Announcement of Greater Buenos Aires to Improve Power Services with World Bank's Support on June 25, 1987

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. 87/96 Contact: Ciro Gamarra (202) 477-5320 GREATER BUENOS AIRES TO IMPROVE POWER SERVICES WITH WORLD BANK'S SUPPORT WASHINGTON, June 25 -t:rg~ntin~' s',,ckeater Metropolitan Area of Buenos Aires will rehabilitate an~~✓electricity distribution networks and reduce its high energy losses by one third in 1990 with the assistance of a $276 million World Bank loan. The loan will help finance a project to improve the efficiency and rehabilitate the finances of SEGBA, a government-owned utility in charge of generation, subtransmission (transmission to minor substations), and distribution in the Greater Buenos Aires area. SEGBA, the largest power company in Argentina, covers about 35 percent of national power demand. The project will directly benefit about 3.7 million consumers through the improvement of the reliability of electricity services and 400,000 new consumers who are expected to be connected in the period 1988-1992. A large population, estimated at about 400,000 (mainly immigrants from economically depressed provinces), lives in about 100,000 dwellings in shantytowns outside Buenos Aires without electricity service, although most of these dwellings are illegally connected to SEGBA's networks. The.project will include the implementation of a loss reduction program; transmission, subtransmission and distribution works in SEGBA's 1988-1992 expansion program as well as acquisition of equipment for SEGBA's load control and general plant. A training program for SEGBA staff is included. The project is a key element of the World Bank's support of the government's efforts to improve operating performance and investment planning in the power sector. It will contribute to improving the management of SEGBA and its existing infrastructure while constituting a prototype for future efforts to enhance other provincial power companies' capacity to plan and carry out distribution investments. The estimated total cost of the project is $778.2 million, and the remaining balance will be provided by SEGBA's internal cash generation ($161.7 million), government's contributions ($125 million), borrowings from connnercial banks ($190.5 million), and consumer contributions ($25 million). The Bank loan will be disbursed over the implementation period of seven years. (more) NOTE: Money figures are expressed in U.S. dollar equivalents.  ,r ... _..,, - 2 - ( The project, the fifth with SEGBA, is expected to improve the reliability of electricity supply for some 12 million present consumers and 1.7 million new users, expand its availability and reduce power losses. It will improve SEGBA's management, operations and maintenance. Since 1962, the World Bank has made a total of seven loans to Argentina's power sector, four of which (amounting to $325 million) were to SEGBA to help finance an oil-fired thermal generation plant, and transmission, subtransmission, and distribution expansions. The World Bank loan was made to SEGBA with the guarantee of the Republic of Argentina. It is for 15 years, including three years of grace, with a variable interest rate, currently 7.92 percent, linked to the cost of the Bank's borrowings. It also carries an annual coill!4itment charge of 0.75 percent on the undisbursed balance. - 0 -