Romania - Danube - Black Sea Canal Project

Document of v t, 4 8 0 The World Bank FOR OFFICIAL USE ONLY Report No. P-2680-RO REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE INVESTMENT BANK FOR ROMANIA WITH THE GUARANTEE OF THE SOCIALIST REPUBLIC OF ROMANIA FOR A DANUBE-BLACK SEA CANAL PROJECT December 26, 1979 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Currency Unit : Leu. (plural Lei) 1. Official Rate Lei 4.47 = US$1.00 Leu 1.00 = US$0.22 2. Tourist Rate Lei 12.00 = U$l.00 Leu 1.00 = US$0.08 3. Conversion Rate for Traded Goods Lei 18.00 - US$1.00 Leu 1.00 = US$0.06 The Official Exchange Rate of lei 4.47 per US$1 is used only for accounting purposes. The rate used for tourist transactions is lei 12 per US$1. Be- ginning in March 1978, a trading rate of lei 18 per US$1 has been used to convert the prices of all traded goods; this rate is considered representa- tive of the average cost of convertible foreign exchange. Fiscal Year January 1 to December 31 GLOSSARY OF ABBREVIATIONS AFDJ - River Administration of the Lower Danube DBSCC - Danube Black Sea Canal Central DWT - Department of Water Transport IEPC - Constanta Port Enterprise MTTc - Ministry of Transport and Telecommunications NAVROM - River Navigation Enterprise ROMTRANS - Romanian Maritime Fleet  FOR OFFICIAL USE ONLY ROMANIA DANUBE-BLACK SEA CANAL PROJECT LOAN AND PROJECT SUMMARY Borrower: Investment Bank of Romania Guarantor: Socialist Republic of Romania Beneficiary: Danube Black Sea Canal Administration Loan Amount: US$100 million equivalent Terms: Repayable in 15 years, including a 3-1/2-year grace period, through semi-annual installments, with interest at 7.95 percent per annum. Project Description: The project would consist of the construction of a 64 km canal from Cernavoda on the Danube to South Constanta-Agigea on the Black Sea. It would include construction of three ports on the canal (at Cernavoda, Medgidea, and Basarabi), two locks and their operating equipment (at Cernavoda and Agigea), related ancillary works and equipment (such as service roads, rail connections, utilities, buildings, signalling and control systems), and replacement, reconstruction or relocation of existing transport, irrigation and other facilities affected by the construction of the canal. The benefits for the Romanian economy of using its low cost energy saving inland waterway system more fully for large volumes of bulk cargo movement would be considerable as would the benefits generated from savings in ocean freight costs as a result of using large bulk carriers. The project would also benefit other Danubian countries, and would become an integral part of the European waterway system when the Rhine-Main-Danube canal is completed in 1984. It would also help accelerate economic development in the relatively poor Dobrogea region through which the canal runs, and provide local irrigation and power benefits. The risk of the project not being completed on time is small. Our traffic assumptions on the value of imported materials transported on the canal are conservative and are based on production targets, planned plant location, raw material requirements and export estimates made during the recent subsector studies on the steel and chemical industries, the two principal users of the canal. The risk of a shoytfall in traffic is thus small. |This document ha a restricted distribution and may be used by recipients only in the performance Iof their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  Cost Foreign x Estimates: Local Exchange Total F.E. -------------( 7u mMillon)