Announcement of World Bank Approves One Hundred Twenty-Five Million Dollars for El Cajon Power Project in Honduras on March 13, 1980

FOR IMMEDIATE RELEASE 'World ·Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A." Telephone: (202) 477-1234 BANK NEWS RELEASE NO. 80/54 March 13, 1980 IDA NEWS RELEASE NO. 80/26 WORLD BANK APPROVES $125 MILLION FOR EL CAJON POWER PROJECT IN HONDURAS The World Bank has approved a $125 million lending operation to assist in the financing of the El Cajon hydroelectric power project in Honduras. The project will provide an ample supply of electricity for Honduras' interconnected system beyond 1985. A project of regional interest, El Cajon hydroelectric plant has an estimated total cost of $582.7 million. The lending operation will include a $105 million World Bank loan to Ernpresa Nacional de Energfa Electrica and a $20 million International Development Association (IDA) credit to the Republic of Honduras. The 292-megawatt El Cajon hydroelectric plant is to be located approxi- • mately 80 kilometers southeast of Honduras' major industrial center, San Pedro Sula. The annual production of the plant will be l ,051 gigawatt-hour (GWh) of firm energy in a dry year and 1,348 GWh of average annual energy. The main objectives of the project are to expand the hydro generating capacity of the Ernpresa Nacional de Energfa El~ctrica, the national electric energy company, and thereby increase the use of national energy sources to meet Honduras' electricity requirements during 1986-90 and reduce fuel consumption in thermal plants. The project will also strengthen the power company's capacity to manage and operate a major expansion of its interconnected system, and to provide flood control benefits in the Sula Valley through regulating the Humuya River flow downstream of the darn. The regulation of the river flow will permit the develop- ment of irrigation projects in the future. El Cajon may also permit a limited amount of excess energy to be sold to neighboring countries. Co-financing for the project will be provided by the Inter-American Development Bank (IDB), $95 million; the Venezuelan Investment Fund (FIV), $55 million; the Overseas Economic Cooperation Fund of Japan (OECF), $33 million; the Central American Bank for Economic Integration (CABEI), $30.6 million; and is also expected from the Commonwealth Development Corporation (CDC), $10 million; and the Organization of Petroleum Exporting Countries (OPEC) Special Fund, $7.5 million. The $105 million Bank loan to Empresa Nacional de Energfa Electrica, with the guarantee of the Republic of Honduras, is for a term of 20 years, including • 6 years of grace, with interest at 8.25% per year. The $20 million IDA credit to the Republic of Honduras is for a term of 50 years including a 10-year grace period. It bears no interest, but carries a service charge of 3/4 of 1% a year to cover administrative expenses. NOTE: Money figures are expressed in U.S. dollar equivalents. FORM NO. 1121 (5-76) T E C HN I CA L DA T A PROJECT: El Cajon Power ~ COUNTRY: Honduras TOTAL COST: $582.7 million BANK FINANCING: $105 million for a term of 20 years, in:luding 6 years of grace, with interest at 8.25% per year IDA FINANCING: $20 million on standard IDA terms OTHER FINANCING: Inter-American Development Bank (IDB), $95 million; the Venezuelan Investment Fund (FIV), $55 million; Overseas Economic Cooperation Fund of Japan (OECF), $33 million; Central American Bank for Economic Integration (CABL'), $30.6 million; Organization of Petroleum Exporting Countries (OPEC) Special Fund, $7.5 million; Commonwealth Development Corporation (CDC), $10 million; supplier's credits, $68 million; Empresa Nacional de Energia Electrica (ENEE)/ Government of Honduras, $19~.5 million IMPLEMENTING ORGANIZATION: Empresa Nacional de Energfa Electrica (ENEE) Apartado 99 • Tegucigalpa, Honduras PROJECT DESCRlPTION: The El Cajon hydroelectric plant consists of: (a) d concrete arch dam 225 meter (m) high, with a crest elevation of 301 m above sea level; (b) a reservoir with a volume of 5.65 x 109 m3 with an associated spillway system; (c) intake structure and pressure shafts; (d) underground power house with four 73 megawatt (MW) turbine and generator units and auxiliary equipment; (e) tail race structure with four tunnels and outlets; (f) an access tunnel of 700 m and diversion tunnel 500 m long; and (g) about 600 kilometers of access roads. PROCUREMENT: All construction items of the project--except for land, access road to the site, environment and resettlement-- will be procured under international competitive bidding (ICB). Procurement of cement will be subject to ICB consistent with Bank guidelines and subject to Bank review before award. Domestic cement suppliers will be given a margin of preference of 15% of the c.i .f. price or the applicable import duty, whichever is lower. Equipment procurement will be subject to international competitive bidding among suppliers willing to provide financing. CONSULTANTS: Motor Columbus (Switzerland) has been retained for project engineering and administration and supervision of construc- tion. An independent Consulting Board meets periodically to review progress and major project issues and advise ENEE on these matters. ENEE has also engaged an engineering advisor and a financial advisor. ECONOMIC RATE OF RETURN: 13.5% ESTIMATED COMPLETION DATE: 1986 - 0 - •