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Projects and Loans in Latin America & Caribbean
>> Summary >> MDB Assistance Proposals >> Latin America & Caribbean
Summary
MDB Assistance Proposals - By Region & Country
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23. Argentina-Chile: IDB-Trans—Andean Highways
PROJECT DATA
Project No.: AR0202. Estimated total cost: $400 million. Estimated IDB financing: $200 million. Process stage: in preparation. Executing agency: Dirección Nacional de Vialidad: Avenida Maipu No. 3, Buenos Aires, Argentina. Dirección Nacional de Vialidad: Avenida Julio A. Roca 734, Capital Federal, 1067 Buenos Aires, Argentina. Tel: (54-1) 342-9784, 343-2857; fax: (54-1) 342-1965.
DESCRIPTION OF PROJECT
The objectives of the program would be to 1) contribute to the economic integration process between Argentina and Chile through improvement in land transportation for freight and passenger cargoes and 2) support exports from both countries, as well as other MERCOSUR (the common market of South America) countries by facilitating access to ports on the Atlantic and Pacific Oceans. The program would rehabilitate and repave the five most important mountain passes and improve the gravel surfaces of seven other unpaved mountain passes. It would consist of a program of multiple works and include the following components: 1) improvement of the geometric characteristics and pavement of mountain roads that carry large volumes of international traffic, to bring them up to international standards of operational safety and improve their technical standards, 2) improve roads that connect border cities so that they can be used year-round, to stimulate trade among those cities and other important markets, 3) procurement of snow and ice removal equipment and equipment to measure the weight and dimensions of trucks, 4) implementation of technical administrative methods to facilitate border crossing controls and procedures, and 5) institutional strengthening of the executing agency, the National Department of Highways (Dirección Nacional de Vialidad—DNV), in areas related to mountain road administration, operation and construction.
Anticipated procurement: The program would finance road rehabilitation works, including pavement for five mountain passes and gravel surface improvements for seven passes. Consultants would be hired for prefeasibility, feasibility, engineering and environmental studies, as well as project supervision. Roadwork would be continued for highways shown to be feasible. The work would be performed on 1,000 km of roads and include the following activities: a) leveling works to relocate and widen existing platforms; b) installation of surface and underground drainage works; c) bridge construction and special works to stabilize platforms and prevent collapses; d) construction and improvement of surface treading; e) installation of vehicle and pedestrian traffic-safety equipment; f) installation of vertical and horizontal signage; and g) protection measures in environmentally sensitive areas. Consultants would be hired for technical supervision. They would also be needed to provide specialized technical assistance and advisory services to the DNV in areas such as: a) facilitation of border-crossing processes; b) vehicle weight and dimension controls; c) accident and crash prevention and attention measures for vehicles with dangerous cargo; and d) outsourcing of operations and maintenance services on border roads.
In addition, consultants would be needed to provide institutional strengthening and training to the DNV in various technical and administrative areas to improve efficiency. A component may be included to conduct studies for improving and rehabilitating other mountain pass roads, as well as for improving technical construction and maintenance in cold climates subject to snow storms. Environmental Classification: environmental impact assessment has been completed.
USAID'S COMMENTS
Major highway projects that include funds for planning additional highways always require careful review. When one crosses a continental divide, it has an impact on two major watersheds. That raises concerns about potential spills, invasive species, and the cumulative impact of human in-migration into areas that were too remote before to be developed. Chilean forests are among the world's finest and most rapidly exploited temperate rain forests. The Chilean government was at one point supporting an environmental and economic accounting of the management of these forests. It was suspended in the late 1990s before it was completed. The Chilean temperate rain forests also include threatened CITES-listed Chilean redwoods (Alercis Fitzroya) and other sensitive species. This development may not effect those stands but we expect to review the EA with these sorts of questions in mind.
