Announcement of World Bank Supports First Rural Development Project in Peru on March 20, 1980

.FOR IMMEDIATE RELEASE World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A.• Telephone: (202) 477-1234 BANK NEWS RELEASE NO. 8D/60 March 20, 1980 WORLD BANK SUPPORTS FIRST.RURAL DEVELOPMENT.PROJECT IN PERU A rural development project in Peru's southern altiplano region to help raise incomes and improve living conditions for about 29,500 poor rural families will be carried out with World Bank assistance. A Bank loan of $15 million will support this project, the first Bank-financed integrated rural development scheme in Peru. The Puno rural development project will be carried out in the Juliaca micro-region, close to Lake Titicaca on the southeastern border of Peru. The project has an estimated total cost of $27.3 million and will be implemented in four and a half years . • • The Juliaca micro-region is one of the poorest areas of Peru, with an average income for a four-member family of under $200--well below the relative poverty level. The rural population of the micro-region was estimated at 118,000 in 1978, representing some 29,500 families engaged in agriculture. This project will constitute one of the first efforts in Peru to coordinate development activities to improve the quality of life for poor rural families, including small farmers not associated with the government's agrarian reform program. If successful, this approach could be replicated on a larger scale as an important element of the government's program to alleviate rural poverty. The project consists in the improvement and construction of irrigation systems, and the provision of agricultural credit and intensive research and extension programs. It will also include the rehabilitation of rural roads, a forest plantation component for fuel and soil conservation, imporvement of rural health facilities, and construction of communal potable water systems. Vocational training and pre-investment studies for a follow-up project will also be provided under the project. The project is expected to substantially improve living conditions for about 29,500 poor rural families in the Juliaca micro-region. Of these, 17,000 families (4,100 minifundistas, 9,400 small farmers, 500 medium-sized farmers and 3,000 families working on seven agrarian reform enterprises) participating directly in the agricultural development components of the project are expected to increase production and productivity on about 24,000 hectares. Crops of potatoes, barley and other grains, and livestock (beef, lamb, milk, and wool) output are expected • to more than double in most cases. Also, labor demand on area ranches and farms is expected to increase by over 2,000 man-years, at full development of the project • NOTE: Money figures are expressed in U.S. dollar equivalents. ... /  • - 2 - A feasibility study for the project was prepared in 1978 with the assistance of the United Nations Food and Agriculture Organization/World Bank Cooperative Program. The $15 million World Bank loan to the Republic of Peru has a term of 17 years, including 4 years of grace, with interest at 8.25% annually. - 0 - • • • FOAM NO. 1121 (5-76) T E C HN I CA L D A T A • PROJECT: COUNTRY: TOTAL COST: Puno Rural Development Peru $27.3 million BANK FINANCING: $15 million for a term of 17 years, including 4 years of grace, at 8.25% per year OTHER FINANCING: Government of Peru, $11.5 million; Beneficiaries, $0.8 $0.8 million IMPLEMENTING ORGANIZATION: Organismo Regional de Desarrollo de Puno (ORDEPUNO) Puno, Peru PROJECT DESCRIPTION: It consists of: (a) the rehabilitation and construction of small irrigation systems to serve 4,100 hectare (ha); (b) an agricultural credit program to finance on-farm invest~ents and incremental production inputs for the seven agrarian reform enterprises in the project area and 14,000 private farmers; (c) crop and livestock extension services for beneficiaries of the credit program; (d) the establishment of 1,500 ha of forest plantations for soi 1 conservation and fuel; (e) the construction and improvement of crop, livestock and irrigation research facilities, and the establishment of training and demonstration programs; • (f) the rehabilitation and upgrading of 515 kilometers of rural roads, the acquisition of road maintenance equipment for the Juliaca micro-region and the construction of six post offices; (g) the construction and improvement of 6 and 11 rural health facilities, respectively. Equipment for these facilities and the Lampa hospital would also be provided as would a nutrition program and training for rural health agents; (h) the installation of small comunal potable water systems to serve some 13,250 families in 46 communities in the project area; (i) the construction and equipping of 23 vocational training centers; and (j) studies to prepare a second phase project for the Southern Altiplano. PROCUREMENT: Contracts for civil \-Jerks exceeding $500,000 will be let in in accordance with Bank guidelines for international competitive bidding (ICB). Civil works of less than $500,000 but more than $100,000 will be procured under local competitive bidding procedures (LCB) acceptable to the Bank. Most road rehabilitation works and minor irrigation rehabilitation works, that are not likely to attract local contractors because of their small scale and dispersed nature, will be carried out by force account. Contracts for equipment of over $150,000 per package will be let under ICB. Qualified local suppliers and those from Latin American Free Trade Association and Cartagena Agreement member countries participating in ICB will be accorded a preference representing the difference between the prevailing duty actually applicable and the duty applicable to goods imported from non-member countries, or 15% of the c.i.f. price, whichever is lower. Other contracts for equip- ment will normally be grouped into lots of not less than $50,000 each and will be procured under LCB. CONSULTANTS: About 128 man-months of consultant services to assist the • project unit will be required . ECONOMIC RATE OF RETURN: 27% ESTIMATED COMPLETION DATE: 1984 - 0 -