Announcement of World Bank Lends Twenty-Five Million Dollars to Peru for Power Engineering Project on June 25, 1981

' . FOR IMMEDIATE RELEAS·E . • world Bank 18'18 H Street. N.W., Washington, O.C 20433, U.S.A.• Telephone: (202) 477-1234 BANK NEWS RELEASE NO. 81/118 June 25, 1981 WORLD BANK LENDS $25 MILLION TO PERU FOR POWER ENGINEERING PROJECT The World Bank has approve~ a $25 million loan to Peru· to help finance a power engineering project that will strengthen the nationa1 electric power planning capa- bility and assure expeditious preparation of power projects to reduce dependence on expensive thermal generation. The Bank loan is made to Empresa de Electricidad del Peru', S.A. (ELECTROPERU), the national power company which is responsible for developing power generation projects. ELECTROPERU will relend part of the proceeds to Empresa Minera del Centro del Pertf (CENTROMIN) ($3 mi 11 ion), Energ(a Hydroel/ctrica Andina (HIDRANDINA) ~2.6 mill ion), and ELECTROLIMA, the Lima Power Company ($900,000). In spite of its enormous hydroelectric potential, Peru now faces the possible need to install thermal generation plants in the mid-1980s to meet growing demand for power. The main purpose of the project is to accelerate studies of hydroelec- tric projects so as to minimize the need for significant new thermal generating • capacity in PerG. This would, in turn, curtail the use of expensive petroleum derivatives for electricity generation. The power engineering project includes studies for 12 hydroelectric projects with a total generating capacity of about 1,100 megawatt (MW) and a transmission line and thermal plant. It also includes a review of the feasibility study of the Olmos power and irrigation project. Nine of the 12 hydroelectric projects to be studied, with a generating capa- city of about 800 MW, will serve the Central-North system. Two others, Molloco (200-,300 MW) and the Ri"o Chili reinforcement, will serve the southwest, and Quishuarani (30 MW) is located in the southeast. Another objective of the project is to continue efforts to strengthen the electric power subsector and ELECTROPERU. The World Bank has made five previous loans amounting to $102.5 million for power development in Pero since 1960. Three loans were for hydroelectric projects for the Lima area and two for expansion of the Lima distribution system. The $25 million Bank loan to ELECTROPERU has the guarantee of the Republic of Peru'. It is for a term of 17 years, including 4 years of grace, with interest at 9.6% per annum. • NOTE: Money figures are expressed in U.S. dollar equivalents.