Announcement of Fifteen Million US Dollars Power Loan to Ceylon on June 6, 1961

FOR IMMEDIATE RELEASE ..... l, .-. WORLD • INTERNATIONAL BANK FOR RECONSTRUCTION AND D 1818 H STREET, N.W., WASHINGTON 25, 0. C. TELEPHONE: EXECUTIVE 3-6360 Press Release No. 691 SUBJECT: $15 million power loan Jnne 6, 1961 to Ceylon The World Bank today made a: loan equivalent to $15 million to Ceylon.. 1 The funds will be used to add 75,000 kilowatts to electric generating capacity and to extend the distribution of electric power in western Ceylon. The addition.s will double available capacity in the most populous a...~d industrially active part of the country, and will make it possible to satisfy the rapidly incre~ing d&woi.nds for electric power in the area during the next five years. • Six commercial banks are participating in the loan, without the World Bank's guarantee, for a total amount of $1.1 million representing the first five maturi- t:Les 'Which fall due between November 15, 1964 and November 15, 1966. The parti- cipating banks a.re The Chartered Bank - New York Agency; The Hongkong a.n.d Shanghai Banking Corporation: - New York Agency; Mercantile Bank, Limited, London;· Manu- facturers Trust Company, New York; Bank of America National Trust and Savings Ascociation, San Francisco.; and Irving Trust Company, New Yoi"k. The participation by the Mercantile Bank is in pounds sterling. The projects being financed by today's loan include a. 5J,OOO-kilowatt hydro- electric station at Norton Bridge on the Kehelgamu River and ~he addition of a second 25.,000-kilowatt generating unit at the Grandpass thermal station near Colom- bo, the capital. Transmission lines will b~ extended 95 miles southward to Galle, • the third largest town in Ceylon, and w:i.l:L be extended 50 miles further north, from Bolowatta to Puttalam on the west coast. About 200 miles of low voltage trans- miosion lines and 200 substations will also be built in the area.  - 2 - The projects will form part of the integrated electric power system operated • by the Department of Governmental Electrical Undertakings ( DGEU). The area servet by DGEU covers 3,500 square miles, nearly one-sixth of' the land area of CGylon, and has a. population of four million, close to half the total population. DGEU distributes power in Colombo, which is by far the most important cent€r of con- sumption, and. to certain large industrial users outside Colombo. rt also sells power wholesale to about 75 municipal, urban and village communities which have their own distribution systems. In the near future, the Government intends to establish an electricity board which is to take over DGEU's responsibilities. The effective generating capacity of' DGEU's present system is 74,500 kilo- watts. Demand for power in the service area has been growing at a.n average annua rate of 11.5% during the past five years, and is expected to rise to 15% during t: next five years. The thermal addition to Grandpass is urgently needed to avert a • power shortage that otherwise would occur before the Norton Bridge hydroelectric station can be put into operation in 1964. The completion of the Norton Bridge station should take care of power requirements until the latter part of 1966. This is the third loan the Bank has made in Ceylon. All have been for the purpose of developing DGElJ's system. The first, amounting to $19.11 million (later reduced to $16.5 million), was made in 1954 for the expansion of the Aberdeen-La.ksapana hydroelectric power project to a capacity of' 50,000 kilowatts. The second, amounting to $7.4 million, was ma.de in 1958 for the construction of the Grandpass station, which was initially to be equipped with 25,000 kilowatts of' capacity. The Norton Bridge project now being undertaken is, like the Laksa- pana project, based on the Kehelgamu River. It will use water that subsequently will pass through the turbines at Laksapana, and will complete the development of the ~ower potential of the Kehelgamu • •  - 3- • The total cost of the projects being built with Bank assistance is esti- mated at the equivalent of $32. 5 ruilJ.ion. The Ba.i1l~ loan will cover the foreign exchstng'= requ:lr-cments; "G!J.e lo(!al currency costs will be met from Government con- t:-i'butions F.Jct:cl DG_!-<~U rs earnings o The loa.n is for a terr1 of 25 yea.rs and bea1.."s interest of 5-3/4% i:ccll).ding the 1% commissi_on ,. .hich is a.llocated to the Bank's Special Reserve. Amortiza- tion will begin on No~ember 15, 1964 . • •• ,. .. CEYLON DGEU GENERATING STATIONS AND • MAIN TRANSMISSION SYSTEM EXISTING PROPOSED 132 and 66 KV transmission lines •0 •0 Power plants Substations 0 5 10 15 20 25 MILES t N ANURADHAPURA 1 ~,Cs • .BADUL~ RATNAPURA~ ~ • JANUARY 1961 1BRD·777R