RERTURN TO REPORTrS DESK RESTRICTED WITHIN COPYUJE ONE- WEEK KWH1 52 2NE WEEK Vol. 3 Public Disclosure Authorized

This report was prepared for use within the Bank and its affiliated organizations. They do not accept responsibility for its accuracy or completeness. The report may not be published nor may it be quoted as representing their views.

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION Public Disclosure Authorized

AN APPRAISAL OF

THE DEVELOPMENT PROGRAM

OF VENEZUELA

VOLUME III Public Disclosure Authorized ANNEX IV: TRANSPORTATION

ANNEX V: HOUSING

ANNEX VI: PUBLIC HEALTH

August 17, 1965 Public Disclosure Authorized

Western Hemisphere Department CURRENCY EQUIVALENTS

Selling Rate

U.S. $1.00 = Bs. 4.50 (Bolivares) Bs. 1.00 = U.S. $0. 22 Bs. 1, 000, 000 = U. S. $222, 222

Petroleum Exports

U.S. $1.00 = Bs. 4.40

Other Exports

U.S. $1.00 = Bs. 4.48 AN APPRAISAL OF THE DEVELOMFENT PROGRAM OF VENEZUELA

ANNEX IV: TRANSPORTATION

TABLE OF CONTENTS

Page No.

SIJDTI7ARY AND CONCLUSIONSN...... ii

A. GENERAL,.*..**e* .*.....* * **....*** .*...1

B. PIGM-AYS ...... o..@@@*..... 8

C. THE CARACAS TRANSPORTATION PROBLE4...... 31

D. PORTS AMiD SHIPPING ...... * ...... 35

E. AIR TRANSPORT ...... 44

F. RAI'LWAYS...... so ...... 50

APPENDIX

USER CHARGES

A. ASG±I-ENT OF USERS' RESPONSIBIITTIES

B. PRESENT USER CHARGES

C. POSSIBLE INCREASES IN USER CHARGES SUMMRY AND CONCLUSIONS

1. Hgighways provide the backbone of Vlenezuela's transportation system, with other transport media playing a subsidiary role. Consequently, the in- vestment progrcm is mainly a highw¢ay investment program.

2. The objectives of the transport program are:

(a) Completion of the national trunk road system and its improvc- ments iwhen warranted by the growth of traffic.

(b) Improvement in the transport efficiency of urban areas and regions of high population density (urban roads, expressways).

(c) Improvements of other transport facilities to accommodate growJth of traffic.

(d) Promotion of developmer.t of other sectors, especially agriculture.

3. The major part of the proposed transport investment program is directed towards improvements and some expansion of the national highlway system, development of secondary and rural roads and urban road developmient designed to alleviate traffic congestion, especially in the metropolitan area. During the program period, the development of an urban mass trans- portation system in Caracas will also be studied. The bulk of the program will be pLanned and executed by the I1inistry of Public lorks.

4. The present organization of transportation planxning requires con- siderable strengthening to deal iath the growing complexity of Venezuela's transport problems. Specifically, a central planning office dealing with transport problems should beestablished tithin the i4inistry of Public W;orks, the coordination between transport planning and regional development planning should be strengthened, and a suitable organization should be established for the planning, construction and maintenance of rural feeder roads.

5. The investments in the transportation sector planned for the period 1965-1968 amount to Bs. 3,163 million, Bs. 662 million in 1965, Bs. 943 million in 1966, Bs. 863 million in 1967 and Bs. 695 million in 1968. The maission recommends the followi-ng changes in this program:

(a) The phasing of the investments should be changed both on general econonic grounds and to even out the undesirable peaks. The adjusted program would reduce the 1966 investment program by Bs. 200 million, which would still leave the investment volume larger than 1965; the 1967 program would be left at the planned level, and the 1968 program would be increased by Bs. 255 million. - ii -

(b) The planning and execution of rural feeder roads should be con- solidated within the l$inistry of Public Works and be increased by Bs. 17 zillion in 1967 and Bs. 47 million in 1968. The over- all size of this program would then be Bs. 20 million in 1965, Bs. 33 million in 1966, Bs. 50 million in 1967 and Bs. 80 million in 1968.

6. The analysis of users' contributions to the cost of transport facili- ties indicates the need for a drastic upward revision of road user charges. A. GENERAL

1. Recent Developments in the Sector

General Considerations

1. In Venezuela highways provide the basis of the countrY's trans- portation system, with other transport media playing a subsidiary role. Con- sequently, the investment program in the transport sector is main.y a highaway investment program. The high priority given to highways appears reasonable because of the relatively short or medium hauls in the more developed part of the country and the small demand for medium and long distance carriage or large volume bulk products..

2. The past efforts of Venezuelan governments have been concentrated on the development of a network of main highways (ritroncales"). In order to relieve traffic congestion on sections of the network, a number of express- ways (urban and interurban) have also been constructed or started. WJith the virtual completion of the main road netiwork, the Venezuelan transportation system has achieved a high level of development.

3. The country has on the wThole satisfactory port facilities and air services are adequate. The existing railway lines have not been developed into a national system and, except for the Barquisimeto-Puerto Cabello line, are rather antiquated. Lake Maracaibo and the lower reaches of Orinoco are the important inland waterwayn serving Venezuelan overseas trade. There is also a certain volume of coastal shipping and river navigation serving re- gional or inter-regional trade.

Institutional Arrangements and Policies

4. The Ministry of Public Works, which is responsible for road con- struction and maintenance, has played the principal role in the transport field. Some specialized functions have been allocated to otlher ministries. No agency coordinates or reviews transportation policies or operations of the several ministries and agencies in the transportation field. MOP has developed an efficient organization capable of performing its allotted role. However, in viewr of the virtual completion of the main trunk road system and the growing complexities of transport problems, it is reasonable to question whether the present organizational framework will prove adequate to meet new demands, particularly in the planning field.

Past Investment Programs

5. Approximately 90 to 95 per cent of capital expenditures in the transportation sector have been made through the budget of the Ministry of Public Works. The capital expenditures of this Ministry provide a good indi- cation of the size and structure of past investment programs. - 2 -

Capital Expenditures in Transport Sector Ninistry of Public Wlorks (In r-.llions of Bolivares) Urban Roads and Ports and Year Roads Streets Expressways Airports Total

1959 348.8 22. 45.5 39.4 456.0 1960 256.0 43.9 29.1 61.9 390.9 1961 25;0.6 20.5 33.8 35.8 340.7 c1962 201.5 13.2 62.6 19.9 297.2 15963 2].9.2 43.7 136.3 16.6 415.8 1964 22'8.8 61.6 187.3 10.8 488.5

Source: kinistry of Public Works

Capital expeaiditures in the transportation sector cumount to approximnately 7 per cent of tctal ozpenditurGs of the Federal Governmea:t.

6. The decline of investments during the 1961-1963 period was due to econonmic recession. Capital expenditures during this period were, therefore, lower than the expenditures recommended by the IBRD aconomic survey mrission of 1959. However, all projects identified by that mission as high priority works either have been completed or are under construction.

7. As the result of a policy decision not to develop a national railway system, only minor investments have been made in the railway sector. This policy has been consistent with IBRD mission's recommendations.

2. The Proposed Program (1965-1968) Ob ectives of the Program

8. The objectives of the transport program are: (a) Completion of the national trunk road system and its improve- ments when warranted by the growth of traffic. (b) Improvement in the transport efficiency of urban areas and regions of high population density (urban roads, expressway4. (c) Improvements of other transport facilities to accommodate growth of traffic.

(d) Promotion of development of other sectors (especially agriculture). - 3 -

9. The major part of the proposed transport investment is directed towards improvements and some expansion of the national highwxay system, the development of secondary and rural roads, and the alleviation of urban traffic congestion.

Proposed Investments

10. The investment program in the transportation sector is sum- marized in the table below. More than 90 per cent of the program will be executed by the Ministry of Public IlJorks.

Investment Program 1965-1968 Transportation Sector (In ni'lu-ions of BoJ.varve)

Agency/Subsector 1965 1966 1967 1968 Total

MLinistry of Public Worlcs 589 883 801 632 2905 Roads 5 831 2687 Ports 11 24 29 22 86 Airports 14 28 38 52 132 Ministry of Corimunications (a) 9 19 29 21 68 IADA 1 14 15 14 44 IAAFN 1 1 1 1 5 LAV 37 0 0 0 37 I NC 6 6 6 6 25 States and Municipalities 18 20 20 21 79

Total (b) (c) 662 943 863 695 3163

Notes: Because of rounding,totals in this table may not equal exactly the sector figures used in other parts of the report.

(a) Including minor communications items.

(b) In order to obtain a functional sector totals, rural feeder road expenditures of the Ministry of Agriculture (Bs. 20 million p.a.) should be added. IrLnistry of Public Works road program includes Bs. 13 million for 1966, 1967 and 1968; thus the total rural feeder road program is 1965 - Bs. 20 million; 1966 - Bs. 33 million; 1967 - Bs. 33 million; 1968 - Bs. 33 million.

(c) Excludes any investment in transport facilities made by Guayana Corporation.

