Announcement of Three Million Eight Hundred Forty Thousand US Dollars Power Loan in El Salvador on July 29, 1960

Q WORLD • INTERNATlONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT 1818 H STREET, N.W., WASHINGTON 25 1 D. C. TELEPHONE: EXECUTIVE 3-6360 PRESS RELEASE NO. 64 5 SUBJECT: $3,840, Oll}O power loan 1\ July~~29, 196o in El Salvador . The World Bank tod.ay made a loan equivalent to $3,840,000 :for the expansion of electric power facilities in El Salvador. The loan will ~inance imported e~ipment and services for the .construction of the Guajoyo 15,00Q-kilowatt hydroelectric' power plant and associated transmission facilities. The new i' . \ I installations :form part o:f a -program '·'o:f electric- power expansion being carried out by El Salvador to keep pace with the demands of its rapidly growing eiconomy. Bankers Trust Company, Grace Na.tionai. Bank of New York and Manufacturers • Trust Company a.re participating in the loan, without the World Bank's guarantee, for a total amount of $87l ,ooo representing the first two maturities which fall 1 due in October 1963 and April 1964. The loan was made to the Comision Ejecutiva Hidroelectrica -del Rio Lempa, \\ (\ )) ) a. semi-autonomous government agency established in 1945 to plan and provide ;/ facilities to meet El Sal.vador's power requirements. It supplies power whole- sale to the country's principal distributors of electricity which serve nearly all consumers. El Salvador is the smallest and most densely populated of the Central American republics. It is predominantly agricultural., with coffee and cotton exports accounting for over four-fifths of export earnings. Industrial growth,. however, has bee~, an important :feature of El Salvador's economic_ development • during tlie past dozen years. Among new_ ent.erprises are a sugar refinery, a flour mill,' cement end paint factories, and aluminum fabricating and tire retreading plants. The expansion of industry has helped to diversify and strengthen the economy and is providing. new employme,t~=9pportunities.  If - 2 - (I • The ava:Llapi'i1ty of electric energy has been an important factor in stimu- lating, industrial development; in 1959, industry accounted for more than a third of power consumption. Si~ce 1946, the d~mand for electricity has increased at an average rate of about 15% a year. Electric serv~ce now reaches about 701, \\ of the urban popu1ati6n, and it is being extended rapidly to the remaining urban areas. The Guajoyo powar plant Wi.11 provide the additional power needed until the latter part of 1964. The program of the Comision Ejecutiva Hidroelectrica del Rio Lempa (CEL) is based on the power potential of the River Lempa system. At present, CF.!L's only power plant is the Guayabo plant on this river. The Guayabo plant now has a capacity of 45,000 kilowatts, and Will have a capacitY, of 6o,OOO by 1962, some 45,000 kilowatts of it· financed by $15,545;0QO of Bank lo~ns ma.de in 1949 and 1959. The Guajoyo plant, for which today's loan is being made, Will be near the Desague River, a tributary of the ~mpa. with one 15,000-kilowatt tur~o-generator. The Guajoyo plant will be equipped The project a.lso includes a step-up ,·. • substation, a 20-mile transmission line to connect the plant with the CEL trans- mission system, and the necessary extension of existing substations. The ~ . project is scheduled for completion by early 1g63. The total cost of the Guajoyo power project is.estimated at the equivalent of $5. 54 million. The Bank (loan will cover the .foreign exchange requirements and the remaining costs will be met from CEL's resources. The Bank loan'.1.s for a. term of 25 years and bears interest of 5-3/4"/o per annum including the 1i commission which is allocated to the Bank's Special Re- serve. .Am:>rtization will begin in October 1963. The loan is guaranteed by the Republic of El Salvador. Including today's loan, the Bank has made five loans in El Salvador total- ing $35,485,000, which includes $16.1 million for highways and $19,385,000 for electric power. .A:f'ter having been approved by the Bank' a Executive Directors, the 1oan documents were signed by His Excellency Dr. Hector David Castro, Ambassador of El Salvador in Washington, on behalf of the Republic of El Salvador, and by Sr. Enrique Lima, General.Manager,on behalf of the Comision Ejecutiva Hidroelectrica • • del Rio Lempe.. 0