the funds required, aggregating about US$801
million equivalent, will be provided by GOI (US$696 million) in the form
of loan and share capital, and by NTPC from its own resources (US$105
million). GOI has indicated that it may seek additional external financ-
ing in the form of commercial bank loans to help meet the balance of the
foreign exchange requirements (about US$221 miLlion) of the project. GOI
may also consider suppliers' or export credits for the major equipment
items if a successful bidder or other agency provides an acceptable
financing proposal for the lowest evaluated bid in cash terms. In this
event, COI's contribution to project financing will be reduced
accordingly, and the Bank would seek to reallocate its contribution for
the financing of these items to other items in the project, as
appropriate.
71.     The proceeds of the proposed loan will be onlent by GOI to NTPC.
Terms for the onlent Bank funds will provide for repayment over 20 years,
including five years' grace, at an interest rate of not less than 13.0%
per annum, under a subsidiary loan agreement between GOI and NTPC.
Execution of the subsidiary loan agreement between GOI and NTPC will be a
condition of effectiveness for the loan. The average inflation rate is
not expected to exceed 7.7% per annum. COI's onlending rate to NTPC is
therefore expected to remain positive in real terms. The foreign exchange
and interest rate risks will be borne by GOI.
Procurement and Disbursement
72.    Procurement arrangements are sunmmarized in Annex IV. The major
equipment associated with the combined cycle units, together with the fuel
supply equipment and civil works associated with the construction of the
plants, costing an estimated US$893 million, will be subject to interna-
tional competitive bidding (ICB), in accordance with Bank guidelines. The
major equipment and works for the combined cycle units would be grouped
for each station in a single supply and erection contract. The transmis-
sion facilities (lines and substations), some electromechanical equipment
and works associated with the plants, and other civil works will be
grouped in separate contracts and procured on the basis of local competi-
tive bidding (LCB); these items will not be financed by the Bank. About
72% of works, goods, and services for the project will be procured under
ICB. Consultants will be selected in accordance with Bank guidelines.
Suppliers competing under ICB for contracts for supply and erection of
goods will have a 15% preference or the applicable duty, whichever is
less, on the Locally manufactured goods and materials. All equipment
contracts costing the equivalent of US$3.5 million or more will be subject
to the Bank's prior review. Such review would cover contracts totaling
about 90% of the estimated cost of the Bank-financed components.
73.     The proceeds of the loan will be disbursed over a six-year period
(FY87-FY92) against 100% of the c.i.f. cost of imported goods or of the
ex-factory cost of goods manufactured in India subject to ICB, 40% of the
civil and erection works, and 100% of the cost of consultancy services.
Expenditures covering consultancy services incurred since July 1, 1985,
and prior to loan signing will be financed retroactively up to an amount
of US$1 million. The disbursement period for this loan is shorter than



-26-
the Bank-wide composite average for power generation projects, but is
reasonable considering worldwide experience in combined cycle
construction, NTPC's implementation capabilities, and the advanced stage
of project preparation.
NTPC Finances
74.     NTPC is currently in the tenth year of an investment program under
which it expects to construct and commission by 1999/2000 a number of
large-scale thermal power stations with an aggregate generating capacity
of 25,870 MW, and about 23,925 km of high-voltage transmission lines. The
Government's investment in this development has undergone continuous
review during the past five years in an attempt to accommodate the
increased demand for power. As a result, the original investment program,
which was designed to provide a generating capacity of 7,300 NW and about
6,000 km of associated transmission lines at a cost of about US$3,417
million, has been extended in stages and by 1995/96 will amount to about
US$31,000 million equivalent. By the end of 1984/85, NTPC had an
installed generating capacity of 2,200 NW. Financing for the increased
investment program will come from NTPC's internal resources accruing
during the extended construction program (about 30%), from GOI in the form
of long-term loans and equity share capital (about 40%), and from foreign
sources in the form of Bank loans, bilateral assistance, and cofinancing
(about 30%). NTPC's contribution to the investment is expected to exceed
40% in the latter years of the program. NTPC's investment program and
financing plan are satisfactory.
75.    NTPC began commercial operations in 1982 with the commissioning of
its first 200-MW generating unit at Singrauli. Since then, ten additional
200-NW units have been commissioned-four more at Singrauli, three at
Korbat and three at Ramagundam. Operations in 1982/83 were minimal owing
to the stabilization requirements of the newly commissioned generating
units. However, NTPC's net earnings for that year compared favorably with
the forecast. For 1983/84, operating income and net income exceeded
previous forecasts and yielded a rate of return of about 11% on histori-
cally valued assets, which compares favorably with the 7% minimum rate of
return required for this year (para 76). The equivalent rate of return on
revalued assets, calculated on a pro-forma basis, is slightly more than
5%. Cash generation measured as a percentage of average annual capital
investment requirements was only about 3%, solely because of the scale of
existing operations compared to the very large investment program. Cash
generation will increase significantly in future years (para 78). NTPC's
debt-equity ratio at the end of 1983/84 was 26:74, which is satisfactory.
Although NTPC still needs to improve its accounts receivables collections
(para 80), its overall financial performance in 1983/84 and its financial
position at year end were satisfactory.
76.     In accordance with previous agreements, NTPC is to set tariffs at
the levels required to achieve annual rates of return of not less than 7%
on historically valued assets for the period through 1989/90, not less
than 9.5% for the period 1990/91 through 1994/95, and at levels sufficient
to ensure its viability thereafter. Similar measures have been adopted
under the proposed project. It has also been agreed that, since the
Government does not wish to use asset revaluation as the basis for



-27-
estimating returns to capital, on the basis of current projections a rate
of return of 14-15% in 1995/96 (which would be equivalent to a rate of
return of about 8% on revalued assets), would be adequate to ensure NTPC's
financial viability. The progressive increase in the rate of return takes
into account the schedule for the stabilization of new units, and the
dampening effect on the rate of return when large new investments are
undertaken. In view of the high initial capital investment in the early
stages of NTPC's power development program and the time involved in com-
missioning generating capacity, this approach to tariff setting is
appropriate. NTPC's rates of return throug1l 1994/95 are expected to
exceed the minimum levels specified, and its projected rate of return of
15.0% for 1995/96 is considered adequate, as indicated above, to ensure a
satisfactory level of financial performance in that year.
77.     Under previous loans and credits, GOI and NTPC agreed to sell
power from NTPC's power plants under contracts satisfactory to the Bank.
These contracts have now been concluded with the Delhi Electricity Supply
Undertaking, the Damodar Valley Corporation, the Electricity Department of
the Union Territory of Goa, and all SEBs designated to receive power from
NTPC plants. The Electricity Department of the Union Territory of
Pondicherry is not expected to receive power from NTPC until early 1988.
A contract in respect of this entity is therefore not yet required but
will be concluded at the appropriate time. While the contracts signed to
date are satisfactory as an interim measure, a number of additional provi-
sions relating to contract renewal, tariff revision, return on equity, and
the introduction of capacity charges need to be incorporated in future
versions. In addition, NTPC's role in the generation and transmission of
electricity is expected to increase substantially, imposing new require-
ments on the structure of the bulk supply tariff. These arise from
various factors including: (a) the potential multiplicity of tariffs--the
existing regionaL bulk supply tariff is set on a station-specific basis,
because NTPC is presently operating only one station in each region; (b)
recovery of transmission costs-there is no provision in the existing
tariffs for recovering costs of transmission facilities that are not
associated with specific generating stations; and (c) merit order
operation--SEBs, which at times have surplus generating capacity (e.g., at
night and during the monsoon), find it cheaper to incur their own short-
run marginal costs and avoid the "full" NTPC tariff, even though NTPC's
short-run marginal costs are lower than those of the SEBs; as a result,
plants are operated out of merit order, and resources wasted. GOI has
established a high level committee to examine some of these issues.  The
committee's report will shortly be provided to the Bank for review.
Following the review, additional studies as necessary will be defined by
the Bank in conjunction with GOI to ensure that all of the issues of
concern relating to NTPC's bulk supply tariff structure are adequately
addressed. The additional studies will be carried out by NTPC in col-
laboration with the Bank and in accordance with terms of reference and
timetables to be agreed by August 31, 1986.
78.     With regard to NTPC's future operations, power generation is
expected to increase from 1,109 GWh in 1982/83 to 98,202 GWh in 1995/96.
NTPC's average tariff is expected to increase at an average rate of about
8.5% per annum, .from 32.30 paise/kWh to 93.50 paise/kHh, over the same
period. Average tariffs would be maintained approximately on par with the