11. The estimated foreign cost component of the investment ranges fromn about 40 per cent (average for road construction), 50-60 per cent (port construction) to 100 per cent (acquistion of aircraft and aids to navigation equipment), and would total about US$280-300 million equivalent. 3. General Evaluation of the Program (1965-1968)

Size of the Program

12. The over-all size of the program is considered realistic in relation to the needs of the economy. The broad allocation of funds between the subsectors corresponds to demands for services of different transport media and the economic functions performed by them.

13. The phasing of the program requires considerable readjustment for the foll(oing reasons:

(a) On general eccnoiic grounds the concentraticn of capital expenditures in 1966 is not advisable.

(b) The sharp increase (by 44 per cent) of investment expendi- tures in 1966, and subsequent decline in 1967 (by 9 per cent) and 1968 (by 20 per cent) is likely to produce seri- ous administrative strains at the beginning of the program, and subsequent readjustment problems towards its end.

14. Analysis of subsector programs indicates the need for some adjustments. These problems are discussed in specialized sections of this report.

Organizational Framework

15. The existing organizational structure was developed to deal with the first phases of Venezuelan transport development, namely, the construc- tion of a national system of trunk highways, more urgent urban roadworks, air- ports and ports facilities. Venezuela is now entering a new phase where project evaluation and the formulation of transport policies involve problems of con- siderable economic complexity, and which require reexamination of the existing organizational structure.

16. The problems requiring special attention in this connection are:

(a) The development of a long-range transport policy closely related to the developmental programs of other sectors and to regional planning.

(b) The coordination of transport investment policy with policies aimed at the development of the transport indus- tries (carriers).

(c) Problems of urban transport. (d) The development of rural feeder roads to serve the ex- isting concentrations of rural population and to stimulate agricultural development.

17. In view of the above, the economic planning organizations dealing with transport problems should be strengthenecl. Because of the key role played by the Ministry of Public lWorks, it is particularly important that a strong central transport planning office within this Ilinistry should re- place smaller planning units attached to its operating directorates. Serious consideration should also be given to the reallocation of different ministerial responsibilities concerned with transport problems to decrease the present diffusion of authority and to assure a higher degree of coordination. The multiplicity of interministerial and interdepartmental coordination committees suggests that; fundamental changes in the allocation of transport sector re- sponsibilities may be overdue.

Technical Feasibility

18. The design and execution of the proposed construction program appears to be within the capacity and capability of existing domestic tech- nical and construction resources, supplemented in certain specia:Lized fields by foreign outside consultants or contractors.

19. The Ministry of Public IJorks, responsible for designing and supervising the bulk of the program, is well staffed with competent adminis- trative and technical personnel. The present staff could probably absorb the additional workload by increased efficiency without increase in numbers, except possibly in the number of field inspectors.

20. The Venezuelan contracting industry has a capacity to execute mcre than Bs. 4,000 million of civil engineering works and buildings an- nually, which appears in general adequate to handle the expected volume of such construction in both t;he public and private sectors over the next few years. User Charges

21. On general economic and financial grounds and in order to assure the most efficient allocation of resources, the problem of user charges requires serious consideration. This applies especially to highway user charges because of the great importance of road transport in Venezuela. In other fields of transport, organizational changes aimed at the decentral- ization of the management and greater revenue consciousness should bring port and airport facilities closer to financial self-sufficiency.

Recommendations

22. The main recommendations relating to the transport sector are:

(a) The public investment program should be adjusted as follows: - 6 -

(i) The road investment program for 1966 should be reduced by Bs. 200 million. No change in over- all size is proposed for 1S67, but a Bs. 200 million increase is suggested for 1968.

(ii) The rural feeder road program shouldbe consolidated within the Kinistry of Public lorks, and increased by Bs. 17 million in 1967 and Bs. 47 million in 1968. The size of the proposed feeder road program wiould be as follows:

1965 1966 1967 1968 (In millions of Bolivares)

Present MOP - 13 13 13 Present MAC 20 20 20 20 Proposed additions - - 17 _ 47 20 33 50 80

Provided that the organizational changes suggested in the highway section are successfully carried out, further increases in rural feeder road investments may be ju2tifiod.

(b) Transport planning organization for all modes should be considerably strengthened.

(c) User charges and taxes should be increased to cover the proportion of costs of the facilities considered to be users' responsibility (cf. Section B - Bl.-hways).

(d) In view of the importance of Caracas metropolitan transport and the large expenditures potentially involved, the studies of the public transit system within the general frame- work of metropolitan planning should be completed prior to any major investment decisions (Section C).

(e) A Caracas regional transport authority should be estab- lished to regulate rates, coordinate bus operations, issue taxi licenses and regulate parking (cf. Section C).

(f) Port operations and administration should be improved. No new port sites should be developed, but some expansicn of the existing port facilities at Puerto Cabello appears to be justified (Section D). - 7 -

(g) Parallel with the modernization and expansion of airport facilities at Maiquetia, the structure of the airport administration should be reorganized, and an independent authlority formed.

(h) A continuation of the LAV re-equipment prograrn should be considered, but made contingent upon pooling arrange- ments with AVENSA, the other airline, or on route rationalization.

(i) No major railway expansion is recommended, but moderate improvements on the Barquisimeto-Puerto Cabello line should be favorably considered. The phasing out of other railway lines should be seriously considered.

23. These recommendations are amplified by recommendations contained in specialized parts of the sector report. - 8 -

B. HIGHWAYS

1. The Existing System and Recent Developments

The Existing System

24. At the end of 1964 there were approximately 29,900 km. of roads in Venezuela, 14,400 km. of which were asphalt surfaced (Table B 1). Approximately 8,070 km. of roads are classified as trunk roads (carreteras troncales) of which 7,130 km. are paved. The total network of trunk roads, after the planned roads are completed, would be 9,570 km. Venezuelan high- way planners also use another classification, based on traffic, namely the "principal /highway 7 network" (La red principal) which comprises trunk highways ancL more important secondary roads. Over 17,000 km. of highways are included in this system, 73 per cent of which are paved. 25. During the 1958-1964 period, the main stress was put on the com- pletion of the network of trunk highways; 3,245 km. of new roads were con- structed and 7,981 km. were paved (Table 3 2).

26. Drxing the last decade the number of automobiles has increased from 128,00() in 1954 to 286,000 in 1963 (Table B 3). The overall size of the truck. fleet has, on the other hand, remained virtually stationary, and while the proportion of trucks wTith over 10 ton capacity has increased slightly, there has been a decline in tractor/trailer combinations.

27. Irn spite of this, highway freight traffic has increased rapidly, or by an estimated 31 per cent from 1961 to 1963. This was the result of highway improvements, which made a better vehicle utilization possible. Highway improvements also are believed to have resulted in a reduction of trucking colsts and charges. No reliable statistics are available, however, covering a period of years (Table B 4).

Highway Transport Fleet (Trucks) Total Trucks with number capacity Tractor-trailer of trucks of over 10 tons combinations Year (no.) (no.) d of total (no.) % of total ] 956 41,770 2,359 5.65 848 2.03 1961 44,408 3,310 7.45 352 0.79 ]1962 47,878 3,726 7.78 502 1.05 1963 44,986 4,134 9.19 490 1.09

S'ource: Direeccion de Estadistica, Ministerio de Fomento

28. In Venezuela transportation is essentially of a short haul nature, wihere large-scale operations and large-sized equipment do not have as great advantages as in long hauls. This helps to explain both the prevalence - 9 -

of small-scale operations and the relative failure to take advantage of the potential economies of tractor/trailer operations. In its turn, how- ever, the small scale of operations with the predominance of individual operators may have delayed the shift to larger and more economical but at the same time more expensive equipment.

Freight Carried by Highway Transport (million t/km)

1961 1962 1963

Enterprises 337.46 351.22 397.15 Individual Operators 3,442.66 4,527.74 4,551.37 Total 3,780.12 4,878.96 4,948.52

Source: Banco Central de Venezuela, Informe Economico Correspondente al Ano 1962 do, 1963.

Past Highway Programs

29. The beginning of modern highway planning in Venezuela dates from the "Plan Preliminar de Vialidad" completed in 1945; this plan visualized the road network as a system aimed at achieving national integration. With :,ome modifications, this plan served as the basis for subsequent highway constructions, and the majority of highways proposed have now been built. Investment was especially high in the years immediately prior to 1960, during which the first expressways were completed and major urban roadworks were undertaken by the Government. The next stage in highway planning dates from about 1L960, when regular four-year programs were introduced on a more raticnal oconomic basis. For general economic reasons, investment in the per- iod 1960-64 was not as high as in previous years, but emphasis was given to completing the principal highway network and expanding the expressway system. The distribution of funds between roads, urban road work and expressways is indicated below:

Capital Expenditures on Roads 1959-1964 (In millions of Bolivares)

Roads Year (Trunk and Secondary) Urban Roa(lworks Expressways 1959 348.8 22.h 45.5 1960 256.0 43.9 29.1 1961 250.6 20.5 33.8 1962 201.5 13.2 62.6 1963 219.2 43.7 136.3 1964 228.8 61.6 187.3

Source: Ministerio de Obras Publicas - 10 -

30. In addition, the Ministry of Agriculture (Ministerio de Agricultura y Cria) organized a program of construction of "farm-to-market" roads or rural feeder roads (caminos vecinales).

