Mexico - Technical Training Project

Document of FILE COPY The World Bank FOR OFFICIAL USE ONLY Report NoP-3101-ME REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTENATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO NACIONAL FINANCIERA, S.A. WITH THE GUARANTEE OF UNITED MEXICAN STATES FOR A TECHNICAL TRAINING PROJECT June 30, 1981 This document has a restricted distribution and may be used by recipients only in the performance of their oflcil dudes. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Since September 1, 1976 the Mexican peso has been floating; it fluctuated itnund Mex$ 22.60 to the US dollar from mid-1977 to the second half of 1980. On June 22, 1981, the peso traded at 24.39 per US dollar. An exchange rate of Mex $23.50 per US dollar was used for currency conversions in this report. FISCAL YEAR January 1 to December 31 ABBREVIATIONS CET: Center for Technical Studies (Centro de Educacion Tecnica) CONALEP: National Agency for Professional and Technical Education (Colegio Nacional de Educacion Profesional Tecnica) IDB: Inter-American Development Bank (Banco Interamericano de Desarrollo) NAFINSA: Government Development Bank (Nacional Financiera, S.A.) PEMEX: Mexican Petroleum Company (Petroleos Mexicanos) SEP: Ministry of Education (Secretaria de Educacion Publica)  FOR OFFICIAL USE ONLY UNITED MEXICAN STATES TECHNICAL TRAINING PROJECT LOAN AND PROJECT SUMMARY Borrower: Nacional Financiera, S.A. (NAFINSA) Guarantor: United Mexican States Beneficiary: National Agency for Professional and Technical Education (CONALEP) Amount: US$90 million equivalent Terms: 15 years, including 3 years of grace, at an interest rate of 9.6 percent per annum. Project Description: The project would support CONALEP in strengthening and com- pleting its first phase (1979-1983) technical training program for skilled workers and technicians. Objectives: The program's goals are to expand the output of skilled workers and technicians and to improve the quality, relevance and efficiency of technical training. Components: The project would include: facilities for training teachers, development of instructional materials, and program administration; constructing, or remodelling, and equipping of 99 technical training centers; and the prepara- tion of CONALEP's 1984-1988 operations plan. Benefits: The project would increase CONALEP's enrollment capacity by 50,000 student places and would provide equipment necessary for 70;000 trainees. At full development in 1985-86, the project is expected to add annually about 20,000 skilled workers to the labor force. It would also prepare annually 800 technical teachers, and upgrade specialized skills for 1,000 employed workers and technicians. Risks: The major risks are difficulties in recruiting teachers and retaining students. However, teacher recruit- ment should be improved by CONALEP's strong program of teacher training, close cooperation with industry, good facilities, and adequate salaries. Student retention would also be improved by CONALEP monitoring closely placement of its graduates (as well as of dropouts) and by offering more practical and relevant courses in appropriate laboratory and shop facilities. Overall, considering the capacity of CONALEP for executing the program and the strong support of industrial enterprises for the program, the risks are acceptable. I n-,t ha :' restricted distribution and may be used by recipients only in the performance of L their official duties. itS contents may not otherwise be disclosed without World Bank authorization.  Estimated Cost: 1/ --CategorUS$ Millions------------ Category Local Foreign Total I. Construction 81.9 18.0 99.9 II. Equipment 7.4 66.1 73.5 III. Furniture 1.7 0.4 2.1 IV. Base Cost 90.9 84.5 175.4 V. Contingencies 19.5 20.0 39.4 Physical 3.7 7.3 10.9 Price 15.8 12.7 28.5 VI. Total Cost 110.4 104.4 214.8 Financial Plan: -------------US$ Millions------------- Local Foreign Total Government 110.4 14.4 124.8 Bank - 90.0 90.0 TOTAL 110.4 104.4 214.8 Estimated Disbursements: