Announcement of Eighteen Million US Dollars Loan for Electric Power in Uruguay on November 25, 1970

~. lNTERN.ATIONAL BANK FOR .RECONSTRUCTION AND' DEVELOPMENT 1818 H STREET, N.W., WASHINGTON D. C. 20433 TELEPHONE: EXECUTIVE 3-6360 Bank Press Release No. 70/67 Subject: $18 million loan for electric November 25, 1970 power in Uruguay The World Bank has approved a loan equivalent to $18 million for the further development of electric power in Uruguay. The loan will be made to the Administracion General de las Usinas Electricas y los Telefonos del Estado (UTE), an autonomous government enterprise responsible for providing electric power and telephone services in Uruguay. The loan will be for a term of 25 years, including a 4-1/2-year grace period, and will bear interest at 7-1/4%. It will be guaranteed by the Republic of Uruguay. UTE now operates generating plants with a total installed capacity of 572 • megawatts and* with the exception of a few private plants owned by large industrial enterprises in Montevideo, supplies all Uruguay's electricity requirements. UTE supplies power to Montevideo, the capital and chief commercial center, and the larger towns 'through an extensive transmission system and to smaller coumunities from diesel units. Between 1950 and 1956 trrE received three loans totaling $64mil- lion from the World Bank for the expansien of its power and telephene systems. During 10 years of severe inflation and economic stagnation in Uruguay begin- ning in the late 1950s, UTE 1 s financial p•sition and operating efficiency were impaired. In 1968 the Uruguayan Gove'.:rnm.ent took drastic measures to reduce in- flation and to c•rrect the distorticns in the country's economy. In 1969 a con- sultant, pr@vided by the Bank, assisted UTE in drawing up a program of essential measures to restore its former position, and as a result the enterprise is much stronger. With the recovery of the Uruguayan economy and the increased tempo of development n~w under way, the demand for electricity will rise and 8TE expects its sales t• inerease at an annual rate of 5 to rt. /mere Bank P.R. No. 70/67 - Uruguay-Power • - 2 - The project being assisted by the Bank loan includes the additional generating capacity in which UTE must now invest to supply the expected demand, which by the end of 1973 will exceed present capacity, plus the most urgent investments which must be made in the distribution network of Montevideo. It includes the installation of a 100-MW unit at the 230-MW Batlle steam plant in Montevideo, and the rehabilitation and extension of the Montevideo distribution system involving about 190 miles of underground cable, about 2,000 miles of low-voltage overhead line and 450 MVA of trans- formers. Also included are the services of consultants to design and super- vise the installation of the steam unit and to assist UTE in planning its expansion program for the next decade and in further improving efficiency. The project is scheduled for completion by December 1973 at a total estimated cost equivalent to $23 million. struction. The Bank loan will finance the foreign exchange requirements, including interest on the loan during con- The remaining costs will be met by UTE. • - 0 - • ·.