The Japan Bank for International Co-operation has signed two ODA loan agreements totalling 56 billion yen (about US$420 million) with the government of India. 27 billion yen will go towards financing the 1000 MWe Simhadri thermal power station project (phase III), to be executed by the National Thermal Power Corp. Ltd. The balance will finance phase III of the Delhi mass rapid transport system.

Following the nuclear tests conducted by India in May 1998, the Japanese government froze ODA loans to the country for new projects, in accordance with its charter. However, as the Simhadri project is regarded as ongoing by the Japanese government it is exempt from these measures. ODA loans financed the first and second phases of the project.

Proceeds of the loan for Simhadri phase III will finance the civil works and procurement of materials and equipment necessary for the construction of a coal-fired thermal electrical power plant in the suburbs of Vishakhapatnam, in southern India.

India’s power stations fall well short of satisfying demand in terms of capacity and supplied electricity volume. The shortfall is greatest in the western and southern parts of India where industrialisation is proceeding faster, although in the southern state of Andhra Pradesh, where this project is being implemented, the shortage of electric power is stifling economic development. But as well as local industry this plant will also supply electricity to farm villages and households, thereby improving living standards.