Announcement of Algeria to Increase Efficiency in Power System on July 1, 1988

FOR IMMEDIATE RELEASE World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A.• Telephone: (202) 477-1234 BANK NEWS RELEASE NO. 88/106 Contact: Fawzi Rihane (202) 473-2675 ALGERIA TO INCREASE EFFICIENCY IN POWER SYSTEM WASHINGTON, July 1, 1988 -- Algeria will use a $160 million World Bank loan to strengthen the country's power system and financially restructure SONELGAZ, a government-owned power company, to make the utility a more viable and efficient entity. The project will assist SONELGAZ in its institution-building efforts, improving management, planning and engineering capabilities. It will also support the implementation of major investments in the transmission network aimed at improving Algeria's power system. The recent decline in hydrocarbon revenues in the Algerian economy has underlined the need to increase efficiency in the energy sector. Over the last year, the government has embarked on a far-reaching program of financial and institutional reforms to improve public enterpise efficiency in the energy sector. SONELGAZ is one of the largest and most important public enterprises in the country and the project is part of this overall effort to improve the public sector. During the 1970s, the Bank made two loans to Algeria's power subsector totaling $96 million. The World Bank loan is for 15 years, including five years of grace, with a variable interest rate, currently 7.72 percent, linked to the cost of the Bank's borrowings. It also carries an annual commitment charge of 0.75 percent on the undirbused balance. NOTE: Money figures are in U.S. dollar equivalents. ,r