Announcement of Twenty Million Dollars Credit to Nicaragua for a Reconstruction Program held on May 10, 1973

j • INTERNATIONAL DEVELOPMENT ASSOCIATION 1818 H STREET. N.W., WASHINGTON 0. C. 20433 TELEPHONE: EXECUTIVE 3-6360 IDA Press Release No. 73/30 Subject: $20.0 million credit to Nicaragua May 10., 1973 for a reconstruction program The International Development Association (IDA), a member of the World Banlc Group, has approved a credit of $20.0 million equivalent as part of a more comprehensive undertaking of various international and national agencies to support the Government of Nicaragua in the reconstruction of the capital city, Managua. The central part of the city was levelled by the severe e4rth- quake of December 23, 1972. IDA financing will particularly complement the activities of the Inter- American. Development Bank and of the United States Agency for International Development. The project is based on surveys carried out by several IDA missions soon • after the earthquake to determine priorities in the reconstruction task and to assess the earthquake's effects on ongoing World Bank-assisted projects in the water supply, power and education sectors. The main objective is to help re- store quickly essential services and to carry out urgently needed programs to assist displaced people and increase employment. The reconstruction of Managua itself will be the subject of a program to be determined at a later date. Early in 1973, the World Bank Group, in response to a request of the Government of Nicaragua, joined the Inter-American Develop- ment Bank and the Organization of American States in sponsoring an International Panel to advise on the complicated technical and economic questions involved in the reconstruction of Managua. The Panel's report was completed in late March. Taking into account existing conditions in the affected area, and the fact that the large industrial establishments and most of the infrastructure suffered little damage, the International Panel recommended making continued ~~e of much of the existing site of Managua. The report stressed, however, that population density in the downtown area should be reduced and that the city should be decentralized by encouraging the development of secondary towns and cities where • refugees from Managua'have relocated since the earthquake • The comprehensive program for the reconstruction and redevelopmsnt of the Managua region will be prepared by the Nicaraguan authorities after they have completed consideration of the International Panel's report and of the report /more IDA P.R. No. 73/30 --- Nicaragua -- reconstruction l . - 2 - of a Mexican team of consultants prov"ided by the Mexican Government to draft • a reconstruction plan. In the meanwhile, clearance of the devastated area is going ahead and is expected to be finished by the end of 1973. The $20.0 million credit approved by IDA will help finance five sub- projects of high priority in the Government's reconstruction program: Sites and Services. $8.0 million for a $1300 million plan to provide low cost housing for 6,400 low to middle--income families displaced by the earthquake. About half of them will settle in the outskirts of Managua and the remainder in other cities. Each of the sites assisted will be provided with primary so~ools, health centers, community centers, recreational space and markets. Techn.ical assistance, engineering design services and construction supervision will bei made available at each site. The Banco. de la Vivienda de Nicaragua (National Rousing Bank) will implement this subproject. Industrial Credit. $2.5 million for a $5.0 million program to help restore production of the small and medium-size industrial sectors in cities outside Managua, as a complement of the sites and services subproject. The industrial credit program is expected to provide between 1,200 and 1,500 permanent new jobs for refugees. The funds will be lent by the Govenunent to the Institute de Fomento Nacional (National Developtm?nt Institute), an autono- mous agency which will administer the program, for making subloans for indust~ial • sit~s and services and also for purchasing plant, equipment and buildings for about 30 to 50 medium-size enterprises already identified in secondary cities. Education. $2 .0 million for a $2 .9 million emergency program to provide new facilities in Managua for secondary level students. An estimated 85% of the secondary school capacity in the capita! city was destroyed by the earth- quake. Practically the only ~ublic schools left standing were two general secondary schools and a teacher training college recently built under a World Bank loan. The IDA credit for education will be used to construct 100 pre- fabricated classrooms in