Announcement of Tire Project in Romania will Create 4,300 New Jobs with World Bank Support on March 27, 1978

- •World Bank '1818 H Street, N.W., Washington, D.C. 20433, U.S.A. • Telephone: (202) 393-6360 BANK NEWS RELEASE NO. 78/61 March 27, 1978 TIRE PROJECT IN ROMANIA WILL CREATE 4,300 NEW JOBS WITH WORLD BANK SUPPORT The World Bank approved an $85 million loan to help Romania fi- nancea tire.project aimed at increasing production of truck, tractor and rough-terrain tires. The project will create some 4,300 new industrial jobs and produce annual foreign exchange benefits of about $150 million. The project will have an estimated total cost of $251.8 million. It will consist of two plants to expand annual production capacity by one million truck tires, 150,000 tractor tires and 20,000 off-the-road tires for oper~tion in uneven terrain. The truck tire plant will be set up at Zalau. It is expected to • employ abcut 2,500 people and is scheduled to start commercial production by early 1980. Production facilities at Drobeta-Turnu Severin for tractor and rough-terrain tires, employing about 1,800 people, are expected to start operations by early 1981. The project will help to meet increasing domestic demand, save foreign exchange, and provide a base for incfeased tire exports, primarily to other Eastern European countries. The $85 million loan was extended to the Investment Bank of Romania, with the guarantee of the Socialist Republic of Romania. It wi 11 have a term of 15 years, including three years of grace, with interest at 7.45% per annum. NOTE: Money figures are expressed in U.S. dollar equivalents . • FORM NO. 1121 (5-76) T EC HN I CAL D A T A PROJECT: COUNTRY: TOTAL COST: Ti re Socialist Republic of Romania $251.8 million • BANK FINANCING: $85 million for a term of 15 years, including 3 years of grace, with interest at 7.45% per annum. OTHER FINANCING: Government of Romania IMPLEMENTING ORGANIZATION: Investment Bank of Romania, Str. Doamnei No. 4, Bucharest, Romania PROJECT DESCRIPTION: The project will consist of two new plants to expand annual production capacity by one million truck tires, 150,000 tractor tires and 20,000 off-the-road (OTR) tires for operation in uneven terrain. The truck tire plant, which is located at Zalau, is expected to employ about 2,500 people and is scheduled to start commercial production by early 1980. The production faci 1 i~ties • tractor and OTR tires, employing about 1,800 people, will be located at Drobeta-Turnu Severin and are expected to start commercial production by early 1981. PROCUREMENT: Equipment and materials estimated at $82 million for the Zalau and Orobeta-Turnu Severin plants financed under this loan will be procured through international competitive bidding in accordance with Bank guidelines. A major package of imported technology, engineering and specialized process equipment for the OTR tire plant is included. Romanian suppliers will have a 15% margin of preference or applicable custom duty, whichever is lower, in bidding for the types of equipment which couid be supplied by local industry. Items to be import rl under smal 1 contracts (up to a total of $3 million) may be purchased through internaL,vnal shopping on the basis of suitability, availability and price considerations. ECONOMIC RATE OF RETURN: ESTIMATED COMPLETION DATE: 22% 1981 - 0 - •