Announcement of Thirty-Two Million Dollars Financing for a Fifth Power Project in the Philippines on March 23, 1972

•. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION 1818 H STREET, N.W. WASHINGTON D.C. 20433 TELEPHONE: EXECUTIVE 3-6360 Bank Press Release No. 72/14 Subject: $32.0 million financing for IDA Press Release No. 72/22 a fifth power project in the March 23, 1972 Philippines The World Bank and its affiliate, the International Development Association (IDA), have approved financial assistance totaling $32.0 million for power development in the Philippines. The Bank is making a·loan of $22~0 million and IDA is providing a credit of $10.0 million ~o help expand the generation and transmission capacity of the National Power Corporation (NPC), the government-owned utility, in the island of Luzon. This. is the first project in the country to receive IDA funds. The project provides for the construction of a 150-megawatt thermal- ~ electric generating unit and three 75-megavolt ampere transformers and ancillary equipment on the Bataan peninsula near Manila. It also provides for the construction of 24 substations and 870 miles of transmission lines in Luzon. Also included are consultants' services for technical assistance. NPC's load in Luzon has been increasing by 21% annually over the past six years. NPC, with a total installed capacity in Luzon of nearly 500 megawatts. mainly hydroelectric, sells bulk power to industrial users and local utilities, including the only major utility with generating plant, the privately owned Manila Electric Company (Meralco). Tog~ther NPC and Meralco accot.mt for about 90% of total generation, with Meralco serving the greater Manila area and NPC the rest of Luzon, Mindanao and other principal islands. The new Bataan 150-megwat~ unit will increase ~PC's installed generating capacity in ·Luzon by about 30% and will make it possible for NPC to meet demand until 1977. In line with the priority given by the Government to provincial electrification, the transmission works will increase l~PC' s transmission in Luzon by about 60% in length and will serve 80 towns and 20 large power users, • in addition to the 250 towns and 27 large users that NPC is now serving • /more Bank P.R. No. 72/14 - IDA P~R. No. 72/22 -- Philippines -- power - 2 - These new connections should result in reduced energy costs of 25% to 30% compared to the cost of energy currently provided by local diesel plants. • In addition, a reliable supply for 24 hours a day instead of the usual supply of six and eight hours in these areas will encourage the use of electricity for such purposes as drinking water distribution, pumped irrigation and power for workshops, cottage industries and other small businesses. The Bank has helped to finance four other NPC projects. The first three projects were for hydroelectric power development. The fourth was for the construction of a 75-megawatt thermal plant on Bataan peninsula, to be placed in operation this year. Net Bank lending for these four earlier projects totaled $67.3 million. The current project, to be executed by NPC, is scheduled for completion in mid-1975 at an estimated cost of $46 million. The Bank and IDA funds will cover the entire foreign exchange cost of the project and interest on the Bank loan during construction. Local costs will be met from internally generated funds and local borrowing. • The Bank loan is being made to NPC, with the guarantee of the Government of the Philippines. It is for a term of 20 years, including four years of grace, and carries interest at 7~% per annum. The IDA credit is being made to the Republic of the Philippines and is for a term of 50 years, including 10 years of grace; it is interest-free but carries a service charge of 3/4 of 1% a year to cover IDA' s administrative expenses. The Government will relend proceeds of the IDA credit to NPC on the same terms as the Bank loan. Five Japanese and United States financial institutions are participating in the Bank,loan for a total amount of approximately $427,000 equivalent. They ar~: The Daiwa Bank Ltd., Osaka; The Yasuda Trust and Banking Co., Ltd., Tokyo; Beverly Bank, Chicago; The Bank of Tokyo Trust Co., New York; and The Sanwa Bank, Ltd., New York. - 0 - • • TECHNICAL DATA PROJEcr: Power Development CX>UNTRY: Philippines TarAL COST: $46 million BANK FJ..NA..~CING: $22.0 million, 20 years, four years of grace, 7~% interest per annum. IDA FINANCING: $10.0 million, 50 years, 10 years of grace, interest free except for 3/4 of 1% service charge to c~ver IDA's administrative expenses. OTHER FINAN'CING: Internally generated funds and local borrowing. IMPLEH!~NTING ORGANIZATION: ~ational Power Corporation, 161 Bonifacio Drive, • Port Area, Manila; Cable address - NAPOCOR, Manila. PROJECT DESCRIPTim~: Construction of a thermal unit of 150-megawatt; three 75-megavolt ampere transformers and ancillary equipment on the Bataan peninsula, and 24 substations and 870 miles Qf power transmission lines in Luzon. PROCUREMENT: One 150-megavolt thertnJ:ll unit, three 75-megavolt ampere trans- formers and switchyard, transh 1sion lines and substation equipment. Contracts for civil works and for equipment will be awarded after international competitive bidding. CONSULTANT SERVICES: Consultants will be engaged for: final design and super- vision of project construction; preparation of feasibility studies of hydroelectric schemes in Luzon and a long term plan for the Luzon grid expansion; review of NPC's accotmting system and procedures and the current value of fixed assets; and improvement of NPC's technical operati one • ESTIMATED COMPLETION DATE: 1975. • - 0 -