Lanco Group (Lanco or the Group), is the Sponsor of the project and will invest in the project through its flagship company, Lanco Infratech Limited (LITL). LITL is an infrastructure development company with interests in power, construction and property development. Mr. L. Madhusudan Rao is the chairman of Lanco Group. For the year ending March 31 2006, LITL had total revenues of about $34.7 million and net income of about $3.31 million. As of January 31 2007, LITL holds 78.24% of the company’s shares while 10% of shares are held by KVK Group of Andhra Pradesh and the remaining 11.76% of shares are held by DEG, Germany.

The total cost of the project is expected to be INR 26,318 million (about $578 million) and IFC is considering investing up to $8 million in equity in the company.

8.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan
Equity	8.0

* These investment figures are indicative

The project is located near Patadi village, Korba district in the state of Chhatisgarh in India. The project site is a greenfield site located close to the four villages of Patadi, Saragbundhia, Pahanda and Khoddle.

- Reduction of power shortages: India faces severe shortages of electricity, with base load and peak shortages estimated at approximately 9% and 12% of total demand respectively. The project will contribute to reduce this demand-supply gap, which has resulted in erratic supply of electricity with fluctuations in voltage and/or power outages. The consequences of the power shortage are far-reaching and adversely impact commerce, industry, agriculture, education, and socioeconomic development. - Low cost power: The project is expected supply power to PTC at a levelized tariff of about INR 2.25 /kWh for a period of 25 years which is lower than the prices for sale of bulk power in many states in India. - Linkages to local economy: The project will help the local economy through creation of contractual jobs during construction and permanent jobs during operation.

IFC’s involvement in the project will improve Lanco’s credibility in the domestic and international market due to IFC’s adherence to high standards of corporate governance and environmental, safety and social consciousness. Lanco is in the process of developing into a major infrastructure developer with significant investments in the power sector in India. IFC’s investment in the project will help the sponsor in attracting other strategic investors and partners for its growth plans in the future. IFC’s participation will ensure that the company achieves international ‘good practice’ standards in its environmental and social performance, which will in turn support the company’s sustainable growth. IFC will provide equity to the project and thus be a long term partner of the sponsors in this important project.

This is a category A project according to IFC''s environmental and social review procedure. Review of this project consisted of appraising technical, environmental and social information submitted by the company including:

- the Comprehensive Environmental Impact Assessment;
- Rapid Social Impact Assessment;
- regulatory approvals;
- public hearing record notes;
- Engineering, Procurement and Construction (EPC) contract documents; and
- management system manuals.

The appraisal team also interviewed LAPPL’s corporate and plant level operations, environment, occupational health, safety, human resources and community relations professionals. Further, the appraisal included:

- a site visit to the company’s proposed power plant site at village Patadi near Korba;
- interactions with representatives of affected communities; and
- interactions with members of the project affected households (PAHs) from the four affected villages.

The company has presented plans: to address project related social and environmental impacts; and to ensure that the proposed project will, upon implementation of the specific agreed measures, comply with the host country laws and regulations and IFC’s social and environment policies and performance standards and the environmental, health and safety guidelines as applicable. A discussion on the company’s plans to mitigate/minimize identified social and environmental impacts has been provided in the Environmental and Social Review Summary (ESRS) and an Environmental and Social Action Plan (ESAP). The company has carried out extensive consultation with stakeholders, in particular the project affected communities. In accordance with the Environmental and Social Action Plan, the company is strengthening the ongoing consultation. IFC will verify broad community support prior to a decision on the project by IFC''s Board.

The following complete set of Category A documentation regarding the project has been released locally and to the World Bank Infoshop:

- Comprehensive Environmental Impact Assessment, dated November 2005 (disclosed locally and to the World Bank Infoshop);
- Rapid Social Impact Assessment, dated March 2007 (disclosed locally and to the World Bank Infoshop);- Environment and Social Action Plan, dated March 2007 (disclosed locally and to the World Bank Infoshop);
- Environment and Social Review Summary, dated March 2007 (disclosed to the World Bank Infoshop);
- The documents disclosed locally have been placed at the following location:

Gram Panchayat Office
Village Patadi
P.O. Tilkeja, District Korba
Chhattisgarh State, India
PIN Code: 495 674