Announcement of Mexico Receives Forty Million US Dollars Loan for Water Supply and Sewerage on December 19, 1975

eWorldBank 1818 H Street; N.W., Washington, D.C. 20433, U.S.A. • Telephone: (202) 393-6360 Bank News Release No. 75/103 December 19, 1975 MEXICO RECEIVES $40 MILLION LOAN FOR WATER SUPPLY AND SEWERAGE The World Bank has approved q. loan of $40 million to a Mexican federal development bank to help finance a project that will improve water supply and sewerage facilities in eight medium-sized cities. The loan will go to the Banco Nacional de Obras y Servicios Publicos, S.A., and will be re-lent through a recently established investment fund to local water and sewerage administrations. The project, with a total cost of $100 million, is associated with the establishment of a new organizational unit within the Ministry of Hydraulic Resources (SRH) designed to strengthen project preparation, design, construc- tion, and operation activities. The project also aims at supporting new financial mechanisms to channel funds into this sector, and the setting up of guidelines for project prepara- • tion, design and appraisal of water supply and sewerage systems in urban cen- ters. Mexico is a country with special limitations on its water resources. Com- peting claims for electric energy, irrigation or water supply for urban use pose growing problems. Technical studies and training plans will be prepared at the same time as the project to help improve the economic use of water in Mexico. The project, which will provide water supply and sewerage facilities in several urban corrnnunities, at minimum costs, also could be duplicated in other parts of the country. There will be a training program for the staff of SRH and local water adm~n- istrations connected with the project. This will cover operational, administra- tive, and financial techniques. Water supplies will be improved and extended in eight cities -- Ciudad Victoria, Jalapa, Mexicali, Morelia, Reynosa, Salamanca, Tampico-Ciudad Madero and Tuxtla Gutierrez -- with additional sewerage services in six. On completion of the project in 1980, an additional 580,000 people in these cities will have a regular water supply and 642,000 will be connected to a sewerage service. The National Bank of North America, New York.City, and the Industrial National Bank of Rhode Island, Providence (U.S.A.) are participating in the loan. • The $40 million loan will be for 20 years, including four years of grace, with interest at 8-1/2 percent per annum . Note: Money figures are e.xpressed in US dollar equivalents. Form No. 1121 (9-75) PROJECT: T E CHNI CAL DAT A Medium Size Cities Water Supply and Sewerage Project • COUNTRY: Mexico TOTAL COST: $100 million BANK FINANCING : $40 million for 20 years, including four years of grace, with interest at 8-1/2% per annum OTHER FINANCING: Government of Mexico - $60 million IMPLEMENTlNG ORGANIZATION: Ministry of Hydraulic Resources (SRH) Paseo de la Reforma 69 Mexico, D.F. FINANCIAL AGENT: Banco Nacional de Obras y Servicios Publicos, S.A. Insurgentes Norte 423 Mexico, :O.F. • PROJECT DESCRIPTION: Improvement and extension of water supply facilities . in eight medium size cities -- Ciudad Victoria, Jalapa, Mexicali, Morelia, Reynosa, Salamanca, Tampico-Ciudad Madero and Tuxtla Gutierrez -- and sewerage services in six of them. The project also includes a training program for the executing agency, SRH, and the beneficiaries' staff. PROCUREMENT: Contracts for civil works (to be grouped insofar as possible to cost $1.6 million or more) and procurement of materials and equipment (estimated to cost $150,000 or more) on basis of interna- tional competitive bidding in accordance with Bank guidelines. Invitations to bid for civil works estimated to cost less than the equivalent of $1.6 million and more than the equivalent of $80,000, and for materials and equipment estimated to cost less than the equivalent of $150,000 and more than the equivalent of $50,000, shall be advertised locally in accordance with the normal practices of the Government, which do not preclude bidding by foreign contractors or suppliers. Civil works esti- mated·to cost the equivalent of $80,000 or less may be procured (1) in accordance with the Government& ordinary procurement procedures; and (2) through force account in special cases, up to an aggregate cost of $1.2 million. CONSULTANTS: To be selected by SRH and Government. Bank loan will cover expenditures on consultants for training only. ECONOMIC FATE OF RETURN: The incremental financial rates of return on the proposed investment on water supply range from 0.7 to 10.7%. • ESTIMATED COMPLETION DATE: June 30, 1980 -0-