-28-
long-run marginal cost of electricity generation. Operating income is
expected to increase from Rs 675 million (US$52 million) in 1983/84 to Rs
39,889 million (US$3,068 milLion) in 1995/96, and net income from Rs 449
million (US$35 million) to Rs 24,257 million (US$1,866 million) during the
same period, yielding financial rates of return on historically valued
assets ranging from about 11.3% to 15.0%. Both the financial rate of
return and the internal cash generation would increase to acceptable
levels of about 14% and 42%, respectively, by 1992/93. NTPC's projected
rates of return are realistic and achievable, and its forecasts of future
financial performance and cash generation are satisfactory.
79.     NTPC's capitalization as of March 31, 1983--which is the end of
the financial year in which NTPC began to earn revenues--was about
US$1,158 million, divided between GOI loans (including the onlending of
Bank Group finance) and equity capital in the ratio of 21:79. In March
1991, after the completion of the proposed project, total capitalization
will be about US$15,178 million, with a debt-equity ratio of 44:56. The
debt-equity ratio would drop to 39:61 by March 1995, at which time total
capitalization will be about US$26,554 million. Debt service coverage is
expected to decrease from 3.5:1 in 1983/84 to 2.3:1 in 1990/91, then to
increase to 2.5:1 by 1994/95. NTPC's issucd share capital will rise
progressively during this period from a level of about US$1,205 million at
the end of 1983/84 to US$10,273 million by the end of 1994/95. NTPC's
financial position, debt-equity ratios, and debt-service coverage are, and
will remain, satisfactory.
80.     NTPC's collection of accounts receivable has been unsatisfactory.
As of December 31, 1985, outstanding receivables represented the equiv-
alent of about 3.8 months of sales. Under the bulk supply contracts,
customers are required to open revolving letters of credit for an amount
equivalent to one month's power purchases and to remit payment for power
purchases not covered by letters of credit within 30 days of receiving
bills from NTPC. At present, all of the customers in the Northern,
Western, and Southern Regions have opened letters of credit, except for
the SEBs of Rajasthan and Haryana and the Electricity Department of the
Union Territory of Goa. NTPC's customers in the Eastern Region have not
yet done so because bulk supply contracts for this Region were concluded
only recently and NTPC's Farakka plant is yet to be commissioned. NTPC
has undertaken to obtain the required letters of credit within six months,
from those customers who have not yet opened them. In addition, NTPC has
undertaken to seek agreement from its customers on revision of those
existing letters of credit for which the amounts specified are not commen-
surate with its monthly allocations of power. With regard to the arrears
arising from sales of electricity prior to the bulk supply agreements,
when electricity was sold at interim rates subject to subsequent
adjustment, repayment schedules have been drawn up by NTPC in conjunction
with each of the customers in arrears in its payments, for repayment of
these arrears by March 1987. With respect to sales after the conclusion
of bulk supply agreements, NTPC also agreed to ensure that its total
accounts receivable will be maintained at a level equivalent to not more
than two months' sales of power.



-29-
Project Justification and Risks
81.     The proposed project is justified as part of the least-cost system
expansion plans for the Western and Northern Regions on the basis of the
load forecasts. With the opportunity cost of gas based on fuel oil
parity, and assuming the earliest feasible implementation of the Kawas
plant in the Western Region and the Anta and Auraiya plants in the
Northern Region, the project forms an integral part of both the respective
least-cost development plans. Even if these plants were to burn liquid
fuels rather than gas, the cost of electricity at the relevant load cen-
ters would be comparable with any other source of supply. The combined
cycle plants have the added advantages of a short implementation period
and low capital cost per kW generated. Both the Northern and Western
Regions are large enough to accoomodate unit sizes based on the largest
combustion turbogenerators available, and economies of scale dictate that
these should be chosen. The range of 95 MW - 115 MW has been specified to
ensure competitive bidding among manufacturers with different frame sizes.
The economic rates of return for the Northern and Westerr Region's expan-
sion program are about 12Z and 13%, respectively, according to benefits
based on incremental revenues at average retail tariffs and quantifiable
industrial and agricultural consumers' surplus. The actual rates of
return are likely to be considerably higher if domestic consumers' surplus
is taken into account.
82.     No unusual risks are foreseen.  NTPC is experienced in the design
and construction of generation and transmission facilities, and will
receive assistance from consultants in the engineering and implementation
of the combined cycle units. These units are a standard type of installa-
tion that require limited civil works and relatively little assembly on
site. Risk of damage due to fire or explosion would be covered by the
respective contractors during the construction phase, and, after
commissioning, by NTPC through its insurance policies, which are
satisfactory.
PART V - RECOMMENDATION
83.     I am satisfied that the proposed loan would comply with the
Articles of Agreement of the Bank and recommend that the Executive
Directors approve the proposed loan.
A. W. Clausen
President
March 10, 1986



ANNE 1
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POPULATIU,111TKAI (CTROUMU) 43649.0   54759.0   733243.0
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POWULATUM FROMMC =
POPULATYIO IN  gAR 2000 (lLL)                          994.4
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FOIULATIOU 3N651W
SI liO. at.                      52U.3     146.6      223.0             17.3S                    316.9
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,via AND MgRr
iMlK or 700w 110. MR CAPITA
(1969-71-100)                      9S.0      102.0      113.0             116.6                    124.4
PER CAPETA SUPPLY 09
CALORS (I or hgQUIUSINTS)        93.0       91.0       92.0             106.3                    11S.7
13O521  (CRMS FR DAT)            56.0       50.0       50.0              60.1                     60.3
Or CSIC  AMAL An PLZ            17.0       15.0        13.0 Id          14.4                     14.1
CHILD0 (AS  1-4) 11AT1 RATB       26.3        19.7       11.0               7.3                      7.2
LIM lPlCT. AT U111 CUM)            42.2       47.3       54.9              60.5                     60.6
IAMr lOtT. RAS (PSi TOU)        165.0       139.0       93.               69.2                     6U.9
ACCESS TO SAU WATER (110?)
TOTAL                             ..        17.0        41.0k            44.2                     46.0
0I631                             ..        60.0       77.0              77.2                     57.6
RRAL                              ..         6.0       31.0              34.4                     37.1
ACCESS TO  CIA DISPOSAL
(S or POPUlATION)
TOrAL                             ..        13.o        6.0 /             7.8                     50.1
QRHA                              ..        85.0       27A0              26.S                     52.9
RUtAL                             ..         1.0        1.0 E             5.5                     44.7
POPULATIO  PM PTSICIAS           4850.0     4390.0     3690.0            3313.0                   7751.7
POP. PER  USINC PERSON          10980.0 It  7420.0     5460.0            4690.7                   2464.5
POP. PER HOSPRTAL SC0
TOTAL                          21U0.0     1650.0      1290.0 h          1U39.2                  IIILI
111                               ..         ..       370.0             2I9.1                    651.4
RURAL                             ..         ..      10410.0           4026.2                   2536.9
AODSSIONS      HOPITAL So           ..         ..         ..               52.3                     41.1
AVERD E SIZE 0 OF vCuseR
TOTAL                             5.2        5.6
01.3*1                            5.2        5.6
RUL                               5.2        5.6
AVERME NO. OI lSRSS/SRI
TOTAL                             2.6        2.5
URBAN                             2.6        2.0
RURAL                             2.6        2..
PURCEWACC 0o DWELLINS MITE MIECT.
TOTAL                             ..         ..
RURAN                            ..          ..
RWURL                             ..         ..          .                 ..



