Announcement of Eight Million Eight Hundred Thousand Million US Dollars Power Loan in Colombia on June 3, 1963

... \, f WORLD BANK . , INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT 1818 H STREET, N.W., WASHINGTON 25, D. C. TELEPHONE: EXECUTIVE 3-6360 ~ank Press Release No. 63/18 Sub,ject: $8. 8 million power loan June 3, 1963 in Colombia The World Bank today made a loan equivalent to $8.8 million for the continuing development of electric power in the Cauca Valley of Colombia. The loan will help to finance the addition of 60,000 kilowatts o:t· generating capacity, the extension of the transmission system to Buenaventura, Colombia's main Pacific port, the ex- pansion of the distribution system in Cali, and new machinery to mine co1il for the system's thermal plant. Industry and agriculture in the Valley have expanded. so • rapidly that demand for power has grown faster than was anticipated, making it necessary for the authorities to accelerate their power development program. The additional facilities should meet the expected power requirements of the Valley until 1967. Four commercial banks a.re participating in the loan, without the World Bank's guarantee, for a total amount of $400,000 representing the first two maturi tie,s ,/ and part of the third ma.tw. . i ty which fall due between February 1966 and February 1967. The participating banks are The Bank of California, San Francisco; Wells Fargo Bank, San Francisco; the New York Agency of The Royal Bank of Canada; and The First Pennsylvania Banking and Trust Company, Philadelphia. The loan was made jointly to Corporacion Autonoma Regional del Cauc~ (eve), an autonomous regional organization responsible for the economic development of the Cauca Valley, a.nd Central Hidroelectrica del Rio Anchicaya Limitada (CHIDRAL), the • principal. supplier of bulk power in the Valley and in which CVC holds the majority of she.res.  - 2 - i Since 1950 the population of Cali, the commercial and industrial center of the Cauca VaJ.ley, has risen from 243,000 to about 600,000, out of a total of 1.7 million for the Valley as a whole. Industrial expansion in the area of Cali and • its suburb, Yumbo, has also been exceptionally rapid and now accounts for over half the sales of electric power. Demand for power has been increasing at an annual average rate of 16% and, considering the new industrial plants being built, the expansion of transmission and distribution facilities and normal increases in commercial and residential consumption, it is expected to continue to increase at this rate until 1970. New industrial consumption will come frc!~ !:!. paper mill, a, cement plant whose capacity is being doubled, a new rolling mill for finished aluminum products, a cable manufacturing plant, a citric and acetic acid plant, a new sugar mill and a small steel foundry. Agriculture, too, will require mart~ electricity as pumping plants for irrigation are built. landowners who have adopted modern agricultural methods. The Cauca Valley is one of the most fertile regions in the world -- a fact impressively demonstrated by More land is being • crought under cultivation by reclamation and flood prevention works being con- structed. by eve and which will be supplemented by irrigation works. Bank lending for the development of.electric power in the Cauca Valley be- gan in 1950 and, with today's loan, comprises five loans aggregating $44,630,000. At the time of tne first loan, generating capacity was 16,000 kilowatts and the power market was limited to the Cali-Yumbo area, as it remained until the end of 1961. When the current project is in operation, and transmission and distribution 11orks now under way are completed, the CVC/CHIDRt\L system will have a generating capacity of 255,000 kilowatts and a transmission network serving many towns and villages in the Valley, altogether an area of some 1,750 square miles. Earlier Bank loans assisted in financing the 64, 000-1,;:ilowatt Anchicayc:;1; :~.7.'"dro- • electric plant and the 58,000-1:ilowatt Yumbo steam station. Part of a loan made ' • - 3 - in 1960 is assisting in the construction of the Calima I hydroelectric plant which was designed for four 30,000-kilowatt units, of which two were to be installed initially. Because of the rapid growth in power demand, the third and fourth units a.re being installed with the assistance of today's loan to bring Calima I to its full capacity of 120,000 kilowatts by 1965. The Bank-financed project also includes an extension of the transmission system to Buenaventura; improvements in the distribution system in Cali; the purchase of new machinery for two coal mines CHIDRAL found it necessary to ac- quire and operate in order to ensure coal supplies for the Yumbo thermal station; and the services of engineers to plan for further development of the CVC/CHIDRAL pouer system, including designs for Calima II power station to be built downstream from Calima I and preliminary studies for the Salvajina hydroelectric project. • The total cost of the project is estimated at the equivalent of $11.2 mil- lion. The Bank's loan will cover the foreign exchange requirements and part of the local currency costs of engineering; the remaining costs will be met from CVC/CHIDRAL's own resources. The generating units have been procured through international competitive bidding and all other major equipment will be obtained on the same basis. The Bank loan is for a term of 20 years and bears interest at the rate of ~a/o per annum, including the 1% commission which is allocated to the Bank's Special Reserve. Amortization will begin in February 1966. The loan is guaranteed by the Republic of Colombia. This is the Bank's twenty-first loan in Colombia and brings the total lent there to $278.9 million . •