Announcement of Fifteen Million US Dollars Power Loan in Peru on November 22, 1963

l (' \_} 1· INTERNATJONAL BANK FOR · • RECONSTRUCTION AND o·EVELOPMENT 1818 H STREET, N.W., WASHINGTON D. C. 20433 TELEPHONE: EXECUTIVE 3--6360 B.3?J.k Press Release No. 63/51 Subject: $15 million power :b,eaiQer 22, 1963 loan in Peru The World Bank today ma.de a. loan equivalent to $15 million to Lima Light and Pt')w-er Company (Empresas Electricas Asoc:Ladas) of Peru. The loan will help to fl!l.a.tlce a program for expanding the supply of electricity in the Greater Lima arec, I and will also help pay the cost of a related scheme for the use of water resources. ,, ,• As a result of the new·\works, Lima. Light will add 120,000 .kilowatts of generatirt.g \ cap.city to its system; \\in addition, there will be a substantial increase in the ou-t,i:u.t of existing power i?lants, more drinking water f~r Lima, and et!ough water • (' ' Ji fo"': the irrigation of a s:\i.zable tract of arid land south of Lima. Ten private banks are participating in the loan to the. extent of $615,000, r,?presenting the first three maturities and part of the fourth maturity which fall d.ue between February 1967 and August 1968. The participating banks are as follo~; Bank of America National Trust & Savings Association, San Fran,~isco Girard Trust Corn Exchange Bank, Philadelphia Irving Trust Company, New York Wells Fargo Bank, San Francisco Fidelity-Philadelphia Trust Company The Bank of California National Associa.tion, San Francisco The Philadelphia National Bank The First Pennsylvania Banking and Trust Company, Philadelphia Grace National Bank of New York Crocker-Citizens National Bank, San Fr~ncisco Lima Light and Power Company is a. privately-owned public utility corporation. Greater Lima, its service area, has a population of over two.million, or a.bout one- fifth of Peru's total, and is the administrativ~, commer~ia.l and industrial centP.r • of the country. The company's power sales have been increasiiig a"t a.n average a.ru::.nal  - 2 - rate of about 1(1/o; more than half the sales are to industrial and commercial con- • '.• \\ sumers. The industries served include plants producing cement, rubber goods, vegetable oil, textiles, paper, metal products, fertilizers and fish meal. To meet the rapidly rising demand for electricity in the Lima. area, Lima Light undertoo!{ a long-range program in 196o to provide about 28o,ooo kilowatts of new capacity. The main items in this program were· the Huinco hydroelectric project, which will ultimately provide 240,000 kilowatts of capacity, and the a3sociated Marcapomacocha water diversion scheme. A Bank loan of $24 million \tffi.S made for the first stage of these projects in 196o. It included structures to ~ollect water from the Marcapomacocha Basin and a six-mile diversion tunnel -ch-.c-:>uga."'1 the Andes mountain range to bring the waters to the Santa Eulalia Basin JD the western side. The Marcapoma.cocha Diversion Scheme came into operation in • 1962; the Huinco hydroelectric plant, located on the Santa Eulalia River about 4,) miles northeast of Lima, w.tll come into operation in 1964 with an initial capa- ~l ~y of 120,000 kilowatts. Because power demand has increased at a faster rai, than was expected in I 1~60, Lima Light has accelerated its construction program a.nd the second stages ,)f these projects, for which today's loe.n was mad.e, are being unclertaken about a year earlier than had been planned. When they are completed, the generating capacity of the company's system should be adequate to meet demand until 1969. In the second stage of the Ma.rcapoma.cocha Diversion Scheme, additional canals will be built to divert the natural outflow of six lakes to the existing tuanel through the mountains, and dams will be built to regulate ~he outflow of tne two largest of these lakes, Marcacocha and Antacoto •. The additional water t.~1·•1s made available will increase generation in Lima Light's. hydroelectric power plants by about 500 mill:!.9n kilowatt hours annually. It will also increase the • , ,• . . . . ,1• • •  - 3 - • drinking water"supply to Lima and make possible the irrigation of 12,350 acres of latd south of Lima. Two more generating units will be installed at the liuinco pov.1'!r station to bring it to its full capacity of 2J-1-o, 000 kilowatts. Small ·~eser- VJirs will be bu:i).t at the intake of the plant ~nd at the tailwater to provide II JI d'lily regr.llation of the water flow. The plant 1/~nd. the receiving substation in Lima. will be equipped with additional transformers and associated equipment. Bank funds will also be used for the strengthening and expansion of the Lima dis- tribution system during the yea.rs 1963 to mid-1966. Included in t~is expansion will be connections for 45,000 new customei:s. The total cost of the p:r-ojects is estimated at the equivalent of $30 million. Tbe: Bank loan will cover most of the foreign exchange requirements and the remain- ing costs will be met by Lima Light and Power Company from earnings and from othc~ • borrowings • The Bank loan is for a term of 25 years and bears interest at the rate of 7·1/1;!/a per annum including the 1% commission which is allocated to the Bank's \\ Special Reserve. Amortization will begin in Fel:ruary 1967. The loan is guaranteel 'ty the Republic of Peru . •