Announcement of World Bank Gives Eleven Million Dollars Technical Assistance Loan to Ecuador on August 4, 1977

•World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A. • Telephone: (202) 393-6360 BANK NEWS RELEASE NO. 78/9 AUGUST 4, 1977 WORLD BANK GIVES $11 MILLION TECHNICAL ASSISTANCE LOAN TO ECUADOR Ten preinvestment studies for future projects aimed at modernizing the economy, developing natural resources, improving the standards of living of the urban poor, and creating employment opportunities in Ecuador will be carried out under a technical assistance project sup~orted by the World Bank with a $11 million loan. The main objective of the Second Technical Assistance Project in Ecuador is to improve the efficiency of the Government's investment machinery while expanding the pipeline of projects for Ecuadot's in- vestment program. The total cost of the project is estimated at $17.8 million. • It wi 11 provide for pre investment studies of future industrial, agro- industrial, power, agricultural, urban development, and water supply projects. The studies on the power sector will help the Government to meet the continuing over 13% annual increase in power demand. They will include the preparation of an integrated power development master plan coverfng an evaluation of hydroelectric and geothermal resources; and a feasibility study of a major hydroelectric project. The industrial sector studles are designed for the possible establishment of new pJants particularly in agro-industry (forestry development and soybean production) and construction materials; and a high priority petrochemical complex with an estimated total invest- ment of approximately $1,500 million. The remaining studies concern the rehabilitation of the ailing cocoa industry, the improvement of living conditions in Guayaquil-- the largest city in Ecuador--and the expansion of safe water supplies and waste disposal facilities for small rural communities in the Ca"°ar, Azuay and Marona- Santiago provinces. The project will also provide technical assistance to the National Preinvestrnent Fund (FONAPRE) for advising and training the staff of that institution and of other government agencies in specific project preparation and management. . .. I • NOTE: Monetary figures are expressed in US dollar equivalents.  - 2 - The United Nations DevelopmeAt Programme·(UNDP) will participate in the financing of the project with a contribution of $600,000. FONAPRE will be responsible for the execution of the project and will on-lend proceeds to public sector agencies. • The loan to the Republic of Ecuador wi 11 have a term of. 10 years, including 3.5 years of grace. The loan carries interest at the rate of 8% per annum -- a new interest rate which came into effect this month. In May 1976, the Bank announced a new formula under which the Bank's lending rate VJill be reviewed at the end of each quarter and adjusted to the average weighted cost of funds borrowed in the preceding 12 months. To this calculation a positive spread of 1/2 of 1% will be added to arrive at the interest the Bank will charqe its borrowers on new loans granted in the ensuing quarter. - 0 - • • FORM NO. 1121 (5-76) T ECHNI CAL D A T A • PROJECT: COUNTRY: TOTAL COST: Second Technical Assistance Project Ecuador $17.8 million BANK FI NANC I NG : $11 mi 11 ion repayable over 10 years, including a 3-1/2 period of grace, with interest at 8.0 percerit. OTHER FINANCING: Government of Ecuador: $6.2 mil lion UNDP: $0.6 million IMPLEMENTING ORGANIZATIQN: Fondo Nacional de Preinversion (FONAPRE) Edificio Benalcazar 1000 Qui to, Ecuador PROJECT DESCRIPTION: The project's main objective is to improve the efficiency of the Gov~rnment 1 s investment machinery while expanding the pipeline of projects for Ecuador's investment program. It provides for preinvestment • studies of industrial and agro-industrhl, power, agricultural, urban development, water .supply and other investment possibilities. The project also includes technical assistance for advising and training FONAPRE's staff in project preparation and management; and assisting local consulting firms. PROCUREMENT: The loan will be disbursed over.an estimated four-year period against appropriate documentation for (a) 6p% of the cost of each study (other than the power studies); (b) 70 % of the cost of preparing the power studies; (c) 100% of the cost of the general advisor, the training ex~-ert and the short-term consu~tants; and (d) 60% of the cost of assistance 'to domestic consultant firms. In addition, the individual experts and consultants to be employed under the project wi 11 have qualifications acceptab'e to the Bank, as would be the procedures used in obtaining their services. It is expected that, in several of the project studies, foreign consultants will be involved with Ecuadorian firms in joint ventures or sub-contractual arrangements. Retroactive financing v1ill be provided up to $75,000 for expenditures made after March 1, 1977 to cover initial contractual services under the project . • ESTIMATED COMPLETION DATE: 1981 - 0 -