Announcement of World Bank Lends One Hundred Seventy-Three Million Dollars for Urban Transport and Petrochemical Projects in Brazil on May 11, 1978

., ,FOR I fy'lMEDfATE RE~EASE Q ' ' tJWorldBank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A. • Telephone: (202) 393-6360 BANK NEWS RELEASE NO. 78/84 MAY 11 , 1978 WORLD BANK LENDS $173 MILLION FOR URBAN TRANSPORT AND PETROCHEMICAL PROJECTS IN BRAZIL - Two World Bank loans totaling $173 million wi 11 help finance, for the first time, an urban transport project and a petrochemical project in Bra~il. The first project will benefit low-income residents of five large cities and the second will have a ma- jor positive impact on the country's balance of payments. The urban transport project is being supported by an $88 mil lion loan. It will improve urban transport services in five metropolitan areas: Belo Horizonte, Curitiba, Porto Alegre, Recife, and Salvador, with a total population of over 8.5 mi 11 ion. The petrochemical project, compr1s1ng a raw materials and utilities plant, wi 11 form the core of the country's third petrochemical complex, to be located near Porto Alegre, in the state of Rio Grande do Sul. It will be supported by an $85 million loan • • Urban Transport The first World Bank operation in the urban transport sector in Brazil is aimed at improving urban transport services, with emphasis on the provision of public trans- port, especially to the poor; promoting and supporting the development and implementa- tion of appropriate urban transport policies; and strengthening municipal, state and federal capacity to implement sound urban transport projects. The project wil~ be carried out by the Empresa Brasi leira dos Transportes Urbanos (EBTU) an~ has an estimated total cost of $248.9 million. It includes traffic engineer- ing measures to improve circulation in central areas; introduction of exclusive bus lanes; traffic operations programs to improve capacity and safety; widening or con- struction of missing road 1 inks in the network; reorganization or construction of bus terminals; and paving of bus routes in low-incDme areas .. Over two thirds of the investments included in the project are expected to gener- ate benefits directly to people with per capita incomes below the relative poverty level in the urban areas of Brazil, currently estimated at $~50 per annum. ,I COPESUL Petrochemical The Companhia Petroquimica do Sul (COPESUL) petrochemical project also represents the first involvement of the Bank in this sector. The total cost of the project is estimated _at $836 million. Its financing wi 11 include participaiion of-the Inter-Ameri- • can Development Bank (IDB)_~J..th an expected amount of.. $112 million, and of a syndicate of French banks, through a tied credit of about $22 mil lion. ! ... NOTE: Money figures are expressed in U.S. dollar equivalents.  '. • ., -2- The project wil 1 produce approximately 1.25 million tons per year of petroleum • derivatives including primarily such basic petrochemical raw materials as ethylene, propylene, butadiene and benzene for supply along with utilities, to at least seven second-generation units that will produce plastics and synthetic rubber. Net annual foreign exchange savings by 1985, when the Rio Grande do Sul complex will reach its full operation capacity, are estimated at $510 million at 1977 prices, or about 12% of Brazil's projected current account deficit. In addition, the petro- chemical complex wi 1 l have a significant effect on the development of Brazil's southern region by stimulating the growth of related industries and creating additional job opportunities. The project will create l ,400 jobs directly and indirectly up to 15,000 in the seconC:-..:-.11d in the more labor-intensive third-generation industries. Both loans will have a term of 15 years, including 3 years of grace, with inter- est at 7.5% per annum. -0- • • Y"Oij¥ NO. 1121 (~-76) T EC HN I CA L DAT A • PROJECT: COPESUL Petrochemical COUNTRY: Braz i 1 TOTAL COST: $836 million BANK FINANCING: $85 million, for a term of 15 years, including three years of grace,.with interest at 7.5% per annum. OTHER FINANCING: Petrobras Quimica S.A. (PETROQUISA) and lnsumos Basicos S.A. Financiamento e Parti"cipacoes (FIBASE) equity contributions, $334.4 million Banco Nacional de Desenvolvimiento Economico (BNDE), $241.7 mi 11 ion Inter-American Development Bank (IDB), $111.7 million Foreign Private Lenders, $33 million· French credit line & suppliers credits, $30.2 million IMPLEMENTING ORGANIZATION: ~ompanhia Petroquimica do Sul COPESUL Avenida Presidente Vargas; 309 21a Rio de Janeiro Brazil PROJECT DESCRIPTION: It consists of a raw materials plant with a production • capacity of about· 1,250,000 ·tons per year of ethylene, propylene, butadiene, benzene and other petioleum derivatives and a ~ti1ities plant including (i) steam production facilities; (ii) water treatment facilities to treat and demineralize water for utility and process requirements; and (iii) power generation facil- ities for critical operations that cannot tolerate power interruptions. PROCUREMENT: Procurement of equipment to be financed by the Bank will be through international competitive bidding or interna- tional shopping in accordance with the Bank's guidelines. Brazilian suppliers will be allowed a preference margin of 15% (or the import duty rate if lower}c Procurement of the coal-fired boiler system to be financed jointly with the IDB loan wil 1 also be made through international competitive bidding consistent with Bank's guidelines. CONSULTANTS: Compagnie Francaise d'Etudes de Construction, Technip, France Kinetics Technology International (KTI), Netherlands Promon Engeneria S.A. Brazil Montreal Engeneria S.A. Brazil • ECONOMIC RATE OF RETURN: ESTIMATED COMPLETION DATE: 20% 1981 - 0 -  ,,. FORM NO. 1121 •• 0 (, ,-~· (5-76) T ECH N I CAL DAT A PROJECT: COUNTRY: TOTAL COST: Urban Transport Braz i 1 $248.9 million • BANK FINANCING: $88 mil lion, for a term of 15 years, including 3 years of grace, at 7.5% per annum. OTHER FINANCING: Empresa Brasilei ra dos Transportes Urbanos (EBTU), $87. 4 mi l 1 ion States and municipalities, $73~5 million IMPLEMENTING ORGANIZATION: Empresa Brasilei ra dos Transportes Urbanos (EBTU) Edificio Toufic 70000 Brasilia Brazil PROJECT DESCRIPTION: It will include traffic engineering measures to improve circulation in central areas; introduction of exclusive bus lanes; traific operations programs to improve capacity and safety (TOPICS) to alle- viate critical congestion points; widening or construction of missing links in the urban road networks; reorganization and construction of bus terminals; and paving of bus rout. in low-income areas. It wi 11 also include an extensive technical assistance program fo the sector. PROCUREMENT: The civil works and equipment for the project, with an estimated total cost of $130 mil lion and $6 mii lion, respectively, will be procured under international competitive bidding in accordance with Bank guidelines. Manufacturers whose bids contained components manufactured in Brazil equal to at least 50% of the value of the bid wi 11 be given a margin of preference equal to 15% or the applicable import duty, whichever is less. CONSULTANTS: Consultant services of traffic engineering, bus operations and related specialists, for a total of 204 man-months, will be required for the project. An additional 244 man-months of consultants is needed for the preparation of studies on bus operations and regulation for the metropolitan area of Recife; a program of monitoring and evaluation of the project; the development of Metropolitan Urbaq Transport Companies; the relationships between employment, poverty, and urban transport; and of the potential for introducing urban road pricing in Brazi 1. ECONOMIC RATE OF RETURN: ESTIMATED COMPLETION DATE: 31% for subprojects in Curitiba, Recife and Salvador 53% for the sub-project in Porto Alegre 1981 - 0 - •