THE WORLD BANK GROUP ARCHIVES PUBLIC DISCLOSURE AUTHORIZED Folder Title: Project Completion Report - India - Fertilizer Industry Credit - Credit 598 - June 23, 1986 Folder ID: 1099201 Project ID: P009706 Dates: 6/23/1986 Fonds: Records of the South Asia Regional Vice Presidency ISAD Reference Code: WB IBRD/IDA SAR Digitized: 5/15/2019 To cite materials from this archival folder, please follow the following format: [Descriptive name of item], [Folder Title], Folder ID [Folder ID], World Bank Group Archives, Washington, D.C., United States. The records in this folder were created or received by The World Bank in the course of its business. The records that were created by the staff of The World Bank are subject to the Bank's copyright. Please refer to http://www.worldbank.org/terms-of-use-earchives for full copyright terms of use and disclaimers. M THE WORLD BANK Washington, D.C. @ International Bank for Reconstruction and Development / International Development Association or The World Bank 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org III'l' III ||||01 111II |I||II|iI Archw is 1099201 RI 986-051 Other #: E862, Box # 9990B Project Completion Report - India - Fertilizer Industry Credit - Credit 598 - June 3, 1986 DECLASSIFIED WBG Archives DECLASSIFIED The World Bank JUL 18 2018 FOR O ICIAL USE ONLY Wi3 ARCHIVES E[R Report No. 6297 PROJECT COMPLETION REPORT INDIA - FERTILIZER INDUSTRY CREDIT (CREDIT 598-IN) June 23, 1986 Industry Department 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. FOREIGN EXCHANGE RATES Mo/Year Appraisal 04/75 US$1 - Rupees 7.85 Board Approval 12/75 US$1 - Rupees 7.80 Credit Closing 12/82 US$1 = Rupees 9.70 Project Completion Report 02/86 US$1 - Rupees 12.50 FISCAL YEAR April 1 - March 31 ABBREVIATIONS ASC - Administrative Staff College of India, Hyderabad CFL - Coromandel Fertilizers Ltd. DOA - Department of Agriculture FCI - Fertilizer Corporation of India GOI - Government of India GSFC - Gujarat State Fertilizers Ltd. HFC - Hindustan Fertilizers Corporations Ltd. HPCL - Hindustan Petroleum Corp. HSC - Hindustan Steel Corporation Ltd. IDBI - Industrial Development Bank of India IFFCO - Indian Farmers' Fertilizers Cooperative Ltd. KFL - Madras Fertilizers Ltd. NCAER - National Council of Applied Economic Research NFL - National Fertilizers Ltd. NLC - Neyveli Lignite Corp. PDIL - Planning and Development India Ltd. RCF - Rashtriya Chemicals & Fertilizers Ltd. RITES - Railway Investigation Transport Engineering Services SAIL - Steel Authority of India, Rourkela (the new name of HSC) SPIC - Southern Petrochemical Industries Corp. ZAC - Zuari Agrochemicals Ltd. FOR OFFICIAL USE ONLY THE WORLD BANK Washington, D.C. 20433 U.S.A. 001ce tE Dtrctr-Ceewral Opewatims Evalation June 23, 1986 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Report: India - Fertilizer Industry Credit (Credit 598-IN) Attached, for information, is a copy of a report entitled "Project Completion Report: India - Fertilizer Industry Credit (Credit 598-IN)" prepared by the Industry Department. Under the modified system for project performance auditing, further evaluation of this project by the Operations Evaluation Department has not been made. Yves Rovani By Otto Maiss Attachment 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. FOR OFFICIAL USE ONLY PROJECT COMPLETION REPORT INDIA-FERTILIZER INDUSTRY CREDIT (CREDIT 598-IN) TABLE OF CONTENTS Page No. PREFACE BASIC DATA SHEET ................... HIGHLIGHTS ............-.. *- * -- - --.--...- -- . .--... v Is INTRODUCTION -- - - .-..................... ...... ...... 0 .. 1 II. PROJECT BACKGROUND ............................... .......... 1 A. Project Origin, Preparation, Appraisal, Approval and Credit Effectiveness ....................... I B. Project Description and Objectives ....................... 2 C. Project Scope Revision .................................. 4 D. Subprojects Characteristics -............... 55--. E. Project Cost ..... *.--..-.--.--...................... .. 6 F. Credit Allocation .......... ............. ... ,. 8 G. Sub-borrowers Caracteristics............................. 8 III. PROJECT IMPLEMENTATION AND MANAGEMENT ............ 9 A. Achievement of Project Objectives ........................ 9 B. Project Management .. 10 C. Technical Assistance and Training ........................ 11 D. Use and Performance of Engineering Contractors ........... 11 E. Transfer of Technology .-----......................... 12 F. Procurement and Performance of Suppliers ................. 