ANNEX 1
T A I L t  3A                                  Page  2 of 6
IUILA                  - SOCIAL IND RCAI  DATA SHRKT
INDIA                                 C 2RS00I GROPS (WEIGNTED AVRAIZS) /
mmST                     (MOST RCENT SRTEA) /b
RC IIIT            LO llC0  10OH         IDLS INCOHZ
a9soL!.    l9700! 8TINAT3LI         ASIA A PACIFIC         ASIA  PACFnc
AD?UST SliOLUIT RATIt#
MDIEt:  TOZAL                     61.0        73.0       79.0 te            *2.6                     100.7
1AL1                   NO.0        90.0        93.0 Z            105.5                    104.4
mAE                     W0.0       56.0        64.0 E            79.3                      97.2
SU IWAR: TOTAL                    20.0        26.0       30.0 1e            31.3                     47.8
KALE                   30.0        36.0        29.0 .9           40.6                      S0.6
VENALE                 10.0        15.0        20.0 7     E      21.9                      44.8
vOCATXOIL (Z oF S U01W )             2.6         1.0        ..                 3.2                      18.4
FPUL-TRAC)R PRATIO
PIRXAN                            4 .0        41.0       54.0 Ic            38.0                     30.4
ENOARDAT                          16.0        21.0        ..                17.4                      22.2
PASSENO  CARS/THOUSAND PO            0.6         1.1        1.4 a              0.1                      10.1
RDIO  CRIVES/TIuIsAUID POP           4.9        21.5       55.S              129.5                     172.9
TV RCZXVRfUSD POP                    0.0         0.0        2.9               19.8                      58.5
NUVSPAPRR ("DAILY CIIEAUL
XImnTR ) C>RLATOn
R THOUSAN  POPUIILAT               10.6        16.2       19.4 A             25.7                     65.3
CI17MA ANIUAL ATSI7     CAPITA       3.2         6.2        6.6                6.0                       3.4
TOTAL LABOR FORCE (TOUS)        18591.0   219194.0   284251.0
PLUWE (PSRCu)                     30.7        32.5       31.4               33.2                     33.6
ARICELIU  (PRCET)                 74.0        74.0       71.0 Jc            69.6                      52.2
XIISn (PDAMST)                    11.0        11.0        13.2 T,           15.8                      17.9
PAWTCPATIXOM RATE (PERCE
TOTAL                             42a         40.0       38.8               41.9                      38.9
NALM                              57.0        52.4        51.7              53.6                      50.8
FWL                               27.3        26.9       25.3               29.1                      26.8
REC   otIrNDCI RATIO                 1.1         1.1         1.1               1.0                       1.1
1MICON     F DI SnTIDE  Q
RECEIE  2S
IIICI 55 O0  ItSENOII             26.7        26.3        ...
hIIXQST 201 O   U IIW JI S       51.7        45.9 7fi    ..                 ..                      48.0
LOI= 20S 0r NOFO110S               4.1         6.7  f     ..                 ..                        6.4
ILEST 40S OF ROSELS               13.6        17.2         ..                ..                       15.5
CSTXDUNSD ABLU    Y3T  XllON
LEVL CUS PZR CAIA)
VaRnn                              ..          ..        132.0 t           133.9
AL                                 ..          ..       114.0.             111.6                     151.9
ESTDAU  IRATIE POYVRBY XICOM
LEME COSS PMI CAPITA)
URBAN                              ..          ..         ..                 ..                      177.9
RURAL                              ..          ..         ..                61.7                     164.7
ESTIMA2ED POP. 5M ABSOLUTE
POVTY INCOII LML (C)
UIRN"                              ..          ..        40.3               43.*                      23.5
UL                                 ..          ..        50.7               51.7                      37.8
ROT AVAXLARI
ROT APPLICABLE
/.  Th grOup £vsrqPe fO: each IndicAtar epoplatioa-volghtad aritime  meao. COerg" of countries
smug the liicators depens on *avlabllty of dat and Ls not vufoe.
lb  DUles otherwLse noted. "ata for 1960" rfe  to any year bet_wn 1959 and 1961; "Data for 1970" between
1969  d 1971; end data for "mt Recet Setlatw betwee  1981 and 1983.
Ic 1940; /d 1977;  g 1976; /f 1962; k 1976; /h 1979; i  1964-65.
JU. 1985