24-a. Bolivia: IDB/WB—Export Corridors: Santa Cruz-Puerto Suárez Highway
PROJECT DATA
Projected IDB funding: $134 million. Projected WB/IDA funding: $65 million. Projected total cost: unknown. Tentative IDB board date: to be determined. Tentative Bolivia World Bank board date: May 2001. Stage: in preparation. IDB EA category: full EIA and social impact. World Bank environmental assessment category A (formerly B). Project I.D.: BO036. Project first entered: January 1997. Entry updated: March 1999 (see below for additional information, 2000).
DESCRIPTION OF PROJECT
This proposed project seeks to increase the competitiveness of Bolivian products in international markets by decreasing transportation costs in the country and ensuring that the Santa Cruz-Puerto Suárez Highway remains open and passable throughout the year. The program will include works, studies, and an environmental impact mitigation component.
The credit will finance construction of the San José-Puerto Suárez road, a sector of about 400 km of the export corridor Santa Cruz-Puerto Suárez. Identification mission is scheduled for fiscal year 2000.
USAID'S COMMENTS
USAID/Bolivia understands that this project aims at improving an existing road, that it has major economic and development significance, and that it will have an environmental impact mitigation component. It is not the direct impacts of the road itself that are of concern, but rather the indirect ones. The project description itself alludes to those potential indirect impacts when it implies that this is a natural area for population expansion.
Specifically, USAID wants to ensure that the improved road will not accelerate haphazard colonization and deforestation into areas that are 1) inappropriate for long-term agricultural production, or 2) of high biological value—for example, the Tucavaca Valley. (Although much of the valley is already slated for "traditional" development, at least portions of it need to be protected.) An improved road would almost certainly put this area under increased conversion pressure, and the protection issue should be considered and resolved before the roadwork would begin.
Another issue is the potential impact the road would have on the Bolivian Pantanal. Although worldwide attention has been directed toward conservation efforts in Brazil, the Bolivian Pantanal may be of even greater biological importance because of the extensive tracts of undisturbed dry forest and cerrado. The increasing emphasis on mining (e.g., Cerro Mutun), the export of natural gas, and harvest of timber in the dry forests to the northwest could be encouraged by such a project, and therefore these should be predicted. The loan should include a component to build the capacity of the government to ensure that these activities will not be environmentally unsustainable.
USAID would like to see rigorous enforcement of authoritative land-use planning before the road improvements begin. The improved road would also potentially move more people relatively close to the Kaa Iya del Gran Chaco National Park (where USAID supports work with Wildlife Conservation Society and the Izoceño indigenous people). There should be guarantees that it would not encourage encroachment into the park (in particular with cattle ranches, logging of quebracho, or irrigated agriculture). Increased protection for the northern border of the park linked to the road improvement is also needed.
The road is a priority development project. USAID is not suggesting that it should not proceed, but it should be classified as an IDB environmental assessment category 4, or World Bank EA category A—"operations that may have significant negative impacts on the environment and will require a detailed environmental assessment."
Another area of conservation importance is also the Chiquitano dry tropical forest that goes from the north to the south of the proposed road. Many of these areas have already been flagged as being of critical conservation importance in the Santa Cruz land-use plan. USAID recommends that an anthropologist be assigned to the team since the project is likely to affect several indigenous groups such as the Izoceños and Chiquitanos. USAID is working with both groups under its forestry and biodiversity conservation work.
USAID/Bolivia recommends using the project as a vehicle to ensure that these areas are protected—that is, build into the project, on the basis of the EA, resources to mitigate the indirect effects of the road construction.
The project would also support the Hidrovía Waterway—building a paved road to it that would make agricultural production and logging more profitable and affect a bigger area. The pressures from those sectors for the Hidrovía would increase.
