US$10 million loan approved for private Bolivian consortium

(Caracas, December 18, 1998).– A US$10 million long-term loan with the private Bolivian consortium Aguas del Illimani was approved (December 15) to partially finance the expansion plan of a concession project for water and sanitation services in the cities of La Paz and El Alto.

CAF President & CEO Enrique García said the operation would supply, through private-sector participation, the population with a basic service indispensable for collective well-being, namely drinking water and an adequate drainage system.

He said the initiative of delegating execution of new investments to the private sector in areas which were previously strictly reserved for the State has CAF’s full support because it diversifies provision of services, while guaranteeing their continuity and sustainability over time.

Aguas del Illimani is the consortium formed by the French group Suez-Lyonnaise des Eaux, as leading promoter, the company Bolivian Investment Corporation, which is controlled by Banco Mercantil de Bolivia, and other minor partners including the companies Meller SA, Arousa SA, and Connal SRL.

Suez-Lyonnaise des Eaux is one of the world's leading groups in the area of water service, supplying 70 million inhabitants in 30 countries.

Making the service more efficient Under the concession agreements signed by the Bolivian State and the Aguas del Illimani consortium, the latter assumes for its own account and risk the drinking water supply and installation of the respective drainage system in La Paz and El Alto, in exchange for charging for provision of the service.

The program is part of the Bolivian government’s efforts in favor of the privatization and capitalization of public companies with a view to raising their efficiency, while reducing state bureaucracy.

As a final objective of the concession, by 2026, the consortium agrees to provide minimum coverage of drinking water, equivalent to 100% of the population of La Paz and 90% of El Alto.

With respect to the sanitation service, minimum coverage required by the government is 95% in La Paz and 90% for the city of El Alto. Execution of the project will directly benefit a current estimated population of 1,370,000 inhabitants.

The total cost of the expansion program of Aguas del Illimani is US$72 million, with an estimated borrowing of US$40 million. In addition to CAF, funds will be contributed by International Financial Corporation IFC with US$15 million, and the Inter-American Development Bank (IDB) for the same sum.