ANNEX 1
DPNfllOT   OF SOCIL IND1CATORS
Node Ahog te da  drws fmsm m lyjpdd  *mo1   u mad dhk h should ao be noted daey may no beiaubontl.sU
opamb_ehute of lel k or iawihd duie  ma conale1ts ued by diem comuim in coitcdg the data. The det am. nooehem  vmfml so
desdbde mds ofrludendiruk tuA _md dhuatleiu        iajordfems ew   cobean e.
The d  -ps am (I) te  se ony  o  of th  ubj cuntry and()a maty pwp wiih  Ie hgh avea_ Inc   tn the d couiy
group of t bject euat (excpt frr h  ne 0_ i Epoters" poop whome -Middk 1nme Noeh Aflc and Middle Eas"I dies boe  ofstixue
oedo-cularl dUl,In die Kne  epduc d avarpampopatonweimaarkhmetic muepa for eindabad  wn ony we majoty
ofl te comtr.iapnq ha aarta alesto. ine h oerag  f mtu. Xampelbongthe    tosdepedn te avalaby adata *nd Is not umfona.
mutioAmt beeerd in rdatnaveraesom isdmtor toanote. 'Ihacavapa are only mful In cmparge e da ne r admatort a time among
comuby ad -reerge1 grou11.
AREA (thousnd sq.km.)                                           Crude tA _> Rawe (per rhouind)-Number offive births in the year
T.vd-Toul surface ae compeliag lad area and inland waters;     per thousad of mid-year population; 1960.1970. and 1923 data.
1960. 1970 aDd 1983 data.                                      CGd Dead  ate (pff thewaud)-Number of deaths in the year
ApriesmrIEFtimate of agricltura area usot tcmporarily or       per thousand of mid-year population; 1960. 1970. and 1933 data.
peranenty for cropa. pastures, market and kitchen gardns or to  Gro  Reswdactu JbRte-Average number of daughters a woaun
lie fallow. 1960.1970 and 1982 data.                           wifl bear in her nomalW  reproductive period if she exriences
present age-specific fertility rater usually fiv-year averge ending
GNP PER CAPITA (USS)-GNP per capita estimates at current       in 1960. 1970, and 1983.
market prices. calculated by sane conversion method as World   F       Pkmag-Accgpes. A 1 (th.us.uds)-Annual num-
Bank Atias (I198183 basis); 193 dta.                           ber ofacceptors of bih-control devices under auspices of national
ENERGY CONSUMTON PER CAPMTA-Annual appaent                     family plnning progmm.
consumption of commercial primary  egy (coal and lignite.      Fald( Pfmng'Lw 5 (pareF    dfITit wenpWm)-be: pcen-
petroum. natural ga ad hydro-. nuikar and geotberml dcec-      tage of married women of child-hearing age who are practicing or
ricity) in kilograms of oil equivalent per capita; 1960. 1970. and  whose busbands are practcing any form of contraception. Women
1982 dats.                                                     of child-bearing ape are generay women agd 15-49. although for
some countries contaceptive usage is measured for other age
POPULATION AND VITAL STATISCS                                  groups.
ToA Pep.et, Mid-Yew (trhaam)-As of July 1; 1960. 1970.         FOOD AND NUTRM iON
and 1983 data.
Ura Pbpialiss (pseree f qf e;O-Ratio of urban to tow                 fF   PrAnctia Per Capita (1M9-71 -1 EW)-n     of per
population; different defiitons of urban areas may affect compar-  ,ac,ta animal feduand seea fordagicuture wFod comodtie
ability of data among countries; 1960.1970. and 1983 data.     ncludse priay fomodities (eog. sugrktne Fis.ead of sugar)
,pd.5i.u P-ejeaa_                                              which are edible and contai nutrients (e.g. coffe and te  ar
Populatwn m year 200-0The projection of population for 2000.   xcuded); they comprise ceals, root crops. pulse  oil seeds.
made for each economy sewparatdy. Stating with infornatti  on  vegetables. fruits, nuts, srcane and sugar beets livestock, and
total population by age and s. ferlity rats mortality rates, and  livestock poducs. Aggrept producton of eacb country is based
intenational migation i the ba  year 1980. the  paamees        on naDonal avrge producer price weights 196145. 1970. and
were projected at five-yar itavals on the basis of generalized  1982 data.
assumptios, until the population became stationary.            Per CAP" SP$Y ofCdm   (pL-ru of-1qldelds)-Comput-
Starwoay populwou-4s one in whicb aBe- and sx-specific mor-    od from calorie equivalent of net food supplies available in country
tality rates have not changed over a long period, whbile agepecific  per capita per day. Avaible supplies comprse domestic produc-
fertiEty rates have simultaously remained at  lacement levl    tion, imports less exports. and changes in stock. Net supplies
(net reproduction rate- 1). In such a popuaton, the birth rate is  exlude anil feed. seeds for ue in agriclture, quantities used in
constant and equal to the death rate, the age stuctue  is also  food processing, and losms in distribution. Rcquirements were
constant, and the growth rate is zeo. The stationary population  esimated by FAO based on physiological needs for normal activity
sie was stimated on the basis of the projected charactenstics of  and health considring environmental temperature. body weights.
the population in the year 2000. and the rate of declie of ferlity  age and sex ditrtibution of populaion, and allowing 10 peroent ror
rate to replacement klv.                                       waste at bousehold level; 1961. 1970 and 1982 data
Pbpuafioun Mo _neng-Is the tendency for population growth to   Per Caps So"& of  toid (grauwper dap)-Protcin content of
continue beyond the time that replaccuent-levl fertilty has been  per capita net upply of food per day. Net suppy orfood is defined
achived; that s cven after the net reproduction rate has reached  as above. Requirements for al countries establsbed by USDA
unity. The momentum of a population in the year : is mcasured as  provide for minimum allowances of 60 grams of total protein per
a ratio of the ultimate stationary population to the population in  day and 20 grams of animal and pule protein, of which 10 grams
the year t. given the assumpion that fertity rmains at repbace  should be animal protein. Tbes seundards,are lower than those of
ment level from year t onward, 1985 data.                      75 grams of total protein and 23 grams of animal protein as an
Pep-Ja    Dell                                                 average for the world proposed by FAO in the Tlnrd World Food
Per sq.km.-Mid-year population per square kilometer (100 hecc  Supply. 1961. 1970 and 1982 data.
tares) of toUtl a; 1960, 1970. and 1983 data.                  Per Capitta Pswrei Skpp&y  w. Amimdad Pbe-Proten supply
Per sq.Am. aridruram lad-Computed as above for agricultural    of food derved from aDnimals and pulses in grams per day; 1961-65,
land only. 1960. 1970. and 1982 data.                          1970 and 1977 data.
P atiuI. Age Stracter (fpeJ xu)-Chiidren (0-14 yeas). work-    Cai(dra 1-4) Deat Rate (pgr dJand)-Number of deaths of
ingage(I5-4years).and retired (65ycarsand over) aspercntage    children aged 1-4 years per thousand children in the same age
of mid-year population; 1960. 1970. and 1983 data.             group in a gwrn year. For most devdoping countries data derived
hpuIbtiou Growth Rate (perceisr)-teral--Annual growth rates of  from life utabls 1960. 1970 and 1983 data.
total mid-year population for 1950-0. 1960-70, and 1970483.    HEA13H
Pbpdlaw Goh Rate (paewu)-miAnnual growth rates                 Lift Expecaniy atr Bit (yewrs)-Number of years a newborn
of urban population for 1950.60.1960-70. and 1970-83 data.     infant would live if prevailing patterns of mortality for all people



