Announcement of Romania Receives World Bank Loans for Danube-Black Sea Canal Construction and Irrigation Works on January 24, 1980

' ' 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. 80/44 January 24, 1980 ROMANIA RECEIVES WORLD BANK LOANS FOR ( I DANUBE-BLACK SEA CANAL CONSTRUCtlON AND IR~IGATION WORKS The World Bank today announced the approval of two loans totaling $190 million to help finance the implementation of two development projects in Romania. A $100 million loa~ will support the construction of a 64 kilo- meter (km) long canal, connecting Cernavoda on the Danube River with South Constanta-Agigea on the B~ack Sea. The loan to the Investment Bank of Romania is for 15 years, including 3-1/2 years of grace, with interest of 7-95% per annum. The other loan of $90 million wi 11 assist the construction of irri- gation works in an area 250 km northeast of Bucharest. The loan, to the Bank for Agriculture and Food Industry (SAFI) is for 15 years, including 3 years of grace, with interest at 7.95% per annum. Both Wor'd Bank loans are to be guaranteed by the Socialist Republic • of Romania . Danube-Black Sea Canal Project Establishment of a direct canal link between the Danube and the new deepwater facilities at the new port of South Constanta-Agigea will add significant additional transport capacity for Romania's growing economy. The canal, together with other major complementary investments being undertaken by the Government, will facilitate the movement of large volumes of bulk cargo through the country's cost efficient energy saving inland waterway system and will result in considerable savings in ocean freight costs through the use of large bulk carriers. Other countries through which the Danube passes, including Austria, Yugoslavia and the Federal Republic of Germany will benefit from the canal, and with the completion of the Rhine-Main-Danube Canal in the Federal Republic of Germany in 1984 the project will become an integral part of the European waterway system stretching from the North Sea to the Black Sea. In 1985, it is estimated that about 51 mill ion tons of traffic will move through the canal, of which about 7 million tons will be international transit traffic. The canal passes through the Dobrogea region which is one of Romania's poorest areas, and it is expected that the project will accelerate the region's economic development, in addition to providing local irrigation and power benefits. • NOTE: Money figures are expressed in U.S. dollar equivalents. / ...  - 2 - Under the $1.75 billion project, to be supported by the $100 million World Bank loa~, a barge canal will be constructed. It will accommodate convoys of up to six barges of 3,000 dwt each, transiting in both directions. Three ports will be constructed at Cernavoda, Medgidea and Basarabi, towns along the canal, and identical locks will be built at Cernavoda and Agigea. Service r0ads, railway connections and other ancillary • facilities will be provided, and existing facilities affected by the con- struct ton of the canal will be replaced, reconstructed or relocated. Covu r l u i I r r i ga ti on Proj ec t Crop production is expected to increase and stabilize in an area of 148,400 hectares (ha) located on the Covurlui plateau, in Galati District, as a result of construction of irrigation and drainage systems and related facilities. The proiect is expected to more than double labor productivity; and increase production of maize, wheat and other crops from an annual but fluctuating average of about $35 million to a relatively stable annual average of about $83 million. The $354.6 mill ion project, with a $90 million World Bank component, provides for construction of a pumping station on the Danube River to lift water into an irrigation canal in the flood plain, and a second pumping station to further lift the water into a system of canals on the Covurlui plateau. Another 16 repumping stations and 44 pressure pumping stations will be built, as well as a storage dam. Distribution networks, soil reclamation and valley • training wi l 1 a1so be included, and energy will be supplied to the pumping stations by 114 km of power 1 ines and related transformer substations also to be constructed under the project. In addition, equipment for operation and maintenance of irrigation and drainage works and farm machinery to support intensified agriculture in the area will be supplied. The project is expected to create about 4,000 new jobs during con- struction and 1,500 thereafter. - 0 - • FORM NO. 1121 (5-76) T E C HN f CAl DA T A • PROJECT: Danube-Black Sea Canal COUNTRY: Socialist Republic of Romania TOTAL COST: $ l , 750 mi 11 ion BANK FI NANC I NG: $100 million for 15 years, including 3-1/2 years of grace, and an interest rate of 7.95% per annum. OTHER FINANCING: State budget, and co-financing of about $150-200 mi 11 ion. IMPLEMENTING ORGANIZATION: Ministry of Transport and Telecommunications Bucharest, Romania PROCUREMENT ORGANIZATION: Contransimex State Company for Foreign Trade 38 Dinicu Golescu Blvd. Bucharest, Romania Telex No.: CTRIX 11606 PROJECT DESCRIPTION: Construction.of a 64 km long canal from Cernavoda on the Danube to South Constanta-Agigea on the Black Sea. It includes construction of ports at Cernavoda, Medgidea, and Basarabi; locks and their operating equipment at Cernavoda and Agigea; construction and supply of ancillary • works and equipment; and replacement, reconstruction, or relocation of existing transport, irrigation and ether facilities affected by construction of the canal. PROCUREMENT: Equipment and materials equivalent in cost to the Bank loan ($100 million) will be procured under international competitive bidding in accordance with Bank guidelines. Romanian manufacturers will be allowed a preference of 15% of the c. i .f. 'price or the applicable customs duty (whichever is lower). It is estimated that foreign suppliers wi 11 win contracts· estimated to cost about $5 million, principally for specialized machinery and equipment for the lock gates. • ECONOMIC RATE OF RETURN: 25% ESTIMATED COMPLETION DATE: 1984 - 0 - FORM NO. 1121 (5-76) T E C HN I CA L DA T A • PROJECT: Covu r l u i I r r i ga ti on COUNTRY: Socialist Republic of Romania TOTAL COST: $354.6 million BANK FI NANC I NG: $90 mi 11 ion for 15 years, including 3 years of grace, and an interest rate of 7.95% per annum. OTHER FINANCING: State budget and Bank for Agriculture and Food Industry and co-finanancing of $100 million. Sub-borrowers' contributions: $23.8 million. IMPLEMENTING ORGANIZATION: Ministry of Agriculture, Food Industry, and Water Management Bulevardui Repub1ici i, 24 Bucharest, Romania PROCUREMENT ORGANIZATION: Romagrimex Foreign Trade Enterprise 16 Alexandr~ Sahia Street Bucharest, Romania Telex No.: 11522, 11693; Cable Add.: ROMEX-R PROJECT DESCRIPTION: !rrigation and drainage of 148,400 ha gross (143,250 ha net) through: construction of two main pumping stations, 60 repumping and pressure pumping stations and a storage lake; establishment of distribution networks, soil reclamation and valley training; construction of 114 km • of 110 kv and 20 kv power lines with transformer substations; and farm machinery and equipment for operation and maintenance of the project will be supplied. PROCUREMENT: Equipment and materials equivalent in cost to the Bank loan ($90 million) will be procured under international competitive bidding in-accordance with Bank guidelines. Romanian manufacturers will be allowed a preference of 15% of the c. i .f. price or the applicable customs duty (whichever is lower). It is expected that foreign suppliers will win contracts estimated to cost about $13.5 mi 11 ion for some of the construction and maintena~ce equipment. • ECONOMIC RATE OF RETURN: 16% ESTIMATED COMPLETION DATE: 1985 - 0 -