Announcement of Twenty-Seven Million US Dollars Loan to El Salvador for Electric Power Expansion on April 30, 1973

INTERNATIONAL BANK FOR .RECONSTRUCTION AND DEVELOPMENT 1818 H STREET. N.W .. WASHINGTON D. C. 20433 TELEPHONE: EXECUTIVE 3-6360 Bank Press Release No. 73/22 Subject: $27'13 million loan to El Salvador April 30, 1973 for_electric power expansion The World Bank has approved a loan of $27.3 million for the expansion of electric power generating and transmission facilities in El Salvador. The main features of the project consist of the construction of a geothermal power plant -- the first of its type financed by the Bank in I.atin America -- and the construc- tion of a large hydroelectric plant for which the Inter-American Development Bank (IDB) is a co-lender. The project also includes related tl\':l.nsmission and ancillary facilities. The loan is the sixth made bf the World Bank Group to the Comision Ejecutiva Hidroelectrica del Rio Lempa (CEL), which will be responsible for the execution of the $97.7 million project. GEL is·an autonomous public agency which generates about 92t of El Salvador's electricity supply. · ",Electric power demand in El Salvador has grown at an average rate of 11.5% annually during the past decade. Demand is expected to increase 11% a year through 1984 as industrial expansion, urbanization and rural electrification continue. To meet project demand over the next 10 years, CEL is constructing the 135 megawatt • erron Grande hydroelectric plant some 25 miles northeast of the capital city of San Salvador. The IDB has already approved a $38.1 million loan to help finance civil works, turbo- generator units and installation of all equipment. · Some $13.0 million of the World Bank loan.will cover foreign exchange costs of equip- ment other than the generators and of engineering and diversion works. IDB will have primary responsibility for construction supervision. Nearly $8.0 million of the Bank loan is for the construction of a 45~megawatt geothermal power station at Ahuachapan, about 37 miles west of San Salvador. The project is based on a study of the geothermal field and plant financed by the United Nations Development Programme (UNDP). . . The balance of the Bank loan will help fi~.nce transmission lines for both the Cerron Grande and the fthuachapan plants, a telemete~ing center at CEL 1 s headquarters to control ope~ations, engineering and feasibility studies.for future expansion and training of CEL 1 s professional staff. The Ahuachapan plant will not adversely affect the envirorunent. Safeguards have been agreed upon to protect public health.and ocean life from effluent waters from the geothermal wells. A resettlement and employment program will be implemented by r.EL to insure the welfare of about 10,000 people to be affected by the-construction of the dam at the Cerron Grande site. The loan to CEL, with the guarantee. of ·the Republic of El Salvador, will be for a • erm of 25 years, including five years Qf grace, with annual interest at 7~. '·' Two United States financial institutions are participating in the Ba~ loan for a total amount pf $200,000. They are Central National Bank in Chicago and Marine Midland Bank - New York. - 0 -  • April 30, 1973 TECliNICAL DATA PROJECT: Power COUNTRY: El Salvador TOTAL COST: $97. 7 milHon equivalent. BANK FINANCING: $27.3 million equivalent, 25 years, 5 years of grace, 7~% interest per annum. OTHER FINANCING: Inter-American Development Bank (IDB), internal cash generation and local borrowing. IMPLEMENTING ORGANIZATION: Comision Ejecutive Hidroelectrica del·Rio Lempa (CEL), 9a Calle Poniente No. 950 Entre 15A. y 17A. Avenida Norte, San Salvador, El Salvador, C.A. PIDJECT DESCRIPTION: Construction of the Ahuachapan geothermal power plant; construction of the Cerron Grande hydroelectric development; • expansion of CEL's transmission and distribution facilities. PROCUREMENT: Equipment and material contracts financed by the Bank to be awarded on the basis of international competitive bidding. Up to $1.8 million for foreign exchange expenditures incurred between June 1972, and the date of signing would be reimbursed to the 'Borrower. CONSULTANTS: Electroconsult (Italy), Harza Engineering (U.S .A), Atilio Garcia Prieto y Cia. (El Salvador) Kingston Reynolds Thom and c Allerdice (New Zealand), and Kennedy and Donkin (U.S.) prepared the UNDP-financed study of the geothermal field and plant at Ahuachapan. ESTIMATED COMPLETION DATE: 19 77 • - 0 - •