ANNE 1
Page 4 of 6
at the t   of of it birth were to say the m    throout Its lf  A99&uahr ltade - prary. sand uouuday-Toa stud_t e
1960, 1970 a" 1993 data.                                      roled in pry and sodary lvels diided by numbe  of
10w AeIapt  Aw (p    )N          Numbsr of infants who tie    tbAM in the wrrspnd_ng  l
heror racing on yme of ag per thousand Eve birt  In a gie
yeur 1960, 1970 and 1963 datL                                 CONIUMION
Aem go So  u  (pwaw if "VP)-14 when.                           ms "         (PM rd_d a                       cmfm he     car e
mwl-Nmher of peope (total, urbn ad rul wth esable             pe motor carsmating ls don eight peuon; exclude ambul-
accs to sfb wainr supply  nud  treae  surfa  et   or          no_  hearses and mary vehicl
untreated but     a       ed ter sch as that fiom protected   AGE.  hebs (pm thationdppsfutbsD-All tp  orive
boIeholesa sprip and untr wls) as pecuent    of ther re-      for rdio broadcss to pnea pubUc per thound of population;
tive popWaton  In an uban ae a public founin or stadpost               u-Moeda rgcr9 In coIn    e aSd in years when
bcard not mo-  tn 200 mess. from a  u    y                 . registi  of rado st wasin effeot data for rcet yes may
as being widhio _reaon   aless of tht haou   In nmdal -       not be aoparabe smost countries abousim    lini
rasoableas        wuldimply dtat dhousewifeor mernbera of the
houselhold do not have to spd a disproportionate par of the day  TJR#m     (pw                     recve. for brwadcast
in feching the mis wate nedt ps.kg                                                Ud populton amlde unHiese TV
Autam Lv x.,s Dhpml (          .w f pq.lalvainecontri andei years when registration of TV set was
_d r_roP-Number of people (totaL urban  nd rural) served by   in Cflct
m$Idopo al   p ecentags of thi respective popusations.        - C,c         Pd                "1i)   w
Excmu di poselwmay nclude the coleton and dispo, with or             ation of daily gneral         n         ddd   a
wiou tratmt, of human excieta an wase-wat                     perodical publon devoted primarily to recording genal news
bon syms or the use of pit privies and imiar isllaios         It is coadetd to be 'daily" iit apper at lea four tie a week
M I I le per Paldor-Pbliulation divided by umber of prac-     CeaSns Aind Andmua pe C_pr pmw Y_a-_ssed on the
tsing phydans qualified firo  a medial chool at univesity level,  number of ticke; sold duing the yp indcluding adumisons to
Jpdm p.r jAi   PJ         _-R dpuIatin divided by number of   driin ve W5 ard Emobic units.
practcing ma  and femae graduat nuse  ssistnt nurses,
p l nure and nuig auwl.                                       LA  FOICE
F    H, * al aid-srd, when,sad Bawutin               Tod Labor Force (fr&ssad-Boononically wactive pasons, in-
(Wtot al. m    rurbal) divided by their respective number of        amied forces aW unemployed but e_cuding housewive
hoset   o mpubeandpubcadvaw.rMaa ad  cilied                   studmeutc, w  covering population of anl ages Deofinitions
hospi   and  abiliato  umte  Hosptal are  mbF          l      varis coun tries  e ant cmparnalra    1960,1970 and 1963 data.
pemanety staWed by at least one physca  Esabunat Mxov-        F       (prcem)-Fbualee labor fonz as pecntage of total labor
idig prinqpaly actodi  care are not iluded Rral hospitl       for e
howev,m iclude health and medical centers not permanently saKed  _rkw  (peret)-.abor force in farm , forestry. hunig
by a physician  (   by a medica asistant nunse, midwi  etc.)  and fishbing as pecntag of totl labor force; 1960. 1970 and 1980
which offr in-patient accommodaton and provide a limited rang  data.
of medica raciti                                              IAdasa  (Porcear)-Labor force in mi      conucon. manu-
AAMssio psr H0apisid AL-dTotal number of admsios to or        factuing and electricty. watr and ps as pcntage of toul labor
disliarges from hospitals divided by the number of bedL       force; 1960, 1970 and 1980 data
-wui*d  im l    (pftcaJ-4Ai,     _ M.ad-t=oiiaton
HOUSING                                                       or actvity rates are conmpued a totl, male, and female labor form
,6e *  She of KinAY (poso= per ha,ldf)-rad, _rea,             as percentages of totl male and female poplatio  of al aes
aadrrl-A householdcoositsofa gwupofindividuals whoshre        respectively; 1960,1970. and 1983 data. Tbese ae bued on IWLs
i-vg quate  and thir mam meals A boader or lodger may or      prbcipton rates rellecting ages  stucue ofthe popuocn and
My not be incuded in the houshold for staisical purposs.     long tme trend. A few estmat are from natona sorces
Ai.w4 N_mbgr qf PAmm per RP_m-sarwh, ml ewu-                   E..udc D_pahmxjy ldsl-Ratio of populaion under 15, and
Avea  number of perons per room in al urban. and rural        65 and over, to the wrking age population (those apd 15-64).
ocarped oDnvenional dwelins. respecively. Dwelling  cude
Oan pmat str r  and unoccupied pars                           ICOME DSm       iUON
Pemrct   of Dwes ru  Ekcidry-v94 whev. ma,rawl-               Prfna  of Toed Diagsse Luca  (bad in cak ed kf)-
Conventionl dweligs wih el cty in living quartcrs as pere-    A    qrig to pecentie groups of households ranked by total hous-
tage of totaL urban, and ural dwlhnp respecively              hold income.
EDUCATION                                                     POVElTY TARGET GROUPS
Af.ted E_efteor Aale                                          The folowing esimates are very approximate meastus of poverty
fry  Jdze - tmotal mate md jence o   total          and      leve  and sbould be i        with considerable caution.
female enrolment of adl as at the primary Lel as pacntags of  EutdasedAbiilvte hwty Amm Lewd ((5per cepif)^-,w6
zupectrve pimay sodl-age popultios Wile many counties         mL ,mu-Absolute povery inoome level i that incme evd
condr primary shool age to be 6-11 years odts do not The      below which a minimal nutrionaDy adequat diet plus essential
dfferences in couary pracs in the ages and durado of school   non-food rnqmrents is not affordable.
are reflctd in the ratios given For some countries with universal  Esx           errplocem Lewd (=  pgr cWksl -when
educaton, gross erollment may xced 100 pac smt smum sno       en  rrd-Rural rative poverty income leved i one-tbird of
pupis are beow or above the country's stndard primary-slho   aveag per capita personal inxe of the country. Urban level is
age-                                                         derived from thc rural level with adjusment for higher cost of
Secondry sdcool - to*a  .mak =dfonal-Cboputed as abovc;    living in urban area
secodary education requies at least four years of approved pr-  Esad Pepulle  Below Ahsorae PoAty Aces.w Led (pa-
mary instruction; provides general, vocational, or te ting            a    d r-J- Perce  of populaion (urban and rural
inasuctions for pupls ully of 12 to 17 yes of ag; corspond-  wbo are 'absolute poor.'
ence cours are gerally eduded.
Vocaldend Errde  (pecet ojf se-dary)-Vocional institu-                  Compaative Anslyss and Data Division
boris i d       c te al industl. or other programs which opemt       Econom  Analysis and Projections Departmt
idependently or as depatments of secondary in  s                                     June 1985



NI
les *r of
Umi C llELOPllUUF DATA
111 YU CAPITA JI 26038260   S
ROSS DOIUSTIC PSOSUCT Ul 1913,64 k/                                         AIRWAL DAfl OLP OR Oa   (Z. Conerta  Prices) S/
55,54-39140  60616A6   65J/4 49170  70171-74175  75/7-79/60  30161-32/63
US. Blr.    S
CDP at Market Price.            19.31      100.0                   3.7         3.6          3.7         2.9          4.1          5.1
Gros Dtomeic J _es                45.94      24.0
CrC   Natieal Saving              43.17      2X.7
Current AccoLnt blean             -2.17      -1.5
OUTPT. LAUOR   CE An1 raoucrvn ir  19 1
Val" added (at factor cmet)       Laor For  l
U5$ U31                X          1 1.-     iS       t U   A. ofeti al tAvene
Agriculture                       52.5                  35.9        172.7    70.6    304         51
loduatry                          34.5                  23.4         31.6    12.9   2092       13
Services                          59.2                  40 5         40.3    165    1409        246
Total/Averap                     146.2                                       1N.0       W  ; iE
GWWiFlWWr P1tW
Cenral Qowerim.mt */                              Cmatral Sprmeint
Re. n.             Z of GM                    Rs. Dn.            X d 0
9031        19631     1979/80-19 3/84         1963        19 3/L      1979160-19e2164
current Recaipta                 376.54         19.3           19.5            201.67        10.3            10.3
Current Expenditures             397.12         20.3           19.4            225.42       U1.S             10.9
Curret Surplua/Doefcit           -16.58         -1.0            0.1            -23.75        -1.2            -0.6
Capital Expenditures  i          149.66          7.7            U.0            114.12         5.8             5.8
Exteral Ai       e (et) dl   19.16               1.0            1.1
MONE. CREDIST AID P1L            1970/71  1975/76  1978179 1979/10  1900/61  19B1/B2  L92i63  1963 34 Jauary 1964 January 1985
(Re 21111om outatadiop at end of perlod)
-Mre and quaai loney             109.6    224.0   401.1   472.3   557.7   627.5   728.7   360.9            635.1         993.9
Bank Cedit to C e          (met)   54.6    106.3   159.3   200.1   257.2   306.3   353.6   407.7           403.1         433.9
SDak Credt to Commrcial Sector . 64.6    156.2   255.3   310.1   366.4   434.6   517.1   612.7             575.5         685.0
(Perctantae or 11ie Onhro)                      I  Arl-Jan 83/64   April-Ja  64/85
Mone  And Quasi Remya an a Z
Of GDP                          27.3      30.3    41.1       4.1    43.7    42.5    44.5    44.0
Iloleeal Prie< Indu
(1970/7 - 100)                 100.0    173.0   165.6   217.6   257.3   281.4   266.6   315.2            313.6            336.7
Annual Percentage changes in:
Wholeuale Prica Indez              7.7      -1.1      -       17.1    16.2      9.4       2.6     9.2        9.2              7.4
Dank Credit to Covernment (sat)   15.0      22.7    16.0    25.e    28.5    19.1    15.1    15.3            16. 9-2          23.2 h/
Dank Credt to C rcial Sector  19.4          22.7    20.3    21.5    18.2    13.6    17.7    18.7            13.8             15.6 w
aI TSh per capita NP estimte in at arkst prims using  onrld Dak Atla nethodolojy. baa prLod 196143.
All otbhr conweraics to dollar  in this table are at ths averd_ae chage rate prevailIng durlng the perlod cowerd.
ki Qwick  etimea. Centra Statstlcsl Oranisatio.
S/ Coeputed frm tred lie Of GoP at fActor cost serles. Snelui  ones. obeeration befeX firt yaer  ad    o obsertion after
eat yar of lated perlod.
d/   orld Dank eati_tem of net diSburemnt of concesslonal aid and ISED.
*I Tranfa  betwee Centre and States hn been netted out.
fA1 loans ad advanle to third partle  hae be  netted out.
Percetag  chan  from and-March 1963  to end-Jn.64.
h/ Prctagp  hae from eed-Narch 13  to and-Jae.J5.
1Total labor Pre. ad percetg  br1adom fr  1961 Cea Ca. Includes data for Aommn.



