The loan will be used to finance the replacement of 118 transmission towers damaged by the two super typhoons, and improve TransCo's capability to build stronger infrastructure that will stabilize power supply in Bicol and the nearby areas, making them less vulnerable to strong typhoons.
The World Bank made the offer for emergency support immediately after the super typhoons struck. The construction to restore services proceeded simultaneously with the approval processes of the Philippine government in concurrence with the World Bank. TransCo provided advance funding, to respond to the pressing need on the ground for the restoration of power supply in Bicol.
The typhoons killed over 700 people, toppled power lines and buried villages in mud. Reconstruction started shortly after the typhoon and is expected to be completed by the first quarter of 2008.
Secretary Teves said: 'We truly appreciate the emergency funding offered by the World Bank to help us restore stability to our power supply after those powerful storms hit the country in quick succession. The retroactive financing feature provided for by the World Bank's Rapid Response to Crises and Emergencies made it possible for government to move quickly in restoring power supply to the Bicol Region.'
Mr. Hofman said: 'This project is of utmost importance to the World Bank because the Bicol Region is one of the country's poorest areas and ensuring a more reliable power supply will contribute significantly to the reduction of poverty not only in those provinces, but in the country.'
The loan is part of a larger $21.6 million program jointly financed by the Government and the World Bank to provide Transco with 11 additional Emergency Restoration Structures, establish an investment program that will strengthen the power system against future typhoon damage, and remove infrastructure constraints to the region's economic development.
Mr. Hofman said, 'The project will contribute to the preservation of key assets in the power sector, and it has raised awareness on the importance of focusing not only in restoring power but also in the need to invest in disaster risk reduction and preparation.'
The project, approved by the World Bank's Board of Executive Directors early this month, is a variable-spread loan (VSL) with a maturity period of 18 years and a five-year grace period. Loan charges consist of a front-end fee of 0.25 percent and an interest rate based on Libor, which would be reset every six months. The interest rate for the current semester would be Libor + 0.13% or approximately 3.31%.
To know more about World Bank-assisted projects and programs in the Philippines,visit http://www.worldbank.org.ph
Leonora Aquino-Gonzales (632) 917-3003
Anissa Tria (632) 917-3013
Mohamad Al-Arief (202) 458-5964