"'I ~' t 1NTERNATIONAL BANK FOR .RECONSTRUCTION AND DEVELOPMENT 1818 H STREET, N.W., WASHINGTON D. C. 20433 TELEPHONE: EXECUTIVE 3-6360 Public Disclosure Authorized Bank Press Release No. 63/ 39 Subject: $85 million loan in V~z-Jela. Sv.ptember 20, 1963 The World Bank today made a loan equiiralP.nt to $85 million f'or electric power development in Venezuela.. The loan Will help to finance the construction of the Guri hydroelectric project on the Caroni River, one of the country's most important sources of hydroelectric power. Public Disclosure Authorized Seven commercial banks are partici~ating in "the loan, 'Without the World Bank's guarantee, for a total amount of $1,225,000 representing the first maturity and l)art of the second maturity which fall due in May and November 1968. The partici- • pating banks are The Marine Midland Trust Company of New York; The Cha.se Manhattan Bank; Irving Trust Company; Th~ Royal Bank of canaaa., New York Agency; The Meadow Brook National Bank, New York; The First Pennsylvania Banking and Trust Com:[:6I)Y; Public Disclosure Authorized and Dresdner Bank A.G., Frankfurt. The Guri project will help to realize the economic potential of the Guaya.na region of eastern Venezuela, in which a large~ of Venezuela's mineral wealth is found. The region is richly endowed. Its iron ore deposits are exten..~ve and of high quality, and other minerals are believed to exist in the area in ce>mP.rcia.l quantity; its potential for power is very large; it is within reach of abundant petroleum and natural gas, and Puerto Ordaz, its deep vra.ter port, makes it ~ess.. Public Disclosure Authorized ible to ocean-going shipping. The Corporacion Venezolana de Guaya.na (CVG), a government agency responsible • for promoting the development of the Gua.yana.s, has initiated a n~..r of steps for , I - 2 - the industrial development of the area~ CVG already is operating a large inte- • grated steel -works at Ciuda.d Guaya.na with a capacity of about 600,000 tons a yea:r of finished steel products. Negotiations have been completed between CVG and Reynolds International Inc. for setting up an aluminum plant, and the setting appears favorable for the establishment of other industries, including the manu- facture of ferro-alloys and fertilizers. Industrial users of power in the area already include the Orinoco Mining Company, the mines of the Bethlehem Steel Com- pany and the Phillips Petroleum Company. The demand for power in the Guayanas is expected to require three times as much generatinG capacity by 1979 as is avaj_lable to<lay, and the Government already has begun a program to meet future demand py developing large amounts of hydro­ electric power from the Caroni River,., the chief tributa:ry of the Orinoco. As a first step, the Government completed in 1961 the 365,000-kilowatt plant at Macagua, near the Caroni' s confluence with the Orinoco. A subsequent study of the river, • undertaken by consulting engineers, shmred that the logical next step would be the construction of another hydroelectric installation upstream at the Guri site. In its first stage, the Guri plant will have a capacity of 350,000 kilowatts. The consultants believe that the ultimate potential of the Guri site may be as much as 6,000,000 kilowatts. In its first stage, the Guri project will include the construction of a dam 100 meters high, a power plant with two 175,000-kilowatt generating units, and a transmission line to connect the plant with the Ciudad Guayana substation some 50 miles away. The total cost of the first stage is estimated at $137 million, and the Banl~' s loan is calculated to meet the foreign exchange cost >I The project is expected to be in operation in 1968. The capacity of the first stage could.pe expanded. to 1,750,000 kilowatts in a second stage by the installation of eight additional generating ~~ts without further increase in the height of the dam. • I \ l •, \J i The $85 million B:.1.llk loan was ma.de to C. V. G. Electr:i.ficacion del Ca.roni C.A. • JEDELCA), a wholly-owned subsidiary of CVG established in August 1963 to construct the project and to own and operate both the Guri and the Macagua plants. Overall responsibility for the execution of the Guri project lies with EDELCA's staff, the nucleus of which was formerly the electric power division of the parent CVG. The management's consultants, Harza Engineering Company International, which has participated. in the planning of the project, will assist in supervising the con­ struction of Guri. EDELCA will sell power in bulk to other systems operating in Venezuela. The power requirements of ED:W.uCA's combined market area -- those of Guayana, CAD.A.FE, the national power company, and Caracas -- are expected to increase to 878,000 kilowatts in 1965 and to 2,720,000 kilowatts in 1979. It is estimated that EDELCA • will supp:::..y 4z{o of the interconnected systems ' demand in 1965 and 86% in 19 ..(9. The loan is for a term of 25 yea.rs a.nd bears interest at the rate of 5-1/'c/o per a.nnum, including the 1% commission which is allocated to the Bank's Special Reserve. Amortization will begin in May 1968. The loan is guaranteed by the Republic of Venezuela. .