With the Andhra Pradesh government diluting its scheme of free electricity to farmers, the World Bank has expressed its willingness to provide loans for various projects in the state.

Michael F. Carter, country director of the World Bank, Wednesday said the Andhra Pradesh government's request for a structural adjustment loan would be treated as a priority.

Talking to reporters on the sidelines of a conference on Fiscal Responsibility and Intergovernmental Finance here, he said the bank was keen to continue financial assistance to the state.

"There is a suggestion for further adjustment lending and we are certainly going to look at that as one of our priorities. We are just about to start work on it and there is quite some way to go."

The comment came amid reports that the centre was ready to clear the third instalment of the state's structural adjustment loan (SAL) from the World Bank. The World Bank reportedly agreed to give the third instalment of Rs.16.10 billion after the Congress government in the state brought some changes in the electricity scheme.

Carter also said the World Bank was expected to approve another loan of $250 million for urban development projects in the next few months.

The World Bank, which has provided $4 billion to the state in the last several years in various sectors, is also considering the state's request to fund projects in areas of highways, irrigation and rural poverty eradication.

"We are discussing with the state government different priority areas for our work over the next two or three years," he said while praising the government for carrying forward the process of reforms.

Carter clarified that the World Bank had not received any request from the state to fund irrigation projects. "If we receive a request, the first thing we need to do is to look at the performance in implementing the ongoing projects. We are concerned about the need to improve cost recovery."

On free electricity to farmers, he denied that the World Bank was innately against it. "What we did say though was that it was very important for free power to be targeted to those who really need it. And I think that the recent steps taken by the government to make sure those who are less in need will pay for power is a very positive step."