US$290 million granted to Venezuela for four major projects

President & CEO of the Andean Development Corporation, Enrique Garcia, and Finance Minister, Nelson Merentes, representing the Bolivarian Republic of Venezuela, signed four loan agreements for a total of US$290 million to finance projects related to transport, agricultural development, commercial management and technology, and provision of potable water and sanitation services in the municipalities in the western region of the country.

CAF President García emphasized the satisfaction and importance of these four loan agreements for the multilateral since the funds would be used to continue the development of projects with a high social content. "The aims are to improve the quality of life of vast sectors of the population in the Caracas area, and to strengthen the integrated management of water resources, improving the conditions of agricultural producers and the potable water and environmental clean-up services in the western area of Venezuela, as well as supporting the national government’s efforts to strengthen the institutional and service capacity of companies such as CADAFE," he said.

Minister Merentes emphasized the Corporation’s strategic role in the region, and thanked CAF for the financial support received especially by Venezuela. "With these loans, we are addressing a broad spectrum of the country’s most important development needs, especially in relation to collective welfare with no type of discrimination. (...) We will continue to work with CAF on specific areas. Venezuela now has financial advantages resulting from the current economic pickup, with growth for eight consecutive quarters and very optimistic projections for this and future years," the minister said.

Projects to be financed

An amount of US$200 million will finance Stages I and II of the Caracas-Tuy Medio Rail Project. This new contribution brings the multilateral’s participation in this project to US$360 million. The new loan covers the direct costs of the project, civil works and equipping of the system. The amount also partially finances the direct costs associated with infrastructure construction (railroad, yard and workshops, stations, underground and surface work, electricity substations, among others), relocation of infrastructure services (electricity, canalization, telephone networks, telephone cabling and public services), along with improvement works for alternate routes and constructions associated with the works of the Metro. The loan also includes the costs associated with the integrated system, environmental costs related to the execution of the project, and the start-up of the service and the financial commissions of the loan.

The loan is for ten years, including two years of grace. The first disbursement will be US$140 million.

The second loan, destined for the Yacambú-Quibor project, finances Regulation and Diversion works, the agricultural development of the Quibor Valley, and Conservation of the Yacambú River Basin. A US$50 million line of credit was signed to cover the social, environmental and infrastructure components. The loan has a 12-year term with a four-year grace period. The first disbursement will be for US$7,005,963. This is the sixth concession that CAF has made in favor of this project, totaling US$206.5 million.

The third contribution by the multilateral is for the project to Optimize the Commercial Management of CADAFE (Project Participa) for US$25 million, representing 53% of the total cost. The funds will also assist with the direct costs of the program, and the studies on the institutional strengthening of the company, including preparation of the diagnosis of the environmental and social work of CADAFE and its subsidiaries. The loan has a five-year term and two years of grace. The first disbursement will be for US$100,000.

The fourth loan operation will finance the program of Investments in Potable Water and Sanitation in La Guajira peninsula, Zulia state, for US$15 million, representing 67% of the project’s total cost of US$22.52 million. The funds will cover the direct costs of the program. The first disbursement will be for US$2,500,000. The loan has a ten-year term with three years’ grace.

In all cases, the initial disbursements are planned for the fourth quarter of 2005, after completion of all legal formalities.