Announcement of World Bank Lends One Hundred Fifty Million Dollars to Mexico for Railway Improvement on December 18, 1980

" . FQR IMMEDIATE RELEASE World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A.• Telephone: (202) 477-1234 BANK NEWS RELEASE NO. 81/37 December 18, 1980 WORLD BANK LENDS $150 MILLION TO MEXICO FOR RAILWAY IMPROVEMENT The World Bank has approved a $150 million loan to Mfxico to help finance the rehabilitation of the largest railway network in the country. The project aims at expanding the Ferrocarriles Nacionales de Mexico's carrying capacity to meet the transport demands of a rapidly growing economy. With an estimated total cost of $1,527 million, the project is the fourth assisted by the World Bank in the railway sector. The Bank has previously financed three other railways projects in Mexico with a total lending of $236 million. • The project represents the Ferrocarriles Nacionales investment plan for 1981-83. It will help finance the purchase of about 94,000 tons of rails, about 7,000 sets of freight car components, 504 service and freight cars, 8,000 axle and roller bearing sets, and consulting services for technical assistance. Mexico's railways play a key role in the development of the country's economy. They are the principal means of transporting bulk commodities over long distances, including food grains, minerals, and fertilizers. Ferrocarriles Nacionales is the largest of five separate government- owned railways. It has 14,200 kilometers of track, or 70% of the total network, and carries 80% of the total rail traffic. The project is expected to relieve the bottlenecks in the country's railway system, which caused serious problems in the movement of grains and other commodities in 1980. It will also help improve the efficiency of Ferrocarriles Nacionales operations and its financial performance, con- tinuing programs initiated under previous projects. The $150 million loan was made to Banco Nacional de Obras y Servicios Poblicos (BANOBRAS), as financial agent for the Government of h{xico and Ferrocarriles Nacionales de Mexico, with the guarantee of the United Mexican States. It has a term of 15 years, including three years of grace, with interest at 9.25% per annum . • NOTE: Money figures are expressed in U.S. dollar equivalents. FORM NO.1121 (5-76) T EC HN I CAL DAT A PROJECT: COUNTRY: TOTAL COST: Fourth Railway M~xico $1 , 52 7 mi 11 ion • BANK FINANCING: $150 million for a term of 15 years, including three years of grace, with interest at 9.25% per annum OTHER FINANCING: Nacional Financiera, $929 millioni Banco Nacional de Obras y Servicios Publicos (BANOBRAS), ~313 million; Government of Mexico, $41 million; and Export Import Bank of the United States, $94 million IMPLEMENTING ORGANIZATION: Ferrocarriles Nacionales de Mexico Avenida Central 140 M/xico 3, D. F., Mexico PROJECT DESCRIPTION: It includes: (a) track rehabilitation on about 780 km of principal traffic routes and on about 560 km of secondary lines; (b) track maintenance machinery and equipment; strengthening and, where neces- sary, replacement of 510 older bridges; (o) lengthening of existing sidings and con- struction of additional sidings to enable longer freight trains and more frequent ser~ vices; (d) installation of a centralized traffic control system on about 960 km or lines; (e) acquisition of 192 main line diesel locomotives, 50 shunting locomotives, and 9~350 freight cars; (f) replacement and addition of workshop machinery; and (h) technical assistance. PROCUREMENT: All items to be financed under the loan, other than consultant services, will be subject to international competitive bidding in accordance with Bank guidelines, In evaluating bids, Mexican manufacturers will be allowed a margin of preference equivalent to 15% of the c.i .f. cost of competing imports, or the relevant prevailing custom dut~ whichever is lower. CONSULTANTS: About 220 man-months of consultant services will be re9uired in the areas of management information systems, computeriza- tion of rail line and yard capacity planning, and improvement of train and yard operations. ECONOMIC RATE OF RETURN: ESTIMATED COMPLETION DATE: 22% i984 - 0 - •