Announcement of World Bank Loan to Assist a Sugar Rehabilitation Project in the Dominican Republic on September 20, 1979

. . - FOR IMM~DIATE RELEASE •World Bank .1818 H Street, N.W., Washington, D.C. 20433, U.S.A.• Telephone: (202) 477-1234 BANK NEWS RELEASE NO. 80/12 September 20, 1979 WORLD BANK LOAN TO ASSIST A SUGAR REHABILITATION PROJECT IN THE DOMINICAN REPUBLIC The World Bank has approved a $35 million loan to assist a sugar rehabilitation project in the Dominican Republic. The project is expected to enable the country to sustain its present level of exports while meeting the projected increase of do- mestic sugar consumption. The primary objective of the project is to improve the operational efficiency and financial situation of the Consejo Estatal del Azucar (CEA), the State Sugar Council that controls most of the sugarcane production in the Dominican Republic. Sugar accounted for 32% of the country's total exports in 1978, with a total • production of 1.4 million metric tons (MT). Production capacity is distributed among CEA (840,000 MT) and two private groups. CEA administers the 12 state-owned sugar estates. The project has an estimated total cost of $69.2 million. It includes the rehabilitation of six CEA sugar mills at Ozama, Rio Haina, Boca Chica, Consuelo, Quisqueya,and Barahona. It also includes the rehabilitation of a total of 540 kilometers of railway track. Irrigation and drainage studies at Barahona estate, a cane area reduction pro- gram~ two pilot research programs, and technical services to assist CEA in improving its management and organization are also included. The project is expected to lower unit costs of production of sugar for all CEA operations and increase the production of sugar by 74,000 metric tons by 1986. It will also help maintain many of the 40,000 jobs in CEA headquarters and sugar estates as well as an equal number of jobs in related occupations. The $35 million loan to CEA has a term of 17 years, including 4 years of grace, with interest at 7.9% per year. NOTE: Money figures are expressed in U.S. dollar equivalents . • FORM NO. 1121 (5-76) T E CHN I CAL D A T A PROJECT: COUNTRY: TOTAL COST: Sugar Rehabilitation Dominican Republic $69.2 mi 11 ion • BANK FINANCING: $35 million for a term of 17 years, including 4 years of grace, with interest at 7.9% per annum. OTHER FINANCING: Government of the Dominican Republic, $15 millio~ co- financing for $90 million (including $19.2 million for investments under the project) is expected to be provided by private commercial banks. IMPLEMENTING ORGANIZATION: Consejo Estatal del Azucar (CEA) Centro de las Heroes Telex: 3460016 Santa Domingo, Dominican Republic CEDAZU PROJECT DESCRIPTION: It includes: a) rehabilitation of the sugar mills at Ozama, Rio Haina, Boca Chica, Consuelo, Quisqueya, and Barahona; b) rehabilitation of a total of about 540 kilometers of railway track and the purchase of 150 hauling cars, three locomotives, telecommunications equipment, an initial stock of spare parts, and a fully-equipped rail car repair shop; c) carrying out of irriga- • tion and drainage studies at Barahona estate, a cane area reduction program, and two pilot research programs; and d) provision of technical services to assist CEA in im- proving its management and organization. PROCUREMENT: Purchases of similar equipment items for sugar factories, transportation, and agriculture will be bulked into single contracts, whenever feasible. For contracts above $50,000, procurement of factory, trans- port and agricultural equipment, and materials to be financed by the Bank wi 11 be by international competitive bidding. Equipment purchases of minor items will be in accord- ance with sound business practices and after receiving quotations from at least three suppliers, provided that such contracts will not exceed in the aggregate the equivalent of $500,000. Civi 1 works for sugar factories and for rail track rehabilitation wi 11 be procured through force account by the project mills, with assistance of sub-contractors. The civil works will be entirely covered by local counterpart funds. CONSULTANTS: International consultants will be hired for: a) engineering work in the sugar factories; b) technical assistance for railways; c) management of the Barahona irrigation and drainage studies; d) management of part of the cane area reduction program, and e) establishment of a management informa- tion system (MIS) and operational and administrative planning. ECONOMIC RATE OF RETURN: 25% ESTIMATED COMPLETION DATE: 1985 - 0 - •