31. This program, important as it is to the development of agriculture, has not proved to be fully successful because of the problems of organizing suitable maintenance and planning organizations. It is believed that many of these roads will have to be reconstructed in the near future. A number of roads have also been constructed by local authorities or organizations, information on which is not readily available, however.

Road Construction Activities, Ministerio de Agricultura y Cria

Activities 1963 1964 1965

Construction of roads (km) 650 700 900 Reconstruction of roads (km) 150 150 200 Roads maintained (km) 2,000 2,000 2,500 Costs (Bs. 1,000,000) 20.44 14h.9 19.72

Source: Ministerio de Agricultura y Cria

Organization of Highway Planning.

32. In the M4inistry of Public Works, highway planning is concentrated in the Coordination and Planning Division of the Direccion de Vialidad. However, certain planning functions are allocated to the Office of Pro- gramming (Oficina Ministerial de Programacion y Presupuesto)l/ and Planning Directorate (regional and urban planning). In addition to their own planning staffs, the Venezuelan administration makas use of foreign con- sulting firms in preparing certain projects.

33. While individual officials engaged in planning are highly com- petent, there exists a great need for a stronger and more centralized planning and programming office dealing with transport problems. Lack of professional economic staff, and the lack of information on highway users (road haulage industry in particular)?/ are the obvious gaps. Even more

1/ The functions of the Oficina Ministerial are described as follows: (1) advising on program formulations, (2) economic analysis and calculation of the programs and investment projects, (3) assessment and supervision of the preparation of projects and programs by the planning units of different directorates of the ministry, (4) progress evaluation of pro- grams, (5) elaboration of the general economic criteria, evaluation stan- dards and presentation format in order to standardize the work of differ- ent planning units, and (6) coordination of investment plans with other agencies and ministeries which may involve joint participation.

2/ Economic regulation of highway transport is part of the functions of the Division de Transporte of the Ministerio de Fomento. Operational control of road users is in the hands of the Direccion de Transito Terrestre of the Ministerio de Communicaciones. serious is the absence of an ofice or agency which would work out and revise a longer term highway plan coordinated with the development plans of other sectors and with regional development programs. This need is realized by the Venezuelan administration and was clearly expressed in the most recent Annual Report of MOP,

"Es necessario producir no so'lo planes a mediano plazo, sino un plan integral de transporte de mayor alcance que sirva de base a los futu- ros planos cuatrienales. As! mismo, que integre no sdlo las facili- dades terrestres sino todos los medios de transporte. Este futuro plan tendra que ser no so'lo un plan de inversiones en infrastructura sino que debera' estabelecer politicas de conservacion, mantenimiento y operacion del sistema. Adema's debe contemplar el financiamento del sector, El desarrollo que ha alcanzado el transporte y los beneficios que da a los usuarios parecen ya indicar que estos deben empezar a contribuir mas directamente en la obtencion de los fondos a invertir. Finalmente, la reorganizacion administrativa del sector esta planteada, pues la evolucion de que hemos hablada hace cada dfa ma's anticuada la organizacion administrativa actual."

Ministerio de Obras Publicas, Memoria 1964, p.1-73

34. The rural feeder roads program is to be coordinated by an Execu- tive Committee on Rural Roads (Comite Ejecutivo de Vialidad Rural) com- posed of the representatives of the Ministerio de Obras Publicas, Minis- terio de Agricultura y Cria, instituto Agrario Nacional and CORDIPLAN. It is not planned, at present, to provide the committee with full time staff. The regional planning aspects of the program are to be adminis- tered by regional committees composed of local operational officers of the same agencies (except CORDIPLAN) and representatives of municipal and state administrations. The regional committees wJould serve as channels through which local proposals would be passed to the main committee. They would have rno specialized or full time staff. The questions of standards, construction methods and mnaintenance organizations are still to be decided.

Organization and Effectiveness of Design, Construction and Maintenance

35. The bulk of highway construction in Venezuela is the responsi- bility of MOP. Construction is normally executed by contract to the designs and under the supervision of the Highway Department of MOP, which some- times seeks the assistance of domestic consulting firms and the occasional aLdvice of foreign consultants.

36. The geometrical design standards for highways, as prescribed by MOP, have remained much the same over the past years, although recently there has been an increasing tendency to rationalize design standards by correlating them to projected traffic volumes. However, such correlation should not be carried too far. For exanple, it is irrational to relate - 12 - bridge loading and right-of-way width to traffic volumes ashen considering the passage of heavy through traffic on a long trunk road where the traffic volumes might vary considerably from a few hundred to many thousands of vehicles a day.

37. A more rational approach to design would be to prescribe three sets of basic standards for the three classes of roads identifiable in Venezuela, namely: trunk, secondary and local rural. An appropriate network of roads in each of such classes should then be predicated on the traffic forecasts generated by the over-all economic development plan for the country. The basic design elements (speed, ruling gradient, right- of-way, bridge loading, etc.) should remain the same for each class of road, but certain technical features such as widths of pavement and shoul- der, thickness of pavement and type of surfacing, etc., could be improved by stage construction in accordance with short-term traffic forecasts.

38. There appear to be justifiable grounds for increasing the pre- sently prescribed width of shoulder and for increasing vertical bridge clearances.

39. The legal limit for the single axle loading of trucks in Vene- zuela is 8 rmetric tons, but the limit is unrealistically low and is not enforced. Trucks with axle loading of over 15 metric tons are using the highway system, usually to the detriment of both the truck and the highway. The policy of MIOP is to measure or estimate the average axle loading of trucks using a particular road, and to design the pavement thickniess accord- ingly. The mission is of the opinion that a more economical approach would be to introduce realistic legislation concerning an optimum vehicle axle loading and rigidly enforce such legislation by better policing and an increase in the number of truck weighing stations. A legal limit of 'LO metric tons is suggested for single axle loading, with MOP designing pavements to, say, 11 metric tons as a margin of safety.

40. Highway construction techniques and the quality of worlkmanship is generally satisfactory. When preparing bidding documents, greater accuracy is desirable in estimating quantities of work to be executed, in order to avoid overruns in quantities and resulting claims for extended contract periods and revised unit prices. NiOP will need to engage more field inspectors and supervisors if the volume of future highway work is to be increased substantially.

41. A general complaint among construction contractors is that of delay in receiving payment for work performed. The delay seems to arise from the present complex administrative procedure which requires checking of the contractors' invoices first by MOP, then by the Ministry of Finance, and finally by the Contraloria. Since payments to construction contrac- tors, excep-t final payments, are all interim and subject to future correc- tion, delays could be avoided by making such payments upon iMOP's recommend- ation only, and correcting later after checking by other government agenc-es. - 13 - 42. The highway maintenance organization of MOP appears lto be som,a- what overstaffed, particularly with unskilled laborers and assistants to equipment operators. This seems to reflect an effort to provide unemploy- ment relief in certain areas. The number of laborers employred per km. of road maintained is particularly high in the States of Niiranda and the Fed- eral District. Consideration should be given to streamlining highway maintenance operations, and rehabilitating redundant personnel in other occupations.

43. The accepted policy of the maintenance organization of MOP to resurface rc,ads lwrith heavr-duty asphalt carpets, irrespective of traffic volume, should be critica:Lly reviewed with a view to substituting bitumi- nous surface treatments and substantially cutting cost. A similar polic'Y of paving the shoulders of highways should also be reviewed with a view to the elimination of such1 paving.

2. The Proposed Program

General Considerations

44. The stated objectives of the program are:

(a) The completion of the network of trunk highways.

(b) Paving and improving of the principal highways (trunk high- ways and more important secondary roads) in order to reduce vehicular operating costs, including time saving.

(c) Construction of a secondary road system to improve the utilization of the principal highway network and to provide highway transport facilities for the rural areas,

(i) Construction of roads to open new areas of the country; and

(ci) Increased construction of rural feeder roads (caminos vecinales).

Trunk Roads

45. The four-year program includes construction of 977 km. of new trunk highways, paving of 1,194 km., reconstruction of 580 km. and repairing of 1,678 km.. of trunk highways.

46. The capital expenditures are estimated as follows:

(EL) Direct capital expenditure on projects included in the pro- gram:

During 1965-68 period Bs. 698.9 mill ion Prior to 1965 (expenditure on initial phases of projects included in the program) Bs. 208.0 million Estimated expenditure on projects included Bs. 86.0 in the program to be made after 1968 million

(b) A proportion of general expenses (Bs. 127.3 million) not allocated to individual projects .1/

47. The majority of trunk road projects listed in the program were started prior to 1965 or are to be started this year.

Secondary Roads?/

48. The objectives of the secondary road program are:

(a) Paving of 6,770 km. of secondary roads which are considered to be a part of the "principal highway network".

(b) Construction and reconstruction of 2,053 km. of secondary roads, reconstruction or repavement of 5,092 km. of these roads, and construction of a further 235 km. of roads classified as local roads("locales").

(c) Construction of 1,371 km. and paving of 1,747 km. of develop- mental roads.

