Announcement of World Bank Lends Ninety-Two Million Dollars for Irrigation in Mexico on May 25, 1979

.. FOR IMMEOIA fE RELEASE ... • .. .\ o, ~ •World Bank 1818 H Street, N.W., Washington, O.C. 20433, U.S.A.• Telephone: (202) 477-1234 BANK NEWS RELEASE NO. 79/93 May 25, 1979 WORLD BANK LENDS $92 MILLION FOR IRRIGATION IN MEXICO A project to promote development of intensive irrigated agriculture in Mexico is being supported by a World Bank loan of $92 million. The project is aimed at increasing the productivity of 196,000 hectares (ha) in the northern part of the State of Sinaloa, on Mexico's Pacific Coast. The project will be implemented in two irrigation districts, Rio Stnaloa and Rio Fuerte, at an estimated cost of .$249.7 million. It is expected to directly benefit 19,700 families comprising 17,250 ejidatarios and 2,450 private farmers. Ejidatarios are members of an ejido, a form of group land tenure in Mexico based on usufruct. The project will comprise reclamation of 60,000 ha of saline lands in the Rio Fuerte district and construction and rehabilitation of irrigation • infrastructure in the Rio Fuerte district (60,000 ha) and in the Rio Sinaloa district (76,000 ha). Infrastructure works wi 11 be complemented by a program of intensive techni.ca1 assistance and applied agricultural research benefiting fa rme rs in both d i s t r i ct s • About 95% of the beneficiaries have less than 20 ha and their present incomes vary from $500 to $1,700, placing them in the lowest ~0% of the national income distribution. As a result of the project, their incomes are expected to rise threefold. At full development, the project is also expected to reduce rural underemployment, through provision of an additional 3.3 million man-days of labor per year. Also, it would generate substantial indirect benefits by preventing salinization of additional lands and by creating more employment opportunities in other sectors. The $92 million loan to Naciona1 Financiera, S.A. has the guarantee of the United Mexican States. It has a term of 17 years, including 4 years of grace, with interest at 7.9% per year. In its first loan to Mexico for irrigation development in 1961, of $15 million, the World Bank assisted in the reclamation of some 77,000 ha of saline lands in the Rio Fuerte district. In 1974, the Bank approved a $47 million loan to help finance part of the Rio Sinaloa irrigation network • • NOTE: Money figu~es are expressed in U.S. dollar equivalents. FORM NO. 1121 (5-76) • T E C HN I CAL DA T A PROJECT: Rio Fuerte/Rio Sinaloa Irrigation COUNTRY: Mexico TOTAL COST: $249.7 mill ion BANK F I NAN CI NG : $92 million for a term of 17 years, including 4 years of grace, with interest at 7.9% per annum. OTHER FINANCING: Government of Mexico, $157.7 million IMPLEMENTING ORGANIZATION: Secretaria de Agricultura y Recurses Hidraulicos (SARH) lnsurgentes Sur 476 Mexico, D.F., Mexico PROJECT DESCRIPTION: It consists of: ~J construction and rehabilitation of irrigation and drainage infrastructure serving 76,000 ha in the Rio Sinaloa Irrigation District; b) reclamation of 60,000 ha of sa1ine lands 3nd rehabilitation of irrigation and drainage infrastructure serving another 60,000 • ha in the Rio Fuerte Irrigation District; c) a program of technical assistance, applied research and studies benefitting area farmers; d) equipment for operation and maintenance of the districts; and e) a telephone network to link major operating centers of the two districts. PROCUREMENT: Contracts for major civil works--grouped where possible into contracts with a value of at least $2 million-- will be awarded on the basis of international competitive bidding (ICB) in accordance with Bank guidelines. Contracts for smaller civil works--including on-farm works sJch as smoothing of land--will be let under the guarantor's ordinary procedures. The estimated cost of vehicles, farm machinery and equipment Js about $8.8 million, out of which $6 million will be subject to ICB, in accordance with Bank guidelines. A margin of preference up to 15% of the c.i.f. price will be allowed for equipment produced in Mexico. The remaining equipment, which for reasons of efficiency are not suitable for ICB, will be purchased through the government's ordinary procurement procedures. ECONOMIC RATE OF RETURN: ESTl~ATED COMPLETION DATE: 18% 1985 - 0 - •