Announcement of Dollar 50 Million Power Loan in Colombia

)' ,.,,,, WORLD • INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT 1818 H STREET, N.W., WASHINGTON 25 1 D. C. TELEPHONE: EXECUTIVE 3-6360 Ba.Lk Press Release No. 62/15 SUBJECT: $50 million power May 23, 1962 loan in Colombia Th¢·world Bank today ma.de a loan equivalent to $50 million in Colombia for a group of projects to further increase the supply of electric power to the capital city of Bogota and the surrounding area. This is the Bank's 20th loan in Colombia, bringing the total lent there to $270 million. Four private banks are participating in the loan, without the world Bank's guarantee, for a total amount of $350,000 representing part of the· first maturity • which falls due in February 1966. The participating banks are the New York Agency of the Royal Bank of Canada, the New York Ag.ency of the Bank of Montreal,The :First Pennsylvania Banking and Trust Company, Philadelphia, and Grace National Bank of New York. The loan was made to Empresa de Energia Electrica de Bogota (EEEB), an autonomous agency, which provides power to the Bogota area. The projects being financed will increase Empresa's hydroelectric and thermal generating capacity by 183,000 kilowatts to 428 ,ooo kilowatts and expand transmission ,,and distribu- tion facilities. This should meet the power requirements of the area until 1967. Bogota, with a population of about 1.2 million, is Colombia's principal center of industry, commerce and governmental administration. Tne demand for electricity in the area has been steadily rising, and power sales have increased • at an ~verage annual rate of about 13% ovel" the past 10 years. The supply of electric power, however,, has fallen behind 4emand, and for several years it has been necessary to restrict residential and in~ustrial consumption.  - 2 - r'"' In 196o, EEB:B began a 10-year exp1311sion program to more than double its - generating capacity and greatly strengthen its transmission and distribution :f'a.cilitj.es. A main feature of the program is the continuing development of the hydroelectric power potential of the Bogota River which, in the first 15f miles after it leaves the Bogota plateau, drops from an elevatj_on of 8,300 feet above sea level to about 2,400 feet. Three plants are already in opera- tion on this stretch of the river. Under the program t,;ro more are being built, and an existing plant has been enlarged. This capacity is complemented by a thermal plant being built near Bogota. Today's loa.n will help to finance the construction of the new Colegio hydroelectric plant, which will have an initial capacity of 150,000 kilowatts; the installation of a second 33,000-kilowatt unit at the Zipaquira thermal power plant; works to complete the Guatavita dam, raising its height to 162 faet and thereby increasing the capacity of the storage reservoir to 345,000 acre feet; and additional pumping facilities at the Muna reservoir, which is • used for daily and weekly regulation of water for the power plants. Along with the increase in generating facilities EEEB will make substan- tial improvements and additions to its transmission and distribution facilities. A part of the loan also will be used for the improvement of transmission and distribution facilities in several nearby towns in the region served by CAR (Corporacion Autonoma Regional de la $a.ban.a de Bogota y los Valles de Ubate y Chiquinquira), an autonomous agency recently established to develop the water and agricultural resources of the plateau north and west of Bogota. A reliable source of power from EEEB will help in the development of the region. • The total estimated cost of this stage of EEEB's expansion program is equivalent to about $74 million. The Bank loan will cover the foreign exchange  - 3 - :..-~ ~.:d.rements and part of the local currency costs of engineering. The remaining local currency costs will be financed by EEEB from its own resources and from foreign and local borrowings equivalent to about $10 million. These borrowed funds will be supplied by a consortium of Colombia..n banks ( up to 50 million pesos) and by the Chemical Bank New York Trust Company, of New York ($3 million). All major contracts Will 'be let through international competitive bidding. The loan is fer a. te:"m of 25 years and bea.:t·s interest at the rate of 5-3/4% annually including the 1% commission which is allocated to the Bank's Special Raserve. Amortization will begin in February 1966. The loan is guaranteed by the Republic of Colombia. Economic, and particularly industrial, growth has been making urgent demands on the supply of electricity in Colombia for more than a decade. The ~ank has • bean lending for the development of electric power in Colombia since 1950; today's loan is its 11th for that purpose and brings total Bank power invest- ment in Colombia to $147 million. Projects financed with the help of the Bank represent an addition of about 750,000 kilowatts -- more than three times the 2~1,000 kilowatts which was the total capacity of public utility companies j,n 1950. Today's loan is the second made by the Bank for E~'s power expansion program; together with the earlier loan it is financing the addition of 300,000 kilowatts of new capacity in the Bogota area. The other loans increased power supplies in Cali, the principal city of the upper cauca River Valley and.a fast growing industrial area; ,in Manizales, the center of Colombia's coffee-growing s.rea; in Bucara.manga, the center of a rapidly expanding tobacco industry; and in Medellin, an important center of textile manufacturing and o"Lher industries . •