49. The cost of the program is estimated as follows:

(a) Direct capital expenditure on projects included in the plan:

During 1965-68 period Bs. 454.2 million Prior to 1965(expenditure on initial phases Bs. 148.8 of projects included in the plan) million

Estimated expenditure on projects included Bs. 121.5 in the program to be made after 1968 million

(b) Paving of secondary roads Bs. 196.7 million (c) A proportion of general expenses not allocated Bs. 127.3 to individual projects (see par. 45-47) million a/ These are: (1) additional pavement and asphalt coating on "different highways"-Bs. 38.8 million; (2) various works, highways-Bs. 22.1 million; (3) new bridges-Bs. 27.4 million; (4) construction of "puentes metalicos"- Bs. 19.4 million; (5) highway beautification works-Bs. 19.7 million. No attempt is made to allocate these expenditures betwieen trunk roads and secondary road systems. 2/ Venezuelan terminology makes distinctions between "vias alimentadoras" (feeder roads), "vias alimentadoras de la red principal" (feeder roads which form part of the principal road network) "caminos locales" (local roads) and "vias de penetracion" (developmental roads). - 15 - Expressways in Rural Areas

50. The program aims at the completion of the expressways system in the central region of the country and the improvement of certain of its existing sections. After completion, the central region expressways will connect La Guaira-Caracas-Tejerias-Valencia-Puerto Cabello, serving inter- city and suburban traffic. The system is expected to be completed in 1966.

51. Although not classified as such, another important rural express- way which will be integrated in the central system is La Autopista de O)riente (del Este), wihich will integrate the Tuy Valley with the Caracas metropolitan area. One of the major consequences of this link will be the opening of the Tuy Valley for satellite town developments; this, in turn, will require the preparation of a comprehensive regional plan for this area.

52. The estimated expenditures on the expressway program during the 1L965-68 per:iod are estimated at Bs. 198 million to complete the "central region rural expressways system" (excluding Autopista de Oriente, the cost of which - 1Bs. 35 million - is included in the urban road program).

Urban Roadworks (including Urban ExpressWays) 53. The Central Government is responsible for major road construc- tion in the Federal District and for certain road projects in other urban areas wxhich are considered important links of the national highway system. The only exception to this is the road development in San Felix-Ciudad Bolivar. More than half of the funds devoted to the urban program will be used for providing better traffic facilities in thie Caracas metropoli- tan area.

54i PLanned expenditures during the program period are lBs. 695.8 million-/

Prior to 1965 After 1968 (road projects (toad projects included in the 1965-1968 included in the program) program Expenditures (in millions of Bolivares) rotal 174.9 695.8 (100 per cent) 55.0 Caracas 81.2 389.8 (56 per cent) -

Source: Mizisterio de Obras Publicas, Programa de Obras Viales l/ See Table B-5 for the list of major urban road projects. - 16 -

Rural Feeder Roads (Caminos Vecinales)

55. The rural feeder road program is considered essential for the improvement of the economic position of the existing farms and is a pre- requisite for the utilization of new agricultural areas. The program wias initiated and until now administered by the Ministerio de Agricultura y Cria.

56. During the 1965-68 planning period the following developments are envisaged:

(El) Taking an inventory of the existing rural feeder roads.

(b) Reconstructing to satisfactory standards the existing rural feeder road system.

(c) Commencing the construction of new rural feeder roads on the basis of economic priorities.

(cd) Establishing an inter-ministerial committee to coordinate and administer the program (see par. 34).

(e) Devising a system of cost sharing (for both construction and maintenance) between the Government and local authori- ties or interested parties, -with the objective of creating a sense of local responsibility.

57. The possibility of transfering the administration of this pro- gram to the Ministry of Public Works is under discussion. Should it be effected, the Executive Committee on Rural FFeeder 7 Roads would be charged with over-all planning, and the Ministry of Public Works would act as an executive agency. In the absence of an agreement on the trans- fer of responsibility for the project, the Iministry of Agriculture will Continue its own program.

Planned Investments and Expenditures

58. Details of the proposed program are given in the follow^ring table: - 17 -

Planned Road Expendituires, Ministr of Public Works and i nistry of Agriculture -TIn millions of Bolivares)

1965 1966 1967 1968 Ministry of Public lJorks Studies and Inspection 32 42 42 37

Land and Compensation: cash 9 30 30 30 bonds 50 50 50 50 Highways 176 448 402 316 Trunk Roads 101 252 201 145 Secondary 49 142 146 117 Miscellaneous works 26 54 54 54 Expressways 163 35 - - Urban Roadworks 134 226 210 125 Sub-total 39 7m527

Maintenance, Ministry of Public Works

Labor, Materials, etc. 135 135 135 135 Social Security 25 25 25 25 Sub-total 160 160 1-60 Total, Ministry of Public Works 693 1009 1312 736 Ministry of Agriculture Rural feeder roads (caminos vecinales) 20 20 20 20

Total, MOP and MAC 713 1029 1332 756

3. The Evaluation of the Program

59. The size of the program considered as a whole, and the broad allocation between diffe.'ent parts of the highway system, appear to be economically justified. However, it also appaears that the program schedu- ling should be readjusted for the following reasons:

(a) For general economic and financial reasons the over-all level of public investment projected for 1966 is too high.

(b) 1966 shows a very sharp increase (70 per cent) in expendi- tures over 1965. If the program is executed as planned, following the 1966 peak the volume of capital projects would decline by more than 25 per cent between 1966 and 1968. In order to even out the flow of expenditures and the work load of organizations concerned, an adjustment of project schedules is advisable. - 18 -

(c) The program envisages a large volume of new projects (Bs. 81.4 million) starting in 1966 when construction would be at a peak on previously started projects, thereby straining the available contracting and supervisory resources.

(cl) A particular sharp increase is prograrmmed for the construc- tion of secondary roads, from Bs. 49 million for 1965 to Bs. 142 million in 1966. For planning and general organ- izational reasons such a sharp increase in a particular sub-sector involving a large number of individuaL projects may prove difficult to handle.

60. The mission reviewed in broad terms the material relating to the economic justification of particular road projects and has the following general conrcents to offer:

(a) The completion of the trunk highway network and its exten- sion to the South (Llanos, Guayana) and to the Zulia region, warrants highest priority.

(b) Similarly, the road improvements in Caracas and the central region around Caracas, and the improvement of roads between Caracas and the eastern population centers all appear to be economically justified.

(c) Road construction in the cattle producing region of the Apure state requires further study before its justification can be established.

(cd) Most of the secondary roads in the program appear to be economically desirable but not necessarily of high priority. The proper evaluation of individual projects from the point of view of priorities, developmental effects and the effects on other parts of the system would require a considerable refinement in the benefit/costs techniques presently used.

(e) A study of the presently available documentation on highway evaluation indicates that most of the program of secondary roads could be postponed from 1 to 3 years without serious adverse economic effects. A more detailed reappraisal of the individual projects on the basis of economic criteria is likely to indicate the advisability of the indefinite postponement of some of these projects.

61. A reduction in the 1966 program of Bs. 200 million, would require postponing the commencement of work on most of the secondary roads by one year, extending the construction period for some of the secondary and trunk highways, and postponing some of the paving and reconstruction work. Provided that the problems of program readjustment are handled with - 19 -

reasonable dispatch, there is no reason to expect serious adverse effects on the economy nor on project costs. At the same time, the postponement of most of the planned secondary roads may permit the Ministry to reevaluate the economic priorities of these roads.

62. Problems of organizational changes, revisions of standards, etc., are discussed in other sections (cf. paragraphs 32-34, 35-43 and 77-79.)

4. Special. Problems User Contributionsy1

63. The important classes of highway user contributions are fuel taxes, ].icense fees and special tolls applicable only to the users of toll roads and bridges. Vehicle license fees are collected both by the states and the Central Government, the State Government fees being considerably ]arger.

64. Road user contributions in Venezuela are presently much lower than the costs which could reasonably be allocated to the users. In 1964 Central Government revenues from fuel and lubricant taxes,as well as registration fees and other imposts were Bs. 78 million, or only about one half of road maintenance expenditures alone, which amounted to Bs. 151 million (excluding equipment depreciation charges). Local registration fees, which amounted to Bs. 50 million in 1964, are much below expendi- tures on urban road works, which amounted to Bs. 62 million spent by the Central Government in 196)4 in addition to substantial expenditures of local governments, for which information is not available. Toll revenues, wfhich amounted to Bs. 30 million in 1964, also appear to be below the costs which could reasonably be assigned to the users of these facilities.

65. Depending on the level of development achieved and the economic functions of different parts of the road system, some portion of road expenditures should be considered as an investment in general social overheads. This consideration should determine the proportion of total road costs which should be recovered by user charges. In order to establish tlhe appropriate level of user contributions to highway costs in Venezuela the following assumptions were made:

(a) 25 percent of trunk highway costs were assumed to be incurred on the grounds of general economic development; thus only 75 percent of these costs were assumed to be properly chargeable to highway users.

(b) 75 percent of the secondary road system was assumed to have been undertaken to aid rural development; thus only 25 per- cent of those costs were assumed to be properly chargeable to highway users.

