Second loan granted for Bolivia/Brazil gas pipeline

(Caracas, November 25, 1998).– CAF granted the second loan for what is considered the most important project of the continental energy integration strategies: the Bolivia-Brazil gas pipeline.

In 1997 CAF approved a total US$215 million for construction of the gas pipeline to interconnect the two countries. To date, US$165 million has been granted, including this operation.

The beneficiary of the new loan – for US$80 million at 15 years – is the company Transportadora Brasileira Gasoduto Bolivia Brasil SA (TBG), mixed state-private company formed especially for this project, with 50% capital owned by Petroleo Brasileiro SA (Petrobras) and the remainder by important multinational companies of the sector. The credit is backed by the sovereign guarantee of the Republic of Brazil.

The loan agreement was signed in Washington by CAF President & CEO Enrique Garcia; TBG Director César Diaz Ramos. On behalf of the government of Brazil, the guarantee document was signed by the Brazilian Ambassador in the United States, Paulo Tarso Flecha de Lima, who emphasized the role played by CAF from the initial stage of the project as the first multilateral organization to offer decisive support for the financial viability of this strategic infrastructure work.

Garcia – of Bolivian nationality – said this time the CAF funds would be used to partially finance construction of the main gas pipeline on the Brazilian side, after granting , US$85 million three months ago to Petrobras to finance the Bolivian side of the line.

The 3,061 km gas pipeline will run from the city of Santa Cruz de la Sierra through eastern Bolivia to Puerto Suárez on the border with Brazil; from there it continues to the city of São Paulo to finally reach Porto Alegre in southeast Brazil. The interconnection between Santa Cruz and São Paulo is planned to start operations early next year.

On the benefits for both countries, Garcia said, "opening this new and important export market for Bolivian gas will contribute to the expansion of this industry, with the consequent positive impact on the country's economic activity and its trade balance;: while the Brazilian market will be able to meet growing energy demand, supplying natural gas to consumers in industrial areas and the economically most important cities of the country, improving the quality of life of the population and in conditions compatible with the environment."

“The gas pipeline will also open real opportunities for participation by the private sector, making a decisive contribution to the strengthening the economic and institutional reforms in the energy sector," he added.