Costa Rica: CAF and Central American Bank for Economic Integration finance products pipeline

In alliance with the Central American Bank for Economic Integration

CAF cooperates on building products pipeline in Costa Rica

To partially finance the third stage of the Limón-La Garita Products Pipeline project, CAF Executive President Enrique García and the president of Refinadora Costarricense de Petróleo (Recope), Litleton Bolton, today signed a $30-million loan agreement.

García said that this was the first operation with Costa Rica since the country became a CAF shareholder, and was the first concrete event in the strategic alliance formed with the Central American Bank of Economic Integration (CABEI / BCIE) through a co-financing agreement in which the two institutions will share the guarantees on this loan.

García said that the products pipeline, with a total estimated investment of $120 million, would cover future demand for fuel for 20 years safely and reliably starting in 2006 when the project comes on line.

The pipeline project has three stages: the first was executed in 1998-2000 with the building of 13 kilometers; and the second from 2002 and 2003 with a further 39 kilometers. After completion of the third stage, the 123-kilometer pipeline will transfer 537 m3/h of diesel and 590 m3/h gasoline.

Recope is a state company, structured as a commercial corporation under the supervision and inspection of the Controller General of the Republic, the Budgetary Authority and the Ministry of National Planning and Political Economy. It is the only company authorized to market crude and products in Costa Rica.

Uniting forces

During the ceremony the loan agreement between the Recope and the BCIE was signed by the bank’s president Harry Brautigan. The CAF president stressed the importance of an alliance with an institution such as the BCIE, which is the development bank and financial arm of Central American integration. Such an agreement between the two institutions is a clear sign of confidence in the country and a stimulus for shared integration goals, he added.

On the importance of Costa Rica’s presence as a partner country in the CAF, García said that, since the origins of the alliance, it has been seen as a win-win relationship in which the CAF supports the development of Costa Rica and the strengthening of its links with the Corporation’s other member countries. At the same time, members can benefit – through the CAF – from Costa Rica’s successful experiences in many areas. This Central American country is an example for the region because of its democratic tradition and stability, institutional strength and important achievements in competitiveness, human development and environmental responsibility.

In relation to future CAF support for the country, Garcia mentioned some areas of work such as: the "Atlantic Corridor" road program which integrates Costa Rica’s northern border with Nicaragua (Los Chiles-Las Tablitas) and the southern border with Panama (Bibri-Sixaola), which is part of the Puebla-Panama Plan; a global credit program, currently in preparation, to improve the competitiveness of the Costa Rican productive sector looking ahead to CAFTA membership; support for Costa Rica’s efforts through the National Concessions Council to grant concessions for highways and accompany Recope in its investment challenges for the 2004-2010 period through our investment banking and financial advisory services, with financing for projects that are prioritized by the company and the authorities. The CAF expects to implement all these support initiatives for the country jointly with the BCIE.

Special mention should be made of CAF’s ongoing support for Costa Rica in the framework of the Latin American Carbon Program (PLAC) executed by this multilateral. This support consists of formulating the carbon component of the Chocosuela hydroelectric generation project, which will generate approximately 576,000 tons of reduced greenhouse gases (carbon). Their sales represent a potential value added for the project of approximately $3.3 million, which increases profitability. The project has been accepted by the Netherlands government and will benefit from the CAF-Netherlands CDM facility.