These comments were conveyed to staff of the Inter-American Development Bank. The bank responded that since April 1997, IDB has not used environmental classification by category for its projects, but determines on a case-by-case basis the scope of the EIA required. Particularly for this project, a full EIA was required, corresponding to the earlier category 3 classification. For the Santa Cruz-San José segment, a consulting firm is preparing the detailed engineering design and the detailed environmental assessment. For the San José- Puerto Suárez segment, this firm is preparing the EIA and feasibility study. The studies are proceeding, if slowly. The draft of the EIA has been presented and the final report (feasibility studies and engineering designs) was scheduled for April 1999. IDB staff members plan to commission additional environmental and social impact studies for the corridor. That would not preclude the presentation and acceptance of the designs from the consulting firm for the Pailón-San José segment.
The World Bank responded regarding the Santa Cruz-Puerto Suárez Road, including the San José-Puerto Suárez segment, the one in the World Bank's portfolio: IDB's financing of the Pailon-San José segment will complete the Santa Cruz-Puerto Suárez Road. Concerning the section San José-Puerto Suárez, the World Bank has not yet started the project preparation. It is awaiting the results of the prefeasibility study financed by IDB and approval of the bank's budget for fiscal year 2000.
With respect to USAID's concerns about the environmental assessment categorization for the project, the categorization of B is provisional. It will not be definitive until the project concept document review, when it will probably be changed to A. In any case, the World Bank plans to conduct a full environmental assessment, as it has done with the Abapo-Camiri Road, now in the final stage of preparation. The full EA will be performed separately from the one for Pailón-San José, to be prepared by IDB, but in close coordination with it. Finally, our tentative board date was May 2001, to give time enough to complete and discuss the engineering design and the EA. It could be advanced if both are completed before expected. World Bank staff was looking forward to discussing the environmental issues with USAID at the early stages of project preparation.
July 2000 Update from IDB Web site (note the different information posted within the May-July 2000 period in the following entries concerning this project):
PROJECT DATA
Loan: BO0036. Amount: $60 million. Executing agency: Servicio Nacional de Caminos: Avenida 20 Octubre 1829, Casilla 1485, La Paz, Bolivia. Tel: (591-2) 351-746; fax: (591-2) 391-764. Contact: Carlos Klinsky, executive director.
DESCRIPTION OF PROJECT
Increase the competitiveness of Bolivian products in international markets by decreasing transportation costs in the country and ensuring that the Santa Cruz-Puerto Suárez Highway remains open and passable throughout the year. The program will include works, studies, and an environmental impact mitigation component. Estimated total cost: $135 million. Environmental classification: category 3. The environmental study was completed in December 1998, but it needs to be expanded to include evaluation of the Santa Cruz-Puerto Suárez corridor. In preparation stage.
Anticipated procurement. The following works would be financed: a) construction of a 1,500-meter, two-way bridge, b) paving and improvement of a 220-km segment of the Pailón-San José section of the highway, and c) improvements of 380 km of roads (San José-Puerto Suárez segment). Contracts for earth moving, paving, bridge construction, and drainage would be financed. Weight control and other equipment would be purchased. Consultants would be hired for construction supervision and institutional strengthening activities. The program would also finance studies to identify other transportation infrastructure improvement needs in the eastern and southeastern regions of the country. A firm has been hired to carry out technical, economic and environmental studies.
24-b. Bolivia: IDB/WB-300 Kilometers of Santa Cruz—Puerto Suárez Highway
PROJECT DATA
Identification mission scheduled for fiscal year 2001. Environmental assessment category A. US$65 million (IDA). Consulting services to be determined. Servício Nacional de Caminos, Edificio. Centro de Comunicaciones, Piso 8, Avenida. Mariscal Santa Cruz, esq. Ororu, La Paz, Bolivia. Tel: (591-2) 342-957, fax: (591-2) 391-764.
DESCRIPTION OF PROJECT
Transport. World Bank part of joint IDB/WB project also known as the Export Corridors Project, IDB. San José-Puerto Suárez: The credit will finance construction of the San José-Puerto Suárez road, a 300-km section of the export corridor Santa Cruz-Puerto Suárez.
