Announcement of 25.5 Million Loan Dollars in Uruguay held on October 25, 1956

FOR IMMEDIATE RELEASE WO II. I. D • JNTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT 1818 H STREET, N.W., WASHINGTON 251 0. C. TELEFHONE: EXECUTIVE 3-6360 Press Release No. 462 SUBJECTS $25.5 million loan in Urugua.v October 25, 1956. l/ The World Bank today made a loan of $2S.S millio~ in various currencies for electric power development in Uruguay. The l·oan will help to finance the construe~ tion of a hydroelectric power plant at Rincon de Baygorria on the Rio Negro, and additional transmission and distribution facilities. The project will increase generating capacity in Uruguay by about one-quarter and is part of a program being carried out to provide an adequate power system throughout the country. The loan was made to the Administracion General de las Usinas Electricas y los • Telefonos del Estado (U.T.E.)J an autonomous government agency responsible for pro- viding electric power and telephone servi1!es in Uruguay. U.T .E. supplies power to the smaller communities through diesel uni ts, a~ /td- the larger towns and l'Iontevideo, the capital and chief commercial center, thr9,~h an extensive transmission system fed by two steam plants in Montevideo and a hydroelectric plant at Rincon del Boneta on the Rio Negro about 135 miles north of Montevideo. The new Baygorria plant will be connected into this system and rai.se its generating capacity to 392 1 000 kilowatts. \ Since 1947 there has been a considerable eJq,ansion or eJd.sting industry and C .! development, or new industries in Uruguay, especially in the interior. They have in- c.luded a cement plant, a tannery, a sugar refinery, fertilizer plants and paper fac• tories. This industrial growth, together with a steady rise in demand f~r residential and other uses, has resulted in an increase in the demand for electricity throughout the country. From 1947 through 195.5/ the incre,ase in sales of power in Montevideo ,- . • averaged about 8.5% a year; th~ increase in the other communities reached 16.2%, reflecting the growth of industry in the interior where industrie.l power sales more than doubled in the past six years. The site of the Baygorria plant is about 53 miles downstream from the existing  - 2 - , Bonete hydroelectric station. The new plant will have only a small reservoir and • will utilize the regulated flm-, of Bonete•s large reservoir. The Baygorria plant will have three generating units with a combined capacity of 103,000 kilowatts. High tension transmission lines and substations will be put up to connect the Baygorria station with Rincon del Bonete and with Montevideo. Also included in the project is a "collector ring" consisting of underground cables, transmission lines and substa- tions to be built, in Montevideo to improve the city's primary distribution system. A small part of the loan will be used to purchase business machines to mechan:t~e U.T.E. 1 s accounting department. A contract for the construction of the Baygorria station was awarded in May 1956 to a consortium of European firms on the basis of international bidding. Contracts for the transmission lines and the collector ring are yet to be awarded. The entire project is scheduled for completion in 1961. • The total cost of the project is estimated at the equivalent of $58 million • The Bank's loan will provide $25.5 million of the foreign exchange costs. A large part of the loan will be made in deutschemarks and the remainder in Swedish kronor, Swiss francs and other currencies. The equivalent of ~32.5 million will be financed by U.T.E. from its own resources or local borrowings. The Bank's loan is for a term of 25 years and bears interest of 5% including the 1% commission charged by the Bank. Amortization will begin October 15, 1961. The loan is guaranteed by the Republic of Uruguay. The Bank has now made three loans totaling $64 ntj.Uion to U.T.E. A loan of $33 million in 1950 covered most of the foreign exchange costs of various projects for expanding and. modernizing U.T.E.•s power and telepvone facilities. This loan has been completely disbursed and the projects finished. A loan of $5.5 million in 1955 is helping to finance ari additional 50,000-kilowatt unit at the Batlle y Ordonez • thermal power station in Montevideo • After having been approved by the Bank's Executive Directors., the loan documents were signed today by His Excellency., Dr. Julio A. Lacarte Muro, Ambassador for Uruguay in Washington, on behalf' of the Republic of Urugt1,ay, Senor Orestes L. Lanza, President of U.T.E •., on behalf of the borrower, and Mr. W.A.B. Iliff, Vice President, on behalf of the World Bank.