Announcement of World Bank Provides Fifty Million US Dollars for Fertilizer Project in Mexico on May 23, 1975

AN 1818 H STREET. N.W .. WASHINGTON 0. C. 20433 TELEPHONE: EXECUTIVE 3-8360 Bank News Release No. 75/41 May 23, 1975 WORLD BANK PROVIDES $50 MILLION FOR FERTILIZER PROJECT IN :MEXICO The World Bank has approved a $50 million loan for a fertilizer project in Mexico. The loan, made jointly to Hacional Financiera S.A., and Guanos y Fertilizantes de Mexico S.A. (Guanomex), with the guarantee of the United Mexican States, will assist the construction of two new urea plants and the expansion of an existing insecticide plant. The project includes the design, engineering and construction of a 1,000 tons per day urea plant, as an addition to the existing fertilizer complex at Bajio, near Salamanca, in the State of Guanajuato (Bajio II Plant) and a 1,500 tons per • day urea plant, to be located at Coatzacoalcos, in the State of Veracruz (Istmo Plant). It also includes the expansion of an existing insecticide plant, part of the chemical complex at Salamanca, by adding a further 10 tons per day of manufac- turing capacity of parathion. This expansion is aimed at substituting projected cuts in DDT consumption, because of ecological reasons. The project will help to make Mexico independent of imported urea fertilizer in the medium term, eliminating the risk of loss of agricultural production in times of scarcity, and protecting farmers from violent fertilizer price fluctuations. It is estimated that fertilized land in Mexico - now about 5.7 million hectares - can be doubled, thus creating the conditions for greater agricultural production. It is estimated that gross foreign exchange savings after five years of operation will be about ·$96 million annually. During construction, the project will provide direct employment to about 1,000 people. The two financial institutions, Deutsche Genossenschaftskasse, Frankfurt, Germany and Equitable Trust Company, Baltimore, Maryland, have agreed to participate in the Bank's loan, an amount totalling $3.5 million equivalents. The Bank loan is for 14.years, including 3-1/2 years of grace, at 8-1/2% annual rate of interest. • Note: Money figures are expressed in US dollar equivalents .  TECHNICAL DATA PROJECT: COUNTRY: Fertilizer Project Mexico • TOTAL COST: $133. 5 million BANK FINANCING: $50 million, 14 years, including 3-1/2 years of grace, at 8•1/2% annual interest. OTHER FINANCING: $60 million equity contribution; $40.2 in long-term loans from foreign and local banks. IMPLEMENTING ORGANIZATION: Guanos y Fertilizantes de Mexico, S.A. (GUANOMEX). Morena 804 Mexico 12, DeF. PROJECT DESCRIPTION: The project consists of a) a 1·,000 tons per dey (TPD) urea plant as an addition to an existing fertilizer complex at Bajio, near Salamanca, in the State of Guanajuato; b) a 1,500 TPD urea plant at Coatzacoalcos (Istmo Plant); c) expansion of an· existing • parathion (insecticide) plant in Salamanca, in the State of Guanajuato, by adding an additional production capacity of 10 TPD. The loan is made to Nacional Fi- nanciera S.A. and to Guanos y Fertilizantes de Mexico, S.A., with the guarantee of the United Mexican States. PROCUREMENT: Equipment and materials financed under the loan will be procured through international competitive bidding, with the exception of about $5 .11- million of proprietary equipment, critical i terns in limited supply and small cost materials. Domestic manufacturers will be given a margin equal to 15% of the c.i .f. cost of competing imports or the import duties, whichever is lower. CONSULTANTS: Design and Engineerin~ Services: GUANOMEX, in . . co~formity with Bank n~ocedures• has contracted the services of foreig~ and ~ocal firms for the design and engineering of the Bajio plant. Other services will be needed for the design and engineering of the Istmo plant. ECONOMIC RATE OF RETUIN: ESTIMATED COMPLETION DATE: 24%. 1978. •