Announcement of a Five and a Half Million Dollar Loan to Uruguay for Increasing Electric Power Supplies on August 30, 1955

HOLD FOR RELEASE aNTERNATIONAL BANK FOR ~ECONSTRUCTION AND DEVELOPMENT <WORLD BANK) 1818 H STREET, N.W., WASHINGTON 25, D.C. TELEPHONE: EXECUTIVE 3-6360 PRESS RELEASE NO. 424 FOR RELEASE A.M. Newspapers SUBJECT: $5 .5 million loan in Uruguay. Aagust 30., 1955 The World Bank today announced a loan in various currencies., mainly Italian lire and Swiss francs, equivalent to $5.5 million for increasing elect:i·ic power supplies in Uruguay11 The borrower is the Adrninistracion General de las Usinas Electricas y los Telefonos del Estado (U.T.E. ), an autonomous aget.1cy of the Govern- ment which has exclusive right to provide electric energy and telephone service • in Uruguay. The First National City Bank of New York and the Nethe~lands Trading Society, Amsterdam., are participating in the loan for an amount equivalent to $654,000. The participation of the First National City Bank is $300,000 1 representing part of the first five maturities falling due semi-annually from May 1., 1958 through May 1, 1960. The participation of the Netherlands Trading Society is equivalent to $354,000, payable in Netherfands guilders and representing the remainder of the first five mat,u.rities and all of the sixth maturity which falls due November 1, 1960. This is the second loan the Bank has made to U.'r.E. A loan of $33 million., made in 1950., covered most of the foreign exchange cost o.f various projects for expanding and modernizing the agency's power and telephone facilities. Those • projects are nearing completion • The new loan will finance the foreign exchange cost of installing a new 50,000 kilowatt unit., with the necessary boiler and auxiliary equipment, in the Batlle y Ordonez thermal power station in Montevideo. A 50,000-kilowatt unit It· . \ - 2 - • was previously installed in this plant under the Bank's first loan. The new generator will increase the station1s installed capacity to 150,000 kilowatts, and should come into full operation by the end of 19.57.. Nearly all the equiprnent for the installation is being purchased in Western Europe. The turbo-generator is being supplied by the Brown Boveri Company of Switzerland, and the boiler by the Societa Edison of Italy. Local costs of the project, amounting to about 1.4 million pesos (about $800.,000), are expected to be met, by U.T~E. from its own resources. Authorization exists to supplement these resources, if necessary, by the sale of peso bonds in Uruguay. Increased supplies of electric power are needed to promote further economic progress in Uruguay, both in the Montevideo industrial area and in the :i.nterior. The Batlle station project is part of a larger power expansion program aimed at meeting Uruguay's expected power demand until about 1962. Consumption of electrici t:v has been steadily mounting throughout the country. U.T.E.'s total sales, measured in kilowatt hours., increased from 1947 through 1954 at an average amiu~l rate of 9.6%. Outside of the Depe.rtment of Montevideo the increase averaged 17% a year. • This reflects the growth of industry in the interior, where industrial sales of electricity have doubled in the ~ast five years. U.ToE. has encountered a wide- spread demand for power which it has not been fL1lly able to meet11 During the past decade, U.T.E. has made a profit in every year except 1951. Earnings last year were sufficient to cover interest charges on its debt four and a hqlf times. Virtually all of U.T.E. 's earnings have been retained in the business a.nd used principally for capital expansion and improvements. The loan is guc1.ranteed by the Republic of Ur11guay. It is for a term of 20 years c:,nd carries an interest rate of 4-3/4%. Amortization will begin May l, 19.58. After approval by the Bank's Executive Directors, the loan documents were signed on August 29 by His Excellency Dr. Jose A. Mora, Uruguays.n Ambassador to the United States, on behalf of U.T.E. and the Republic of Uruguay; and by Mr11 Robert Le Garner, Vice Presj_dent, on behalf of the World Bank • •