Announcement of Thirty-Five Million Five Hundred Thousand US Dollars Lent for Road and Rail Transport in Colombia on July 24, 1968

7818 H STREET, N.W., WASHINGTON D. C. 20433 TELEPHONE: EXECUTIVE 3-6360 Bank Press Release No. 68/37 Subject: $35.5 million lent for road and July 24, 1968 rail transport in Colombia The further improvement of Colombia's rail and road transport systems will he assisted by two World Bank loans totaling $35.5 million. The, World Bank has been closely associated with the development of efficient rail and road transport systems in Colombia since 1951 and World Bank Group lending for this purpose will now total $198 million. Continuing improvement of surface transportation, only 20 years ago the largest single obstacle to Colombia's development, is essential for the movement of internal and external trade. Better and less costly service will ~ stimulate the further development of agriculture and industry. Colombia, covering an area of 386,000 square miles, has a population of 20 million. Three mountain ranges dividing the country present formidable barriers to movement between population centers which until recently were separate and vir- tually isolated communities. Since 1951 the railway system, originally a number '\ of independent lines, has been consolidated under the authority of the Colombian National Railroads (CNR) into a s.ingle network, and a new 420-mile railway, giving Bogota and other industrial centers access to the Atlantic through the port of Santa Marta, has been built and is now the main artery for railway traffic. Some of the rest of the system has been rehabilitated, operations improved and carrying capacity increased. About 2,175 miles of the most important trunk roads comprising ~art of the 11,200-mile national highway system have been built or • reconstructed to higher standards to meet requirements of rapidly increasing traffic, and maintenance operations have been improved. /more  A Colombia Transport Loans - 68/37 • - 2 - While considerable progress has been made in road and rail transport, much remains to be done. The most urgent need for the railways is further track re- habilitation and additions of locomotives and rolling stock to improve operating efficiency, reduce costs,.provide better service, and expand capacity to handle the expected rise in traffic. The road system is still in relatively early stages of development. Modern methods of road construction were introduced following the first Bank road loan in 1951. Execution of the road projects proceeded slowly due to organizational, technical and financial difficulties. Management consultants are now assisting in the reorganization of the Ministry of Public Works, which is responsible for the road system, and the Government has taken several measures to expedite road development. The current project comprises high priority items of road construction and technical assistance. $18.3 Million Railway Loan The railway project now being assisted by a ·Bank loan of $18.3 million is part of CNR's five-year $81 million investment program which has grown out of a 10-year (1963-72) rehabilitation program undertaken by CNR following recommenda- tions of consultants who surveyed all modes of transport in Colombia in 1961. • The Bank loan will cover about half of the foreign exchange required for the first three years of the program during which total expenditures will be equiva- lent to $62 million. Long-term supplier credits for the procurement of 60 diesel locomotives in Spain and 1,200 freight cars in Mexico will finance the remainder. Association of the Bat;k loan with the supplier credits will allow the execution of a larger project with a correspondingly greater impact. The local currency component will be covered out of the Government's budgetary allocations to the CNR. The principal items to be financed by the Bank loan are 256 miles of track, 110 ballast cars, equipment for track maintenance, teleconnunications and freight handling, parts for passenger and freight cars, and consulting services for the reorganization of several aspects of CNR's operations. All coptracts for equip- ment financed by the Bank loan will be awarded on the basis of international competitive bidding. The i.oan will be made to the Colombian National Railroads and will be guaranteed by the Republic of Colombia. It' will be for a tenn of 20 years, in- cluding a 3-year grace period, and will bear interest of 6-1/4%. l\ank of America,i • American International Bank, and National Bank of North America, all of New York, have agreed to participate in the loan to the extent of $300,000 representing part of the first maturity which falls d~e in October 1971. /more  Colombia Transport Loans - 68/37 • $17.2 Million Road Loan - 3 - The project being assisted by a Bank loan of $17.2 million consists of the construction of sections totaling 317 miles of important trunk highways, con- struction of a major bridge, and consultants' services for studies, further engineering of high priority roads and other work. Construction involves:, Completion of a highway between Buga and the port of Buena- ventura which will provide a much shorter route between the fertile Cauca Valley north of Cali and the port. Improvement of three sections of the Medellin-Cartagena road to provide a completely paved trunk highway between Medellin, the country's second largest city and an important industrial center, and the Atlantic port of Cartagena. This highway is the only transport mode for the region and serves many popula- tion centers along the route, many of which tame into being as a result of its original construction. Reconstruction of a road between Medellin and Santuario to facili- tate .industrial expansion in the Medellin area; Medellin is lo- cated 'in a valley and has little land left for expansion. • Construction and paving of a section to complete the trunk high- way between Bogota and Bucaramanga, the main industrial and mar- keting center of the northeast region of Colombia. Rl'tplacement by a modern structure of a single-lane, unsafe bridge on the Cauca River at La Virginia between Cali and Medellin. The roads for which preinvestment studies and detailed engineering will be undertaken will be selected on the basis of a transportation survey soon to be completed by a Harvard University team. Bank funds will also finance the second phase of the management study which involves the implementation of consultants' recommendations for the reorganization of the Ministry of Public Work.s, and mis- cellaneous laboratory and workshop equipment needed to carry out the reo,r.:gani,) zation. The total cost of the road project is estimated at the equivalent of , , $39.5 milli.on. The loan '~ill cover the estimated foreign exchange costs of\: construction and consultants' services. The local currency costs will be financed through the National Highway Fund. The loan will be made to the Republic of Colombia for a ti~i: of 24 years, including a 4-year grace period, with interest at 6-1/4%. • - 0 -