Announcement of Barbados Gets First Loan for the Power Sector on January 8, 1981

• • • </iJ!. FOR IMME!)IATE, RELEASE World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A.• Telephone: (202) 477-1234 BANK NEWS RELEASE NO. 81/45 January 8, 1981 BARBADOS GETS FIRST LOAN FOR THE POWER SECTOR The ~orld Bank has approved a $6 million loan to the Barbados Light and Power Company, Limited (BLPC) to help finance an expansion program to meet the electricity needs of Barbados up to 1985. With an estimated total cost of $8 mil 1 ion, the project is part of the 1980-85 expan: ion program of BLPC. The total cost of the BLPC's investment program in this period is estimated at $121 .7 mill ion. The provision of an adequate and reliable electricity service is essential to the development of the country's tourrsm and industrial sectors. These sectors provide employment for about 40% of the labor force, account for 24% of the gross domestic product, and contribute about 80% of foreign exchange earnings . • The relatively strong economic growth of Barbados during the past years has produced proportional rapid increases in the demand for electricity; growth in demand is projected at 7.6% per annum during 1980-85. BLPC's gener2tion, transmission, and distribution systems must be expanded and improved to serve this growing market while improving the present quality of service. BLPC, a.utility partially owned by the Government of Barbados and local investors, has an installed generating capacity of 96 megawatts and trans- mission and distribution facilities which presently serve about 67,000 customers, providing service to roughly 90% of the total population of the island. Local ownership of BLPC is expected to increase in 1983 to 61% from the current 31%. The project assisted by the Bank will include, essentially, primary distri- bution feeders, distribution transformers, capacitors, and service connections. It also includes the installation of such equipment, development of an energy conservation program,and a study for generation expansion. As Barbados is located in the Caribbean hurricane beit, the transmission system will be designed to withstand 120-mile per hour winds, to minimize the risk of hurricane damage. The $6 mill ion loan to BLPC is guaranteed by the Government of Barbados. It is for a term of 15 years, including a grace period of 3 years, with interest at 9.25% per annum. Co-financing will be provided for BLPC's investment program • by the Commonwealth Development Corporation ($11 ,7 million), the European Invest- ment Bank ($7. 1 million), the Caribbean Development Bank ($6 million), and the Royal Bank of Canada ($5.9 million). NOTE: Money figures are expressed in U.S. dollar equivalents. I ...  -2- The project will be the World Bank's fourth lending operation in Barbados, since the country bec3me a Bank member in 1974. Previous Bank loans to Barbados total $27 mill ion; they are for education, tourism, and industrial development. Barbados has also benefited from the World Bank's lending to the Caribbean Devel- opment Bank. • • • FORM NO. 1121 {5-76) T ECHN I CAL D A T A £0JECT: Power WuNTRY: Barbados TOTAL COST: $121 . 7 mi 11 ion BANK FINANCING: $6 mill ion for a term of 15 years, including three years of grace, with interest at 9.25% per annum OTHER FINANCING: Internal cash generation, $46.7 million; Suppliers' credits, $33.3 million; Commonwealth Development Corporation, $11 .7 million; European Investment Bank, $7. 1 mill ion; Caribbean Development Bank, $6 million; Royal Bank of Canada, $5.9 mil- l ion; Sale of shares, $5 mi 11 ion IMPLEMENTING ORGANIZATION: Barbados light and Power Company, Limited (BLPC) Garrison Hill St . Mi ch a e 1 , Ba r bad o s , \,/. I • Cable: KILO\.!ATT BARBADOS Telex: 2241 KILO\./ATT WB PROJECT DESCRIPTiON: BLPC's 1980-85 program of capital investments includes: (a) the generation expansion program compri~ing the installation of two low-speed diesel units of 14 megawatts (MW) each in 1982-83, a ~ird 14-MW unit in 5, and commencement of work on a fourth 14-M\.J unit to be completed ,:, 1987;: (b) the i struction of 15 kilometers (km) of 69-ki lovolt (kV) transmission 1 ines: (c) the construe- on of two 69/24-kV substations, the acquisition of one mobile substation, and modifica- tions to existing 24-kV substations; (d) the conversion of about 402 km of 11-kV primary feeders to 24-kV; (e) the distribution expansion program including installation of about 60 megavolt-ampere Gf distribution transformers, 23.8-megavolt-ampere reactive of capa- citors~ and 36,400 meters, 300 street lights and associated additions to the 240-volt secondary circuits; (f) improvements and additions to general property including transpo~ tat ion equipment, buildings, land, and right of way; and (g) studies for generation ex- pansion, tariff structure, energy conservation, and sector regulation. PROCUREMENT: Goods and services to be financed by the Bank will be procured through international competitive bidding (ICB) in accordance with Bank guidelines. Equipment which cannot be grouped into packages of at least $50,000 will be procured on the basis of local competitive bidding procedures that are acceptable to the Bank. A maximum of $250,000 in the aggregate will be procured in this manner. In the case of ICB, domestic manufacturers tendering under international procedures wi 11 re- ce,ive a margin of preference of 15% of cost or the applicable custom duty, whichever is lrn•Jer. Regional preferences for other members of the Caribbean Common Market (CARICOM) will be limited to 15% of the c. i .f. price of non-regional goods or the difference in the amount of tariffs payable by CARICOM and non-CARICOM sup~'iers, whichever is lower. CONSULTANTS: About 75 staff-months of consultant services to prepare the studies for generation expansion, tariff structure, energy con- servation, and sector regulation will be required under the project. ~NOMIC RATE OF RETURN: 13.5% for BLPC's 1980-85 fnvestment program ESTIMATED COMPLETION DATE: 1984 -0-