Colombia - Fifth Highway Project

RESTRICTED FILE COPY RReport No. P-620 This report was prepared for use within the Bank and its affiliated organizations. They do not accept responsibility for its accuracy or completeness. The report may not be published nor may it be quoted as representing their views. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE REPUBLIC OF COLOMBIA FOR THE FIFTH HIGHWAY PROJECT July 11, 1968  INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOFMENT REPORT AND RECOMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED IDAN TO THE REPUBLIC OF COlOMBIA FOR THE FIFTH HIGHWAY PROJECT 1. I submit the following report and recommendation on a proposed loan in an amount in various currencies equivalent to US$17.2 million to the Republic of Colombia. PART I - HISTORICAL 2, The Bank has been closely associated with highway development in Colombia since 1951, having made four loans totalling US$66.85 million equivalent in 1951, 1953, 1956 and 1961, respectively. In addition an IDA credit of US$19.5 million was made in 1961. The emphasis of these loans was on the reconstruction, improvement and expansion of existing roads to meet rising traffic demands and on improvement in the maintenance of the Colombian highway system generally, 3. The proposed loan would continue this process of upgrading of priority trunk highways, on some of which work began under earlier loans. The loan would also finance the implementation of consultantslrecommenda- tions for the reorganization of the Ministry of Public Wbrks. 4. Apart from lending for highways, the Bank has also been active in financing the Colori,bian National Railways (CNR), having provided four loans totalling UJS$76.3 million equivalent between 1952 and 1963. A project for a further loan of US$18.3 million equivalent is being pre- sented together with the proposed highway loan. 5. The Project was appraised in April 1968. Negotiations of the proposed loan took place in Washington June 12-14., 1968. The Colombian Government was represented by Dr. Bernardo Garces, Minister of Public Works, who was assisted by Dr. Oscar Mejia, a private consultant. 6. The following is a summary statement of Bank loans and IDA credits to Colombia as of June 30, 1968:  -2- Loan/ Amount (US$ Million) Credit Undis- No. Year Borrower Purpose Bank IDA bursed Fully disbursed Total (less cancellations) 313.8 5 1961 Government Roads 19.5 o.6 345 1963 Acerias Paz del Rio S.A. Steel 30.0 6.0 369 196h Empresas Publicas de Medellin Power 45.0 26.6 h48 1966 Government Agriculture 16.7 12.1 h51 1966 Banco de la Republica Industry 25.0 8.7 499 1967 Empresa Nacional de Communi- Telecomunicaciones cations 16.0 14.6 502 1967 Instituto Colombiano de la Reforma Agraria Irrigation 9.0 9.0 534 1968 Banco de la Republica Industry 12.5 1/ 536 1968 Empresa de Acueducto, Water Bogota Supply 14.0 1/ 537 1968 Empresa de Energia Elec- trica de Bogota Power 18.0 1/ _ Total (less cancellations) 500.0 19.5 77.6 of which has been repaid to Bank and others 101.3 Total now outstanding 398.7 Amount sold 16.7 of which has been repaid 13.9 2.8 Total now held by Bank and IDA 351.h0/19.5 Total undisbursed 77.0 o.6 77.6 1/ Agreements for these loans have been signed and they are expected to become effective prior to September 1968. 2/ Excludes US$44.5 million for Loans 534 co, 536 CO and 537 cO which have been signed but have not yet become effective. 7. Twenity-three loans have been completely disbursed and four have been repaid in full. On the remainder, disbursements-are proceeding nor- mally except on Loan 345 CO (Acerias Paz del Rio,pS.A.). The Executive Directors recently approved an extension of the Closing Date on this loan by one year to October-31, 1969 to allow for further disbursements, mainly of contract retentions.  - 3 - 8. Together with this report, I am submitting to the Executive Directors a proposed loan of US$18.3 million equivalent to the Colombian National Railways for the Fifth Railroad Project. These two loans, if made, would raise the Bank's total lending to Colombia to US$535.5 mil- lion. In the near future I expect to present to the Executive Directors a loan of about US$7.6 million equivalent to the Government for secondary education and a loan of about US$16.0 million equivalent for Power Inter- connection. 9. IFC has made 21 investments and underwriting commitments in 13 enterprises in Colombia totalling US$14.7 million. PART II - DESCRIPTION OF THE PROPOSED LOAN 10. The main features of the proposed loan are as follows: Borrower: Republic of Colombia. Amount: The equivalent in various currencies of US$17.2 million. Purpose: To finance the expansion and construction of 510 km of important truik highways, the construction of a major bridge, consultants' services for the supervision of construction and for the reorganization of the Ministry of Public Works, and pre-investment studies and detailed engineering of further high priority highway projects. Amortization: Loan would be for a term of 2b years, includ- ing a b-year grace period ending in 1972. Repayment would be in forty semi-annual install- ments from November 15, 1972 to May 15, 1992. Interest Rate: 6