Announcement of Fifteen Million Two Hundred Fifty Thousand US Dollars Power Loan in Nicaragua on May 22, 1968

fN~rERNA-TIOi\lAL 8/\J\H\ F()f~ .RECONSTRUCTIO D"DEVELOPMFNT 1818 H STREET, N.W., WASHINGTON D. C. 20433 TELEPHONE: EXECUTIVE 3-6360 Bank Press Release No. 68/22 Subject: $15.25 million power loan May 22, 1968 in Nicaragua A major expansion of Nicaragua's electric power supply will be undertaken with the assistance of a $15.25 million loan announced today by the World Bank. The Bank has, been associated with the development of electric power in Nicaragua since 1953 when there was a severe power shortage, particularly in the area of Managua, the capital. A.series of six loans totaling some $27 mil- lion helped to finance the i.nstallation of nearly 100 megawatts of generating capacity and the construction of an integrated transmission system to replace • small, isolated units. Almost all the funds went to the company which supplies most of the country's power, Empresa Nacional de Luz y Fuerza (ENALUF), whic~ will be the recipient of today's loan. ENALUF's main service area is the Pacific slope which contains most of the population and all industry. ENALUF's generating capacity will be increased by 90 megawatts to a total of 195 megawatts with the assistance of the current loan. ENALUF's power sales have been growi~ at the rate of 23 percent annually since 1958. This high rate of growth has resulted from development of industry esp'e~ially textiles, metal products and food processing -- which doubled its pro- ducti2, tn the last decade, as well as from increased urban settlement and from connections to new areas. Sales of power and peak demand are expected to nearly double during the seven years, 1968-74. The new installations, which comprise 60 per cent of ENALUF'.s capital investment program for 1968-72, will enable the company to keep pace with this demand. The project being assisted by the &pJlk, loan consists of the addition of a 40-megawatt unit at the existing JO-megawatt thermal plant in Managua; .the /more  + 2 - construction of a new SO-megawatt hydroelectric plant, known,as Santa Barbara, on the Viejo River; and transmission facilities to connect the Santa Barbara plant with the integrated transmission system. The total estimated cost of the project is equivalent to $24.7 million. The Bank loan will finance most of the fore~gn exchange requirements. Equipment and materials will be procured on the basis of international competitive bidding. The financial condition of ENALUF is good and it is expected to continue earning a satisfactory rate of return on its investments and to provide the funds needed to complete the project. EliALUF has engaged the services of consultants to assist in carrying out the project. The loan, to be guaranteed.by the Government of Nicaragua, will be for a te1,n of 20 years, including a five-year grace period, and will bear int~rest of 6-1/4%. Five private commercial banks in the United States have agreed to ~ participate in the loan for a to~al amount of $500,000 representing the first maturity and part of the second which fall due between June 1 and December 1, 1973. The participants will be Bank of America, New York Crocker-Citizens National Bank, San Francisco First National Bank of Memphis United California Bank,,, Los ~geles First Pennsylvania Banking & Trust Company, Phila'aelphia - 0