Announcement of World Bank Approved Three Loans to Colombia Totalling Two hundred Thirty-Seven Million Eight Hundred Thousand US Dollars to Improve Key Infrastructure Investments on November 27, 1985

I Ir FOR IMMEDIATE RELEASE i BANK NEWS RELEASE NO. 86/35 Ciro Gamarra November 27, 1985 (202) 477-5320 WORLD BANK APPROVED THREE LOANS TO COLOMBIA TOTALLING $237.8 MILLION To Improve Key Infrastructure Investments Colombia's efforts to rehabilitate its port facilities, expand the electricity distribution network in Bogota, and improve water supply services in Barranquilla, will be assisted by three World Bank loans, totalling $237.8 million. The first loan, of $42.8 million, to the Empresa Puertos de Colombia, S.A. (COLPUERTOS), the National Port Authority, will help finance the rehabilitation of port installations in Buenaventura, Cartagena and Santa Marta. This is expected to increase port productivity. It is the World Bank's first operation in Colombia's port subsector. The second loan, of $171 million, is to the Empresa de Energia Electrica de Bogota (EEEB), a municipally owned utility that serves the Colombian capital. The main objective will be to achieve greater efficiency in EEEB's operations and to extend electric service to a larger segment of Bogota's population. The third loan, of $24 million, to the Barranquilla Municipal Companies (EPMB), will help rehabilitate and extend water supply, sewerage, and solid waste management facilities in Barranquilla, Colombia's fourth largest city. The loan will also strengthen the management and operating efficiency of EPMB. Scarcity of resources experienced in the last few years has presented major challenges to the Colombian economy, requiring a reorientation towards measures to enhance efficiency in the economy and promote exports. The expansion of capacity in publicly owned enterprises is giving way to rehabilitation of services, strengthening institutions, and a more intensive use of existing facilities. Rehabilitation of Buenaventura, Cartagena and Santa Marta Ports Maritime transport supports most of Colombia's foreign trade, which moves mainly through its public and private seaports. COLPUERTOS, a state-owned commercial enterprise under the Ministry of Public Works and Transport, controls all the public ports. NOTE: Money figures are expressed in U.S. dollar equivalents.  - 2 - Three of the four main commercial ports administered and operated by C0LPUERT0S -- Buenaventura on the Pacific Coast; and Cartagena and Santa Marta on the Caribbean Coast -- have deteriorated due to poor maintenance, and a major rehabilitation effort is necessary to ensure their continued operation. With an estimated total cost of $60 million, the project involves the rehabilitation of existing infrastructure in the three ports. It also includes partial replacement of obsolete equipment, acquisition of selected container-handling equipment and preparation of studies for long-term expansion and modernization of the public port facilities. The project will also strengthen C0LPUERT0S' managerial, financial, administrative and operational capabilities to improve port services and reduce operational costs. A training program for management, operations and administrative personnel at the ports and COLPUERTOS' central office is also included. The port rehabilitation project aims at upgrading capacity of the ports by restoring installations. It will also increase port productivity to enable the public port system to cope with future traffic demands and ensure adequate support to Colombia's foreign trade. Power Distribution for Bogota The World Bank's main objective in assisting the Colombian power sector is to achieve greater efficiency in the operation of the country's electric utilities. The substantial energy losses prevalent throughout the sector constitute one of the major deficiencies in the current operations of these utilities. EEEB, one of the largest power utilities in Colombia, is an autonomous company owned by the Municipality of the Special District of Bogota. EEEB has operated the city's electric service for the past 85 years, and served about 700,000 subscribers at the beginning of 1985. The project will support primarily the 1985-1990 distribution and subtransmission program of EEEB, including the expansion and improvement of Bogota's network. It will include studies to improve EEEB's distribution and operational planning, a training program for EEEB's staff and a program for reducing the system's losses. The training program will facilitate improvements to EEEB's organization, managerial skills, technical and operational planning and human resources management. Around 240,000 new customers will be connected to the power service, and 1,100 MVA in subtransmission substations will be built.· About 10 km of 230 kV and 75 km of 115kV lines will be constructed, together with 350 MVA in distribution substations and 1,000 MVA of distribution transformer capacity and more than 1,400 km of new primary and secondary distribution circuits. • ,, - - 3 - The estimated cost of the project is $389.6 million. In addition to the Bank loan, about $18.6 million will be provided by suppliers' credits and the remaining $200 million by EEEB. The World Bank lent $87 million to EEEB in March 1980 to assist its 1979-1985 subtransmission and distribution program. Water Supply for Barranquilla The project, which has an estimated cost of $41,6 million, will include the provision of equipment, civil works and technical assistance for these purposes as well as consultants' services for preparation of subsequent network expansion to meet demand in the 1980s. It will also promote the institutional development of EPMB by strengthening its management and its administration and operating efficiency. Such improvements should, in turn, restore the company's financial viability, enabling EPMB, by 1989, to generate sufficient funds from internal sources to finance a reasonable share of its investment requirements. By 1991, about 600,000 additional people are expected to have access to potable water from the project. About 400,000 of them, or 70 percent of the beneficiaries of this program, reside in the city's lower income areas. Of these about 100,000 will receive service through house-connections and 300,000 through public standpipes. Barranquilla, the commercial center of Colombia's Atlantic Coast region, has a population of about 1.1 million. Public services in Barranquilla are the lowest in coverage and quality among Colombia's larger cities. EPMB's water supply facilities serve about half of the city's total population through residential, industrial and commercial connections. It is estimated that about 150,000 people receive water through illegal connections. Some of Barranquilla's poorest people purchase water from private vendors. Maintenance and repair of the water system is very poor. At least in two occasions this year the services were paralyzed in the city when the system failed. The project focusses on rehabilitating the most deteriorated parts of the system in order to reduce the risks of future breakdowns and to increase the system's efficiency. The three World Bank loans will have the guarantee of the Republic of Colombia. The loans are for 17 years, including four years of grace, with a variable interest rate, currently 8.82 percent, linked to the cost of the Bank's borrowings. They also carry an annual commitment charge of 0.75 percent on undisbursed balances. - 0 -