USAID'S COMMENTS
Since USAID's 1999 report, the World Bank upgraded the project to category A and produced a full environmental assessment. A review of the assessment in early 2001 found it thorough except that there was little consideration of the alternative of helping the new private owners to upgrade the existing railroad in the same corridor, now limited to slow speeds because of disrepair. This alternative could be more efficient, less disruptive. USAID also has a continuing concern about the adequacy of the environmental and social safeguards and their sequencing.
24-c. Bolivia: IDB/WB—Social Sector
PROJECT DATA
Project preparation is under way. Environmental assessment category B. US$5 million (IBRD). Consulting services to be determined. Viceministerio de Asuntos Indigenas y Pueblos Originarios (VAIPO), Sánchez Lima 2072, Mazzanine, CP M-10126, La Paz, Bolivia. Tel: (591) 237-4295.
DESCRIPTION OF PROJECT
The project will a) strengthen the institutional and organizational capacity of indigenous communities and organizations as well as governmental institutions working with these groups, b) reform indigenous legal framework, and c) test innovative subprojects managed by and for indigenous communities.
24-d. Bolivia: IDA—Transport
PROJECT DATA
Project is being identified. Environmental assessment category to be determined. US$40 million (IDA). Consulting services to be determined. Servicio Nacional de Caminos, Edificio. Centro de Comunicaciones, Piso 8, Avenida Mariscal Santa Cruz, esq. Ororu, La Paz, Bolivia. Tel: (591-2) 342-957, fax: (591-2) 391-764.
DESCRIPTION OF PROJECT
Road rehabilitation and maintenance. The project will support a) institutional development activities to strengthen managerial capacity of the Servicio Nacional de Caminos and interinstitutional coordination, b) investments for the rehabilitation of specific segments of the road network, and c) technical assistance for the design of new projects.
USAID'S COMMENTS
USAID has in the past intervened and achieved mutually reinforcing accommodations in MDB law reform projects that coincided with USAID judicial reform projects (civil and criminal). The Agency recommends that the indigenous peoples project be coordinated and integrated with those of other donors and with major transportation loans such as the San José-Puerto Suárez highway. Social and legal reforms are needed before the potential effects of major development projects such as new roads in relatively pristine areas can be controlled with any degree of assurance. The transport sector loan may have a larger impact on Bolivia than any one highway, so its assessment bears careful consideration to ensure that the ministry's environmental assessment capacity and inclusion of indigenous peoples in planning are in place.
25. Brazil: IDB—Cana Brava Hydroelectric Dam
PROJECT DATA
Tractebel Brasil Limitada ("Tractebel") was awarded the Cana Brava project concession contract, as the result of an international competitive tender, in March 1998 by Agencia Nacional de Energia Eléctrica (ANEEL), the Brazilian regulatory agency for the electric sector. The concession provides for the use of the river resources for a period of 35 years. Tractebel, through its subsidiary Centrais Geradoras do Sul do Brasil S.A. (Gerasul, or the "Sponsor") has created a special-purpose company, Companhia Energética Meridional (CEM), to implement the project. The project will be constructed under a turnkey fixed-price engineering, procurement, and construction contract by a consortium formed by four Brazilian companies: two civil works construction companies, Construtora Norberto Odebrecht S.A. and Construtora Andrade Gutierrez S.A.; and two equipment suppliers, Voith S/A Máquinas e Equipamentos and Siemens Ltda. CEM will enter into an operation and maintenance agreement with Gerasul for the term of the concession contract.
Gerasul will finance the project using a combination of long-term financing and an IDB A/B loan. Gerasul has requested IDB financing for the Cana Brava project in the amount of US$160.2 million, consisting of an A-loan for $75 million and a B-loan of $85.2 million. Total project costs are estimated at $426 million, of which Gerasul will contribute 30 percent with equity, and the remaining 70 percent will be funded with debt.