66. Costs of urban roads are most appropriately matched against local vehicle charges. Consequently both urban road costs and local 1/ For a more detailed discussion see the Appendix on user charges. - 20 -

registration. fees were omitted from the present calculations. Costs of expressways and other toll facilities were also omitted as well as toll revenues. on this basis it was estimated that the share of highway costs which could reasonably and conservatively be allocated to the users would amount to approximately Bs. 270 million. Assuming an 8 percent annual increase in traffic, revenues of the Central Government from road user charges, excluding toll revenues, would, on the other hand, not exceed Es. 110 million by 1968. There would thus be a gap, or "road deficit," of Bs. 160 million. These calculations are admittedly rough and ought to be refined in order to provide a more accurate guide to road user taxa- tion policy. Nevertheless, they clearly show how low present road user charges are and indicate an order of magnitude of the increase which it might be reasonable to aim at.

67. The present fuel tax is a combination of a sales tax and an excise tax calculated as a proportion (50 percent) of customs duties. The combined imposts amount to Es. 0.030h per liter on "standard" gaso- line and Bs. 0.0609 per liter on premium gasoline. Imposts on diesel fuel amount to Bs. 0.00323 per liter.

68. There is no reason for taxing diesel fuel at a lower rate than that on gasoline; in fact in some jurisdictions (e.g. Ontario) the diesel fuel tax is higher than the gasoline tax, the differential being calcula- ted on the basis of average fuel consumption per unit of distance. A case may be made, on the other hand, for having a higher tax on higher octane gasoline which is normally used by more expensive automobiles. A tax of this nature would thus have some element of a luxury tax.

69. In addition to fuel taxes, registration fees are imposed both by the central and local governments. The Central Government registration fee amounts to Bs. 20.00 per year. Local government taxes are highest in the Federal District and the District of Sucre in Miranda State, where they range (depending on the vehicle weight) from Bs. 126.00 to 316.30 per year on automobiles Bs 144 on vans and between Bs. 648.00-Bs. 2,628.00 per year on trucks./ Registration fees in other states are considerably lower (Bs. 25.00 per quarter), which leads to possibilities of evasion.

70. The following adjustments of the present road user tax system are recommended:

(a) Studies should be conducted to establish more precisely the proportion of road costs properly allocable to road users, the road cost responsibility of different user groups, the incidence of road user taxation and the effect of different user taxes on the transport services of the country.

(b) Road user charges should be increased to a level which would balance annual costs considered to be the responsibi- lity of the users and annual user charges.

1/ Annual rates here shown equal four times the quarterly rates ls. 10 ,ercent. - 21 -

(c) Uniform vehicle registration fees should be adopted through- out the country and the fee collection systems consolidated into a single national collection system. A share of the revenues thus collected, equivalent to their present reve- nues from this source, should be returned to local author- ities. The consequent removal of a source of tax evasion and administrative simplification would be additional benefits.

(d) The structure of registration fees should reflect more closely highway costs caused by different classes of vehicles. A tax system based on maximum axle loads rather than on vehicle capacity should be considered.

71. The desired revenue increases could be obtained by various com- binations of license fee and fuel price increases. The best "mix" of these methods depends largely on local conditions. In order to indicate the orders of magnitude of the required tax increases, two alternatives were analyzed:

(a) Alternative 1. Registration fees could be brought up to the level of those of the Federal District (as per recomrnen- dation c above), and the additional revenues obtained by a sharp increase in fuel taxes. The required additional fuel tax on standard gasoline would be of the order of 170 per- cent of the present tax, which would :Lncrease the price of standard gasoline by 50 percent. An increase of this mag- nitude would result in transport cost increases of at least 5 percent.

(b) Alternative 2. Gasoline taxes could be increased by 70 percent, which would raise the price of standard gasoline by 20 percent. The license fees on automobiles would then have to be increased across the country to a level double that of the present Caracas license fee schedule, while the license fees on trucks would be raised to an average of 25 percent above present Caracas levels.

72. Each alternative has its own advantages and disadvantages:

(a) Putting the main stress on license fee increases would result in heavy periodic payments by motorists and truck operators. On the other hand, it allows a greater degree of flexibility in adjusting tax burdens to different classes of road users both by suitable adjustments in the structure of fees and by possibilities for granting con- cessions to special classes of users (e.g. trucks owned by agricultural cooperatives; farm trucks, etc.). It would in all probability result in a lower increase in the costs of transporting goods than a greater increase in fuel taxes. - 22 -

(b) Putting the main stress on fuel taxes would avoid, or diminish, the problems of heavy periodic tax payments. On the other hand, it would tend to be especially burdensome in areas of poor roads, where fuel consumption per km is higher and competition from efficient operators smaller than in other areas.

73. The potential increases in road user charges here outlined do not represent the upper limits of the portion of road costs users might appropriately be asked to pay in terms of benefits received. However, because road user charges have been so extremely low in Venezuela, the Government may want to increase then more gradually than here envisaged and, in the meantime, allocate a larger share of total road costs to the economny as a whole.

Regional Planning

74. The need for integrating transport planning into regional or city development plans is receiving growing recognition. The Central Government in Venezuela approaches this problem primarily through studies pursued by the planning division of the Ministry of Public Works. This division is mainly concerned with the preparation of physical master plans, which then are executed by the local authorities concerned. Some liason between industrial development agencies and the planning division exists, but no coordinated regional industrial, agricultural and trans- port development programs exist, except in the case of the Guayana Cor- poration which carries out extensive integrated planning for the Guayana region.

75. There is a strong case for the intensification of the studies in Caracas and surrounding areas. The location and characteristics of the planned satellite towns is bound to have a profound effect on the transport problem of the area. One case may be noted here: with the com- pletion of a new highway, Tuy Valley (located immkediately south of Car- acas) is now open for urban development. In order to prevent speculative developments and creation of slums, plans are being made for the establish- ment of satellite towns, to which industry could also be attracted. The characteristics of desirable and potential industrial development in the area, plans for the establishment of "industrial estates", or any special incentives which would have to be given, have not as yet been defined. Also unexplored as yet are future demands for additional highway capa- cities which such satellite towns would create. At this stage it is impossible to determine whether and to what extent the Tuy Valley develop- ment should be pursued or whether it would be more economical to contain these developments to one medium-sized satellite town and develop other possible town sites in the' central region. Yet the answer to such ques- tions is essential for reasonable planning of the transport system. - 23 -

5. Recommendations

The Highway Program and User Charges

76. Mission recommendations relating to the highway program and 'user charges can be summarized as follows:

(a) The following rephasing of the highway program is recommen- ded:

(i) Highway investments planned for 1966 should be de- creased by Bs. 200 million. Highway investments planned for 1968 should be increased by Bs. 200 mil- lion. In this way, the overall size of the four-year road plan would remain the same (cf. par. 59-61).

(ii) The program rephasing would involve the postponement of most of the planned new secondary roads, as well as the postponement of most of the repaving and re- construction work on these road projects. The construction period of roads previously started could be extended. However, high priority should continue to be assigned to completion of the national grid of trunk highways (cf. par. 59-61).

(b) A program aimed at the recovery of an appropriate pro- portion of highway costs through increased user charges is recommended (cf. par. 63-73 and the Appendix).

(c) The program of agricultural feeder roads should be expanded in 1967 and 1968 to Es. 50 million and Bs. 80 million, re- spectively, and a suitable organization for planning and administration of this program should be established (cf. par. 55-57 and par. 77-79). Planning of Highways

77. The mission recommends the following steps aimed at strength- ening the highway planning process: (a) Until a Ministry of Transport is established, the office of economic planning should be located in the Ministry of Public Works and made directly responsible to the Minister (Oficina Ministerial de Programacion y Presupuesto can provide the basis for such an organization).

(b) The functions of economic planning and economic control (i.e. intra-ministerial allocation of funds, control over prior- ities and scheduling, program costs'analysis) should be consolidated in the proposed office. - 24 -

(,^) Presently existing economic planning units located in the operating directorates should be concentrated in the cen- tralized office; in this way physical and economic planning would be separated.

(d) Within the planning office an economic research unit should be established to study, i.e., long-range problems of the transport industry, particularly road transport, the rela- tionship between road planning and other programs, improve- ments of benefit/costs and other program evaluation methods.

(e) The proposed organization would attempt to solve its ini- tial staffing problem by arranging for the advanced training of selected candidates with good general background.

Plann lg and Organization of Rural Feeder Road Construction

7B. The mission recommends the following arrangements in order to secure adequate planning and implementation of the rural feeder road ;program:

(a) Rural feeder road planning should be handled by a special unit located within the central planning organization of MOP. This unit should be created as soon as possible, and have available to it, as required, the services of experts in the fields of agricultural economics, soils and geo- graphy (with special reference to aerial survey data anal- ysis), highway planning and transport economics as well as budget preparation.

(b) A decision, already made in principle, calling for trans- fer of responsibility for the rural feeder road program to the Ministry of Public Works should be carried out. The recently created intra-governmental rural road committee should continue as a general policy coordinating body. The rural roads planning unit suggested above should act as its permanent and full time secretariat.

(c) The maintenance of rural feeder roads should be adminis- tered by IOP.

79. The mission also suggests that in the planning of rural feeder roads special attention be given to the following considerations:

(a) The need to allocate funds properly between potentially rich yet lightly settled areas and poorer areas with higher population density.

