DJTERNATIONAL BANK FCR



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                                          RECONSTROOTION AND DEVELOPMENT

        Fffi THE PRESS                                                        FOR IMMEDIATE RELEASE

        Press Release No. 353                                                 February 24., 19$4

             The International Bank for Reconstruction and Development today made a loan

        of fpl8., 790.,000 to the Brazilian Traction., I,:j.ght & Power Company., Ltd. to help

        fin.a.nee the construction of a thermal electric power plant at Piratininga near

        the city of Sao Paulo.      The new plant will alleviate the power shortage in the

        Sao Paulo area., an important center of industrial production.
             Sao Paulo is the capital of the State of Sao Paulo and the ~ite or many of
        Brazil's leading industries.           They include £co~ processing., coffee roasting,
        te~tiles~, chemicals., paper., cement, iron and steel, bu.i.lding and construction
        materials., automobiles, 1ight agricultµral -machinery., and freight and passenger

        railway cars.      The electric utility which ~erves the area is the Sao Paulo Light

•       and Power Company., Ltd • ., a subs~dia.:ry or Brazilian Traction,.      In recent ye~rs

        the company has had difficulties in accepting new customers without restriction

        and power is.    now being rationed, with consequent loss of ind\lstrial pro4ucti~n.
              To meet the demand for
                                   .
                                     additional power., Sao Paulo l;,ight i.'1tends
                                                              .                '~:-:
                                                                                    to double

        its present capacity of ?00.000 kilowatts by 1956. "-s a f:i,rst st~p toward thi!J;r
        objective the company, in 1952, s~ca~ted construction of the 160,0~kilowatt

        Piratininga Plant, which it will mm and operate when completed.                Therm.al power
        was decided upon because a thermal plant could be most quickly b:rought into
        operation and beca\lse eventually it would provide balance in the company's

        hY'd+oel:ectric system.    L9ng droughts in the area
                                    .,,                 :::,
                                                             over tpe past ttJ1;'ee years pave
        reduced th~ t,raters in the storage reservoir us_ed by Sao Pal,Jl.() Light to one-fifth
        of its normal c~paeity,.          F~tner long periods of   ~   wea.the:r' would present serious




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        p:ro'blems fQr the company if' it were to depend exclusively on hydroelectric powe:" ..

              The Piratininga ·plant is scheguled !o:r completion by tbe latter part of 195).;.'J

        The total cost of i,~e P+"oject ~s est~ted at th~f equivaient or. $3$ million.             The

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             Bank's loan of $18. 79 million will' pay for the imported equipment needed tor the

•            plant; Bra;ilian Traction will meet the remaining costs t'rom its own resources.

                    The loan is for a tenn · of 20 years and bears interest of   4- 7/8%. per annum..
             including the   1% commission which will be allocated to the Bank's Special Reserve.
             Amortization will begin September 1.,   195S.   The loan is guaranteed by the Govern-

             ment or Brazil.

                    As eVidence or indebtedness of the borrower, the B~ will receive Collateral

             Trust Bonds of the Brazilian Traction., Light & r,ower Co • ., Ltd. which will be

             secured.. by the pledge of debent~es of the parent company rs prin~ ipal opera ting
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             subsidiaries and by a floating charge on the assets of the Brazilian Traction,

             l,ight & Power Company, Ltd.

                    Brazilian Traction., a Canadian corporation., is /vhe largest private enterprise

             in Brazil.. It supplies about 65% of the electr-lc energy produced in Bra~lil and,

             serv~s the areas of Rio de Janeiro and Sao Paulo, which produce       75%   of Brazil's
    •        industrial output.    In January 1949 the Bank made a loan or $75 million to the

             company for the expansion of power and telephone se.rvices; · this loan was· increased

             two years later by $15 million.     Electric power proj ec:ts tin~nced i-.ri.th the help or

             tlnt loan have a combined capac;:ity of about 600,000 kilowatts; most or this

             capacity is now in operation and all of it will be :L11stalled by the middle of         1954 •.
                    After having been approved by the Executive Directors., the loan documents were .

             si~ai today on behalf of the Brazilian Government by Dr. Mario· da Camara.,

            ,, Representative of t.he Braz:i.lfan Treasury; on bc!i.alf of Brazilian Traction., Light

             and Power Company, L11nited., by Mr. E. c. lt~ox, Senior Vice Pre~ident of the Company;·

             on behalt of the National Trust Company (Toronto) by Mr. Leslie Calhoun., Senior

             Trust Officer., a.11d b:;,· Hr. David Forsyth; Assistant Secreta.ry Treasurer of that

             Company; and by Rob~rt L. Garnex; Vice ~esideu-t~ on behalf- or the Int.ernatio11al



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