et6
1/  a,~~~~~~~~~~~~~~AM I 
tUt   EJX ih.m                       lU19512    19Jl3       1963/4      1904h5S      tURCSIA Z EXPORTS (AVERACG  198=0/1-1983/84) I/
CuBs Kin.                                                                                                            US$ min. z
Exports oe Good. _1                    0,519      8,290       h.355       8.724       Engineering Coodfs             1115      13
1 ports  t Goods i                   -15.301   -14,290    -14.040    -14.301         Te                               469       6
Trade balane                         - 6.7S2    - *,000     - 5.685     - 5.777       CON.                           1009      12
IFS (A t)                              1.002        935         948       1.0S        Clothing                        6U        8
LeAther nd Leather Products    343        4
Resoure  alance                      - 1.780   - 5,065      - 4.737     - 4.676       Jute  anufecture.               269       3
tron Ore                        400       5
interest  cr_e (nat) /                   350   -   302    -  664        -   75        Cotton Taxtil..                 316       4
Not Tram rfarm 1                       2.317      2,504       2.860       2.930       Sugar                           104       1
Others                         3704      U4
b lUge an Curront Account            - 3.113   - 2,643      - 2.521     - 2,533
Direct Investent                          10         65          62          61
Officel Loans 6 Grants (n=t)           1,6U1      1.901       1.961       1.94        T
Croom Disbur.ests                      2.269      2.513       2.578       2.515       EXTe        DCWT. MARCA   31. 1964
AmortLzat in                             5U         612         617         641
Private borroming (net)                  338        366         528         844                                             US  billon
Outstanding mad Disburmed                21.5
Non-e sideat Depo_ata                    260        578         903         600       Und=dbwsad                               10.4
Transactilon wth DI (nt)                 690      1,960       1.295          70       Outstudfia  iludin   Undimbured          31.9
All otber It_m _/                    - 2,264    - 1,522     -1,347        - 663
Increa  In Resrve   -)                 2,398   -   504      -   U2        - 303        SrT SSZVICZ AATIO FMR 1993/e4 J./ nt    13.6 per cant
Cros. Raemrvs u(d yer) p               4.461      4,965       5.*47       6.150
met Reserves (end year) m/             3.497      2,069       1.697       2.250
P~~~~~~~~~~~~~~~~~~~~~~uRnm  l E-s lo bIIOJUlllC. tfl  31. 1985 1t
Fuel en" Related MaterialsaMO   EIC,HM3,18
US $ mililo
Imports (Petroleum) j/                 5553       4,614       2,963       3,026                                           1615      IDA
of %bhch: Crude                      3.921      3,139       2.183       1.015
Producta                    1.632     1,475         600       2.010       Ousandldn  and Disbursed             2.158   8.902
Uodiab!rsed                         4.326    3,748
ROtstanding including Ufdisbursed    6.484  12.650
JUIY 1966 to mdd-Dcember 1971        USS1.W - Am 7.50
PA 1.00 - US0.13333
mid-Deember 1911 to end-Jum. 19n:  US$1.00 - Ru 7.27927
Ru 1.00 - 11310.137376
After end-Jums  1972              : loating Rate
Spoc Rate end-March 1984         :  US1.00 - Ru 10.711
to 1.00 - U&S0.0933
Spot Rate end-Narch 1965             U$1.00 - Ru 12.3457
Ru 1.00 - USS0.0610
a, Etimated
kt PFgures  oive  cower all lnvestont  ome  (1net). Mjor ptIMta are ainterest on foreign lons ond chara   paid to DrF
and mjor recept. Is linteroat e*mnd on foreign assetu.
1   Plgurma given include wrkarks rditances but excluds officlal grnt amaitsnce whieb in iscluded within official loan
and grants  ad Don-zrreidet deposits wblch are sbon sparately.
ml Exclude nt ue of 33W credit.
i  A*rtization ed interest payments on foreign lean  as a percentag  of total current receipts.
Includes e.hoangs  rate adjuJmts to the valuation of reserves md finnuclng of SmbaLea In rupee trade.
/ Exrludins old.
m aet of parrolen  epaorta



ANNE 1I
Page 1 of 5
MME STATUS OF MAN  GROUP OPEATIONS IN INDIA
A. STATE)EN  OF BAN  LOANS AND IDA CREDITS
(As of September 30, 1985)
US$ million
Loan or  Fiscal                                                 (Net of Cancellations)
Credit   Year of
NO.      Aunroval        PqrVose                        Bank         IDA If     Undisbursed 1
55 Loans/                                             2,528.9          -
102 CreditB fully disbursed                               -        5,938.9 
482-IN    1974     Karnataka Dairy                                   29.2          0.05
1251-IN    1976     Andhra Pradesh Irrigation           145.0          -            9.04
680-IN    1977     Kerala Agric. Development             -           30.0          7.77
690-IN    1977     West Bengal Agricultural
Extension & Research                           12.0           5.28
1394-IN    1977     Gujarat Fisheries                    14.0          -            1.58
747-IN    1978      Second Foodgrain Storage             -          107.0         22.14
761-IN    1978     Bihar Agricultural
Extension & Research              -            8.0          3.83
788-IN    1978     Karnataka Irrigation                             117.6         20.71
793-IN    1978     Korba Thermal Power                              200.0         12.70
806-IN    1978     Ja mu -Kashmir Horticulture           -           14.0          8.01
816-IN    1978     National Seeds II                                 16.0          0.68
1592-IN    1978     Telecommunications VII              120.0          -            7.23
824-IN    1978     National Dairy                                   150.0         14.25
842-IN    1979     Bombay Water Supply II                           196.0        102.39
844-IN    1979     Railway Moderniza-tion
& Naintenance                                 190.0          5.88
848-IIN   1979     Punjab Water Supply & Sewerage        -           38.0          3.24
855-IN    1979     National Agricultural Research        -           27.0          9.88
1648-IN    1979     Ramagundam Thermal Power             50.0          -.41.09
889-IN    1979     Punjab Irrigation                                129.0         15.34
911-IN    1979     Rural Electrification Corp. II        -          175.0          3.25
954-IN    1980     Maharashtra Irrigation TI             -          210.0         11.83
961-IN    1980     Gujarat Community Forestry            -           37.0          0.16
963-IN    1980     Inland Fisheries                                  20.0         12.79
981-IN    1980     Population II                                     46.0         19.59
1003-IN    1980     Tamil Nadu Nutrition                              32.0         14.86
1011-fl    1980     Gujarat Irrigation II                            175.0         71.99
1012-IN    1980     Cashetnut                                         22.0         13.60
1027-IN    1980     Sixngrauli Thermal II                            300.0        112.45
1028-IN    1980     Kerala Agricultural Extension         -           10.0          5.76
1033-IN    1980     Calcutta Urban Transport              -           56.0         14.74



