Peru - Power Engineering Project

Document of The World Bank FOR OFFICIAL USE ONLY FILE COPY Report No. P-3075-PE REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE EMPRESA DE ELECTRICIDAD DEL PERU, S.A. WITH THE GUARANTEE OF THE REPUBLIC OF PERU FOR A POWER ENGINEERING PROJECT June 1, 1981 This document has a restricted distribution and may be used by recipients only in the performance of their ofAicial duties. Its contents may not otherwise be disclosed witbout World Bank authorizstion.  CURRENCY EQUIVALENTS The exchange rate is being adjusted daily roughly in line with the differential between domestic and international inflation. The exchange rate and currency equivalents in 1980 and as of April 30,1981 were as follows: Currency Unit = Sol (SI.) Calendar 1980 April 30, 1981 US$1 S I/. 288.65 S/.404.86 S/.1 = US$ 0.0035 US$0.0025 S/. 1,000 = US$ 3.46 US$2.47 FISCAL YEAR January 1 to December 31 ABBREVIATIONS CENTROMIN Empresa Minera del Centro del Peru, S.A. (Central Peru Mining Company) COFIDE Corporacion Financiera de Desarrollo (State Development Finance Corporation) DGE Direccion General de Electricidad (General Directorate of Electricity of the Ministry of Energy and Mines) ELECTROLIMA Lima Power company ELECTROPERU Empresa Publica de Electricidad del Peru, S.A. (National power company) ERP Economic Recovery Program GW Gigawatt (1000 MW) HIDRANDINA Energia Hidroelectrica Andina, S.A. (Andean Hydroelectric Energy Company) IDB Inter-American Development Bank MEM Ministerio de Energia y Minas (Ministry of Energy and Mines) MW Megawatt (1000 KW) PPAR Project Performance Audit Report PETROPERU Petroleos del Peru, S.A. (National petroleum company) UNDP United Nations Development Program USAID United States Agency for International Development  FOR OFFICIAL USE ONLY REPUBLIC OF PERU POWER ENGINEERING PROJECT LOAN AND PROJECT SUMMARY Borrower: Empresa de Electricidad del Peru, S.A. (ELECTROPERU). Guarantor: Republic of Peru. Beneficiaries: ELECTROLIMA, Empresa Minera del Centro del Peru, S.A. (CENTROMIN) and Energia Hidroelectrica Andina, S.A. (HIDRANDINA) would, in addition to ELECTROPERU, carry out studies under the project. Relending Terms: ELECTROPERU would on-lend part of the proceeds of the loan to CENTROMIN (US$3.0 million), HIDRANDINA (US$2.6 million) and ELECTROLIMA (US$0.9 million) on the same terms and conditions as those of the proposed loan. Amount: US$25.0 million, equivalent. Terms: Repayable in 17 years, including 4 years of grace at 9.6 percent interest per annum. Project Description: The objectives of this operation are: (i) to assure the adequate and timely preparation of power projects (mostly hydro), whose construction must begin within the next two to four years to meet accelerating power demand in Peru with a minimum of dependence on thermal generation; and (ii) to strengthen power sector planning capacity. These objectives would be accomplished through: (a) the preparation of prefeasibility and feas- ibility studies as well as bidding documents and final design, as required, for 12 hydroelectric projects. The feasibility of the proposed Olmos power/irrigation project would also be reviewed; (b) the completion of the feasibility study and preparation of bidding documents for a trans- mission line serving northern Peru and prepara- tion of a feasibility study and bidding docu- ments for an oil-fired thermal generating plant of up to 200 MW for Lima; and (c) technical assistance to improve the planning capability of the principal sector entity - ELECTROPERU. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  - ii - This project involves no special technical risks but its prompt execution does depend on the success of measures now being taken by the Government to improve the technical and management capacity of ELECTROPERU. Government efforts will be supplemented by technical assistance to be provided under the proposed Project. Estimated Cost: The estimated cost of the project, exclusive of taxes and duties, from which the project would be exempt, is as follows: Local Foreign Total --------US$ millions