Announcement of One Hundred Twenty-Five Million Loan to Mexico for Power in June 22, 1972

..t. ·-- ... ' .• l~TERNATIONAL BANK FOR .RECONSTRUCTION AND DEVELOPMENT 1818 H STREET, N.W., WASHINGTON D. C. 20433 TELEPHONE: EXECUTIVE 3-6360 Bank Press Release No. 72/43 Subject: $125.0 million loan to Mexico June 22, 1972 for power The World Bank has approved a loan equivalent to $12S.O million to Comision Federal de Electricidad to assist in financing the Mexican pc-,er sector's continuing investment program which will enable the sector to meet the expected growth in demand and maintain an adequate standard of service. Since World War II the Mexfa.:: .an economy has evolved from a basic depend- ence on agricultural and mining to a more balanced semi-industrialized econom.y 1 and has maintained an. annual rate of growth of gross domestic product of about • /,' 7% over the past 10 years., A reliable supply of electricity has been among the most important of the basic services supporting this impressive economic perfo·rmance. Sales of electricity have been increasing annually by 13Z in recent yeat·s, almost double the rate of growth of GDP. In recent years aggregate pe,'* load has been growing at a rate of over 12% a year; it reached S,720,000 kilo- watts in 19 70. In 1948 Mexico's installed generating capacity was 1 million kilowatts. Twenty-four years later, it is about 10 million. In the interim, 10 World Ba:ik loans totaling about $580 million helped or are helping to finance the instal- lation of this increase and the expansion of transmission and distributing systems. The present loan will be the fourth to the power sector as a whole; the earlier loans were to separate companies. • The fourth power sector project follows the general pattern of the three previous sector projects in that it consists of the investment program expected to be carried out over a specified period, in this case the three years 1972-74. /more  B:mk P .. R. No. 72/43 ,,._ Mexico -- pCMer - 2 - The total cost of the 1972-74 investment program is estimated at the equivaH lent of $1,368 million with a foreign exchange cost of $650 million. Of thJ:? total some 60% is for generation, transmission and substations, 23% for distribution, 6% fo~ village electrification, 8% for overhead and 3% for frequency unification, consultants and miscellaneous. The World Bank loan to Comision Federal de Electricidad and Nacional Financiera, S.A., with the guarantee of the Govemment of Mexico, is for a period of 20 years including a five-year grace period, at an interest rate of 7\% per annum. Some 24 Japanese·., Luxembourgian and United States financial institutions are participating in the World Bank loan for a total amount of approximately $8 million equiv~lent. They are: Kredietbank S.A. Luxembourgeoise, Luxembourg; Manufacturers Hanover Trust Co., New York; National Bank of North America, New York; Crocker National Bank, San Francisco; Franklin National • Bank, New York; The Daiwa Bank, Ltd., Osaka; Seattle-First National Bank; The Chuo Trust & Banking Co., Ltd., Tokyo; The Industrial, Bank of Japan9 Ltd,. , Tokyo; The Mitsubishi Trust & Banking Corporation, ,'fokyo; The SumitoD> Trust & Banking Co., Ltd., Tokyo; Westem Pennsylvania National Bank» Pittsburgh; Wachovia Bank and Trust Co., N.A., Winston-Salem; The Bank of Kobe, Ltd., Kobe; The Mitsui Trust & Banking Co., Ltd., Tokyo; The Toyo Trust & Banking Co., Ltd., Tokyo; 'l'he Mitsui Bank, Ltd., Tokyo; The Sanwa Bank, Ltd., New York; Marine 1-"'ddland - New York; The Tokai Bank, Ltd., Nagoya; American National Bank and Trust, M:>rristown, N.J., Banca • \ \ Nazionale del Lavoro Holding S.A~, Luxembourg; The Taiyo Bank, Ltd., Tokyot \\ \) and Indus trial National Bank of Rhode Is land, Providence. - 0 -  IN-rERNATIONAL BANK FOR .RFCONSTRUCTION AND DEVELOPMENT 1818 H STREET, N.W., WASHINGTON D. C. 20433 TELEPHONE: EXECUTIVE 3-6360 June 22, 1972 TECHNICAL DATA PROJECT: Power COUNTRY: Mexico TOTAL COST: $1,368 million BANK FINA.TiCING: $125.0 million, 20 years, S years of grace, M interest per annun. OTHER FINANCING: Internally generated funds, local and foreign borrowing. IMPLEl.fENTING ORGANIZATION: Comision Federal de Electricidad and Companhia de Luz y Fuerza del Centro, Rodano 14 - 70 Piso, Mexico S, D.F. • PROJECT DESCRIPTION: 3,015-MW of hydro plant; 3,900-MW of ste•-turbine plant; 6 70-MW of nuclear plant; 500-MW of gas-turbine plant; 150-MW of geothermal plant; 15-MW of diesel plant-; 1,860 miles of 400-KV transmission lines; 1,800 miles of 220-KV transmission lines; 3,470 miles of 69-161-KV transmission lines; 17,000 MVA of main substations; 300 MVA of small substations·; the expansion of distribution networks and village electrificatioo·, costing annually 11bout $120 million, and the first phase of frequency unification costir1g about $3 million annually. ·· PROCUREMENT: The loan would cover: 50% of payments d.ue on contracts placed before January 1, 1972 und,er the joint lending agreements of Loan 659-ME; 100% of the CIF cost of equipment procured abroad on the basis of inter- national competitive bidding, provided there is neither joint nor parallel financing for such equipment; 100% of the cost of equipment contracts won by Mexican manufacturers on the basis of intemational competitive bidding w1.th a 15% local preference margin; and 35% of the cost of civil engineering works, this percentage representing the estima- ted average foreign exchange component; international bidding, as under previous loans, ,,ould be required for contracts over Mex$20 million ($1.6 million equivalent). Bids forequipment would be compared on the basis of cost at the place of delivery exclusive of duties (i.e. , preferential treaties would not be reflected in the comparative costs) but taking into account the 15% p~··· • ference for Mexican manufacturers • Contracts for civil works over $1. 6 million and for all equipment will be awarded after internatianal competitive bidding. /more Technical Data Sheet -- Mexico -- power - 2 - CONSULTING SERVICES: Consulting engineers have been engated to des:lgn and supervise the construction of the major new steam plants and to carry out a feasibility study for the Olicoasen - Sumidoro - C,opainada • hydroelectric development on the Rio Gryalva. A Board of International Consultants will continue to review major hydroelectric projects. ESTIMATED COMPLETION DATE: 1974. - 0 - • •