Announcement of Twelve Million Five Hundred Thousand US Dollars Loan for Electric Power in Nicaragua on June 22, 1960

,. FOR· IMMEDIATE RELEASE JNTEHNATl<J R NSTR 1818 H STREET, N.W., WASHINGTON 25, D. C. TELEPHONE: EXECUTIVE 3-6360 PRESS RELEASE NO. 639 SUBJECT: $12 •.5 million loan for June 22, 1960 Electric Power in Nicaragua The World Bank today made a loan equivalent to $12.5 million for the expansion of' electric power supplies in Nicaragua. The loan will help to finance the construction of the Rio Tuma hydroelectric power project which includes a 50,000-kilowatt power plant and a 75-mile transmission line to bring power to the capital, Managua, and smaller towns en route. The new p01,rer project uill more than double the capacity of the power network serving • lvianagua and the main towns of Nicaragua • The loan was made to the Enpresa Nacional de Luz y Fuerza, an autonomous entity of the Goverrnnent. Empresa ovms and operates the only transmission system in Nicaragua and serves nearly 70% of the urban population. The company itself distributes power ret_rJ,,il in Managua and sells it t-irholesale to municipal and private power companies for distribution in other tot-ms. The basis of the hydroelectric scheme now to be undertaken is the diversion of water from the area of heavy rainfall caused by the trade winds in the Eastern part of Nicaragua across the Continental Divide into the drier Western region and to utilize water flowing dotm the steeper slopes towards the Pacific for hydroelectric power generation; this will provide energy in the more densely populated Hestern parts of the country. The project for which the Bank's loan was made consists of the construction of • a dam on t.he upper Rio Tuma creating a reservoir with a gross storage,, capacity of 410 million cubic meters. The water will then be diverted to the Pacific  - 2 ... • side of the Continental Divide i.nto the Valley of the Rio Viejo to a power- house to be built with 50,000 kilowatts of generating capacity. A trans- mission line 75 miles long will be built from the power plant to Managua together with associated facilities to provide service to towns along the route of the new line. The Bank loan will also help to finance transportation, communications and maintenance equipment which Empresa needs to maintain and operate its power network; f;quip:menti to improve the distribution system in Managua; and mater:tals for the construction of a n~~w administration building. This is the .fifth loan made by the. Bank for the improvement and e~ansion of Nicaragua's power system. The earlier loans totaled i9,55o,ooo; the first loan was made in 1953 for the addition of a 3,000-kilowatt diesel unit to an existing power station in Managua, pending the co!lStruction of Empresa's new • 30,000-kilowatt steam plant, which two further loans helped to fina.'lce • Another loan helped to finance the construction of transmission lines to extend distribution of Fmpresa•s power notth and south to 14 other towns in Nicaragua, qr..d to improve the distribution systems in Managua and these towns. As a result of all this expansion, the power shortage in Managu~ was alleviated and areas outside ¥ianagua for the first time had a reliable supply of power. The Rio Tuma power project is being built to meet Nicaragua 1 s growing demand for power. In the 13 years ending in 1959, Empresa•s power sales have increased at an average rate of about 16% compounded annually. A 10% increase is expected in the coming years and to meet this rise in demand, Empresa must have additional capacity by 1965, the year the Rio Tuma power project is ex- pected to come into operation. Future power requirements can be met by the development or the Matagalpa and Viejo river system, where power plants can • be installed with an est:imated additional capacity of 2001 000 kilowatts; :,in addition, the regulated flow or the '·Viejo River would open up the possibili t:,  '· ..· .... - .. ' - 3 - of irrigating an area of about 74,000 acres. The total cost of the Rio Tuma power PfOJect is estimated at the equiva- lent of (~20.8 million. The Bank loan Hill cover most of the foreign exchange requirements; the remaining costs will be met partly by Empresa from retained earnings and partly by the Goverrunent from its own funds and from a loan equivalent to ::~2 • .5 million recently authorized by the United States Development loan Fund. The loan is for a term of 25 years and bears interest of 6% per annum including the 1% commission which is allocated to the Bank's Special Reserve. Amortization will begin in October 1965. The loan is guaranteed by the Republic of Nicaragua. Grace National Bank of New York and Girard Trust Corn Exchange Bank are • participating in the loan, without the World Bank 1 s guarantee, each taking part of the first _:: . aturi ty which falls due in October 1965. Including today's loan, the Bank has made 11 loans in Nicaragua totaling ~;>35 •.5 million. In addition to financing the expansion of electric power facilities, Bank loans have been used for the development of agriculture, port facilities and highways. After having been approved by the Bank's Executive Directors, the loan documents were signed by His Excellency J. C. H. Rueck, Minister of :Finance, on behalf of the Republic of Nicaragua, and by Sr. Enrique Delgado, Chairman \ of the Board, and Sr. Eduardo Montiel Arguello, General Manager, on behalf of the Empresa .Nacional de Luz y Fuerza • ••