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• 1818 H STREET, N.W., WASHINGTON D. C. 20433 '·TELEPHONE: EXECUTIVE 3-6360 Public Disclosure Authorized

Bank Press Release No. 66/44 Subject~ $4.8 million loan fo~ Friday, August 12, 1966 Puerto Cortes in HondutN'.!S t(I

The World Bank has· approved a loan equivalent to $4.8 million to

the National Port Authority (Empresa Nacional Portuaria - ENP) of ,

to help finance the expansion and improvement of Puerto Cortes, the country's

most important port. The loan includes funds to carry out studies of other

Public Disclosure Authorized ports in Honduras. Three commercial banks are participating in the loan, without the

World ~a~k's guarantee; for a total amount of $270,000 representing all of

the first four maturities which will fall due between June 1, 1971 and • December 1, 1~72. The participants are Bank of America National Trust & Savings Association, San Francisco;.First National City Bank, New York;

and Marine Midland Grace Trust Co. of New York, New York. Public Disclosure Authorized The ENP, established in 1965, is responsible for the management of Puerto Cortes and will execute the project being financed by_ the Bank. The

studies. of other ports will be undertake~ by a-consulting firm. Puerto Cortes is located near the Honduran-Guatemalan border, -on the

north side of the Bay of , on the Atlantic coast. The port handles

over half of.'.Eh~nduran foreign trade; it is the major banana export center, as well as "the le~•;ling port for export of lumber, coffee and other products.

Public Disclosure Authorized It is the main port of entry for general cargo imports and it handles a

still small but growing trade to and from El Salvador. - 2 -

The consultant studies will be carried out to determine the desir­

ability and feasibility of constructing or expanding other Honduran ports, one on the Atlantic coast at Puerto Cas.tilla add the other in the Gulf of • Fonseca on the Pacific.

For some time, Puerto Cortes has been unable to handle the country's

increasing foreign trade. The Bank loan will assist in the construction of

two new deep water cargo berths, a transit shed and a warehouse. It will

also provide funds for improvement of existing facilities and the acquisition

of cargo handling equipment.

The new facilities and improvements are expected to alleviate the

serious congestion of recent years and substantially reduce ship waiting

time for berths and for loading and unloading operations, with a corresponding

decrease in cargo handling costs. It is expected that by 1970, taking into

account·the projected increase in traffic, net economic benefits for Puerto Cortes resulting from the project will be on the order of $800,000 per annum. • A modern road system will connect Puerto Cortes with the main. economic centers of Honduras by the time the port work is completed. At present,

1 Puerto· Corte~ is linked 0.:f 0 , the country's rapidly growing industrial center, by a 40-mile (60-km) paved highway, construc:ted under a previous Bank loan to Honduras and completed in 1962., ~e Weis tern. Highway, also financed by a Bank loan and a credit extended by the International

Development Association (IDA), a Bank affiliate, goes from San Pedro Sula to the Salvadorean border. Work is expected to begin soon to build a new paved North Road, which by 1970 is expected to give Puerto Cort:es an all­ weather connection to the Pacific Coast through , the capital.

The project is being financed by the Bank and IDA jointly with the Inter­ American Development Bank. Construction of the Atlantic Highway, under • D

./ ~ 3 •• consideration for financing by other lending institutions, will give Puerto Cortes impra"'red' connections to the eastern part of the country by way of San,

Pedro Sula. Puerto Cortes is also served b}~"'.:: a railway link to San Pedro Sula and the banana-producing regions ,o the east.

The cost of the construction and improvements in Puerto Cortes and related studies in other ports is estimated at $7.2 million. The Bank's

loan will cover about 66% of the .total and will cover the entire foreign

exchange cost of the project. The balance will be supplied by ENP out of

its operating revenues. Construction contracts will be awarded and equip­

me~t purchases made on the basis of international competitive bidding.

The loan will be for a term of 25 years, including a 5-year period

of grace, and will bear interes.t at the rate of 6% per annum. Amoritzation

will ~egin on June 1, 1971. The loan will be guaranteed by the Republic of • Honduras.

This is the Bank's sixth loan to Honduras since 1955, bringing the

iY total to $30,750,000. IDA has provided two credits for a total of l~2,SOO,OOO. Of the five earlier Bank loans, two, totaling $10.2 ~illion, have been for

.~ower development. The other· ~hree, amounting to $15. 7 million, and the two IDA credits have been for highway construction, improvement and main­ tenance •

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