Announcement of World Bank Makes First Loan in Philippines on November 23, 1957

.. HOLD FOR RELEASE •• • RECONS'TR 1818 H STREET, N.W., WASHINGTON 25. D. C. TELEPHONE: EXECUTIVE 3-6360 PRESS RELEASE NO. 514 For Release SUBJECT: World Bank Makes First 6:00 A.M., E.S.T. Loan in Philippines Saturday, November 23, 1957. The Bank has signed its first loan, the equivalent in various currencies of $21 million, in the Philippines. The borrower is the National Power Corporation and the funds will be used for the Binga hydroelectric project in the island of Luzon. The Bank of America N.T. & S.A. and The Chase Manhattan Bank are partici- pating in the loan_, without the World. Bank's guarantee, to the extent of $987,000. This amount , which represents the first four matm:'ities of the loan • • falling due from December 1960 through June 1962, will be equally divided between the two participating banks. The project calls for the construction of a dam and reservoir on the Agno River in northern Luzon, an underground power house with an installed capacity of 100,000 kilowatts, and transmission lines to Manila, about 120 miles to the south, and to various provincial areas. Work has alreacy begun and is expected to be completed in 1960. The Philippines possesses very large unused water pnwer resources. Of the total potential of at least 600,000 kilowatts in Luzon, only about one-sixth has so far been exploited. Binga is the second of six projects planned to develop the hydroelectric potential (")f the Agna and Toboy Rivers. The first project, located at Ambuklao a few miles from Binga, was brought into service • with e>)apacity of 75,000 kilowatts a year ago • • The output of the new plant will mainly serve the Manila metropolitan area and will be sold in bulk to industries and privately-owned distribution le -~ - companies by the National Power Corporation. The Corporation, a government • agency responsible for hydroelectric development throughout the Philippines, ~ has already constructed three major and several smaller projects. The demand for electricity in the Manila area, which now has a population of' more tha..ll one million, has been .growing at 12 per cent annually. But the expansion of industry has been such that consumption by industrial plants has been growing at twice that rate. Demand L11. the Provinces is still very low, but is developing rapidly. In Luzon alone, even a~er the completion of the Binga project, further additions to capacity amounting to 300,000 kilowatts a.re expected to be required over the next decade. The cost of the Binga project is estimated at the equivalent of about $53 million. The proceeds of the Bank loan will be used to meet the foreign exchange expenditure included in this total, while the National Power Corpora- • tion plans to obtain the funds needed to cover local expenditure by sales of • bonds in the Philippines. Tenders for imported equipment ..md supplies are being obtained through international competitive bidding, and orders have already been placed in 12 countries. The loan is for a term of 25 years with semi-a.11.11ual amortization payments beginning in December 1960 and ending in June 1982. The rate of interest, including the 1% commission credited to the Bank's Special Reserve, is 6%. After having been approved by the Bank's Executive Directors the Loan Agreement was signed on November 22, 1957, by Mr. Filemon Zablan, General Manager, on behalf of the National Power Corporation, and the Guarantee Agreement by Mr. Miguel Cuaderno Sr. , Governor of the Central Bank of the Philippines, on behalf of the Republic of the Philippines. Both documents were signed by Mr. Eugene R. Black, President, on behalf of the World Bank.