Announcement of Twenty-Five Million US Dollars of Loans in South Africa on December 1, 1961

FOR IMMEDIATE RELEASE WOIILD INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT 1818 H STREET, N.W., WASHINGTON 25, D. C. TELEFHONE: EXECUTIVE 3-6360 rress Release No. 724 SUBJECT: $25 million of loans December 1, 1961 in S0uth Africa The World Bank today made two loans totaling the equivalent of $25 million Y: !or the improvement and expansion of electric power facilities and railway~ in routh Africa. A loan of $11 million to the Government will provide part of the foreign exchange required for a program being carried out by The South African Pailways and Harbours Administration. The second loan., of $14 million to The Flectricity Supply commission (ESCJM), will assist the expansion of the gener- • ~ting and transmission system which serves the country's most heavily indus- i.r.ialized and mining area.s_ .. other investors are participating in the $11 million railway loan, without the world Bank's guarantee, for a total amount of $1,966,000 representing the first three maturities and part of the fourth maturity which fall due between December 1, 1963 and June 1, 1965. Among the participating banks are the N'e\1 York Agency of Ba.relays Bank D.C .o.; Gira.rd Trust Corn Exchange Bank, Phila- delphia; Morgan Guara.nty Trust Company of New York; Banlt of' Ameri~a National Tru.Bt. and Savings Association, San Francisco; Bank of Montreal; Fidelity-Philadelphia ~1rust Company; The . First Pennsylvania Banking and Trust Company, Philadelphia; und The Riggs National Bank of Washington, n.c. A number of banks are also partJcipating in the $14 million electric power :Loan, without the World Bank's guarantee, for a total amount o.f $1,925,000 rep:r...e- •• \\ ~enting the first two maturities and part o.f the third maturity 'Which fall due -:·,t~+.ween December 1, 1963 and December 1, 1964. Among the participating banks a.rt::  - 2 - • 1 i-;ht::.? Mew York Agency of Barclays Bank n.c.o.; Gira.rd Trust corn Exchange Ba!.1~., Philadelphia; Bank o·f' Montreal; Fidelity-Philadelphia Trust company; The Firat Pennsylvania Banking and Trust Company, Philadelphia; and The Riggs National Bank of Washington, n.c. $11 million loan for the south African Railways The south African Railways and Harbours Administration, a government depart- ment under the Ministry of Transport, operates the railway system, the harbors, airways and some road transport services. Since 1947 a large program of rail- way expansion and modernization has been under ·way and betveen l.950 atJ.d 1960 the equivalent of about $1.4 billion was invested in it. Earlier Bank\']..oans total- ing $136.8 million assisted the program. It included the construction of new lines, an increase in line capacity by double-tracking, the addition of rolling utock, including locomotives, the electrification or dieseL:~.~ation of certain • lines and other improvements. Further investment in the railways is essential to economic growth in South Africa. About 80% of the freight carried by the railways is heavy bulk traffic between tile mining areas in Trans-yaal and Natal, the industrial area of Witwatersrand, and various agricultural areas and the ports. The railways provide the most economical means of transportation for virtually all this traffic. The current expansion program for the 1960-65 period follows the sa.rne ~eneraJ.. pattern as the earlier programs; it is adding capacity to meet the ~emands for service and is achieving economies through the elimination of traffic bottlenecks and through. further electrification and dieselization. The estimated cost of the five-year program is equivalent to $840 millioll, :_che Bank loan of' $11 million will cover part of the foreign exchange require- ments for two years, 1961/62 and 1962/63 during which the total investment will •  - 3 - • ~~ t35(J million. All orders for imported equipment have already been placel. en the basis of international competitive bidding. ~14 million loan to The Electricity Supply Commission (ESCOM) ESCCM, an autonomous government corporation, provides about three-quarters of all the electricity used in south Africa. over the last ten years it haa engaged in an extensive expansion program to meet the demand for power -- its sales of energy have increased at an average annual rat~ of B.Bojo. Two Bank loans totaling $60 million assisted this expansion. Its present program, which covers the per'iod 1960-64 inclusive, will cost the equivalent of $274 million. !t provides for the addition of 1,385,000 kilowatts of new generating capacity, an. increase of nearly 40%, and the construction of about 3,550 circuit miles of transmission lines. ESCOM's operations a.re divided into seven regional undertakings which • serve different parts of the country. The Cape Northern-Rand and orange Free State-Eastern Transvaal system for which the loan ~11 be used is by far the largest of the ESCOM group. It account~ for four-fifths of ESCOM's sales of cn~rgy and serves the principal industrial and mining areas of South Africa. !]:he Rand and Orange Free State ar~a includes the heart of the gold mining industry as well. as the bulk of the country's manufactur.ing industries. The Kimberley diamond mines are in the Northern Cape area where iron ore, asbestos, ~-imestone\ and manganese a.re also produced. In Eastern Transvaal new gold mine~ are being opened up and, because of its larg~ coal deposits, new industries a.re 'being established as well. ESCOM' s expansion program for this syatem calls' for the addition of 370,000 kilQwatts of new capaci1;y through the construction of the new Komati • power station in Eas+:0rn Transvaal with an initial capacity of 750,000 kilowatt.::1,  - 4 - • • cJ.:i-iJ; t.ae ex11ansio:a of the High.veld power station in the Orange Free state ·h:l the addition of generating units w.l:th 120,000 kilowatts of capacity. The P!ogra.m also includes the construction of 31~· circuit miles of high voltage transmission lines with associated sub-stations. The total cost of these works is estimated at the equivalent of $122.5 million. The Bank loan of' $14 million will provide the foreign exchange required from July 1, 1961 through 1962. All imported equipment has been or will be purchased on the basis of international competitive bidding. Terms of Loans Both loans are for a term of 10 years and bear interest of 5-3/4% per annum including the 1% commission which is allocated to the ~ank's Special Reserve. Amortization of the loans will begin in December 1963. The loan to The Electricity Supply Commission is guaranteed by The Republic of South • Africa • •