Uruguay - Fifth Power Project

Document of FILE COPY The World Bank FOR OFFICIAL USE ONLY Report No. P-2657-UR REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO ADMINISTRACION NACIONAL DE USINAS Y TRASMISIONES ELECTRICAS TO BE GUARANTEED BY REPUBLICA ORIENTAL DEL URUGUAY FOR A FIFTH POWER PROJECT November 26, 1979 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CUIRENCY EQUIVALENTS (As of May 1979) Currency Unit - New Uruguayan Peso (NUr$) NUr$j ' 100 Centavos (ctv) NUr$7.7 = US$1 NUr$1,000 US$129.80 NUr$1,000,000 US$129,800.00 MUS$ US$1,000,000 WEIGHTS AND MESURES Metric System GLOSSARY OF ABBREVIATIONS UTE - Administracion Nacional de Usinas y Trasmisiones Electricas ANTEL - Administracion Nacional de Telecomunicaciones CTM . Comision Tecaica Mixta del Salto Grande COMIPAL - Comision Mixta del Palmar IDB - Inter-American Development Bank FISCAL YEAR January 1 - December 31  FOR OFFICIAL USE ONLY URUGUAY FIFTH POWER PROJECT Loan and Project Summary Borrower: Administracion Nacional de Usinas y Trasmisiones Electricas (UTE) Guarantor: Republica Oriental del Uruguay Amount: US$24 million equivalent Terms: Repayable in 15 years, including 3 years of grace, at 7.95% per annum Program and Project Description: UTE's development program consists of the installation by 1983 of about 680 km of transmission lines, about 2,030 km of distribution lines, 251 substations to increase service of consumers from the present 790,000 to about 900,000 by 1983. The project comprises a portion of the 1980-83 works for: (a) renovation and expansion of distribution networks in Montevideo; (b) expansion and some renovation of distribution networks in the interior; and (c) con- sultant services for project management and studies concerning management, tariffs, development program, internal auditing and management information systems, and the energy sector. Project Objectives: (a) Helping finance major investments in the distribution facilities of UTE; (b) improving the operational efficiency of UTE by renovating the distribution network in Montevideo and phasing out uneconomical local diesel generating plants in the interior; (c) improving UTE's management efficiency and financial practices through new legislation, regula- tions and assistance from consultants; and (d) improving sector policies through appropriate legislative changes, an energy sector study, a development study and a tariff study. Benefits and Risks: The project would encompass investments in distribution facilities necessary to improve quality of service and meet forecast demand growth, accompanying the sustained recovery of the economy, utilizing the energy production of the hydro power plants of Salto Grande and Palmar. The distribution facilities would bring this energy to the final consumers, reduce 1 ses and improve the effi- ciency of UTE's operations anl the reliability ef services. The project is not expected to have any adverse effects on the environment. This document has a restricted distribution and may be used by recipients only in the performanc of their ofF,cial duties. Its contents may not otherwise be dischosed without World Bank au,horization.  - ii - The program involves major institutional changes that are aimed at reversing UTE's financial and institutional problems of the past ten years. Given the difficulties of implementing changes that involve major departures from long-standing practices, these institutional changes may not be fully achieved. To limit such a risk as much as possible, the authorities and the Bank agreed that the Bank loan would cover the investment requirements for a two-year period, which should enable the parties concerned to review the progress made and take any necessary correc- tive actions hence. Project Costs: Local Foreign Total ----------US$ - 000