Announcement of World Bank Lends One Hundred Sixty Million Dollars to Mexico for an Irrigation Project on June 2, 1980

FOR IMMEDIATE RELEASE World Bank 1818 H Street, N.W., Washington, D.C. 20433 1 U.S.A.• Telephone: (202) 477-1234 BANK NEWS RELEASE NO. 80/108 June 2, 1980 WORLD BANK LENDS $160 MILLION TO MEXICO FOR AN IRRIGATION PROJECT Mexico will implement an irrigation project in the Apatzingan Valley, a densely populated area in the central part of the country, with the assistance of the World Bank. The Bank has approved a $160 million loan to help finance the Apatzingan irrigation project, which will benefit about 9,800 farm families. The Apatzlngan project is the ninth irrigation project supported by the World Bank in Mexico. With an estimated total cost of $408.8 million, the project is part of a long-term program to develop water management and agriculture in the Balsas River basin. The Apatzingan project area is in a valley formed by the Tepalcatepec River • and its tributaries, located in the central part of Michoacan State. The Tepalcatepec River is itself a tributary to the Balsas River, which flows into the Pacific Ocean. The Balsas basin is the hinterland of the rapidly growing industrial port of Lazaro Cardenas. The project will promote development of intensive irrigated agriculture on about 110,000 hectares (ha). It includes construction of the Chilatan dam, on the Tepalcatepec Rfver, and the rehabilitation of the existing Cupatitzio system in the eastern part of the valley. Land clearing and leveling of about 85,500 ha of the project area is also included. The project will directly benefit some 9,800 families compr1s1ng about 8,900 ejidatarios, or members of a communal-type land tenure, and about 900 private farmers. About 61% of the beneficiaries are smallholders, having less than 10 ha each. Another 32% are medium landholders with up to 20 ha each. On full development of the project, farm incomes are expected to increase by 60% to 100% in the area. The project will provide fuller employment to family members of smallholders and generate opportunities for the landless rural families. Farm employment is estimat- ed to increase by 56%, from 2.5 million man-days per year to 3.9 million man-days. The $160 million World Bank loan to Nacional Financiera, S.A. has the guarantee of the United Mexican States. It is for a term of 17 years, including four years of grace, with interest at 8.25% per annum . • NOTE: All money figures are expressed in U.S. dollar equivalents. FORM NO. 1121 (5-76) T E CHN I CAL D A T A PROJECT: COUNTRY: Apatzingan Irrigation Mexico • TOTAL COST: $408.8 million BANK FINANCING: $160 million for a term of 17 years, including four years of grace, with interest at 8.25% per annum OTHER FINANCING: Government of Mexico, $248.8 million IMPLEMENTING ORGANIZATION: Secretarfa de Agricultura y Recurses Hidra'ulicos (SARH) lnsurgentes Sur 476, Mexico, D.F. Mexico PROJECT DESCRIPTION: It includes: (a) construction of the Chi latan dam, on the Tepelcatepec river, in the western part of the valley; (b) rehabilitation of the existing Cupatitzio system in the eastern part of the valley, with a possible back-up for diverting additional water from local strea. (c) construction of distribution and drainage systems, rehabilitation of diversion structures, and irrigation canals and drainage works, construction of feeder roads and other infrastructure works to service the irrigation district; (d) land clearing· on about 11,500 hectares (ha) and land leveling of about 74,000 ha of the project area; (e) strengthening of agricultural support services (extension, research, and training); and (f) equipment and machinery for operation and maintenance of project fac i l it i es. PROCUREMENT: About 85% of the contracts for the principal irrigation and drainage works, amounting to about $342.5 million, will be procured by international competitive bidding (ICB) in ac~ordance with Bank guidelines. Civil works will be grouped as possible into contracts having a minimun value of $2 million. To expedite the construction of civil works, small jobs {tele- communications, buildings, houses) will be contracted under local competitive bidding (LCB), following ordinary government procedures. The maximun value per contract will be $0.22 million, with the total of all such contracts not to exceed $50 million. Contracts for on-farm development works will be procured under LCB, or through negotia- tion following government procedures. About $5 million in vehicles, farm machinery and equipment contracts will be subject to ICB. A 15% margin of preference in the c. i .f. price or the applicable import duties, whichever is lower, will be allowed for equipment and vehicles produced in Mexico. About $2.8 million worth of minor equipment will be procured by LCB on the basis of government procedures. ECONOMIG RATE OF RETURN: ESTIMATED COMPLETION DATE: 15.5% 1986 • - 0 -