ANz I
Page 2 of 5
US$ zillion
Loan or  Fiscal                                                (Net of Cancellations)
Credit   Year of
No. .. karovaul          Puroe                          Bank        IDA ij     Undisbursed .a
1034-IN    1980     Xarnataka Sericulture                            54.0         21.40
1046-IN    1980     Rajasthan Water Supply & Sewerage   -            80.0         38.84
1843-IN    1980     Industry DFC XIII                    i9.0         -            3.42
1053-IN    1980     Farakka Thermal Power                 -         225.0         68.79
1887-IN    1980     Farakka Thermal Power                25.0         -           25.00
1897-DU   1981      Kandi Watershed and
Area Development                  30.0         -            17.09
1072-IN    1981     Bihar Rural Roads                     -          35.0        73.7
1078-IN    1981     Mahanadi Barrages                     -          83.0         35.75
!082-IN    1981     Madras Urban Development II           -          42.0          18.64
1108-IN    1981     M.P. Medium Irrigation                -         140.0         70.15
1112-IN    1981     Telecomunications VIII                -         314.0         68.36
1116-IN    1981     Karnataka Tank Irrigation             -          54.0         31.84
1125-IN    1981     Hazira Fertilizer Project             -         399.1         60.93
1135-IN    1981     Maharashtra Agricultural Ext.         -          23.0          7.57
1137-IN    1981     Tamil Nadu Agricultural Ext.          -          28.0          13.37
1138-IN    1981     M.P. Agricultural Ext. II             -          37.0          24. 6
1146-IN    1981     National Cooperative
Development Corp. II               -         125.0          61.24
1172-IN    1982     Korba Thermal Power Project II        -         400.0        242.57
1177-IN    1982     Madhya Pradesh Major Irrigation       -         220.0        139.15
2050-IN    1982     Tamil Nadu Newsprint                100.0         -            2.40
1178-IN    1982     West Bengal Social Forestry           -          29.0          18.86
1185-IN    1982     Kanpur Urban Development              -          25.0         12.75
2051-IN    1982     ICICI xIV                           150.0         -           21.60
2076-IN    1982     Ramagundam Thermal Power II         300.0         -          256.89
1219-IN    1982     Andhra Pradesh Agricultural Ext.    -             6.0          4.05
2123-IN    1982     Refinerins Rationalization          200.0         -           71.57
2165-IN    1982     Rural Electrification III           304.5         -          215.94
1269-IN    1982     Kallada Irrigation                    -          60.0         25.10
2186-IN    1982     Kallada Irrigation                   20.3         -           20.00
1280-IN    1983     Gujarat Water Supply                  -          72.0         59.07
1286-IN    1983     JammalKashmir and
laryana Social Forestry            -          33.0          22.30
1288-IN    1983     Chambal Madhya Pradesh
Irrigation II                      -          31.0          16.30
1289-IN    1983     Subernarekha Irrigation               -         127.0         101.90
2205-IN    1983     Krishna-Godavari Exploration        165.5         -          114.48
1299-IN    1983     Railways Modernization &
Maintenance II                     -         200.0         168.63
2210-IN    1983     Railways Modernization.&
Maintenance II                   200.0         -           197.04
2241-IN    1983     South Bassein Gas Development -  139.3            -           133.71
1319-IN    1983     Raryana Irrigation II                 -         150.0          96.85
1332-Il   1983      U.P. Public Tubewells II              -         101.0         84.51



AMX-gII
Page 3 of 5
US$ uillion
Loan or  Fiscal                                                (Net of Cancellations)
Credit   Year of
No.      Approval        Pur_ose                        B nk        flA [J     Undisbursed 1/
1356-IN    1983     Upper Indravati Hydro Power           -         170.0         149.50
2278-IN    1983     Upper Indravati Hydro Power         156.4         -           156.01
1369-IN    1983     Calcutta Urban Development III        -         147.0         134.50
2283-IN    1983     Central Power Trauemission         250.7          -           250.07
2295-IN    1983     Hiualayan Watershed Nanagement       46.2         -            45.31
1383-IN    1983     Maharashtra Water Utilization         -          32.0          23.27
2308-IN    1983     Naharashtra Water Utilization        22.7         -            22.64
2329-IN    1983     Madhya Pradesh Urban                 24.1         -            23.47
1397-IN   1984      Orissa Irrigation II                  -         105.0          74.52
1424-1    1984     Rainfed Areas Watershed Dev.          -          31.0          31.15
1426-IN    1984     Population III                        -          70.0          67.48
1432-IN    1984     Karnataka Social Forestry             -          27.0          22.55
2387-IN    1984     Nhava Sheva Port                    250.0         -           245.88
2393-IN    1984     Dudhichua Coal                      151.0         -           150.62
2403-IN    1984     Cambay Basin Petroleum              242.5         -           239.53
2415-IN    1984     Madhya Pradesh Fertilizer           203.6         -           195.42
1454-IN    1984     Tamil Nadu Water Supply               -          36.5          36.03
SF-12-IN   1984     Tamil Nadu Water Supply               -          36.5          37.40
1468-IN    1984     Periyar Vaigai II Irrigation          -          17.5          12.00
SF-16-IN   1984     Periyar Vaigai II Irrigation          -          17.5          17.59
1483-IN    1984     Upper Ganga Irrigation                -         125.0         124.48
1496-IN    1984     Gujarat Medium Irrigation             -         172.0         146.70
2416-IN    1984     Indira Sarovar Hydroelectric        157.4         -           157.01
SF-20-IN   i984     Indira Sarovar Hydroelectric          -         129.8         129.25
2417-IN    1984     Railways Electrification            280.7         -           280.00
2442-IN    1984     Farakka II Thermal Power            300.8         -          300.05
2452-IN    1984     Fourth Trombay Thermal Power        135.4         -           135.06
1502-IN    1984     National Cooperative
Development Corporation III        -         220.0         214.21
1514-IN    1985     Kerala Social Forestry                -          31.8         31.65
1523-IN   1985      National Agric. Extension I           -          39.1          40.89
1544-IN    1985     Bombay Urban Development              -         138.0         145.88
2497-IN    1985     Narmada (Gujarat) Dam and Power*  200.0           -          200.00
1552-IN    1985     Narmada (Gujarat) Dam and Power*    -           100.0        100.00
1553-IN    1985     Narmada (Gujarat) Canal*              -         150.0        150.00
1569-IN    1985     Second National Agricultural Ext.*  -            49.0         49.00
1611-IN    1985     National Social Forestry*             -         165.0        165.00
1613-IN    1985     Indira Sarovar Hydroelectric*         -          13.2          13.20
2498-13    1985     Jharia Coking Coal                 248.0          -          248.00
2505-IN    1985     Maharashtra Petrochemical          300.0          -          300.00
2534-IN    1985     Second National Highvay*            200.0         -          200.00
2544-IN    1985     Chandrapur Thermal Power*          300.0          -          300.00
2555-IN    1985     Rihand Power Transmission*          250.0         -          250.00
2582-IN    1985     Kerala Power*                       176.0         -           176.00
1619-IN    1986     West Bengal Minor Irrigation*         -          99.0          99.00



