INTERNATIONAL BANK FOR
                           RECONSTRUCTION AND DEVELOPMENT



•   181 8   H
                     INTERNATIONAL DEVELOPMENT ASSOCIATION

                STREET,   N W           WASHINGTON D.C.20433               TELEPHONE; EXECUTIVE   3-6360




   Bank Press Release No. 68/27                     Subject:   Bank and IDA lend $11.5 mil-
   IDA Press Release No. 68/10                                 lion for electric power in
   May 29, 1968                                                Honduras

            The generating capacity of Honduras's chief electricity supply authority,

   Empresa Nacional de Energia Electrica (ENEE), will be nearly doubled by the 40-

   megawatt Rio Lindo hydroelectric project to be built with the assistance of loans

   totaling $11.5 million from the World Bank and its affiliate, the International

   Development Association.

            The development of a public supply of electric power on a ~cale large enough

   to meet the needs of Honduras followed the establishment of ENEE in 1957.          The com-

.pany now has a generating capacity of 47 megawatts or nearly two-thirds of the

   country's total.        Two earlier World Bank loans, totaling $10.25 million, assisted

   ENEE in financing two        projects, the larger of which was the JO-megawatt Canaveral

   power plant, the first stage of the Lake Yojoa-Rio Lindo development.         The project

   now being financed is the second stage of this development.

            ENEE's main service area is the central and northern part of Honduras in which

   are located the main cities -- Tegucigalpa, the capital, San Pedro Sula, the second

   largest city and the most industrialized, and Puerto Cortes on the Caribbean -- and

   the largest industries.       This area is served by an interconnected, system.    The rest

   of the country is served by other systems, some of which will be linked to ENEE's

   interconnected system by 1974.

            Annual increases in ENEE's power sales have been averaging nearly 311 in the

   last few years and are expected to average about 2~ in the period 1967-71.           The


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Bank Press Release No. 68/27
IDA Press Release No. 68/10
May 29, 1968   - Honduras



the Rio Lindo plant will be a part.
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largest increase will be in the area served by the interconnected system of which

                                        In addition to the construction of the Rio
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Lindo power plant, the project includes an expansion of ENEE's transmission
system and feasibility studies for future hydroelectric development.

     The project for which the Bank and IDA loans are being made is the major
part of ENEE's expansion program for the five-year period 1967-71 which will
cost the equivalent of $25.5 million.     In addition to the Bank and IDA funds
the program will be financed as follows:     ENEE's internal cash generation (321),
borrowing from other sources (2ll), Government contributions (31).     The Bank and

IDA funds will cover the total foreign exchange requirements of the project it-
self which will cost a total equivalent to $17.7 million.

     Both the Bank loan and the IDA credit will be made to the Republic of
Honduras.   The Bank loan, equivalent to $7.S million, will be for a period of
2S years, including a 3-1/2-year grace period, and will bear interest of 6-1/41.
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The IDA credit, equivalent to $4 million, will be for a term of SO years.     It
will be free of interest but will carry a service charge of 3/4 of ll per annum
to meet IDA's administrative costs.     The Government will relend the proceeds of
both the loan and the credit to ENEE on the same terms as the Bank loan.
     Bank of America, New York, is participating in the loan to the extent of
$175,000 representing the first and second maturities which fall due on
February 1S and August 1S, 1972.



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