Announcement of Loans Made to Union of South Africa on August 28, 1953

•." (( c:;1 IN1l'!RNA'TIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT • FOR THE PR!$ PRESS RELEASE NO. 332 FOR IMMEDIATE RELEASE August 28, 19$3 TM Internat,fonal Bank for Reconstruction and Development today made · two loans totaling ·~\l6o million to help f.inance programs being carried forward 1.} in the Union of South Africa to meet needs for expanded transportation service and increased supplies of electric power. One loan i3 of $30 million to the Union Government. It will be used chiefly to help pay for· imports of ecJuipment and goods needed to enlarge the carrying capacity ~ and extend the serVices of South African railways. The other loan, also or $30 million, is to'the Electricity Supply Cormni1ssion (ESCOM), an autonomous state corporation., and is guaranteed by Ji /! /! the Uftion Goverrunent. It will be used for part of the imports needed in a • program designed to increase ESCOM • s power-generating capacity by 8QI during ,the, period from 1952 through 1958. Both loans carry interest of 4-.3/!t', and are f6r a term of 10 years. Amortization payments on the ESCOM loan will begin on September 15, 19'5, and on the railway loan on November 15 1 19$$. In'/ the postwar years, rapid growth. of secondary industry and the opening up in the Orange Free State or new gold-mining operations have put a heavy strain on public . service~ in the Union of South Africa, and especially on the railway system and the power supply. The tonnage ca?Tied by. the railways has increased by ~n@-third since 1947, and ESCOM' s sales of electric power have grown even more. The South African railways $re operated by the Railways and Harbors Administration, a depart~ent of the Union Government. The Administration•s •  0 .. 2 - • pro((i:i'm for expanding railway serv:Lca consists ~':..:::>·'I_) or the addition o! new 1ocomot,ivf3s and rolling stock, the enlargement of workshops to assure adequate maintenance or equipment, and improvement of the pemanent way and other traffic facilities to increa~~;/e:arrylng capacity. () In 1951., the International Bank l~nt the Union Government $20 million for railway imports needed during two years of the program. This loan was /; completely disbursed by mid-19S.3. The ;loan of $.30 million announced today is in~rded to help finance imports needed fr~m mid-19S3 to mid•i7~~, and will be // applied principally to the purchase of steam and electric loecmotives, freight cars and rails. It should be of prompt assistance in enabling the Railways Administration to meet the increase of 9 P-J.llion tons of traffic which it expects during the next two years. The Electricity Supply Commission supplies about three-quarters of the • electricity consumed in the µnion of South Africa. Despite the rapid expinsion of power facilities since the 1t1~r., ESCOM has been unable to keep pace ,with ,'-': demand. Shortages are particulia..~ly acute on the Rand, which includes established and new gold fields and the industrial complex of the Transvaal. Here and elsewhere, the supply of power has been inadequate to meet demands for new or·· indreased serVi.ces and in some cases FSCOM has had to ration or reduce supplies to existing customers. ESCOM is engaged in a construction program which by 1958 is intended to add 1.• 4 million kw or generating capacity to' existing capacity of 1.6 millicn. Additions are to be made to 6 existing power stations., and 8 new stations are to be constructed at poirits throughout the Union. New substations and the construction or 900 mil~~ or major transmission lines are also provided for. In January 19Sl., the International Bank lent F.SCOM $30 million for imports  ,. - 3- • needed ovi>..r a two-year period for its expansion pr Jam, and it is expected that this loan will be completely disbursed by next month. The loan of $30 million announced today will help finance the import pf equipment needed for the continuation of this program. It will be applied particularly to the purchase or turbo-generators, boilers,, structural materials and .electrical supplies which include·· switch gear, transformers and cable. Most of the goods to be imported for the railway and power programs will be purcha.sed in the United Kingdviii. :r::-~ !,~!vn or South Africa, however, is able to serVice debt as readily in dollars as in any other currency, and the loans announced today will consist mainly of dollars, as was the case with the two earlier loans. After approval by the Executive Directors of the International Bank, the • loan documents were signed at the Bank's headquarters in Washington on August 28 • Ambassador . G. P. Jooste, oh\,behali' -~ ·: of the Union of South Africa, signed the \\ Agreement for the railway loan and the Guarant,ee Agreement for the electric power loan. Mr. A. J. van Lingen of tlie New York Agency of Barcl~y•s Bank (Dominion, Colonial and Overseas}, on behalf of ESCOM, signed the Agreement for the power loan. Mr. Eugene R. Black, President, signed the documents on behalf of the International Bank for Reconstruction and Development • •