Announcement of One Million Four Hundred Fifty Thousand Dollars Power Loan in Honduras on May 20, 1959

WORLD • INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT 1 81 8 H STREET, N. W., WASHINGTON 2 5, D. C. TELEPHONE: EXECUTIVE 3-6360 PRESS RE'"LJ~ASE No. 586 SUBJECT: $1,450,000 power loan May 20, 1959 in Honduras The World Bank today ·made a loan of $1,450,009 for the expansion of electric power facilities in the metropolitan area of Tegucigalpa, the capital of Honduras. The project Will provide a much needed improvement in the electricity d.istr5.bution system of the city, and will increase generating capacity sufficiently to meet the need for power in the yeai~s immediately ahead. • The Bank of America and the National Bank of Washington (D.C.) are participating in the loan, without the World Bank's guarantee, to the ex- tent of $123,000 representing the first three maturities which fall due between September 1, 1962 and September l, 1963. The loan was ·made to the Empresa N~ional de Energia Electrica, an autonomous government agency which is the sole supplier of power to Tegucigalpa. The ·metropolitan area of Tegucigalpa, "11th a population of 92,000, is the largest city in Honduras and an important center of commerce and, industry. Although consumptton of power has been increasing in recent years at a rate of 13i a year, the consumption level is still oµe of the lowest in La.tin America. Principal factors restricting consumption h~ve been the shortage of generating capaci,ty and inadequate distribut:f.on facilities • • \\ - 2 - The project being financed by the present loan will increase gene- rating capacity fro·m 7, 100 to 9, 6oo kilowatts through the installation • of two diesel units having a combined capacity of 2,500 kilowatts. Distri- bution facilities will be improved and expanded to accommodate 10,000 kilowatts of capacity, and will be designed for a future expansion of up to 30,000 kilowatts; about 5,000 new service connections will be ·made. Funds from the loan 'Will also be used for further engineering and survey work on a proposed hydroelectric installation on the Rio Lindo in northern Honduras on which initial studies have already been ma.de. The ;new installations at Tegucigalpa are schedul.ed f'or completion by mid-1962 at a total cost equivalent to $1, 78o, 000. The Bank's loan of $1,450,000 will cover the foreign exchange requirements. Imported goods and ·materials will be purchased on the basis of international co.mpetitive bidding. Consulting engineers will supervise construction. The loan is for a term of 15 years and bears interest of 61, includ- • ing the 11, com:nission which is al.located to the Bank's Special Reserve. Amo:-tization will begin in September 1962. The loan is guaranteed by the Government of Honduras. After having been approved by the Bank's EJ~ecutive Directors the loan documents were signed by His Excellency Dr. Celeo Davila, .Ambassador of Honduras .in Washington, on behalf of the Government of Bond~as, and by Mr. Lempira E. Bonilla, Econam:Lc Counselor of the Embassy in Washington, on beha.lf of the Empresa Nacional. de Energia Electrica. •