Summary of electric power projects included in the Mexican loan applications

ERMI 25 ILE COPY COlIj7P7^*T. I TE nRi.ATIONAIL 3,A1TT FOR TIOITST.RUCTIOY AFD DEVThr 1 SUTE.LUXY EI CT IC 1O`'ITR PR-J ()CTS -S IiHC L-JJTD IN. THE IXICAT L07 APPLICZ IOfTS Washington, D.C. October 29, 1948. ,:.  C O N T E N T S Paragraphs PART I . . . . . . . . ... l-,-17 PART II . . . . .... .... . 18--58 PART III ..... , 59--74 PA-RT IV, ................. 75-84 Schedule I Appendices A--D It  N O T E This report is not final i.n the sense that, while it contains an appraisal of the electric powxer projects in llexico for which Bank financing is pro- posed, it is not wet possible to include certain data still under discussion wiith the Lexican Government and the liexican Light and Power Company. 0-0-0-0-0  _MEXCO STAIMARY OF MMVLOPICIETT PROJFCTS PART I 3lectric Power in Tlexico - General Information 1. The needs of the mining and textile industries for a source of cheap power led to the creation of the electric power industry in Mexico in 1881. The electricity industry grew ranidly, and by 1900 had a total installed generating capacity of 200,000 kir. By the end of 1947 there were 963,000 kzf of installed capacity throughout Mexico. 2. Because of the scarcity of a suitable grade of coal and the relatively high cost of petroleum on the one hand, and the low cost of labor and availability of water resources on the other, most of the earlier generating plants were hydroelectric. In July, 1947, approximately 54 per cent of the total installed generating capacity was hydroelectric, 27 per cent steam, and 19 per cent internal combustion. At that date 53 per cent of the in- stalled capacity was in 60-cycle plants, 45 per cent in 50-cyrcle, and the remainder in frequencies of 42 to 25 cycles. Public util- ity plants accounted for approximately 75 per cent, plants in private service 18 per cent, and plants in service for both public and private purposes 7 per cent. 3. There has been a fairly constant increase in lkwh generation since 1933, although installed capacity shows a  slowrer growth. Schadule 1 show, s the annual electric power generation throughout MIexico by all types of service,, both public and private. 4. There are five principal interconnected electric rower s-stems in Me-ico. The follolwring table indicates their location and principal suppliers: System Principal Supplier Location 1947 Generation and Purchase of Power 1. Torreon-Chihuahua American & North 325,593 m1kwh Foreign Power Co. Central 2. Puebla-Veracruz East 230,148 Central 3. Guanajuato Central 189,271 Total A & F Fowrer Co. _745 0l12 4, Mexico City Mexican Light & Central 1,548,607 Powrer Co. 5. Chapala iTueva Cia. West 163,305 Chapala Central Small isolated systems and -olants generated about 1,000,000 mkwh in 1947. 5. Power is supplied to some of these systems by a govern- mental agency, the Federal Electricity Commission. This agency was created by law (August 14, 1937, published in Diario Oficial on August 24, 1937) for the purpose of organizing and directing a national system, on a nonprofit basis,for the generation, trans- mission and distribution of electrical energy. The Commission consists of the Minister of I;Tational Economy, wrho acts as  President, and one Executive Director and one Director (who acts as Secretary), both aypointedl byr the Federal Executive. The Commission is empowered, among other things, to plan a national system of electrification; to effect all operations in con- nection with the establishment of such a system, including acquisition of property and of shares and securities in the electric industry; to organize companies for the generation, transmission and distribution of electricity and for the manu- facture of equipment required by the industry; to organize cooperatives of consumers, and to supervise proposed electrifi- cation activity of official, semi-official or private enterprises. 6. The Commissionts plants are locatea in the first, second and fourth of the above listed systems. It sells the out- put to the distributing companies. The princi-oal purciasers are the Mexico City system and the Puebla Veracruz system. Total installed capacity of plants belonging to the Commission amounted to 92,168 wr at the end of February 1948. 7. The following table show;rs the investments in electric power facilities in Mexico, grouped according to the nationality of the ownership:  (million of pesos) Cormany Investment* Percentage Nationality Julay 1947 of Total of C orroany Mexican Light & 445.0 43-3 Belgian Powrer Co., Ltd.., and. and subsidiaries . Canadian American & Foreign 294.0 28.5 American Power Co., Ltd. subsidiaries Monterrey Railway, 38.0 3.8 Canadi^aa Light & Power Co. Nueva Cia. Chapala 47.0 4.6 Mexican Comision Federal de 184.0 17.9 Menican Blectricidad Others 20.0 1.9 Mexican and other 1,028O 100)O * Determined by app1ication of rules of the IMexican Law for the Electric Industry, exce-ot for the Federal Comision which rep- resents book value of investments as of September 30, 1947. Mexican Light and- Power Com-QanY Limited 8. The Company was originally organized. under the law;s of Canada in 1902. Its principal w1holly-owned subsicliaries are uhe Mexican Electric Light Company, Ltd., which has water rights on the Monte Alto River in the District of Cuautitlan; The Compania de Lux v. Fuerza de Pachuca, S.A. ovming iwrater rights in the dis- trict of Zumpango and in the State of iHidalgo; the Compania Menicana Meridional de Fuerza, S.A. which has water rights on two important rivers in Contral ::exico; the Comrinnia de ?auerza del Suroeste de Mexico, S.A. which has wvater rights in the State  -5- of Michoacan; and the Compania de 'ux v. Fuerza Electrica de Toluca, S.A. which has water rights on the Verde, San Simonito and San Pedro Zictepec rivers. 9. The Mexican Light and Power Company and its sub- sidiaries serve the Federal District (in which ltle::ico City is located) and parts of the States of MeXico, EFidalgo, Puebla, Morelos, Guerrefo and Michoacan. The population served is approximately 2,260,000, or 10 per cent of Me.xicols total, eand the rate of population growth is about 2.3 times that of the country as a lwhole. The Federal District accounts for about 35 per cent of the total production of manufacturing industries of MIexico. Moreover, substantial new incdustrial developments are being undertaken in the State of IEexico. High tension in- dustrial customers take about 47 per cent of tle entire out'-put of the Company. 10. The Companies operate 15 hydroelectric plants havirg a total of 223,650 kwr installed capacity, 1 steam plant of 55,000 1m, a total of 278,650 kw. Tlhis, together with the intercoridected 55,800 in,t installed canacity at the Ixtanantongo plant of the Mexican Federal Power Commissioni, the entire output of w,?hich is -purchlased by the Companies, gives a total available capacity of 334,450 1,kw. Including 219,759 mkwh -ourch.ased from the Federal Electricity Commission, the Company distributed, in 1947, a total of 1,548, 607 mkwArh. The Company plans further additions to its own generating capacity and its oTrn distribution s-stem,  but in order to meet future demand it also counts upon purchasing at wholesale the output of additional plants to be constructed by the Federal Electricity Commission. 11. The nrincipal generating units of the Company are INecaxa (hydro), Lerzma (hydro) and Nonoalco (steam). The iTecaxa plant is located about 90 miles northeast of 1.lexico City, the Lerma plart 78 miles northwest and the iTonoalco plant in the City itself. Company plants generated approxcimately 46.5 per cent of all electric power in Miexico and the Company purchased for dis- tribution about 60 per cent of power generated by the Federal Electricity Commission. American and Fore iSn Power Company 12. The American and Foreign Power Company controls the activities of 20 subsidiaries which comprise its system in Mexico. Fifteen are operating subsidiaries comprising three major interconnected systems and eight smaller nonconnected systems. The operating subsidiaries su-pply electric power and light to a population of 2,150,000 in north, central and south- ern Mexico and on the east and west coasts, representing about 9X of the total. 13. In the Torreon-Chihuahua system, power is supplied to those two cities and in addi.tion to the irrigation district of Laguna and the mining areas in San Francisco del Oro, Santa Barbara and ?aral. The other important system of the Company is that of Puebla-Veracruz wrhich includes the industrial cities  of Puebla, Veracruz, Orizaoa ard Cordoba. The remainder of tne Company's operations consist of the interconnected system of Guanajuato and the eight isolated systems in vario-us states. 14. The Company has pre-ared an expansion -program which will increase its generating capacity by approInately 66,000 kw (or 37 per cent over the installed canacity at the end of 1947) to a total of 246,000 kw. Other, Private Utility Companies 15. Other utility companies in Mexico play a much less important role than those above mentioned. A small companyj ESPEMSA, owned by American capital, operates seven isolated plants in the northwest of Mexico. This Company plans certain improvements in its distribution system but is dependent upon the Commissionts projected generating plants for meeting future demand. COoiclusion 16. The relative importance of the electric power industry in Mexico may be gauged from the following table: Years Installed capacity Power generation per. cTapita,in watts rer capitj in kth. Mexico 1947 41.5 158 Chile 1947 (est..) 95 505 Brazil 1946 Z9 109 Argentine 1946 92 200 U,S.A. 1947 367 1,759  17. The economic development of the country in the last few years has substantially increased the demand for power. It could not have been satisfied in spite of new facilities provided by the cormpanies and the Commission. Spaxe generating capacity has beer gradually utilized, so that, at the present time, no interconrected system has sufficient firm capacity to ta!:e care of its contracted load. As a result of this, power rationing has had to be intro- duced in the periods of peak demand.  *99- PART II Development Projects of Federal Eloctricity Commission and L.exican Light and Powver Company A. FEDERAL EL.CTRICITY C01I,.SSION 1l. The five-year electric power development program sub- mitted by the Federal Electricity Commission to the Bank in 1948, calls for - (a) construction of hydro- and thermoelectric plants of an aggregate capacity of 1,018,280 kw; (b) construction of transmission lines, distribution and communication systems, ruial electrification plants; and (c) aid to small private plants. 19. The cost of this program was estimated at .212,h21,OOO. Of this ..i121,929,0O wvere to be spent over a period of five years for imported equipment and materials. The folloiwing table outlines the domestic and foreign financing already disbursed and that still required to carry out the over-all program:  -10w- (in thousands of U.S. Dollars) Type of Total Disbursed or Future Percenta-e Expenditure Disbursements Committed up Disbursements of or Cor.mmitments to 12/31/47 1948-52 Fro