UNX% II
Page 4 of 5
US$ million
Loas  or  Fiscal                                              (Net of Cancellations)
Credit   Year of
o.       Approval       Purose                         Bank         TDA Vj     Undisbursed g|
1621-lN    1986     Naharashtra Composite Irrigation*   -           160.0        160.00
1622-IN    1986     Kerala Water Supply and Sanitation* -           41.0          41.00
1623-IN    1986     Vest Bengal Population*              -           51.0         51.00
Total                                   8,487.0    13,752.7
of which has been repaid              1.324.5       219.7
Total nov outstanding                   7,162.5    13,533.0
Amount Sold                    133.8
of vhich has been repaid    133.8         -      ___-
Total nov held by Bank and IDA 31       7,162.5    13,533.0
Total undisbursed (excluding *)         3,887.15    3,473.30
1j  ID Credit amounts for SDR-denominated Credits are expressed in terms of their
US dollar equivalents, as established at the time of Credit negotiations and as
subsequently presented to the Board.
.3J Undisbursed amounts for SDR-denominated IDA Credits are derived from cumulative
disbursements converted to their US dollar equivalents at the SDR/US dollar
exchange rate in effect on September 30, 1985.
3/ Prior to exchange adjustment.
* Not yet effective.



ANE  II
Page 5 of 5
B. STATEMEDT OF IFC INVESTMENTS
(As of September 30, 1985)
Amount_(US$ million)
Fiscal
Year                     Company                      Loan     Equitv    Total
1959            Republic Forge Company Ltd.            1.5        -        1.5
1959            Kirloskar Oil Engines Ltd.             0.8        -       0.8
1960            Assam Sillimanite Ltd.                 1.4        -       1.4
1961            K.S.B. Pumps Ltd.                      0.2        -       0.2
1963-66         Precision Bearings India Ltd.          0.6       0.4      1.0
1964            Fort Gloster Industries Ltd.           0.8       0.4      1.2
1964-75-79      Mahindra Ugine Steel Co. Ltd.         11.8       1.3      13.1
1964            Laksbmi Machine Works Ltd.             1.0       0.3      1.3
1967            Jayshree Chemicals Ltd.                1.1       0.1      1.2
1967            Indian Ezplosives Ltd.                 8.6       2.9     11.5
1969-70         Zuari Agro-Chemicals Ltd.             15.1       3.8      18.9
1976            Escorts Limited                        6.6        -       6.6
1978            Housing Development Finance
Corporation                           4.0        1.2      5.2
1980            Deepak Fertilizer and
Petrochemicals Corporation Ltd.       7.5        1.2      8.7
1981            Coromandel Fertilizers Limited        15.9        -       15.9
1981            Tata Iron and Steel Company Ltd.    38.0          -      38.0
1981            Mahindra, Mahindra Limited            15.0        -       15.0
1981            Nagarjuna Coated Tubes Ltd.            2.9       0.3      3.2
1981            Nagarjuna Signode Limited              2.3        -       2.3
1981            Nagarjuna Steels Limited               1.5      .0.2      1.7
1982            Ashok Leyland Limited                 28.0        -      28.0
1982            The Bombay Dyeing and
Nanufacturing Co. Ltd.            18.8        -       18.8
1982            Bharat Forge Company Ltd.             15.7        -      15.7
1982            The Indian Rayon Corp. Ltd.            8.1        -       8.1
1984-86         The Gwalior Rayon Silk Manu-
facturing (Weaving) Co. Ltd.      13.5        -       13.5
1985            Bihar Sponge                          10.4       0.8     11.2
1985            Bajaj Auto Ltd.                       22.1        -      22.1
1985            Modi Cement                           12.5        -      12.5
1985            India Lease Development Ltd.           5.0       0.4      5.4
1986            Larsen and Toubro Ltd.                17.2        -      17.2
TOTAL GROSS COMMITMENTS        287.9      13.3    301.2
Less: Cancellations, Terminations,
Repayments and Sales           162.0       6.3    168.3
Now Held                    125.9       7.0    132.9
Undisbursed                  77.0       1.2      78.2
..~-   _ .mm.



ANNE III
Page 1 of 2
INDIA
SUPPLEEMNTARY PROJECT AND DATA SHEET
Section I:      Timetable of Key Events
(a) Time taken by the Borrower to prepare the project
About one year.
(b) The agency that has prepared the project
National Thermal Power Corporation, Ltd.
(c) Date of first presentation to the Bank and date of the
first mission to consider the project
I
The project was first presented to the Bank in
February 1985; an appraisal mission visited India in Hay
1985.
id) Date of departure of appraisal mission
May 10, 1985.
(e) Date of completion of negotiations
February 26, 1986.
(f) Planned date of effectiveness
August 31, 1986.
Section II:    Special Bank Implementation Actions
None.
Section III:   Special Conditions
(a) Issuance of notification of award of contract
for the construction of the HBJ pipeline
(condition of effectiveness, para 63);
(b) Execution of subsidiary loan agreement between
GOI and NTPC (condition of effectiveness,
para 71);



ANMEX III
Page 2 of 2
(c) Execution of gas supply contract(s) between DTPC
and appropriate authorities at least six months
prior to the comissioning of the first
combustion turbine (para 63);
(d) Provision of liquid fuel supplies by GOI
(para 65);
(e) Execution and operation of the project in
accordance with prescribed environmental
quality standards (para. 65);
(f) Achievement of financial rates of return by
NTPC (para 76); and
(g) Execution of studies to reformulate bulk supply
tariff structure (para 77).



AMUEX IV
Procurement Arrangements
(USs Millions)
Procurement Method
Total
Prnject Element                  ICB     LCB    Other a/  Cost
I.   Civil Vorks
Preliminary Works                                 4.3       4.3
Civil Works for Plants           23.7                      23.7
(5.5)                     (5.5)
Other Civil Works                         57.9             57.9
II. Pover Stations
Main Electromechanical
Equipment (Supply and        852.3                      852.3
Erection)                    (463.0)                   (463.0)
Other Electromechanical
Equipment and Vorks                     34.3             34.3
III. Fuel Supply Equipment            17.3                      17.3
(11.3)                    (11.3)
IV. Transmisson Lines and
Substations                            172.9            172.9
V.  Consulting Se-vices and                           11.2       11.2
Technical Assistance                           (5.2)     (5.2)
VI. Engineering and
Administration                                 67.4      67.4
Total                           893.3    265.1   82.9   1,241.3
(479.8)           (5.2)   (485.0)
Note:  Figures in parentheses indicate the amounts to be financed by the Bank.
a/     Direct negotiation or not subject to commercial procurement (e.g.,
land acquisition, owner expenses.)



r                         ,                      HIMACHAO\         t                   . 
(- \ PRADESH 
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,PUNJAB u                                COMBINED CYCLE POWER PROJECT
>  NOUnS   N,~~.                MAJOR POWER STATIONS
PAKISTAN                                                                                       AND
HARVAN L,,w,Ttl          /                     XTRA HIGH VOLTAGE GRID
v  a   ^  /   's4't.gT   8';.A  R uL.4             Qep^    '>sCHINA,                 .
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