Announcement of Mexico to Improve Irrigated Agriculture with One Hundred Eighty Million Dollars World Bank Loan on March 18, 1982

. . . · FO( IMMEDIATf. REL.EASE ·•World Bank ,,, 1818 H Street, N:W., Washington, D.C. 20433, U.S.A.• Telephone: (202), 477-1234 () BANK NEWS RELEASE NO. 82/55 Contact: Ciro Gamarra March 18, J982 (202) 477-8034 MEXICO TO IMPROVE IRRIGATED AGRICULTURE WITH $180 MILUON WORLD BANK LOAN Mexico will carry out an irrigation rehabilitation project with the support of a World Bank loan of $180 million. The project is the second stage of a long-term re- habi 1itation, 'program to improve drainage and water management in the Bajo Rio Bravo and Bajo Rio San Juan lrrigatio~ Districts, in the State of Tamau1ipas. It will promote intensive :\\ agricultural development on about 280,000 hec'tares in the two districts. The first stage of this program was assisted by a $50 million Bank loan of May 1975. The $525 mill ion project is ~xpecte·d to help Mexico provide more food. for its people and reduce foodgrain imports. In 1980, Mexico imported 11.1 million metric tons of basic grain, including corn, beans, and wheat. Largely with improvements in water avai labi 1ity and cultiva,tion methods, the project should increase an'nual crop production from 850,000 to 1,360,000 metric tons in li years. · :. l Some 15,500 families involved in the pr~ject will benefit from the increased pro- duction of corn, sorghum, beans, vegetables, and cotton. The increased production will ~nable farmers, whose plots at;:e'""mostly under 20 hectares, to double or triple their in- comes. Many of them now earrta minimum of $1,500 a year. I lj Anoth~r important feature of the project with multiple effect on irrigation efficiency and salinity controt is land leveling of about 105,000 hectares. In the previous stage of the project, ·-land leveling fel 1 short of the goal because farmers were not convinced that it was necessary. Therefore, the second stage project gives special emphasis to the smooth implementation of this component, including complete designs for its execution already agreed to by the farmers. Furthermore, the Mexican Government will provide the farmers involved with credit for their share in the cost of implementation and compensate them for crop losses when land leveling is carried out on their plots , during the cultivating season. By imP.roving and expanding the technical assistance that was provided in the first stage, the project plans to upgrade substantially th~ production of the farmers. The 0 regional agricultural research center will develop improved agricultural practices for the area with special emphasis on summer crops, mainly beans and maize, which occupy now only 15% of the area. An extension program will be set up to provide one agent for every 150 farm families. . The ~180 mi 11 ion loan to Nacional Financiera, S.A. is guaranteed by the United Mexican States. It is repayable in 15 years including three years of • grace at an interest rate of 11.6% a year. The loan also carries an annuaL comnitment charge of 0.75% on undisbursed balances, and a front-end fee of 1.5% on the amount of the 1oan. ' NOTE: Money figures are expressed in U.S. do 11 ar equ i va 1ents.  ' a (l ~) 0 TECHNJ CAL DA i A1\ . COUNTRY: Bajo Rio Bravo/Bajo Rio· San Juan Irrigation Rehab i 1 i tat 1!,on Mexico • TOTAL ,COST: $525.3 million , . BANK FINANCING: $180 million for a term of JS years, including t~ree years ·of grace, with interest at 11. 6% per year; and annua 1 commitment charge 11 of 0.75% ·on undisbursed balances, and a front-end fe~ of 1 .5% on. the amouJ1t of the loan OTHER FINANCING: Government of Mexico, $345:3 milli9n .1MPLEMENT I NG ORGANIZATION: Secretaria-de ~gricultura y Rec,ursos Hidra~l icos (SARii), . lnsurgentes SUR 476 Mexico 7 06760 Mexico OF, Mexico TELEX NOo SARH 75890 PROJtCT DESCRIPTION: It p:rovides for: a) construction of 820 km of new drain~ge canalsj rehabilitation of 1,160 km of existing drains, and construction and/or rehabilitat;ion of 5~090 related structures; b) land leveling of 105,000 ha with an average land movement of 600 m /ha; c) construction· of on-farm subsoil drainage 0 on 13,700 ha; d) rectification of canal banks {~80 km), selective lining of c:anals where excessive seepage of water has, been identified (440 km), and completion of about 850 • structures for control and measurement devices along the irrigation systems; e)~complet . Of ,1, 750 km of Service roads a Jong i rri gati on canals, 290 km of farm (off i Ci a r) roads, and 870 related s-tructures; f) acquisition and installation of a communications network (telephone and radio~ an..d~addit,ional equipmel"lt for operations and .maintenance; g) t-ech- nicel assistance program--for entire 280,000 Ila to promote land leveling and summer crops Oncludes increasing staff, constructing demonstration centers and houses and procuring equipment for existing organization); h) reinforcement of applied agricultural research and studies for future stages; and i) indemnization of farmers affectec:k:~"',_the works. . ~·, ""-~,,~ (\_\. \. PROCUREMENT: About 80% of the contracts for the principal ,,"rrrigation and. drainage works·· wi 11 be procured by i nternat i ona 1 competitive bidding (ICB) in accordance with B~mk guide) ines. Civil works wi 11, if possible, be groupad into contracts having a minimum value of $2 mi 11 ion. Smal 1 jobs wi 11 be contracted following ordinary government procedures, thus expediting the construction of minor civil works under local competitive 1 bidding (LCB) •. The maximum value of a contract for LCB 1 will . :be $650,000 with the tota 1 ~f a 11 such contracts not exceeding $55 mi 11 ion. Sma 11' or dis- persed contracts for on-farm development works will also be let under LCB, or through negotiations under the guarantor's ordinary procedures. The estimated cost of vehicles, farm machinery, and operation and maintenance equi,pment is about $15 mi 11 ion, of which $12 mi 1 lion wi 11 be subject to ICB, accori;ding to Bank guide.1 ines. A 15% margin of preference or the prevailing custom duties, whichever is low~ir, will be allowed for equipment and vehicles produced in Mexico. CONSULTANTS: Consulting services, if necessary, will be contracted in • )} consultation with the Bank. ECONOMIC ·'RATE OF RETURN: 22.5% ESTIMATED COHPLETlbN DATE: 1987 - 0 -