Announcement of Power Loan in El Salvador on June 19, 1963

' . WORLD INTERNATIONAL BANK FOR • RECONSTRUCTION AND DEVELOPME~T 1.818 H STREET, N.W., WASHINGTON 25, D. C. TELEPHONE: EXECUTIVE 3-6360 Bank Press Release No. 63/23 Subject: Power Loan in El Salvador June 19, 1963 The World Bank today made a loan equivalent . to $6 million for the further ex- pans ion of electric power in El Salvador. -:· The loan Will help to finr;mce an addi- tional 43,00? iflowatts of generating capacity ,to suEply tQ.e country}s powet net- work11. Included. in the project is a new ste~m plant which will both provide addi- tional power to meet the rapidly growing detnand.and,balance the power system which is now all hydroelectric. • Six commercial banks are participating in the loan, without the World.i:Ba.nk's guarantee, for a total a.mount of $395,000, representing the first three maturities and part of the fourth maturity which fall due between October 15, 1996 and April 15, 1968. The participating banks are Grace National Bank of New York; First National City Bank, New York; The Marine Midland Trust Company of New York; Bank of America National Trust and. Savings Association, San Francisco; Maryland National Bank, Baltimore; and Wells Fargo Bank, San Francisco. The loan was made to the Comision Ejecutiva Hidroelectrica del Rio Lempa (CEL), an autonomous government agency established in 1945 to plan and provide the country's electric power facilities. CEL sells power wholesale to utilities which distribute power in El Salvador. CEL began a sequence of power developments in 1949 to provide the generati~~· capacity and transmission facilities needed to meet the demand for electricity as • it evolved. The first installation to be built was the "5th of November" hydro- elec.tric plant at Guayabo on the Lempa River, which has since been expanded to v 1, - 2 - 6o,OOO kildwatts. 11 This was fol:!..owed by the 15,000-kilow.tt Guajoyo hydroelectric • plant near the outlet of Lake Guija which will come into operation next October. Accompanying the construction of power":plants w.s the ~rection of a transmission system, now comprisin.g 135 miles of lines, which connects with distribution facilities serving almost all the urban population. Three Bank loans totaling $19.3. mil,(l.ion assisted in financing each of these p;rojects,. 1 Today's loan 'Will finance the installation of an 18,000-kilowatt unit at th~) Guayabo plant, which will complete the power development at that site. It will also be used for ti(;. · '7nstruction of a 25, 000-,kilowatt steam-electric generating plant at the port city of Acajutla and a transmission line to connect this station II with CEL's ma.in network. ·Demand for electricity in El Salvador has been increasing at an average annual ; -...~ • M -- - - - - - - - ;f - ··-~~--·----- - rate of 12% and it is expected to continue at this rate for the next 10 years • There has been a 30% increase in industrial production since 1~59 and industry accounts for nearly two-fi~hs of the country's total power consumption. El Sal- vador's many energetic entrepreneurs and the organization of the Central Ameri- can Common Market give good prospects for further industrial growth. Industrial consumers of significant magnitude which will transfer to the CEL system when the \) new steam plant comes into operation include an oil refinery, a fertilizer plant, :} - port facilities at Acajutla and a cement plant at Metapan. The expansion of hydro- electric capacity at Guayabo will help to meet the demand during the wet season when the river flow is high; the Acajutla steam plan~ will supplement and firm up , :/ the hydroelectric system during the dry season. Additional capacity will again be required by 1968. The total cost of the power project now being undertaken is estimated at the equivalent of $10 million. The Bank loan of $6 million will cover the greater • I - 3 - tt. part of the foreign exchange requirements, and the remaining costs will be ~t by CEL from its own resources. The loan is for a term of 20 years and bears interest at the rate of 5-1/2% per annum, including the 1% commission which is allocated to the Bank's Special Reserve. 'Amortization will begin in October 1966. The loan is guaranteed by the Republic of El Salvador • • •