(b) The need to develop cost-sharing arrangements between the Central Government and local governments or interests. These arrangements would have to accommodate to dis- parate circumstances, such as low initial populaUion, and at the same time provide an objective basis for program evaluation.

(c) The need to coordinate the rural feeder road program with plans to open new lands for agriculture and encourage and assist spontaneous settlements. This coordination would imply the proper identification of areas of high potential by aerial surveys followed by more intensive ground investi- gations, including land capability studies.

(d) The need to establish economic yet adequate standards of rural feeder road construction and the proper type of main- tenance organization.

80. The mission considers it possible that after the necessary administrative changes have been made and the planning of rural feeder roads further developed, it may be found desirable to increase invest- ments in these roads in greater amount than is now provided for in the adjusted program for 1967 and 1968. This would have to be considered in a future revision of the investment program for these years. - 26 -

Table B - 1 GEOGRAPHICAL DISTRIBUTION OF VENEZUELAN ROADS (1964)

State or Territory Total (km) Asphalt Surfaced (km)

Federal District 605 349 Anzoategui 3,202 1,609 Apure 538 157 Aragua 963 537 Barinas 1,149 404 Bolivar 1,685 720 Carabobo 990 488 Cojedes 977 260 Falcon 2,164 1,025 Guari.co 3,122 1,119 Lara 1,526 746 Merida 1,22 543 Niranda 1,690 918 Monagas 1,196 758 Nueva Esparta 266 173 Portuguesa 1,292 328 Sucre 79h 617 Tachira 1,547 545 Trujillo 1,350 603 Yaracuy 810 285 Zulia 2,645 2,253 Terrm Amazonas 132 - Terr,, Delta Amacuro 38

Total 29,915 14,h3

Source: li4nisterio de Obras Publicas, Mernoria, 1964 - 27 -

Table B - 2

Roads Roads Year Constructed(km) Paved(km)

1958 507.9 539.3 1959 684.6 594.9 1960 410.0 916.2 1961 367.3 1,002.0 1962 519.6 1,432.1 1963 607.5 2,113.2 1964 656.1 1,922.1

Source: Ministerio de Obras Publicas and II Mensaje Presidencial

Table B - 3 VEHICLE REGISTRATIONS (1954-63)

Year Automobiles Buses Trucks Vans Trailers

1954 127,608 5,372 50,375 36,768 366 1955 146,207 7,298 50,155 40,193 875 1956 159,922 6,599 41,7Z0 40,939 484 1957 186,038 6,222 40,446) 45,382 566 1958 186,036 5,799 37,485 44,868 897 1959 238,995 6,800 41,516 50,897 892 196C) 268,693 6,800 44,910 49,071 525 1961 267,377 6,105 44,408 54,092 352 1962 279,905 6,433 47,878 59,004 502 1963 286,600 6,423 44,986 56,936 490

Note: 1964 figures were not available at the time of the Mission's stay in Caracas. It was expected, however, that 1964 figures would show a sharp increase in registrations. Automotive assembly statistics indicate that the production and assembly of passenger vehicles increased from 16,438 units in 1963 to 29,030 in 1964; commercial vehicles from 4,501 units in 1963 to :10,504 in 1964.

Source: Direccion General de Estadistica, Ministerio de Fomento. - 28 -

Table B - 4 HIGHWAY TRANSPORT TARIFFS

(i) Average per ton/km charges between Caracas and other cities (Bs.) Between Caracas and 1962 1963 Change (Percent Puerto Cabello O=.1 0.17 -5.6 Cumana 0.19 0.17 -10.5 Maracaibo 0.13 0.15 +15.4 Valencia 0.19 0.21 +'0.5 Barquisimeto 0.15 0.15 0 San Cristobal 0.13 0.15 +15.4 Merida 0.14 0.14 0 Coro 0.17 0.17 0 Ciudad Bolivar 0.16 0.16 0 Mzaracay 0.26 0.24 -5.7 Valera 0.12 0.12 0 Maturin 0.15 0.17 +13.3 Puerto la Cruz 0.16 0.14 -12.5 La Guaira 0.85 o.64 _24.7

Source: Banco Central de Venezuela, Informe Economico Correspondiente al Ano 1963, p. 410, Table 18.8 Table B - 4 (contld.)

(ii) Average per ton/km tariffs (January 1962)

Distance (kcm) Easy Terrain Difficult Terrain

40 - 50 Bs. 0.44 Bs. 0.50 51- 60 0.41 0.147 61 - 70 0.39 71 - 80 0.36 0.1] 81 - 90 0.33 0.39 91 - 100 0.30 0.36 101 - 120 0.27 0.33 121 - 140 0.24 0.30 141 - 160 0.21 0.27 161 - 200 0.20 0.24 201 - 300 0.19 0.21 301 - 400 0.18 0.20 401 - 500 0.17 0.19 501 - 600 0.16 0.18 601 - 700 0.15 0.17 701 - 800 0.14 0.16 801 - 900 0.13 0.15 901 - 1,000 0.12 0.14 1,001 - and more 0.12 0.14

Notes: (1) Tari.ffs for transporting frozen meats are 20Q higher (Footnote to the original table). (2) Footnote to the original table: "This infDrmation is a general estimate of tariff levels since there are no government rate regulations." (3) It is believed that in many cases the actual rates charged are substantially lower(of the order).

Source: MNinisterio de Fomento, Direccion de Comercio, Departamento de Transporte. Information compared from data provided by Camera del Transporte. - 30 -

Table B - 5 LIST OF MAJOR URBAN ROAD PROGRAMS

Regicin Project Total investment (Bs. 1,000,000) Caracas Avenida Cota Mil 116.0

"t Autopista Puente Mohedrano-Hipodromo 127.0

Autopista Arana-Caricuao 86.0

Autopista Arana-Coche 82.8

Avenida Libertador 44.2

Estado Bolivar Rio Orinoco bridge and associated roadworks 150.0

Urban roadworks, San Felix 25.0

Estado Miranda Bridge and urban roads forming part of Autopista del Este 73.0

Estado Zulia Autopista Urbana, Maracaibo (Stages 1 and 2) 147.7 - 31 -

C. THF CARACAS TRANSPORTATION PROBLEM

1. Background

81. The population of the Caracas metropolitan region has grown as follows:

1936 0.25 million 1941 0.34 million 1950 0.70 million 1961 1.36 million

82. Forecasts based on the current rate of growth, indicate the follow- ing future population in the Caracas metropolitan region:

1970 2.8 million 1980 3.3 million

83. The topographic environment of the Venezuelan capital, a long valley between high mountains, limits the extent and direction of physical expansion that will be possible in this metropolitan region. Caracas has strong concen- trations of administrative and commercial activity in its central business district, and the flow of traffic between residential areas and the center is extremely intense during the morning, midday, and evening rush hours. At times of peak traffic, congestion on streets and expressways is severe and the existing system is used to saturation capacity.

84. The Ministry of Public Works has made studies of the Caracas street and urban expressway system in connection with the authorization of construc- -tion of additional expressways. However, it has become evident that the Caracas traneportation problem requires thorough long-range planning and a special office, the "Oficina Ministerial del Transporte" (OMT), was formed by MOP late in 1964 to deal with the Caracas regional problem.

85. Independent of the activities of OMT, a number of proposals have already been made for the construction of a subway system in Caracas. The proposal which received most publicity during the stay of the rission in Venezuela was one made by a French firm to construct a "Metro"-system of 27 kilometers at an estimated total cost of US$120 million equivalent. This project was to be financed by a 10 to 15 year loan guaranteed by the French Government.

86. The CORDIPLAN has advised the mission that no decision with re- apect to a rapid traDvit system Huill be made until the necessary studies have been comapleted. It therefore appears that the OMT nowz has authority to execute a responsible planning program.

2. The Current Study Program

87. The major activity of OMT up to early May 1965 was the formulation - 32 - of a tentative program for long-range studies of the Caracas metropolitan re- small gion. Negotiations with various consulting firms are in progress and a core of professional staff for OMT has been acquired.

88. The objectives of OMT are to make a careful evaluation of alterna- tive solutions to the Caracas transportation problem and to coordinate trans- port planning with other regional developments. It intends to spend consider- able time and effort in the collection of data on population growth, popula- tion distribution, trip patterns, land use and other relevant economic factors.

89. In this connection, all possible modes of intra-urban transportation are being considered. While expansion of the existing expressway system is one alternative, it seems clear that there is a limit beyond which the con- struction of additional expressways will not serve the region's transportation needs. The OMT intends, therefore, to explore all other types of transporta- tion, including high-speed bus service on grade-separated lanes, subways, elevated tracks, etc.

90. The OPIT studies should produce a plan for an integrated transporta- inte- tion system to serve the entire Caracas region. This system would be an gral part of the general development plan for the region and would be designed The to serve specific developments in individual urban districts of the area. study when completed will affect future urban expressway planning. Meanwhile, the expressway construction now authorized should furnish interim traffic of the relief in the street system of sufficient duration to permit completion present study and action on the earlier phases of the action program which emerge from it.

