WASHINGTON, D.C., June 15 -- The International Finance Corporation (IFC) has approved a US$118 million investment in GVK Industries Ltd. to build, own, and operate a 235-megawatt power plant in the State of Andhra Pradesh in eastern India. This is the first independent power project under the Government's new policy of opening the sector to private investors, both domestic and international. GVK Industries Ltd. will sell the electricity to the Andhra Pradesh State Electricity Board under a 30-year power purchase agreement. The plant will help relieve the power shortage in Andhra Pradesh, where 10-hour power blackouts are frequent for industrial consumers. The combined cycle plant will use mainly gas and some naphtha as its fuel and comply with World Bank environmental guidelines. IFC will provide loans of up to US$40 million for its own account and is syndicating an additional loan of up to US$70 million with financial institutions. IFC will also make an equity investment of up to US$8 million. The total cost
of the project is US$300 million. The main promoter of the project is Mr. G.V.K. Reddy, chairman of the GVK Group, a local industrial firm. Other sponsors include the CMS Corporation, an independent power producer in the U.S., which will operate and maintain the plant; and Asea Brown Boveri, which will undertake to deliver the plant on a turn-key basis (fixed price, fixed delivery date, and guaranteed performance). "The establishment of India's first private sector power plant is a significant achievement signalling the expanding role of private industry in the power sector," said Mr. Everett J. Santos, Director of IFC's Infrastructure Department. "The increased supply of electricity will also contribute to the growth of the region's economy and raise living standards," added Mr. Vijay Chaudhry, Manager of IFC's Power Division. IFC is the private sector arm of the World Bank Group and is the largest source of multilateral financing for private sector projects in developing countries. In its fiscal year ended
June 30, 1993, IFC approved US$438 million in financing for power projects, the total cost of which were US$1.8 billion.
