Announcement of Philippines to Expand Electric-Power Distribution System in Manila on June 12, 1989

FOR IMMEDIATE RELEASE World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A. e Telephone: (202) 477-1234 BANK NEWS RELEASE NO. 89/71 Contact: Leandro V. Coronel (202) 477-3641 PHILIPPINES TO EXPAND ELECTRIC-POWER DISTRIBUTION SYSTEM IN MANILA WASHINGTON, June 12, 1989 -- MERALCO, a privately owned company that distributes electric power in Metropolitan Manila, the capital region of the Philippines, is set to upgrade and expand its subtransmission and substation systems in an effort to improve the quality of service and meet increasing demand. The company will use $64.5 million from its own resources and a loan of $65.5 million from the World Bank to finance the project, designed to strengthen MERALCO's transmission systems, improve communication between substations, and revitalize the company's maintenance capabilities. The World Bank loan will be channeled through the Development Bank of the Philippines. Since 1983, MERALCO (the acronym for the Manila Electricity Company) has substantially expanded its service area by absorbing the systems of failing rural electric cooperatives along its fringes. The company's service area has grown by 172 percent, with the number of its consumers rising from 1.1 million to 1.7 million. To continue improving its technical, commercial and financial performance, the company is implementing a $460 million program to upgrade its subtrans- mission and substation networks and expand its distribution systems. The World Bank-financed project forms a major part of that program. Other components of this program are being financed by KfW of the Federal Republic of Germany, ($36 million), OECF of Japan (about $45 million) and the International Finance Corporation ($32 million). The World Bank loan is for 20 years, including five years' grace, with a variable interest rate, currently 7.65 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 figures are expressed in U.S. dollar equivalents.