Mexico - Third CFE Power Project (Vol. 2 of 2) : Memorandum

~- CIRCULATNIG COPY R E S T R I C T E D O BE RETURNlD TO ARCHIYES DMISION F1' ^ FILE COPYT This report was prepared for use within the Bank. in making it available to others, the Bank assumes no responsibility to them for the accuracy or completeness of the information contained herein. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT MEMQRANDUM ON A LOAN OF $34 MILLION TO COMISION FEDERAL DE ELECTRICIDAD AND NACIONAL FINANCIERA, S.A. FOR THE EXPANSION OF POWER GENERATING AND TRANSMISSION FACILITIES IN MEXICO (GUARANTEED BY THE UNITED MEXICAN STATES) April 22, 1958  INTER1LATIONAL BANK FOR RECON4STRUCTION AND DEVELOPMENT 4EMORAN4DUM ON A LOAN OF $34 MILLION TO COMISION FEDERAL DE ELECTRICIDAD AND NACIONAL FINANCIERA, S.A. FOR THIE EXPANSION OF POWER GEERATING AND TRANSlISSION FACILITIES IN MEXICO (GUARPANTEED BY THE UNITED MEXICAN STATES) PART I - HISTORICAL 1. The Bank has made two loans to Comision, the first for $24h1 million in 1949 (12 ME) and the second for $29.7 million in 1952 (56 ME). The hyCzo. steam and diesel plants and related facilities partly financed by these lcans have added some 600,000 kw capacity to Coinisionts installations, 2,. To meet the growing power demand, Comision is now engaged in an expan- sion program whose total cost has been estimated at about $250 millionc Last fall Comision applied to the Bank for a loan to finance the foreign exchance costs of the major plants within the' program which consist of fiftoe;n inst-t__ lations wita a total capacity of 748,000 kw and their related transrniission facilities, 3. In October and November 1957, a Bank mission appraised Comisionts program and reviewed Comision's organization and procedures. Of the major plants included in the program there are four which are most urgently needed and on which work is already under way. The other plants are less urgent or need further planning and engineering. It was agreed with Comision, therefore. that the Bank would at this time consider a loan for the first four plants and their related transmission facilities. 4. Formal negotiations began in Washington on March 17, 1958. The Mexican Government was represented by Mr. Raul Martinez Ostos, Assistant Director- General of Nacional Financiera, arn Comision was represented by Mr. Carlos Ramirez Ulloa, the Director-General of Comision. Negotiations were concluded on April 11, 1958.  - 2 - 5. If the proposed loan is made, it would increase the total amount of Bank loans in Mexico to $186.3 million net of cancellations and refundings. The Bank has already made the following loans to Mexico: No. Borrower Pu-rpose Amount / 12 ME Nacional Financiera and Fed- eral Power Conmission Power $ 24.1 million 24 ME Mexican Light and Power Company. Limited Power 26.0 million 33 ME Consortium 3nd Nacional Fin- P a2/ anciera Private Thdusry 05 million- 56 ME Nac-%,Jnal Financiera and Fed- eral Power Commission Power 29.7 mill:I,n 103 MiE Ferrocarril del Pacifico Railroad RehabiIitation 61,O million 136 HE Mexican Light and Power Company, Limited Power ll0_ million Totil (Net of Cancellations and Refundings) .......... $15c23 million Air.9ont Sold ........ .