four temporary schools in the outskirts of Managua, to accommodate 8,000 students in two shifts; to construct, furnish and equip two permanent multilateral secondary schools in Managua, with capacity for 5,800 students in two shifts; and to construct and furnish a post-secondary technical institute with 400 places in technical fields and 100 in business education. This program will permit the Ministry of Education to open schools in and around Managua by next June, resulting in only a in the normal academic year. ~-mcnth loss in time The subproject will be executed by the same project unit of the Ministry of Education implementing the World Bank-financed • education project. /more  IDA P.R. No. 73/30 -- Nicaragua -- reconstruction - 3 - • Water Supply. $1.0 million for a $1.2 million investment plan for civil works, equipment and supplies to repair and rehabilitate damaged facilities, and $1.5 million to supplement other ongoing civil works being performed under a pre-earthquake World Bank loan. Aguadora de Managua, a publi..c enterprise, will implement the subproject. Aguadora, which served about 72% of the population in Managua before the earthquake, lost about half of its sub~cribers and suffered severe damage to pipelines, service connections, reservoirs and pumping stations. Power,, $5 .O million for a $6. 7 million program to help restore and repair existing installations and to extend distribution networks to meet the needs originated in shifts of population and service areas. Empresa Nacional de Luz y Fuerza (ENALUF), recipient of eight previous World Bank loans since 1953, will implement the subproject. Main works include repairs in a thermal plant on the south shore of Lake Managua, in adjoining substations, and in the Managua distribution network. The latter and some substations will be expanded to serve part of the population and small industrial and commercial • enterprises which have moved to Managua's surrounding area • Total cost of the IDA-supported project has been estimated at $30.3 mil- lion equivalent. The credit is being made to the Government of Nicaragua on IDA's standard terms; 50 years, including 10 years of grace, at no interest. A service charge of 3/4 of 1% will be made to coVf~r IDA's administrative expenses. - 0 - •  • May 10, 1973 TECHNICAL DATA PROJECT: Earthquake reconstruction COUNTRY: Republic of Nicaragua TOTAL COST: $30.3 million equivalent IDA FINANCING: $20.0 million, 50 years, 10 years of grace, interest free except for 3/4 of 1% service charge to cover IDA's administrative expenses. OTHER FINANCING: Government of Nicaragua; relevant public sector agencies. IMPLEMENTING ORGANIZATIONS: Banco de la Vivienda (BVN), sites and services • subproject; Instituto de Fomento Nacional (INFONAC), industrial credit subprojects; Ministerio de Educacion, education subprojects; Empresa Aguadora de Managua (AGUAIX>RA), water supply subproject; Empresa Nacional de Luz y Fuerza (ENALUF), power subproject -- all of Managua, Nicaragua. PROJECT DESCRIPTION: Five subprojects: sites and services including residences for 6,400 low to middle-income families displaced by earthquake,. conmllllity facilities, building material fund for self- help housing construction, technical assista~ce; industrial credit for 1) industrial sites and services in secondary cities and 2) plant, equipment, buildings for 30-50 medium-size industries also in secondary cities providing 1,200-1,500 permanent new jobs; education including 100 prefab classrooms in 4 temporary schools (8,000 students), 2 multi- lateral secondary schools (5,800 students), a post-secondary technical institute (500 student places); wat~r supply including selected civil works, equipment and supplies to repair and rehabilitate Managua's water supply and financing for local cost of civil works lUlder earlier Bank· water supply loan; power includi~g rehabili~ation, repair of power facilities serving Managua, expansion of distribution network to supply displaced population, industry, and financing of 1973-74 construction program power company cannot now finance because of reduced re,renue.s. PROCUREMENT ARRANGEMENTS: Except for the $2.5 million industrial credit component and for certain emergency expenditures for which retroactive financing is proposed, all items financed under the credit will be procured through international competitive bidding. Up tn $1.85 million • for expenditures incurred for emergency repair and rehabilitation works in power and water supply since January 1, 1973 and in education since March 1, 1973, are being financed retroactively. CONSULTANTS: Unesco providing consultant for education subproject; consultants for sites and services, power subprojects to be selected. ESTIMATED COMPLETION DATE: 1976.