Announcement of Twenty-Four Million US Dollars Power Loan in Peru on June 29, 1960

~ .. FOR IMMEDIATE RELEASE <>' WORLD •• • 1818' H STREET, N.W., WASHINGTON 25, D. C. TELEFHONE: EXECUTIVE 3-6360 PRESS RELEASE NO. 640 SUBJECT: $24 million power loan June 29, 196o in Peru Tht. World Bank today ma.de a loan equivalent to $24 million for the ex- pansion of electric power supplies in the area of Lima, the capital of Peru. The loan will help to finance two separate but related projects: the Marca- poma.cocha Scheme to divert waters from lakes and rivers on the eastern slopes of the .Andes to the Santa Eulalia River Basin in the west to provide more water for hydroelectric power development; and the construction of a power • plant at Huinco on the Santa Eulalia to be installed initially with 120,000 kilowatts of capacity. The new power facilities will increase by 70"/o the power now available in Lim.a, the administrative, cotmtircial and industrial center of Peru. The loan was made to the Lima Light and Power Company ( Empresas Electricas Asociadas), a privately-owned corporation and sole distributor of power in the Lima area. The area has a population of 1. 3 million, or about 141, of ·the total population of Peru. Commerce and industry have concentrated at Lima and now absorb about half the power sold by Lima Light. There are 6,800 industrial consumers which in- clude plants producing textiles, cement, rubber goods, paper, vegetable oil, fertilizer, glassware and shoes. Because of the rapid devel~pment of the area in recent yea.rs, power sales have risen by an annual average of 101,. Industrial •  • - 2 - • power ·-sales· are ,e:;..1?ec\ed ta continue rising at this rate o'\Ter the next decade, while overall sales will grow about 8% annually. The project for which the Bank loan was made is part of a ten-year ex- pansion program being carried out by Lima Light to increase the generating capacity of its system by 26o,OOO kilowatts. The greater part of this new capacity will come from the Huinco power development, which will ultimately generate 240,000 kilowatts of power. The main works to be undertaken in the fh·st stage of the Marcapomacocha Diversion Scheme consist of structures to collect the water of the Marca- pomacocha Basin on the eastern. slopes of the Andes and a six-mile diversion tunnel through the mountain range to bring these waters to the Santa Eulalia Basin on the western side. Increased water supplies from this source will not only provide water for the new power plant to be built at Huinco but will • increase the production capacity of existing power plants downstream and provide more drinking water for Lima. The electric power development cpnsists of the construction of a con- crete a11Ji1r dam at Sheque, where two tributat·ies meet to form the Santa Eulalia River, and a pressure tunnel eight miles long from the dam to the site of the underground powerhouse at Huinco., about 40 miles northeast of Lima.. The power- house will be built to accommodate four generating units of which two, With a combined capacity of 120,000 kilowatts, will be installed initially. Trans- mission lines will also be built to connect the Huinco power plant with Lima. Work on the Marcapomacocha, diversion was started in 1958 and is about half finished; it is scheduled for completion by the end of 1962. Tb.e IIuinco power plant should come into operation in the latter pa.rt of 1964 . •  &, 'i ( - 3- • The total cost of the first s~a.ge of the Marcapomacocha Diversion Scheme and the\ ,Huinco hydroelectric development is estimated at the equivalent of $~4 million. The Bank loan will cover most of the foreign exchange require- }1ents; Lima Light will finance the remaining costs partly from .earnings and partly from additional share capital and borrowings in the private markets in Peru, Switzerland and other European countries. The Bap.k loan is for a term of 25 yea.rs and bears interest of 6<fo including the 1% commission. which is allocated to the Bank's Special Reserve. Amortiza- tion will begin in September i965. The loan is guaranteed by the Republic of Peru. Grace National Bank of New York is participating in the loan, without tri.e. World. Bank's guarantee, taking part of the first maturity which falls, due in September 1965 . • Including today's loan for electric power, the World Bank has· made loans totalling $76.5 million in Peru for port development, highway maintenance, irrigation and agriculture, a cement plant, and for an agricultural and industrial credit program. After having been approved by the Bank's Executive Directors, the lo~ documents were signed by His Excellency Pedro G. Beltran, Prime Minister ~d Minister of Finance of Peru, on behalf of the Republic of Peru and by Sr. Hernando de Lavalle, President of the Lima Light and Power Company (Empresas Electricas Asociadas), on behalf of the borrower • • .;