Operations for US$137 million approved for member countries

(Caracas, March 27, 1992).- Loan and foreign trade promotion operations for US$132 million were approved by CAF at its last Board meeting held in Caracas this week.

Three long-term loans, totaling US$77 million, were granted to Venezuela, Bolivia and Colombia, benefiting the petrochemical, mining and gas sectors respectively.

The companies which will execute the projects are basically from the private sector or are joint ventures. They are also receiving finance from multilateral organizations (such as CAF, OPIC or IFC), from international banks local and foreign private capital.

CAF President & CEO Enrique García said developed countries interested in investing in the Andean Group were participating in the equity of these companies, which fully in line with current CAF policy of promoting foreign investments and stimulating the private sector.

In its decision to finance these projects – he added - CAF took into account the fact that they would generate an exportable offer, as well as contributing to the development of priority sectors.

Another innovative aspect - he said - is that in some cases the proposed guarantee scheme corresponds to a project financing operation, constituted more by the flow of funds, the advantages of the project and the company balance sheet, rather than its fixed assets.

Trade In the area of trade promotion, the line of credit granted to the Colombian Foreign Trade Bank was increased to US$18 million. This financial institution was set up in January 1991 to promote exports by granting credit facilities under pre-and post-shipment schemes, along with avals and guarantees.

Another line of credit which was increased - from US$20 to US$40 million - was that of Banco de la Nación del Peru for the mining sector. As a result, this important economic area will be able to expand its exploration programs, equipment maintenance and exploitation of the richest reserves.

Loans One of the loans approved, for US$47 million, will be used to implement a key project in the Venezuelan petrochemical sector: Methanol II.

The CAF loan will partially finance construction and start up of a plant to produce 2,000 metric tons a day of methanol, using natural gas as basic material, which is very abundant in Venezuela with a cost considered the lowest in the world.

The methanol is used to prepare other product chemical products which make the gases expelled by motor vehicles less polluting. As a result, the product has excellent export prospects, given its impact in the area of environmental protection.

. Supermetanol, the company executing this project, is a joint venture formed by state and private capital. The main shareholders are Pequiven - subsidiary of Petróleos de Venezuela - and Ecofuel, wholly owned by Agip-Petroli, one of the leading companies of the Italian State ENI group (Ente Nacionale Idrocarburi).

A second loan operation, for US$20 million, was approved in favor of the Bolivian mining company Inti Raymi SA (IRSA) to develop the Kori Kollo gold and silver mining project near the city of Oruro.

Inti Raymi is a private company which requires considerable foreign investment for its current expansion process.

Finally, a US$10 million loan was granted to the company Promotora de la Interconnexión de los Gasoductos de la Costa Atlántica (PROMIGAS) of Colombia for expansion of the Ballenas-Cartagena trunk gas pipeline.

This project will increase the use of relatively low cost natural gas for consumers in the cities of Barranquilla and Cartagena, replacing more expensive fuel.

Lastly, a technical cooperation operation for contingent recovery was granted to Empresa Minera del Centro del Peru (CENTROMIN) for US$451,000.