Announcement of Uruguay Modernizes Water Systems on March 24, 1988

FOR IMMEDIATE RELEASE -NorldBank 1818 H Street. N.W .. Washington, D.C. 20433, U.S.A. BANK NEWS RELEASE NO. 88/57 Contact: Ciro Gamarra (202) 676-1217 URUGUAY MODERNIZES WATER SYSTEMS WASHINGTON, March 24, 1988 -- Uruguay's efforts to modernize its water supply systems will be assisted by a World Bank loan of $22.3 million. The loan will support a project which includes restructuring of Administracion de las Obras Sanitarias del Estado (OSE), a decentralized state agency that provides water and sewerage services in the country. The project will enable OSE to satisfy water demand in Montevideo at least to the year 2000, extend services to low-income areas, increase the availability of water in several medium-sized cities, and provide services at affordable prices. The project will extend services to an additional 175,000 people in Montevideo and 58,000 in other cities. This is the first World Bank-financed project in the water and sanitation sector in Uruguay. It will assist the government in improving the operations of OSE and helping it become fully viable financially. OSE has required continual government transfers in the past. Service coverage is still high in Uruguay but infrastructure is old and needs modernizing, reflecting insufficient budgets for system maintenance, rehabilitation and replacement. The $33.2 million modernization and restructuring project will enable OSE to operate without subsidies and to provide services to low-income groups at affordable prices. The rehabilitation of water supply systems includes upgrading the Montevideo water treatment plant to increase capacity by about 20 percent, restoring the capacity of two transmission mains from the treatment plant to Montevideo reservoirs, and repairing or replacing equipment in the production and distribution systems of Montevideo and several medium-sized cities. The project also includess expansion of the Montevideo distribution system to serve 5,000 low-income families, and preparation of OSE's water supply and sanitation plan. Technical cooperation and training, through a "twinning" arrangement with a suitable and experienced water company from another country will also be provided. The project will be carried out over eight years. OSE will provide $10.9 million to cover the balance of project costs. The $22.3 million loan is for 17 years, including four years of grace, with a variable interest rate, currently 7.72 percent, linked to the cost of the Bank's borrowings. It also carries an annual commitment charge of 0.75 percent on the undisbursed balances. NOTE: Money figures are expressed in U.S. dollar equivalents.