CARREGADO POWER II

closed

The proposed borrowers, which are two of the five companies in the primary power system, are respectively the main producer of hydro power (HED) and the only producer of thermal power (ETP). The companies are organized as private concerns, but the Government or government institutions are major shareholders and government policy largely determines the financial and economic performance of the companies. This is illustrated in the 1966 rates law which empowers the Government to vary tariffs from time to time as necessary and to divide the revenues of the system each year between the five companies in determined proportions. The law also provides, as agreed with the Bank, that rates shall be sufficient to enable each company to cover its operating costs, including depreciation, to pay interest and a reasonable level of dividends, and to allocate to reserves an amount equivalent to at least 10 percent of the cost of expansion in that year. The proposed borrowers, which are two of the five companies in the primary power system, are respectively the main producer of hydro power (HED) and the only producer of thermal power (ETP). The companies are organized as private concerns, but the Government or government institutions are major shareholders and government policy largely determines the financial and economic performance of the companies. This is illustrated in the 1966 rates law which empowers the Government to vary tariffs from time to time as necessary and to divide the revenues of the system each year between the five companies in determined proportions. The law also provides, as agreed with the Bank, that rates shall be sufficient to enable each company to cover its operating costs, including depreciation, to pay interest and a reasonable level of dividends, and to allocate to reserves an amount equivalent to at least 10 percent of the cost of expansion in that year.