91. The time requirements for the proposed studies are still indefinite. One proposal under discussion at the time of the mission's visit envisioned preliminary conclusions within 14 months. Other proposals for the study program contemplated a time frame of several years. It is intended that ONT continue its activities after completion of its first basic study. It will serve therefore as a continuing transportation planning agency that will operate concurrently, overtime, with other development planning activities for the Caracas metropolitan region.

3. Public Transport in Caracas

92. At present the following forms of public transport are available in Caracas:

(a) a public, municipal bus system (Instituto Municipal de Trans- porte - IMT);

(b) private bus lines;

(c) taxis providing route service, with charges on a per seat basis (per puesto);

(d) standard taxis. - 33 -

93. fIIT is now carrying out a re-equipment program financed through a loan-lease arrangement by Centro Simon Bolivar (an autonomous government agency concerned with urban affairs). The introduction of new buses has al- ready resulted in a sharp increase in bus traffic. IMT considers its pre- sent fleet inadequate and expects that a larger number of buses and standard- ization of equipment will increase its revenues and operational efficiency. The mission was informed that IMT is also negotiating with Caracas traffic authorities to have parts of certain streets restricted to bus traffic.

94. The main weaknesses of the present public transport situation in Caracas are:

(a) Lack of a central agency for the planning and administration of public transport in Caracas.

(b) Lack of a mechanism for an independent review of fare struc- tures.

(c) Antiquated equipment and an insufficient number of buses, which has been only partially remedied by the recent bus acquisitions of IMT.

(d) Existence of a number of uncoordinated bus lines.

14. Recommendations

95. In view of the importance of the Caracas transportation programs and the very large capital investments prospectively involved, it is recom- imended that:

(a) The study program proposed by OMT be designed to explore the reasonable alternative solutions for the Caracas transporta- tion problem, to produce a coordinated plan for the develop- ment of a transportation system that will adequately serve the metropolitan region, and to pave the way for eventual project financing.

(b) The findings of the general transportation studies by O0MT be coordinated with urban development planning in the Caracas metropolitan area.

(c) A Caracas regional transport authority be established with powier to regulate rates, establish rational routes, coordinate bus operations, issue standard taxi and "per puesto" taxi licenses, and establish parking fees and taxes on parking space. This authority should, if possible, be amalgamated with the present- ly existing transport planning agency, the Oficina Ministerial - 34 - del Transporte, and thus perform the combined functions of transport planning and control in the Caracas metropolitan area.

(d) The fIT re-equipment program be implemented. D. PORTS AND SE PPIMG

1. Recent Davelopments and Present Status

Public Co-mmercial Ports

96. The public commercial ports of Venezuela handle nearly all of the nation's waterborn traffic in general cargo. Imports represent approximately 90 per cent of this traffic. ,ost of Venezuela's export tonnage is bullc cargo handled over the private docks of petroleum and iron ore companies. The changes in traffic volume during the past decade are surnmarized in the table below:

General Cargo Handled at Venezuelan Public Ports (In 1000 metric tons5 T Puerto 5 Smaller Year La Guaira Maracaibo Cabello Ports a!

195 1,174 511 475 272 1956 1,058 630 500 269 1957 a.,444 917 821 410 1958 1,312 667 613 318 1959 1,238 447 698 262 1960 978 277 588 196 1961 816 213 658 157 1962 820 236 650 138 1963 799 263 690 11 1964 928 273 833 167 Source: Servicios Portuarios Nacionales, 1964 Report, pp. l1-24 a/ Guanta, Puerto Sucre, Carupano, Ciudad Bolivar, Las Piedras. Of these five ports, Guanta is the largest, with 119,240 tons handled in 1964.

97. After a sharp decline in 1959-61, general cargo traffic has been increasing again, but except for Puerto Cabello the volume handled through public commercial ports is still less than in 1957 or 1958. °8. In addition to general cargo, the public ports also handled the following volume of cargo in bulc: - 36. - Bulk Cargo Hardled at Venezuelan Public Ports ( Te eric tons) Port 1963 1964

La Guaira 206 198 Maracaibo 64 95 Puerto Cabello 163 338 Three Small Ports 31 56

Total 464 737

Notes: 1. Bulk cargo was handled across general cargo berths. 2. Grain imports were responsible for a large proportion of bulk cargo handled at public ports. 3. "Bulk cargo" as defined here does not include commodities handled in bags or other containers.

Source: Servicios Portuarios Nacionales

99. Wlith the exception of Puerto Cabello, Venezuelan public ports have surplus capacity. iHuch of the cargo handling equipment current'ly in use appears unsatisfactory, but this may soon be improved by new equipment pur- chases for wlhich proposals are being solicited. Average expenses per ton handled increased about 74 per cent between 195' and 1964 (from Bs. 21.03 to Bs. 40.39); there was a peak of Bs. 49.99 per ton in 1960 which reflects continued increases in port employment betwjeen 1957 and 1960, in spite of traffic volume decreases. IJhile costs per ton have declined somewhat since 1961, they are still nearly three times the 1957 level. The changes in traffic, operating costs and employment are summarized below: Traffic, Operating Expenses and Employment Venezuelan Public Ports, l955-196 1955 - 100

Total Operating Average Operating Year Traffic Expenses Expenses per ton Employment

1955 100 100 100 100 1956 101.1 99.8 95.8 108.9 1957 147.8 107.6 72.9 130.4 1958 119.7 150.3 125.6 176.0 1959 108.8 198.9 182.6 197.9 1960 83.9 199.4 237.7 199.9 1961 75.8 178.8 235.9 184.4 1962 78.3 158.7 202.7 153.3 1963 90.6 173.9 192.1 147.4

Source: Servicios Portuarios Nlacionales, 1964 Report - 37 -

Industrial Terrminals

100. Specialized bulLk terminals serve all major oil comparLies, the petro-chemical industr2r, and the two iron ore mining companies in Venezuela. l'hese private facilities were constructed, for the most part, during the last i. years and include examples of very modern dock designs for large bulk carriers. In addition to oil and iron mining companies, the steel plant of the Guayana Corporation, has a dock near Puerto Ordaz wshere dry bul': materials can be unloaded from bulk carriers at a rate of 1,200 t.p.h. and where heavy lifts can be handled. All materials for the Co;po2at'on's steel production move over this dock, including ore from the Orinoco ilring Coo,any and frcm the iron Irnes Company of Venezuela docks 17 km and 25 kia do-nstream from the steel plant.

Fishinrp Pcrts

101. Nearly 100,000 tons of fish are caught annually by Venezuelan fisheries, with a subs-tantial proportion of the high value catch being ex- ported. In most public commercial ports of Venezuela there is some fishing activity. Tlhere this activity is in conflict with comaercial cargo operations, as in La Guaira, the construction of new fishery facilities outside the com- mercial area is necessary.

Channels and Inland Waterways

102. Deep-draft shipping channels are maintained in Lake Haracaibo for oil tankers and in the lower Orinoco River for iron ore and other bulk car- riers. The channels are under the control of the Instituto Nacional de Canalizaciones (INC). The take Maracaibo channel is now dredged to guarantee 45 feet minimum depth at all times; this represents an increase of ten feet over the depths available at the time of the completion of the present channe'l in 1956. T]e Orinoco River channel is maintained to a depth of 32 feet during low water periods from Puerto Ordaz to the mouth of the river; this work is (lone by the Orinoco Mining Company under contract with INC. The INC operation is self-supporting, with an annual income of about Bs. '00 million derived from charges on petroleum, iron ore, and other cargo carried by vessels using the channels.

103. Commerical navigation in the upper Orinoco River exists only on a rery small scale; there is practically no commercial traffic upstream of Ciudad Bolivar, since naviagation on a year - round basis is not feasible. The extensive dredging that would be required to permit commercial navigation does not appear to be justified by existing or potential traffic. However, the Instituto Nacional de Canalizaciones is conducting studies of the posi- bilities to extend by river dredging the navigation on Orinoco River past t,iudad Bolivar up to the Rio Caura, which would faciLitate future exploitation of iron deposits in Trueno. Such studies and continual review of river navi- gation problems appear to be justified; the knowledge thus accumulated may prove invaluable when intensive development of the Orinoco basin becomes justified. - 38 -

Shipyards

104. The operation of government-owmed shipyards and ship repair faci- lities is under the direction of the Instituto Nacional de Diques y Astilleros (INDA). This organization operates a dry-dock in Puerto Cabello, completed in 1958, which is suitable for hull repair work on vessels of up to 34,000 tons displacement. Adjacent to the dry-dock there are two outfitting berths, large land area, a pow-er station, and auxiliary faci'ities. The installation still lacks suitable shops for mechanical and electrica1 work. This facility ha, not yet reached an economic level of activity; however, if all required faci- lities were to be completed, utilization should improve since there are tax advantages for Venezuelan companies in using this shipyard. The Goverr-.ent program provides for Bs. 50 million in 1965-68 for exqDansion of INDA shop facilities and other improverments at the Puerto Cabello shipyard. Merchant Shipping 105. The present size and composition of the Venezuelan imerchant marine is as follo,s: Venezuelan IMerchant M;arine Vessels over 100 tons 1962 1963

Large cargo vessels in foreign trade 10 10 Coastal trade vessels 37 38 Ferries 12 13 Other vessels 30 39 Total number of vessels 89 100

Total net tonnage 217,207 225,145 Total gross tonnage 343,473 363,337 Source: Banco Central de Venezuela, Informe Ecornomico Correspondiente al Ano 1963 page 408; Table 18.2.

