Colombia - Second Telecommunications Project

CIRCULATING COPY RESTRICTED TO BE RETURNED TO REPORTS DESK Report No. P-925 This report was prepared for use within the Bank and its affiliated organizat ions. They do not accept responsibility for its accuracy or completeness. The report may not be published nor may it be quoted as representing their views. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT REPORT AND RECOMMENDATION OF THE PR ESIDENT TO THE. EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO EMPRESA NACIONAL DE TELECOMUNICACIONES FOR A SECOND TELECOMMUNICATIONS PROJECT WITH THE GUARANTEE OF THE REPUBLIC OF COLOMBIA May 3, 1971  INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPIENT REPORT AND RECONMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO EMPRESA NACIONAL DE TELECOMUNICACIONES FOR A SECOND TELECOMMUNICATIONS PROJECT WITH THE GUARANTEE OF THE REPUBLIC OF COLOMBIA 1. I submit the following report and recommendation on a proposed loan in an amount in various currencies equivalent to US$15 million to Empresa Nacional de Telecomunicaciones (TELECOM) for a Second Telecommu- nications Project. PART I - HISTORICAL 2. The proposed loan would be the Bank's second lending operation fr. the Colombian telecommunications syetem. The first was the US$16 million loan made in 1967 to TELECOM. It helped finance a modern long- distance network and the improvement and expansion of local and inter- national telephone, telegraph and telex services. Due to delays in build- ing construction and late deliveries of equipment, the Closing Date of this loan has been postponed by one year to December 31, 1971. The full amount of this loan is now covered by Bank approved purchase orders and the project is expected to be satisfactorily completed and the loan fully disbursed by the new Closing Date. 3. Bank missions to Colombia appraised the proposed project during June-August 1970, and negotiations were held at the Bank during January 15-17, 1971. The Government was represented by Dr. Douglas Botero (Ambassador to the United States), Ing. Humberto Chaves (Vice-Minister of Communications), and Dr. Boris Plazas (Chief of the Communications Division of the National Planning Department). TELECOM's negotiatiors were Dr. Francisco Lozano (President), Dr. Emilio Saravia (Financial Vice-President), and Dr. Augusto Gongora (Chief Planning Engineer). 4. The proposed loan which would be the forty-fifth made to Colombia would increase the total amount of Bank loans to Colombia to US$741.8 million (net of cancellations), of which US$572.4 million is now held by the Bank. IDA has made one credit of US$19.5 million for highways in Colombia. A summary statement of Bank loans and IDA credits to Colombia and their status of disbursements as of March 31, 1971 was  -2- included in nmy Report and Recommendation on the proposed loan for the Caqueta Land Colonization Project (P-921), dated April 21, 1971. 5. IFC has made 35 investments and underwriting commitments in 18 enterprises in Colombia, totalling US$18.5 million (net of cancella- tions). PAR II - DESCRIPTION OF THE PROPOSED LOAN 6. Borrower: Empresa Nacional de Telecomunicaciones. Guarantor: Republic of Colombia. Amount: The equivalent in various currencies of US$15.0 million. Purpose: To assist in financing the expansion and improvement of the local services and the long-distance network of the Borrower. Amortization: 20 years, including a four-year period of grace through semi-annual install- ments, beginning September 15, 1975 and ending March 15, 1991. Interest Rate: 7