DESCRIPTION OF PROJECT
The Cana Brava Hydroelectric Power Project entails the construction and operation of a 450-MW hydroelectric power plant and construction of a 50-km 230-kV transmission line. The project is located on the Tocantins River, between the municipalities of Minaçu and Calvacante in the state of Goiás, approximately 250 km north of Brasilia. The initiative is among the first private projects to be developed under the new institutional and regulatory framework established in 1995 and 1996. It is also one of the first independent power producers or self-generators to be financed under a project finance scheme in Brazil. The project involves a private producer and a private off-taker, with tariffs set freely among private parties. Any excess production above the contracted level will be sold to the market. In this way, the project represents a key step toward the creation of a competitive electricity market in Brazil—an effort that has received continuous support from the Inter-American Development Bank.
The Cana Brava project will be located in the upper reach of the Tocantins River Basin, in the state of Goiás, some 250 km north of Brasilia. The Tocantins River runs northward from the Brazilian heartland to the Atlantic Ocean, over a distance of 2,500 km. In the project area, the river separates the municipalities of Minaçu and Cavalcante. The dam site will be located about 1 km downstream from the Tocantins River's confluence with the Carmo River, approximately 46 km downstream from the São Felix River, and 50 km downstream from the Serra da Mesa hydroelectric power plant. In the Tocantins River, below the Cana Brava Project, there is another hydroelectric power plant in operation (Tucuruí) and another presently under construction (Lageado). The project transmission line will connect the Cana Brava dam site to the Serra da Mesa interconnection facility (at the Serra da Mesa dam site) and will run parallel to the existing road between Minaçu and the Serra da Mesa dam site.
USAID'S COMMENTS
The Cana Brava dam is 610 meters long and 51 meters high. This project was the subject of an environmental impact assessment done under Brazilian law in 1992. Project location and design were altered a bit in 1997, and construction was begun in August 1998 with the reservoir to be fully filled by October 2000.
USAID believes that to come to the board for a loan to help pay for a dam while the reservoir is filling does not make consultation over the alternatives meaningful, thus negating the purpose and possibility of advanced environmental assessments. The Agency advised withholding U.S. support for the dam in light of the impossibility of fulfilling the intent of the EA review process.
The Cana Brava project was deferred by the IDB after the United States objected on "Pelosi" procedural grounds (EA not available 120 days before board consideration) and on the basis of several substantive concerns noted by EPA, NGOs in the field, and USAID field and Washington staff.
One of the major concerns was that the project appeared to be already well underway even in terms of local construction. USAID and others in the interagency review made this objection in this case and again in early September concerning the IDB's Dona Francisca Hydroelectric Power Project, which was approved by the IDB in December 2000.
According to the IDB's description of this project, Brazil has 10-year plans for dam building that began the late 1990s. It would be most useful for the multilateral development banks and the U.S. agencies to review those plans—and Brazil's current thoughts on them—in light of the World Commission on Dams report, to guide our consideration of MDB support for them.
26. Ecuador: IMF/WB—Structural Adjustment Loan
LOAN DATA
Structural adjustment loan (SAL) of US$151.52 million. Technical assistance loan of US$10 million for financial sector. David Yuravlivker, World Bank project manager. Contact: Alejandra Viveros (202) 473-4306. Date approved: 23 June 2000.
DESCRIPTION OF LOAN
The $151.5 million structural adjustment loan will support fiscal reforms, improve public sector financial management, and restore confidence in the financial system, through the restructuring of corporate debt and recapitalization of the banks, in a context of transparency and strengthening of bank supervision.
At the same time, this loan will improve the effectiveness of social expenditures by investing in projects that create jobs for low-income people, including indigenous groups, and by developing education, health, and other services.
The $10 million supplementary technical assistance loan will strengthen the Superintendency of Banks by increasing the efficiency of its regulation and supervision of the banking industry. It will also support the Deposit Guarantee Agency by modernizing its legal framework and operational procedures.
Both loans are part of the World Bank's country assistance strategy (CAS) for Ecuador, which provides for US$425 million in financing until 2002. This strategy, an updated version of which was also discussed recently by the bank's executive directors, forms part of the $2 billion international aid package announced last March. This sum, which includes $300 million from the International Monetary Fund, $620 million from the Inter-American Development Bank, and $700 million from the Andean Development Corporation, will support Ecuador's ambitious program of economic and structural reforms.
