Cesar department guarantees financing for Regional Potable Water and Basic Sanitation Program

(Valledupar, Colombia, June 21, 2006).- CAF and Cesar department, with support from the ministries of Finance; Environment, Housing and Territorial Development; and the National Planning Department, today signed a US$42.5-million loan agreement to finance the Regional Potable Water and Sanitation Program which will benefit a population of 370,000 in 24 municipalities.

The ceremony, which took place in the Cesar government building, was presided by Hernando Molina Araujo, department Governor; and Claudia Martínez, CAF social and environmental development vice president, in the presence of Social Protection Minister Diego Palacios; Attorney-General of the Nation Edgardo Maya Villazón Edgar; and potable water and sanitation director Leyla Rojas Molano.

The loan is accompanied by US$58.2 million from the department, the municipalities and national government, which guarantees financing for the investment plan to be executed over 10 years.

The first stage, projected for the next three years, involves investments of US$70 million, of which US$42.5 million will be financed by the CAF loan, and US$27.5 million by the department, municipalities and the Nation.

This program marks the start of an innovative strategy, with a regional and long-term approach, aimed at improving the provision of waterworks, sewerage and solid waste collection services in the country’s small and medium-sized municipalities, under the leadership of the departments and through ordered, equitable and efficient use of the revenue from the royalties.

Claudia Martínez, CAF social and environmental development vice president, said that the operation was part of the actions that the Corporation was taking to promote an integrated development agenda for the region, by stimulating initiatives to promote integrated stability, efficiency and social equity. She emphasized the importance of supporting projects that address the basic needs of a sector of the population with high levels of poverty and exclusion, where social and environmental institutions are being developed.

This ambitious project is intended to improve the conditions of coverage, quality and efficiency in the delivery of waterworks, sewerage and solid waste handling and disposable services in 24 municipalities of Cesar department. The project is expected to achieve over 95% coverage with 24-hour waterworks service. It is also a stimulus to the social and economic development of the beneficiary municipalities, as well as the creation of favorable conditions for private investment in projects in commerce, industry, tourism, manufacturing and agroindustry in the department.

The program has three key components:

• The regional approach, which exploits economies of scale, design of adequate market structures, application of criteria of regional solidarity and unification of sectoral policies.
• Promotion of fiscal discipline practices by the department and the municipalities by means of the equitable and efficient use of the revenue from the coal royalties, through better investment of the transfers from the General Participation System.
• The inclusion of a component for building managerial capacity in the region by promoting and financing strategic alliances with the country’s best public water and sanitation utilities so that they can provide support and technical assistance to the weakest municipalities and utility companies in other regions of the country.

The work scheme for this project includes the financing of infrastructure investment projects; a strategy to strengthen the managerial capacity of the department, the municipalities and their public utility companies; and development of an integrated river basin preservation and management plan for the department.