k • INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT 1818 H STREET, N.W. 1 WASHINGTON 25 1 D. C. TELEPHONE: EXECUTIVE 3-6360 Bank Press Release No. 63/27 Subject: $22 million loan July 10, 1963 in Costa Rica The World Bank today made a loan equivalent to $22 million for the expansion of electri'c power facilities and the construction of a modern telecommunications system in Costa Rica. The loan will assist in financing a 56,000-kilowatt hydroelectric power plant, together with associated tr~ .'1smission facilities, and the installat;ion 1 of automatic exchange equipment for 26,000 telephone lines, cables, line networks and radio equipment for interurban connections. Power from the new plant will be • fed into the country's integrated power network, and the new telephone facilities will provide service in San Jose, the capital, and 22 other towns. Wells Fargo Bank, San Francisco and Maryland National Bank, Baltimore, .-.are particip1ting in the loan, wi thoti} the World Bank's guarantee, for a total amount of $265,000 representing part of the first maturity which falls due on September 1, An adequate supply of electric power and a modern telecommunications system have become increasingly important in Costa Rica's economic development. The main problem in recent years has been to maintain a growth of national income sufficient to keep pace with the very fast increase in population -- about 4.3% a year -- in the face of unfavorable markets for its chief exports, coffee and bananas. To achieve this growth, the Government has placed special emphasis on expanding produc- tj_on of staple foodstuffs, in which the country has now become self-sufficient, and • more rece11tly on manufacturing industrial goods both for the local market and for the Central Arnex-.ico.u Common Market. For this increasing industrialization, electric power and telecommunications are of prime importance. ,, - 2 - Tne loa.n was made to the Institute Costa.rricense d.e Electricidad (ICE), an i.ntonomous Government agency, originally established to plan and execute a coordinated electrification program and subsequently given responsibility for providing telecom- • mvnications services as well. Existing telephone installations, owned by Compania Naclona.l de Fuerza y Luz (CNFL), a subsidiary of American and Foreign Power, are now bei~g sold to ICEw ICE's telecommunications program has been endorsed by experts re- ta:.ned by the World Bank to carry out a United Nations Special Fund study of tele- communications needs in Central America and Panama. ~lectric Power Project The bulk of Costa Rica's power production and supply is concentrated in the Central Zone which covers an area of some 1,500 square miles and has a population of 792:000, or two-thirds of the country's total. Nearly all the coffee and sugar cane produced in Costa Rica come from the Central Zone; in it are located most of the inc.lustries and the principal towns, including San Jose. Towns outside the Central • Zone receive electricity from small independent units. Sales of power in Costa Rica are expected to increase at an average annual rate cf' 12-1/2% during the next three years. This takes .into account a number of small towns in the area toward the Pacific which are being connected to the integrated system and the requirements of a new fertilizer plant and a cement plant which is now under construction. It is expected that :further additions of generating capacity will be needed before the end of 1968. ICE now has 53,000 l\.ilowatts of generating capacity. The total will be in- creased by 30,000 kilo~watts when the Rio Macho plant, for which the Worl~ Bank made a loan of $8.8 million in 1961, comes into operation later this year. ICE sells most of its power wholesale to other utilities for distribution, but in some towns where no retail colt\piues are at present operattrig,,ICE is responsible for distri- • ·bu.tion as well. CNFL \sµpplies power to the San Jose area both from its own powe:- p1ants and from power· which it buys from ICE. I - 3 - The project now being financed will increase ICE's generating capacity to 139,000 kilowatts by 1966. It consists of the construction of a 56,000-kiloWE.tt hydroelectric power plant near Cachi on the Reventazon River and the exte'nsion of transmissi9n facilities to accommodate the new source of power. Telecommunications Project The existing telephone installations in Costa Rica have been inadequate to meet the demand for service for many years. They are heavily overloaded and the manual type equipment is obsolete and not fitted for extension. The project being financed is the first stage of a modern and efficient telecommunications system. It provides for new automatic exchange equipment for 26,000 telephon~ lines, nearly triple the present number, together with associated installations. With the applications al- ready on hand and allowing for additions during the two years before the new system • can provide service, it is expected that the capacity of the system will be fUlly utilized shortly after it is put into operation. In San Jose, two new buildings will be constructed to house two automatic ex- changes equipped with a total of 14,ooo subscriber lines. Space will be provided for administration offices, maintenance shops, stores and other service facilities. The suburban areas will be served by six unattended satellite exchanges with a total of' 1,310 subscriber lines. Cable networks will be installed to connect the exchanges with the subscribers. Central exchanges will be built in the towns of Alajuela, Cartage, Heredia, Punta.renas and Limon which will have a combined total of 4,900 subscriber lines. Equipment will be provided to permit direct dialing between any of these towns and San Jose. In an additional 17 locations, small automatic ex- changes will be installed with a total capacity of 1,240 lineC. • Terms of Loan The electric power and telecommunications projects should be completed in 1966 at a total cost estimated at the equivalent of about $36 million. The Bank loan ' - 4 - will cover the :foreign exchange requirements and the local cu!'rency costs will be • financed by ICE, mostly t..rom earnings. Equipment and supplies will be purchased on the basis of international competition. The loan is for a term of 23 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 Re- serve. Amortization will begin in September 1967. The loan is guaranteed by the Government of Costa Rica. • • r~-- • N I C A R A G U A • ·-::~.,·°"..r·),, • I ~' .... • - '·--....-.. ............... ~ . / 'l.c,;,,. ""'·"'. ~. ~."'--J"'\·, . ../" r -~ CABLE CONNECT:ONS Parai10 See inset for details of cable connections .•....•....0 Turrialba COSTA RICA PROPOSED ICE TELEPHONE SYST[M I "'tJ J> z // J> - - - - • MICRO-WAVE SYSTEM VHF RADIO SYSTEM .................. CARRIER CIRCUITS 3:: ~ CABLE CONNECTIONS J> 0 10 20 30 40 50 KILOMETERS MARCH 1963 IBR0-1145