Announcement of Five Million Dollars Loan for Electric Power in Nicaragua on October 6, 1966

• 1818 H STREET, N.W., WASH! NGTON D. C. 20433 TELEPHONE: EXECUTIVE 3-6360 Bank Press Release No. 66/56 Subject: $5, million loan for electric ('ctober 6, 1966 power in Nicaragua The World Bank has made a loan equivalent to $5 million for the expansion of electric power generation and transmission facilities in Nicaragua. The loan was made to the E.mpresa Nacional de Luz y Fuerza, an autonomous government corpora- tion, which suppli.es most of the country's public power. The Bank loan will be used mainly to help finance a 15,000-kilowatt gas turbines improvement and expan- si.on of the Empresa's transmission and distribution systems, and engineering ser- vices. • Ten financial institutions are participating in the loan, without the World Bank's guarantee, for a total· amount of $345,000, representing the first four maturities which fall due between April 1, 1969 ,,and October 1, 1970. The partici- pants are Bankers Trust Company, New York; First National City Bank, New York; Meadow Brook National Bank, New York; The American Express Company, Inc., New York; Bank of America National Trust & Savings Association, San Francisco; First Natior,al Bank of Memphis; Crocker-Citizens National Bank, San Francisco; The First Pennsyl- ,,ania Banking & Trust Company, Philadelphia; First Western Bank & Trust Company, Los Angeles; and Marine Midland Trust Company of Western New York, Buffalo. In addition, Bankers Trust Company, First National City Bank, Meadow Brook National fl Bank and Mellon National Bank'& Trust Company, Pittsburgh are purchasing out of portfolio a total amount of $565,,000 of the October 1, 1969 through October 1, 1970, maturities of a $12.5 million loan made to Empresa Nacio[\81 de Luz y Fuerza in • .llme 1960. Bank lending for the improvement and expansion ~f electric power in · Nlcaragua began in 1953, 'when facilities were completely inadequate. Almost  .. 2 - all of the Empresa 's existing generating capacity of 93,000 kilowatts and its trans.. • missioa and distribution networks have been built with the assistance of five earlier Bank loans totaling $22,050,000. Since 1958 generation of power has in- creased from 50 million kwh to 238 million kwh, representing an average annual growth rate of about 25%. This high rate resulted from the development of an integrated transmission network which replaced isolated and inefficient generating sources, and 4 generally high rate of economic growth, particularly since 1961. Power requirements are expected to increase at an average annual ~~te of ab1ut 11% during the next seven years. In erder to meet electric power requirements at times of peak demand and to maintain A prudent reserve, the Empresa will need additional generating capacity with two years. There is also need for expansion of the transmission system. All • the lines are single circuit and some are now operating at the limit of their ~apa .. city. While the Empresa will probably meet its long-range needs for power by con- structing additional hydroelectric plants, the installation of a gas turbine- powered generating set is best suited to its most immediate needs, pending the completion of a study of further hydroelectric possibilities. The gas turbine will be located at Chinandega, an important center of power consumption in the western zone. The transmission system will be strengthened by installing additional high-voltage circuits: 138-kilovolt lines will be built betleen Sebaco and Leon and between Managua and Tipitapa, and 69-kilovolt lines between Managua and Asososca and between Chinandega and the port city of Corinto. Substa- tion capacity will be expanded and distribution lines improved. The loan will also assist in the financing of a new headquarters building for the Empresa and of engineering and management services. The total cost of the project is estimated at the equivalent of $7.3 mil- • lion. The Bank loan will cover the foreign exchange costs. Empresa Naeional de Luz y Fuerza will meet the remaining costs from its own resources. • - 3 - The Bank loan is. for a term of 20 yea.rs and bears interest at the rate of 6% per annum. Amortization will begin April 1, 1969. The loan is guaranteed by the Republic of Nicaragua. Including the loan made touay, the Batik has made 13 loans totaling ~40,750,000 in Nicaragua. Earlier loans were for the development of agriculture, roads.:. electric power and the port of Corinto • • •