Announcement of World Bank Approves Eighth Highway Loan to Peru on February 18, 1982

~ ' H >R IMMH)IA If Rf N t(Sf . 1//1) (.':. \j) ,i,!1) 0 • I \\\ ,,, :.World ~nk · ~18l8 HStr~et N.W., Washington, D.C. 20433, U.S.,•\•Telephone: (202},477-1234 1 , \ ......-.. () () ' {\ " ' D BANK NEWS REl'EASE NO. ,P,2/47 Contact: Ciro G~m1~rra'" February 18, 1982 ) .. ' , ~ (202) 47~-8031' 0 i1 WORLD BANK APPROVES EIGHTH HIGHWAY" LOAN" TO PERU \>,._ ,f :::, A $93 million loan to Peru for~highway deve1o1]ment has. been approved by 'the Worfd Bank. This··e"igh'th highway loan wi 11 help fina·nc~ the co~tinuation · of a ser~s of transport projeets that" began i'n 1952. Un~er thfs Bank~,supported project, whi~ch'will ~,ost a'°t~tal''of $186 million, ,,,three dtfteriorated sections of highw~y wi 11 be rehabi 1 ltated aod 400 kilometers -,~km) of unpaved roa~s in two highland ~eveloprrient regions wi 11 be upgraded. Also, assistance for highway engineering and maintenance wi 11 be'' prov1~ <;led to, the Hi ghw~ys l{ Directorate of the Ministry pf Tran,sport'and Communications. - · The rehabilitation work will include repaving two heavily traveled sections of the Pan-American Highway, the Talara-Cancas section (98 km), the Piura-Paita road (53 km), and a heavily travelled (44 km). section,(lthe Morococha-La Oroya road, of the centra1 highway. The road upgrading work will improve the main roads serving the Selva Central 1 and the Rio Mayo ~reas in the jungle highlands. In both these areas, major rural development projects are underway with financial assistance'from bi1atera1 aid agencies in the United States, the Federal Republic of Germany, and the Netherlands. Increasing the transport efficiency to' and within these developing regions win 'improve access to good farming land, of which there is a serious shortage in Pceru. The nat i ona 1 road ma-intenance service wi 11 be strengthened through p.r~yi s ion of equipment, spare parts., workshop tooJs, and technical support. Finally, technical assistance wi 11 be provided to carry ou·t 'three studies which wi 11 help rural development in central Peru, improve coastal shipping operations, and facilitate local road financing. The seven previous World Bank Joans for highway development totaled $186 mi 1 rion. Fol lowing an earthquake in 1970, the World Bank financed the rebuilding of roads in the Huaraz Valley, thus opening the region to economic development. The last two highway projects have financed the construction of the main road serving the Lima-Amazon Corridor--virtu~tly the only all-weather road across the Andes. · The World Bank ,loan of $93 mi 11 ion to Peru is repayable over 17 years, including four years of grace, with annual interest of 11.6%. • NOTE: Money figures are expressed in U.S. dollar equivalents • ii":'! 'i',i:'\  ; ·o [} CJ rt~OJE,tT}~ j\( rf ·COUNTRY: TOTAL COST:" G ~ (, Eighth Highway $"186 mi llfon \j (j • (c' 0 \\ BA NK FINANCING: 1 $93 millio,n, repayable i.n J7 ·y~ars, includfng four year~ of 0 ' gl'ace, 'with annual interest otJ 1.6% 0 . OTHER FJNANCING: Ccrfin,ancing being arranged:., $4o5 mi 11 ion;' Government' of Peru, $88.5 nii 1l ion G IMPLEMEN'tUJG ORGANIZATION: ,Ml n is.try of Transport and Commun i catt ons AV(enida 28 de Julho Li ma, Peru (TEtEX 25511) 0 \ \) .l>,RO~;ECT DESCRIPTION: It provides support for the government's expanded highway in- vestment program and t;he Ministry of Transport and Communica- tions' Highways Directorate (DGC). It includis: if rehabilitation of 195 km of severely deteriorated paved roads; i,i) imp.rovement of another 400 km of unpaved roads, to a grave 1 _·or paved two-lane standard; and iiJ) assistance for strengthen·ing· DGC's road maintenance·· operations·throµgh provision of eqµipment, spare parts, workshop improvei:nents, technical assistance, and· training staff. To improve the quality of management in DGC,, it alsb pro- vid.es fbr contr~ting experienced engineers and managers to iifi11 senior positions. Finally, it includes detailed engineeriNg for future road rehabilitaiion and improvement and tech- nical assistance for preparing a. regional development project and for executing· three transport sector related studies. PROCUREMENT: Civil works financed by the Bank loan will be procured by international competitive bidding (ICB)in accordance-with Ba~~ g,u i de 1i nes. A1together, 12 contracts wi 11 be bid in four groups. , at ·about two-monfh i< ·intervals; bidding in°this way ,should result in individual contracts ranging in size from $·3.5-10 mi 11 io.n, with groups of contracts r:anging from $13-35 mi 11 ion. Road maintenance equipment and workshop tools, with a base cost of about $4.8 million, will be procured by ICB in accordance with Bank guidelines. lmpra>Vements to workshops and training faci 1i- 0 ties, expected to c:ost. about $1.5 mi 1lion, wi 11 be advertised locally in accordance with local competitive bidding procedur~s (LCB). Spare parts needed for overhaulirlg maintenance eq4ipment, amounting to about $4.2 millJon, will be defined with the assistance of con- sult~nts and procured through LCB ·where possible. In cases where local bidding is not possible, thjse parts will be procured directly from established deal~rs. Qualified local suppliers of equipment produced in Peru and tho$e from Cartagena Agreement member coun- tries participating in ICB may be accorded a margin of preference of 15% or the prevailing import taxes and custom duty, whichever is lower. CONSULTANTS: ' The project includes about 250 man-months of technical assist- ance sertices, 110 by local consultants and 140 bj foreign consultants. . • ECONOMIC.RATE OF RETURN: 3:9% ESTIMATED COMPLETION DATE: 1986 - 0 - C,'