Announcement of Philippines to Revitalize Rural Electricity System on February 26, 1992

FOR IMMEDIATE RELEASE World Bank 1 1 8 H Street, N.W., Washington, D.C. 20433, U.S.A. * Telephone: (202) 477-1234 IBRD News Release No. 92/45Asia Contact: Pat Sison (202)458-0344 PHILIPPINES TO REVITALIZE RURAL ELECTRICITY SYSTEM Washington, D.C., February 26, 1992 --- The Philippine Government's effort to improve the efficiency of rural power utilities will receive assistance from the World Bank in the form of a $91.3 million loan approved yesterday. The loan will support a project to promote the institutional reform and development of the National Electrification Administration (NEA) and Rural Electric Cooperatives (RECs) as well as finance a selected investment program. The NEA was established in 1969 to serve as the energy sector's core agency, overseeing policy and investments for the nation's RECs. The system developed a number of problems, however, and a review conducted by NEA in 1988 indicated that of 120 RECs, only 46 were considered financially viable. NEA itself manifested institutional problems that rendered it less than effective. The Rural Electrification Revitalization Project is comprised of two components. An institutional development component, for NEA and the RECs, which includes technical assistance and training and an investment component. Under the investment component, NEA will on-lend funds to about 54 RECs to support investments including: core system rehabilitation; system extensions; and system improvements to increase the reliability of service. Loan conditions established by NEA are designed to encourage operational and financial reforms among the RECs. The project is expected to stimulate economic activity and employment opportunities in the rural areas by providing an improved, reliable supply of energy. The quality of life in rural areas, particularly for women, will also improve through a wider availability of home lighting and refrigeration. The total cost of the project is $118.5 million. The United States Agency for International Development (USAID) is providing $9 million in parallel financing for facilities, technical assistance and training for the institutional development component. NEA is providing $9.6 million and the RECs are contributing $8.6 million. The loan is repayable over twenty years, including five years of grace at the World Bank's standard variable interest rate, currently 7.73Z NOTE: Money figures are expressed in U.S. dollar equivalent.