Announcement of The World Bank's Transport Rehabilitation Project in Peru on March 18, 1994

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. 94/71 Contact: Antonio Pimenta-Neves - Tel: 202-473-8722 Peru Transport Rehabilitation Project The following is information on a project approved by the World Bank's Board. DATE: March 18, 1994 WORLD BANK GROUP SUPPORT: World Bank loan: $150.0 million. The World Bank loan is for 20 years, including five years of grace, with a variable interest rate, currently 7.43 percent, linked to the cost of the Bank's borrowings. It also carries an annual commitment charge of 0.25 percent on the undisbursed balance. TOTAL COST: $242.0 million. OTHER PROPOSED FINANCING: Government of Peru: $54.0 million; Germany: $38.0 million. IMPLEMENTING AGENCYr Ministry of Transport, Communications, Housing and Construction (MTCC) ESTIMATED COMPLETION DATE: 1999 PROJECT DESCRIPTION: The objective of the Transport Rehabilitation Project is to address urgent transport infrastructure needs, which have been neglected over the past ten years, but are critical to renewed economic and social development. Bank support is required to rebuild and strengthen the institu- tional capabilities of core transport agencies for efficient utilization of financial resources necessary for the restoration of transport infrastructure and services. The project will also lay the groundwork for future projects, focussing on strengthened road management, increased private sector participa- tion in the transport sector, and improved mobility of the poor. The project consists of five components: (a) road rehabilitation and maintenance, includ- ing rehabilitation of six vital roads (725 km) connecting central Peru and the coast, a traffic safety program, a pilot road maintenance program (620 km), a bridge program to reconstruct derelict bridges and acquire Bailey bridges, and support the government's road system; (b) railway privatization and rehabili- tation by reducing staff redundancy, rationalizing railway debt, closing down or receiving budgetary transfers from government for unprofitable services, and urgent rehabilitation to keep the railway in operation while privatization is under way; (d) a pilot project for non-motorized transport in Lima to promote the use of bicycles among low-income residents; and (e) technical assistance and training to strengthen the institutional capacity for managing roads and bridges; support the creation of an autonomous agency responsible for planning, operating, financing, and administering the highway network; increase MTCC's capability to manage environmental issues; and assist the privatization and management of the railways.