Announcement of Philippines Energy Investments Aid Economic Recovery on February 5, 1990

FOR IMMEDIATE RELEASE World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A.* Telephone: (202) 477-1234 BANK NEWS RELEASE NO. 90/49 Contact: Richard Kollodge (202) 477-4507 PHILIPPINE ENERGY INVESTMENTS AID ECONOMIC RECOVERY WASHINGTON, February 5, 1990 -- The Philippines will give industry and commerce a boost by alleviating energy shortages and reducing production costs. The World Bank is supporting the government's efforts with three loans totaling $390 million. Expensive and insufficient energy resources are constraining the growth of Philippine industries, businesses and transportation systems, all of which play an important role in the government's economic-recovery program launched in 1983. Between 1986 and 1988, demand for energy grew about 40 percent. And as economic growth continues, demand--especially for electricity--is expected to increase rapidly. One World Bank loan, for $200 million, will help finance power-expansion investments by the Philippines' National Power Corporation (NPC). A 300-megawatt coal-fired power plant will be built at Calaca, about 75 kilometers south of Manila, and a total of 965 megawatts of capacity will be added to plants in Luzon, Visayas and Mindanao. Geothermal-energy resources will also be developed, other power plants will be upgraded, and new transmission lines and facilities will be built. Another loan, for $150 million, will help the Philippine National Oil Company (PNOC) participate in geothermal-energy development and remove bottlenecks in the nation's refineries. The loan will also help PNOC streamline its operations and increase its capacity for planning and implementing energy-development projects. The third loan, for $40 million, will support the efforts of several government energy agencies to strengthen their investment, procurement and monitoring operations. Key investments to be made under the project will first be cleared by the government and the World Bank to make sure they have no adverse impact on the environment. Investments supported by the three loans are expected to result in an additional 2,260 megawatts of generating capacity. Of that total, about 610 megawatts will be provided through geothermal sources. The World Bank loans are for 20 years, including five years of grace, with a variable interest rate, currently 7.75 percent, linked to the cost of the Bank's borrowings. They carry an annual commitment charge of 0.25 percent on the undisbursed balances. Note: Money figures are in U.S. dollar equivalents. 0