Colombia - Fifth Railway Project

RESTRICTED FILE COPY Report No. P 621 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 report may not be published nor may it be quoted as representing their views.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 COLOMBIA NATIONAL RAILWAYS FOR THE FIFTH RAILWAY PROJECT July 11, 1968  INTERM\ATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO COLOMBIAN NATIONAL RAILWAYS FOR THE FIFTH RAILROAD PROJECT 1. I submit the following report and recommendation on a proposed loan in an amount in various currencies equivalent to US$18.3 million to the Colombian National Railways (CNR). PART I - HISTORICAL 2. The loan would be the fifth Bank loan to the CNR. Three of the four previous loans financed the building and equipping of the Atlantic line which has given Colombia access by rail to the Atlantic Ocean. These loans were made in 1952, 1955 and 1960, respectively, and totalled US$46.3 million equivalent. The fourth loan of US$30 million equivalent, made in 1963, was devoted to rehabilitating the other lines and operating facilities of CNR and increasing the carrying capacity of the whole system. 3. The loan now proposed would continue the process of rehabili- tating, modernizing and increasing the capacity of the CNR, which in turn will lead to a progressive increase in earnings and move the CNR closer to achieving financial viability. b. Apart from the Bank's lending to the CNR, the Bank/IDA have also been active in financing highway development in Colombia, having provided loans totalling US$86.35 million equivalent between 1951 and 1961. A project for a further loan of US$17.2 million equivalent is being presented together with the proposed loan to the CNR. 5. The project was appraised in December 1967. Negotiations on the proposed loan took place in Washington June 10-14, 1968. The CNR was represented by Dr. Javier Ramirez, General Manager, and Dr. Jose Arturo Garcia, Financial Manager. The Government was represented by Dr. Bernardo Garces, Minister of Public Works and ex-officio Chairman of the CNR. 6. The following is a summary statement of Bank loans and IDA credits to Colombia as of June 30, 1968:  -2- Loan/ Amount (US$ Million) Credit Undis- No. Year Borrower Purpose Bank IDA bursed Fully disbursed Total (less cancellations) 313.8 5 1961 Government Roads 19 5 0.6 315 1963 Acerias Paz del Rio S.A. Steel 30.0 6.0 369 1964 Empresas Publicas de Medellin Power 45.0 26.6 448 1966 Government Agriculture 16.7 12.1 451 1966 Banco de la Republica Industry 25.0 8.7 499 1967 Empresa Nacional de Communica- Telecomunicaciones tions 16.0 1L.6 502 1967 Instituto Colombiano de la Reforma Agraria Irrigation 9.0 9.0 534 1968 Banco de la Republica Industry 12.51/ 536 1968 Empresa de Acueducto, Water Bogota Supply 14.0i 537 1968 Empresa de Energia Electrica, Bogota Power 18.02/ Total (less cancellations) 500.0 19.5 77.6 of which has been repaid to Bank and others 101.3 Total now outstanding 398.7 Amount sold 16e7 of which has been repaid 13.9 2.8 Total now held by Bank and IDA 251