12 G. Implementation Schedule .- ....-..... --........... ass.... 12 IV. OPERATING PERFORMANCE ....-- ................................ .......13 A. Commissioning and Start-up ....--...................... * 13 B. Production and Capacity Utilization ...................... 13 V. FINANCIAL PERFORMANCE ................ ****. ....... ... 14 A. Financial Rates of Return ............................. 14 B. Financial Performance ... ..... ,.... , . 15 VI. SECTORAL AND ECONOMIC PERFORMANCE ........ *............ 17 A. Economic Rates of Return ........... 17 B. Stability of Fertilizer Supply .......................... 17 C. Environmental Aspects ....... ............................. 18 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. TABLE OF CONTENTS (Cont'd) Page No. VII. ASSOCIATION PERFORMANCE ................ .................... 18 VIII. LESSONS LEARNED ........ ....................... ................... 19 ANNEXES 2-1 Revision of Project Scope ........................................ 21 2-2 Project Cost and Credit Allocation............................... .. 22 2-3 Production Trends of India's Fertilizer Plants, 1981/82-1984/85 ... 23 3-1 Disbursement Schedule for the Credit ............................. 24 5-1 Retention Price Formula.......................................... 25 5-2 Financial and Economic Rates of Return for Select-d Subprojects .. 26 5-3 Summary of Financial Information for Selected Sub-borrowers 27 6-1 Hi torical Consumption, Production, and Import of Fertilizers in India, 1983/84 ................................................ 28 - i - PROJECT COMPLETION REPORT INDIA-FERTILIZER INDUSTRY CREDIT (CREDIT 598-IN) PREFACE 1. The Association approved a credit of US$105.0 million equivalent (Credit 598-IN) on December 31, 1975 to the Government of India,(GOI) to assist India's fertilizer industry to modernize its existing production facilities, eliminate bottlenecks in production, improve pollution control systems, and install energy-efficient equipment. Under the Credit, thirty-six subprojects have been implemented by 13 subborrowers in the public, private and joint sectors, accounting for 65% of India's fertilizer manufactprers. The Credit was onlent to beneficiaries, partly through the Industrial Development Bank of India (IDBI) with funds earmarked. In addition, GOI sponsored three fertilizer industry related studies under technical assistance. 2. The Project was designed as a pilot project of a new type of program lending which is tailored for a specific industry with a number of firm subproject components. As compared with traditional program or sector loans whose subproject contents were selected and implemented under the initiative of governments, the Project was designed to enable the Association to establish direct relationships with subproject executing entities. Therefore, all the subprojects under the Project were appraised individually by the Association mission during appraisal, and included in the Project scope as firm components. In the course of Project implementa- tion, however, the original concept of the Project proved to be difficult to manage, as most of the subprojects were dropped and had to be replaced by others with similar objectives. Out of nineteen original subprojects, nine were dropped and replaced by twenty-six new subprojects. Against this background, this Project Completion Report (PCR) has been prepared partly following the line used in preparing the PCR for Development Finance Corporation (DFC) projects within the basic framework used for normal industrial projects. 3. In accordance with the revised project performance reporting procedures this report has been read in the Operations Evaluation Department (OED) but the project was not audited by OED staff. The draft Completion Report was sent to the Borrower for comments; however, none were received. - ii - PROJECT COMPLETION REPORT INDIA-FERTILIZER INDUSTRY CREDIT (CREDIT 598-IN) BASIC DATA SHEET KEY PROJECT DATA Appraisal Actual and It em Estimate Final Estimates ProJect Cost (US$ million) 238.7 169.2 Cost Underrun or Overrun () - 29.1 Number of Subprojects 22 a/ 39 a/ Credit Amount (US$ million) Disbursement 105.0 101.9 Cancelled - 3.1 Project Cost and Credit Allocation by Sub-borrower Credit Project Credit Project Allocation Cost Allocation FCI ) ) 3.4 2.2 RCF ) ) 19.9 13.0 HFC ) 79.0 ) 38.5 b/ c/ 35.4 20.9 NFL ) ) 4.5 3.4 PDIL ) ) 0.4 0.4 NLC 19.5 12.0 21.1 10.9 HSC (SAIL) 26.1 15.5 22.2 16.2 GSFC d/ 20.6 9.0 17.1 4.5 SPIC 7/ 46.2 14.0 12.3 8.1 HPCL 25.9 4.0 - - ZAC d/