IFC signs $150 mn loan to Cairn Energy for India and Bangladesh
New Delhi July 3 (UNI) The International Finance Corporation, the private sector arm of the World Bank signed a 150 million dollar loan to Cairn Energy PLC to help alleviate India and Bangladesh's energy shortage.
Apart from the IFC's 9-year term loan a group of international commercial banks have given assurance to provide 850 million Dollar in additional 5-year term funding.
The total 1 billion Dollar loan will finance UK-based Cairn's capital expenditure program, primarily the development of its recent oilfield discoveries in India's northwestern state of Rajasthan.
As part of the project design, IFC and Cairn will help small, local firms to provide support services such as food, transportation, security, grounds keeping and others to the oil and gas operations. They will also work with farmers in developing co-operative dairy ventures to improve production.
IFC's Associate Director for Oil, Gas, Mining and Chemicals, Somit Varma said, ''IFC's partnership with Cairn goes beyond the sizable financing we are providing. We are working with them on extending their leadership on environmental best practices and social development, ensuring benefit for local communities which is both key for development and critical for the long-term success of extractive industry projects.'' With a target peak production of around 150,000 barrels per day, the Rajasthan development will equal around 25 per cent of India's current oil production and about 8 per cent of its current oil imports.
''Support for private sector investments in oil and gas is key to IFC's strategy in South Asia,'' said IFC's Director for South Asia Iyad Malas. ''With our investment, we are supporting the local economy and helping to satisfy India's demand for domestically produced fuel.'' A central component of the Cairn-IFC development program will be the establishment of an Enterprise Center, which will help to provide information and expertise on business practices to local small and medium-sized firms, putting them in a position to become potential suppliers and service providers to the oil and gas operation and other ventures.
The Enterprise Center is part of a joint community development program that aims to maximise positive impacts of the large-scale oil and gas projects in the Barmer region of Rajasthan where more than 20 per cent of households live below the poverty line.
Chief Executive of Cairn Energy PLC Sir Bill Gammell said, ''This project is aligned with the Government of India's objective of securing reliable future energy supplies. IFC's sustained support to Cairn's long-term capital needs helps provide confidence to our other investors and mobilise the 1 billion dollar loan. IFC's expertise on environmental and social management has been equally important to us.'' The International Finance Corporation is the private sector arm of the World Bank Group and is headquartered in Washington while Cairn focuses its activities on the geographic region of South Asia.
The Group holds material exploration and production positions in west India, east India and Bangladesh along with new exploration rights in India and Nepal.
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