Announcement of Philippines Expands Housing Stock and Geothermal Power Supply on June 27, 1988

·' F-OR IMMEDIATE RELEASE World Bank · 1818 H Street, N.W., Washington, D.C. 20433, U.S.A.• Telephone: (202) 477-1234 BANK NEWS RELEASE NO. 88/99 Contact: Leandro V. Coronel (202) 477-3641 PHILIPPINES EXPANDS HOUSING STOCK AND GEOTHERMAL POWER SUPPLY WASHINGTON, June 27, 1988 -- Increased supplies of affordable housing, par- ticularly for the poor, and of geothermal energy will result from two major pro- jects to be carried out by the Philippines. The World Bank has approved three loans totaling $260 million to help finance the projects. Housing Sector Project The Philippine government will use a loan of $160 million for a project designed to further strengthen the country_'s main housing agencies, achieve greater efficiency in using public resources; and build.up the stock of low-cost houses. The project will also promote more prudent financial management of the housing sector; further develop the domestic construction industry; and generate jobs. t Loan funds will be available for imported building materials used for hous- _ing construction; for the mortgage investment program of the National Home Mort- gage Finance Corporation, including low- and moderate-cost houses built by the National Housing Authority and private builders; and if needed, for related tech- nical assistance, equipment, training and studies. Grant funds will be sought for the latter. Besides strengthening institutions and promoting efficient invesment of sectoral resources, the project will add 54,000 new units to the housing stock in the Philippines' urban areas. Nearly three-quarters of these will be available to poor families. Another 9,000 existing dwellings will be upgraded, improving tenure and environmental sanitary conditions. About 120,000 man years' worth of construction jobs will be generated. Four of every ten Filipinos live in cities. This ratio is expected to rise to nearly five out of ten within 15 years. By the year 2000, another 2.5 million new households will have been added to the country's urban areas. The project will be carried out over five years. Financing amounting to $165 million will be provided by the Philippine social insurance system. Bacon Manito Geothermal Power Project The World Bank has approved two loans--$59 million for the National Power Corporation (NPC) and $38 million for the Philippine National Oil Company (PNOC)--to support a project to boost the power supply on Luzon island.  - 2 - The project's main objectives are to develop an existing geothermal steam field at Bacon Manito I and an associated power plant in southern Luzon; map out geothermal resources for use in Luzon; and upgrade and expand NPC's system facili- ties. The project also aims at turning NPC and PNOC into even stronger institu- tions. Eighteen wells will be drilled to delineate or appraise prospective geother- mal sites, additional production or injection wells at the Bacon Manito I field will be built, and a steam-gathering system will be constructed. A power plant, including turbine generators, equipment, and two transmission lines (32 kilometers and 142 kilometers respectively) are also part of the project. Power substations will be rehabilitated and communication links extended. While NPC had sufficient generating capacity to satisfy anticipated demand in the Luzon grid through 1990, the decreasing capacity of a geothermal plant in Tiwi (located in the same region as the Bacon Manito field) and a sharp increase in consumer demand in 1987, require NPC to speed up the development of additional capacity. The project is expected to help meet this demand. PNOC is providing $42.7 million; NPC, $24.3 million; and the Government of Italy, $60 million, to help finance the $227 million project. The two World Bank loans are for 20 years, including five years' 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 undisbursed balance. NOTE: Money figure is in U.S. dollar equivalent.