Mexico - Second Bajo Rio Bravo - Bajo Rio San Juan Irrigation Rehabilitation Project

Document of The World Bank FILE COPY FOR OFFICIAL USE ONLY Report No. P-3215-ME REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL 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 THE BAJO RIO BRAVO/BAJO RIO SAN JUAN IRRIGATION REHABILITATION PROJECT II February 25, 1982 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Since September 1, 1976-the Mexican peso has been floating. On February 18, 1982, the Central Bank withdrew frcm the foreign exchange market and the peso floated downward. By the close of that day, the peso was traded at 37.7 per US$ dollar. FISCAL YEAR January 1 to December 31 WEIGHTS AND MEASURES 2 1 hectare (ha) - 10,000 m = 2.47 acres 1 kilometer (km) 2 = 0.62 miles 1 square kilometer (km ) - 0.39 sq. miles - 100 ha 1 kilogram (kg) = 2.2 pounds I liter (1) - 0.26 gallons 1 metric ton (mt) 1,000 kg - 0.98 long ton ABBREVIATIONS ANAGSA: National Crop and Livestock Insurance Agency (Aseguradora Nacional Agricola y Ganadera S.A.) BANRURAL: National Rural Credit Bank (Banco Nacional de Credito Rural) CIAGON: Center of Agricultural Research of the Northeast Region (Campo Experimental del Instituto de Investigaciones Agricolas del Noreste) CILA: International Boundary and Water Commission ERR: Economic Rate of Return FERTIMEX: Mexican Fertilizer Corporation (Fertilizantes Mexicanos S.A.) FIRA: Agricultural Trust Funds of the Bank of Mexico (Fideicomisos Instituidos en el Banco de Mexico en Relacion con la Agricultura) IDB: Inter-American Development Bank (Banco Interamericano para el Desarrollo) IFAD: International Fund for Agricultural Development NAFINSA: National Development Bank (Nacional Financiera, S.A.) PLAMEPA: On-farm Improvement Plan in Irrigation Districts (Plan de Mejoramiento Parcelario) PNDR: Plan for Small Scale Agricultural Infrastructure Development (Programa Nacional de Desarrollo Rural) SAM: Mexican Food System (Sistema Alimentario Mexicano) SARH: Ministry of Agriculture and Water Resources (Secretaria de Agricultura y Recursos Hidraulicos) SHCP: Ministry of Finance (Secretaria de Hacienda y Credito Publico) SPP Ministry of Programming and Budgeting (Secretaria de Programacion y Presupuesto) SRA: Ministry of Agrarian Reform (Secretaria de Reforma Agraria)  FOR OFFICIAL USE ONLY MEXICO BAJO RIO BRAVO/BAJO RIO SAN JUAN IRRIGATION REHABILITATION PROJECT II LOAN AND PROJECT SUMMARY Borrower: Nacional Financiera, S.A. Guarantor: United Mexican States Amount: US$180 million equivalent Terms: Fifteen years, including 3 years of grace, at an interest rate of 11.6 percent per annum. The loan includes a capitalized front-end fee of US$2.7 million. Project Description: The project would assist the Government in developing irrigated agriculture south of the Rio Grande in about 280,000 ha covered by irrigation districts 25 and 26 of the Bajo Rio Bravo/Bajo Rio San Juan Irrigation Project area (please see maps IBRD 16058 and 16059, attached). The Mexican share of the international waters would be utilized for promoting intensive agriculture through improved drainage, water management, land leveling and extension programs. Rehabilitation of the two irrigation districts is a long-term program, earlier assisted by US$25 million Bank loan 336-ME of April 1963 and US$50 million loan 1111-ME of May 1975 as modified in 1977 and 1979. The proposed project would improve drainage in 60 percent of the project area and water management over the entire areas covered by the two irrigation districts. The project would directly benefit 15,459 farm families, of which 14,770 have holdings between 5 and 50 ha each. On full develop- ment, annual family incomes are expected to increase between 110 and 500 percent. The project would have a favorable environmental impact. With improved agriculture and water utilization practices, soil deter- ioration and salinity increase would be prevented. There are no major risks associated with the project. Land leveling lagged behind in the first stage of the project, and, therefore, for the proposed Stage II project, the program for the next two years has been worked out in detail, reviewed with the Bank and agreement reached with the participating farmers. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  Estimated Cost: Local Foreign Total -----US$ millions----- I. Civil works and engineering services 113.1 76.9 190.0 II. Land leveling 36.5 13.5 50.0 III. Technical assistance, agricultural research and studies 53.7 23.9 77.6 IV. Equipment for operation and maintenance and communication system 0.9 7.1 8.0 V. Indemnities 1.8 .0 1.8 VI. Total Baseline Cost (1981 prices) 206.0 121.4 327.4 VII. Contingencies Physical contingencies 22.4 13.4 35.8 Price contingencies 116.9 42.5 159.4 VIII. Front-end fee on Bank loan - 2.7 2.7 TOTAL COST 345.3 180.0 525.3 Financial Plan: Local Foreign Total % ------(US$ Millions)------- Government 345.3 - 345.3 66 Bank - 180.0 180.0 34 TOTAL 345.3 180.0 525.3 100 Estimated Disbursements: Bank FY 1983 1984 1985 1986 1987 1988 ------