The $151.52 million structural adjustment loan is a fixed-spread, single-currency loan to be repaid in 17 years, including a 5-year grace period. The supplementary technical assistance loan of $10 million is a variable-spread, single-currency loan with a duration of 17 years and also includes a 5-year grace period.
The Project Information Document (PID9029) Revised May 18, 2000 reported that in March 2000, the GOE announced a comprehensive economic program which included a an Economic Transformation Law and subsequent legislation that allows for greater private sector participation in the power, hydrocarbon (oil) and telecommunication sectors. The PID reported that "as part of a concerted effort in support of this program, the World Bank, IADB and the Andean Development Corporation (CAF) announced a three year program of about $1.7 billion which would include the Bank's SAL. The SAL is to include making operational the oil stabilization fund and the necessary regulations for implementing the privatization process for power and telecommunications. The PID concludes "No environmental or resettlement issues are raised by the proposed structural adjustment program."
In the May 14, 2001 Letter of Intent to the IMF that sets forth how the GOE will meet the conditions of the joint IMF-World Bank lending, the GOE says that its financial plan would be supported by an investment associated with the construction of a new oil pipeline. It also notes that inflation would fall to 22-27 percent but that public sector wage increases would be held to 12 and one half percent. The letter says "Although legal obstacles have delayed important parts of the government's structural reform program, significant progress has been made in several areas: Agreement has been reached with a consortium of private oil companies to construct a second oil pipeline from the Amazon to the coast; construction is expected to begin in March 2001. The new pipeline will be able to transport up to 450,000 barrels of oil a day, more than doubling oil exports." The letter notes that a 30-year concession for water and sewage services has been awarded for the largest city in Equador and that six electric generation companies and 18 distribution companies will be privatized by the end of 2001.
USAID'S COMMENTS
The joint International Monetary Fund-World Bank program of structural adjustment points to, among other things, major changes at the national level in many sectors as a condition for future borrowing.
This set of loans raises the question of whether the CAS totaling $425 million from the bank for that period, together with an SAL that provides roughly one third of that in separate installments, will require Ecuador to take actions with substantial effects on human health and the environment. For example, the PID notes that the SAL will support greater private investment in oil development and regulations on privatization of the power sector. These are activities that affect the environment.
Borrowed funds applied now to refinance the ailing bank industry may need to be repaid through increased oil exports. While the need to increase revenues may be important, it may nevertheless create pressure to change oil-production laws and expand oil extraction and pipelines with potentially inadequate assessment and mitigation.
While the SAL may not directly and explicitly require large increases in oil production, it does project that oil will account for 22 percent of GDP each year in the future compared to 14 or 15 per year in most of the last several years preceding the SAL. It also directly supports changes in how oil revenues are managed. It requires the Government to establish an Oil Stabilization Fund held in overseas interest bearing bank accounts and devoted to specific purposes, some of which are quite laudable, including reducing the effect of oil price shocks. The SAL also requires a reform of regulations to facilitate privatization initiatives in the electric power sector. The pollution controls to be required were unknown to USAID. It is commendable that the report on the SAL says, and by implication requires, that the Government will implement a progressive rate to ease the relative burden of price increases on the poor and to encourage conservation, and thus pollution reduction, among larger users.
Given the recent history of the region and Ecuador in particular, major production increases should be undertaken with caution. For example, recent oil spills have threatened endangered wildlife, commercial fishing, and much needed tourism in Ecuador's Galapagos Islands. Additional traffic may require additional capacity to prevent and control oil spills.
The absence of environmental analysis in this case makes more difficult USAID's job of reviewing assistance proposals "to determine whether the proposals will contribute to the sustainable development of the borrowing country"; to determine their impact on the environment, natural resources, and public health; and on the programs of USAID in the country and to advise Treasury, State and others on those points.
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Last Updated on: March 20, 2002 |
