Announcement of Forty-Two Million Loan for Electric Power in Panama on March 11, 1970

lNTcR~~ATIOl\lAL BANK FOR • RECONSTRUCTION J\.N[) DEVELOPMENT I' // 1818 H STREET, N.W., WASHINGTON D. C. 20433 TELEPHONE: EXECUTIVE 3-6360 Bank Press Release Ho. 70/13 Subject: $42 million loan for March 11, 1970 ~lectric power in Panama Panama wiJ.1 underta~e its first large hydroelectric project with the assist- ance of a World Bank loan of $42 million. The Bayano project, together with other installations to be financed, wi.11 :::M 196 megawatts, more than doubling the generating capacity of the country's public power supply. Most of the addi- tional power will be fed into the Metropolitan System serving Panama City and Colon. Provision is als~ made to increase supplies to rural consumers. The loan will be made to Instituto de Recursos Hidraulicos y Electrificacion (IRHE) and will be guaranteed by the Republic of Panama. It will be for a term 1 • of 25 years, including 6 years of grace, and will bear interest at the rate of 7% per annum. Security Pacific National Bank, Los Angeles, and The Northern Trust Company, Chicago, are participating in the loan, taking $150,000 of the first maturity. Apart from the Canal Zone which has its nwn power supply, Panan1a's total generating capacity is about 155 MW. IRHE now generates about 50 MW and the rest is owned and operated by 1-'rivate companies. IRHE's ent.ry into the electric power sector began in 1962 when the World Bank made a loan ,of $4 mil• lfon for the 6-MW La Yeguada hydroelectric plant in the Central" Prov!inces and for diesel units and distribution expansion. The implementation of the project now being financed will convert IRHE from a small rural-oriented utility into the major electric power entity in Panama. It now has the exclusive right to construct and operate all new sources of generation in the country, selling • power wholesale to private retailers • The project being assisted by the Bank loan constitutes the major part of IRHE's expansion program for the eight years 1969 through 1976. It consists /more Bank Press Release Nn. 70/13 - Panama-Power - 2 - of the c"nstru.~tion of the first stage of the Bayano hydroelectric development which includes the construction of a main dam and auxiliary dam, a powerhouse • with two 75-MW units, a SO-mile traDSmission line to PAnama City and a receiving substation; the installation of a 40-MW steam unit at the Las Minas plant on the Atlantic Coast, together with a 34-mile ~~ansmissi~n line to Panama City; 6 MW of additional diesel capacity for the Central Provinces and the western part of Panama Province, including substation facilities; expansion of isolated distribution systems including the addition oI small diesel units during 1970-72; a comprehensive survey of future electric power development, and overseas training for IRHE's staff. The total estimated cost of the project is equivalent to $~ 8.3 millfon. 1 The Bank loan of $42 million will cover the foreign exchange requirements. The re- maining costs will be met by the Government and by IRHE from its own resources. • The annual growth rate of power sales in the Metropolitan System has averaged 10% for about 20 years. Future demand for power in the System will b~, tmet by IRHE. The private company serving the Metropolitan. System and the Panama Canal Company serving the Canal Zone will be IRHE's two main wholesale customers. Until recently the connection between the Canal Zone and the Metropolitan System was primarily for the exchange of emergency power but the Canal Zone has recently signed a 25-year contract with IRHE to purchase 30 MW from its Las Minas plant. IRHE serves some 19,000 rural consumers in. about 50 different locations thr~ugh small isolated plants as well as the Central Provinces and Panama West. IRHE intends to co11nect the latter regions to the Me~ropolitan System by transmission lines in 1975 when demand will have increased and the Bayano plant is in c.peration • - 0 - •