Mexico - Second Toll Transport Project

RESTRICTED Fi1UE Wfl Report No. P-418 This report was prepared for use within the Bank and its affiliated organizations. They do not accept responsibility for its accuracy or completeness. The report may not be published nor may it be quoted as representing their views. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO ;AMINOS Y PUENTES FEDERALES DE INGRESOS Y SERVICIOS CONEXOS (CAMINOS) AND NACIONAL FINANCIERS, S. A. OF THE UNITED MEXICAN STATES FOR A TOLL TRANSPORT PROJECT January 21, 1965  INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT REPORT AND RECOM1ENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO CAMINOS Y PUENTES FEDERALES DE INGRESOS Y SERVICIOS CO`EXOS hCMINOS) AE\D NACIONAL FINANCIERA, S.A. HEXICO FOR A TOLL TRANSPORT PROJECT 1. I submit the following report and recommendation on a proposed loan in various currencies equivalent to $32 million to Caminos y Puentes Federales de Ingresos y Servicios Conexos (Caminos) and Nacional Financiera, S.A. to finance the foreign exchange cost of a toll transport project. PART I - HISTORICAL 2. The Bank has made three loans to Mexico for highways. One of them (317-ME for $30.5 million) was made in 1962 for a toll transport project of Caminos, a government agency whose primary functions are financing, operating and maintaining toll roads, toll bridges and ferries. The other two loans (268-ME for $25.0 million in 1960 and 354-ME for $40.0 million in 1963) were to aid in a comprehensive program for improving the Federal (free) highway system. 3. Continuation of the toll road expansion program was recommended in the July 1964 report of a Bank mission appraising the Government's development program ('TH-137a). The report's financial plan also included external loans for this project. In September-October 1964 an appraisal mission visited Hexico to examine the technical, economic and financial aspects of the proposed second toll transport project. Negotiations took place in Washington in January 1965. Mr. Patino represented Caminos, Messrs. Felix and Mendizabal the Ministry of Public Works and Messrs. Garcia and Valladares the Nacional Financiera and the Government. 4. The proposed loan would increase the Bank's lending to Mexico to $471 million (net of cancellations and refundings). A summary of Bank loans to Mexico follows: Amount Year No. Berrower Purpose (equivalent in $ million) 1949 12 ME Nacional Financiera & CFE Electric Power Development 24.1 1949 13 ME Nacional Financiera & CFE Electric Power Development 10.0 1952 56 ME Nacional Financiera & CFE Electric Power Development 29.7 1958 194 ME Nacional Financiera & CFE Electric Power Development 34.o  -2- Amount Year No. Borrower Purpose (equivalent in $ million) 1962 316 ME Nacional Financiera & CFE Electric Power Development 130.0 1950 24 ME Mexlight Electric Power Development 26.0 1958 186 ME Mexlight Electric Power Development 11.0 1950 33 ME Bank Consortium & Development of Small Nacional Financiera Industrial Projects 10.0 1954 103 ME Ferrocarril del Pacifico Railway Rehabilitation 61.c 1960 268 ME Nacional Financiera Road Construction and Improvement 25.0 1963 354 ME Nacional Financiera Road Construction & Improvement 40.0 1961 275 ME Nacional Financiera Irrigation Improvement 15.0 1963 336 ME Nacional Financiera Irrigation Improvement 12.5 1962 317 NE Caminos y Puentes Federales de Ingresos & Toll Transport Nacional Financiera Facilities 30.5 Total (net of cancellations and refundings) 439.3 Of which has been repaid -62.0 Total now outstanding 37 '(.3 Amount sold * 33.3 Of which has been repaid 20.1 13.2 Net amount now held by Bank 364.1 As of December 31, 1964,1P77.5 million of the above loans had not been dis- bursed. Construction has generally been proceeding without serious delays. There are no problems in regard to disbursement except for some delays in making applications for reimbursement under Loans 275-NE and 354-ME; how- ever I understand that substantial rpplications will be submitted shortly. 5. In addition to the toll transport project, the Government has expressed an interest in obtaining Bank loans for other Federal highways, electric power, irrigation and farm credit; however, no specific projects in these fields have yet been submitted to the Bank.  - 3 - PART II - DESCRIPTION OF THE PROPOSED LOAN 6. Borrowers: Caminos y Puentes Federales de Ingresos y Servicios Conexos, (Caminos), an agency of the Mexican Government in charge of toll transport facilities in Mexico; and Nacional Financiera, S.A., a financial agency of the Mexican Government w