Announcement of Eight Million Eight Hundred Thousand US Dollars Loan in Honduras for Electric Power on June 29, 1960

FOR IMMEDLATE,,RELEASE· ... WO R L .D • 1818 H STREET, N.W., WASHINGTON 25, D. C. TELEPHONE: EXECUTIVE 3-6360 PRESS RELEASE NO. 641 ~dBJECT: $8. 8 million loan in June 29, 196o Honduras for electric power The World Bank tod.ailmade a loan equivalent to $8.8 million for the develop- ment of electric power in Honduras. The loan Will help finance a 27, 000- (J \, kilowatt hydroelectric power plant and related transm~ssion facilities. When the ~roject is completed, Honduras will have for the first time a centralized power system, capable of being expanded economically to, ~eet future needs. Thee National Bank of Washington, D. C: and Grace National Bank of New York (i. • are participating in the loan, without the World Bank's guarantee, for a total amount of $103,000 representing the ~~rst maturity which falls due in May 1964. The loan was made to the Empresa Nacional de Energia Electrica, an autonomous ag~ncy of the Government established in 1957 to develop and operate Honduras' povrer generating an~. distribution facilities. At present its opera- tions are confined to the capital, Tegucigalpa. Empres.a will use the loan for the first stage of a program to develop the hydroelectric power potential of Lake Yojoa and Rio Lindo, using the lake as a ,., storage reservoir. The main works consist of clikes on the lake, a three-mile ,} canal; an intake structure and pen.stocks to bring water from the lake to a powerhouse to be built near the village of Canaveral. The Canaveral power- house will be installed with two 13,500-kilowa.tt generating units, and. provi- sion 'Will be ma.de for the addition of a third unit •., About 175 miles of t:rans- 1,,J • mission liries will be built tp ,connect the plant with Tegucigalpa.., and with San Pe.dro Sula and Puerto Cortes and other towns in the northwest. " () - 2 - • The demand for power in Honduras has been growing rapidly; Empresa's sales of electric ~nergy in Tegucigalpa in the last five years have increased at an average rate of about 19i a,, year. When the Canaveral power project comes into operation, Empresa will hav~ the facilities to increase its sales of power to retail customers in Tegucigalpa, and will sell power wholesale to San Pedro(, SUla, Puerto Cortes and other towns in the northwest, as well ,as to the coun- try's larger industries. Empresa will ,then be supplying an urban and semi<:, /) rural, population of about 208,000 ''as wetl as a sizeable industrial load. It has been conservatively estimated that the rate of growth of power sales in this expanded market area will be about 9'/o annually. The area is now served mainly by a nu~ber of diesel inJiallations having a total installed capacity·of about 2$,~00 kilowatts; their construction and operl~tion is inherently costly because, of their small size and the high cost of • diesel fuel in Honduras. The Canaveral project will replace these small instal- lations by a centralized hydroelectric power system capable of being expanded in successive stages up to a capacity of 16o,ooo kilowatts. From the outset, the Canaveral project will produce energy at a lover cost than that of the present sourcee 0f supply and this cost will further decrease as later stages of development are carried out. The transmission I) system will not only supply ener~~, to the principal urban, centers of Honduras, \, but will provide for the future expansion of the service area. The Canaveral project is scheduled for completion in late 1963 at a total cost equivalent to $14,750,000. The Bank loan w:i..11 cover most of the foreign 11 exchange requirements. The rema.i.ning costs will be met by Empresa, partly from. earnings and partly from other source,; ,:,Empresa has asked tor a loan • from the United States Development Loan Fund to help cover such costs • I) '  () 0 () - 3 ... • The Bank loan is for a term of 25-i years and bears interest of 6"/o per annu~ including the 1% commission which is ~llocated to the Bank's Special 1 Reserve. 1 Amortization will begin in May 19¢,4.' The lda.n is guaranteed by the Republic of Honduras. Including today's· loan :the Bank has made four loans totaling $19,950,000 in Hbnduras for electric power development and for highway construction, improve- ment and maintenance • .After having been approved by''the Bank's Executive Directors, the loan documents were signed by His Excellency Dr. r Celeo Davila, Ambassador of Honduras in Washington, on behalf of the Republic of Honduras, and by Sr. Luis Bogran - Fortin, Manager, on behalf of the Em.presa Naciona~ de En¢rgia Electrica. . \, • II • _;, __ ·•·•.s-,