Tlhe Government enterprise C.A. Venezolana de Navigacion (CAVN) olms and operate; 114 cargo vessels engaged in foreign and domestic trade. According to the Company's annual report, nearly one-half million metric tons of cargo wrere car- ried during 1964. During 1964 CAVN achieved a net profit of Bs. 7 million on total operating revenues of Es. 84 million; this wras applied to write off a large portion of the accumulated deficit, which at the beginning of 1964 amourjit t;o about Bs. 9 million. Recent Investments in lWater Transport

106. The investments made in Venezuela during the past three years in ports, channels, and water transport are sunmarized below (in Bs. millions): 39 - 1962 1963 1964

Ports 13.4 1.0 16.6 Channels 73.0 17.3 12.4 Equipment acquisitions - 58 -

Total 86.4 38.1 29.0

Source: Plan Operativo, Sector Transporte y Communicaciones, page 12, Table 5.

Adequacy of Present Port Facilities

107. In general Venezuela's major public, commercial norts have more than adequate capacity to handle the present and the probable future traffic. (See Table D.1 at the end of this section which summarizes the principal characteristics of these ports). The important exception is Puerto Cabello, which has exDerienced sigLificant traffic growth during the last few years and is the only major Venezuelan public port where the present traffic exceeds 1957 levels. Some of the existing shore facilities at Puerto Cabello are anti- quated and in need of replacement.

108. A part of Puerto Cabello traffic originates in the Caracas area, even though La Guaira, with a location closer to Caracas and with underutilized existing facilities, is theoretically in a better position to attract this business. Should the use of La Guaira be made more attractive to the shippers, it is likely that part of the Caracas area traffic now using Puerto Cabello would move via La Guaira. On the other hand, without improvement of La Guaira's operations the new road nowf under construction between Valencia and Puerto Cabe]lo will cause even greater diversion to Puerto Cabello with addi- tional strain on its present facilites.

109. I'he capacity of some fishing ports is not adequate to meet existing demands of the Venezuelan fishing industry and, at some locations, fishing activities interfere with cargo operations of commercial ports. The construc- tion of additional fishery port facilities appears to be needed.

110. The island of Margarita does not now have a deep-draft public port terminal. In order to attract cruise ships to this area of high tourist po- tential, the construction of a pier has been proposed.

Port Organizaticn

111. Cargo operations at all public terminal facilities in the ports of Venezuela are under the centralized direction of the Servicios Portuarios Nacionales in the I4inisterio de Hacienda. This agency is represented in each port by a port director, wrho is responsible for the management of cargo han- dling activities on shore., Stevedores and longshoremen are hired directly by this agency for all general cargo handling, but contract stevedoring companies provide equipment and labor for the handling of bulk commodities at public - 40 - terminals. Customs control at all public ports is the responsibility of the Servicios de Aduana of the M4inisterio de Hacienda. Immigration, police and tourist control is the responsibility of the YNnisterio del Interior. Control of navigation, including pilotage, is the responsibility of the port captain in each port, who is under the Direccion de Karina Mercante of the Ministerio de Communicaciones. Dredging operations in the Maracaibo Channel and in the Orinoco River are conducted by the Instituto Nacional de Canalizaciones, an a,gency of the Nlinisterio de linas e Hidrocarburos. Construction and main- tenance of aIl docks, breakwaters, buildings and related port structures is the responsibility of the linisterio de Obras Publicas. The securityr of ports is the responsibility of the Iiinisterio de Defensa, which is also in charge of the comnercial ship repair facilities, through the Instituto Nacional de Diques y Astilleros. Tecinical investigation and research for the fishery industry are carried out by the Centro de Investigaciones Pesqueras of the NAnisterio de Agricultura y Cria.

112. Income from cargo handling charges does not usually cover the dlirect costs of administration, dock labor, and operation of handling faci- lities. Direct operating costs (exclusive of depreciation and maintenance cf port facilities), assessments of charges, and actual co)lections during the past four years have been as follows (in Bs. millions). 1961 1]962 1963 1964

Operating expenses 91.5 81.2 8.1 88.9 Billings for port services 76.0 79.0 80.7 100.2 Collection of chTrges 59.2 63.8 59.3 68.1 Actual deficit I 32.3 17.4 21.8 20.8 Collections as percent of billings 64.7 78.5 73.3 76.8

Source: Servicios Portuarios NIacionales, Report for 1964.

1/ Operating expenses less collections of port clharges.

2. The Proposed Program

113. Thle program of port projects proposed by the iinisterio de Obras Publicas for 1965-1968 involves Bs. 86.4 million, which amounts to 3.2 percent of the total investments proposed in the transport sector. The distribution of the proposed investments over the years covered bar the program is esti- mated by the Ministry as follows: - 41 - Investment Year or Period (In millions of Bolivares)

up to 196h1/ 16.3 1965 11.9 1966 23.5 1967 28.7 1968 22.3

Total. 1965-§8 86.4 After 1968It 10.0

Source: Ilinisterio de Obras Publicas, Nlemoria, Ano Fiscal 1964.

1/ Works included in the program.

Estimated foreign cost component of the program is between Bs. 40 and 50 million.

114. About 25 percent of the total proposed port investments is for the improvement of the facilities at Puerto Cabello. A technical and econoiic feasibility report on the proposed improvements and expainsion of this port was completed in January 1965 by Frederic R. Harris Engineering Corporation for the Ministerio de Obras Publicas. This report recommended port improve- ments the costs of which are estimated at Bs. 27.3 nmllion or Bs. 30.6 million, depending on the alternative program that is selected. About 20 percent of the port investment program is allocated to fishing ports. Tho new, commer- cial port projects are programmed to start during the planrning period: (a) a new facility for general cargo at the south shore of Lake Maracaibo and (b) a cruise ship pier for the island of Margarita. The balance of the pro- gram consists of cargo handling equipment acquisitions and improvements in existing ports to accommodate bulk commodities at specialized facilities.

3. The Evaluation of the __roram

115. The proposed port program is modest. The investmlents ccnteplpated for provisicn of specialized facilities to expedite hiandling of bull materials at La Guaira and Puerto Cabello appear to be justified. The exparsion of gencral cargo facilities at Puerto Cabello is also likfely to be justified, but tho alten-ative of irmprovinrE port operaticns in La Guaira shculd be given further consideration. The construction of a new, deep-draft facility on the island of Margarita, involving capital expenditures of the order of Bs. 5 million,is being proposed solely to proraote tourism and can only be evaluated after detailed study of the prospects for major tourist developments on the island. Development of a new port on the southern shore of Lake Maracaibo, with a projected tributary area comprising parts of Colombia and Western Venezuela, appears to have little economic justification. New highways to be constructed in the Zulia region will provide the area south of Lake Maracaibo with good access to the city of INIaracaibo, wlhere port facilities are not fully utilized at present. Furthermore, such small and isolated port facilities generally tend to be expensive and difficult to operate at optimum capacity; relatively low traffic volumes would make it uneconorrdca? - 2 - to support the port related commercial services that could make freouent sailings attractive to shipping companies. It is, therefore, likelY that a large proportoion of the traffic would continue to move via Maracaibo, even if a local port wiere to be constructed on the southern shore of Lake Maracaibo.

4h. Recommencdations

116. La Guaira and Maracaibo, the two largest public, commercial ports of Venezuela, are underutilized at the present time; therefore, efforts should be made to encourage general cargo trade through these ports and the construc- tion of additional small ports in their tributary areas should be discouraged.

117. For the handling of grain and other bulk materials, specialised faci- lities at existing public, coimnercial ports, such as those proposed for La Guaira and Puerto Cabello, would expedite the movement of bulk cargo and would permit more effective utilization of general cargo facilities; this type of development should be encouraged.

118. Expansion of general cargo facilities at Puerto Cabello is likely to be justified but should be studied further in the light of the alternative of increased use of the La Guaira port facilities.

119. The oraanizational structure of port administration within the Venezuelan Government is highly dispersed; concentration of responsibility for port admiknistration in fewer governmental agencies and the establishment of limited local autonomy for the individual ports should be considered.

120. An analysis should be made of the general structure and level of rates charged for all services at VJenezuelan ports, to explore the feasibi'ity of modifying port charges so as to reflect true cost of effective operations, administrative overhead, amortization of capital investment, and maintenance of port facilities. The feasibility of modernizing the collection system in the ports, to eliminate the need for adjustments to assessed charges, should also be studied. T A BLE D.i

PR I NC IP AL ClA R ACT E RI ST I C O0F V EN EZ UE LA N PO0R TS

LA GUAIRA PTO. CABELLO MARACAIBO GUANTA PARAGUANA CUMANA CARUPANO CDAD. BOLIVAR arvesYards houses Whre Yrs-h gave Yrs ~ ,ns -Yrs oua (rv ads houses WharesYrd iougth of intoros;iooaj,wharves (in) Wharve Yrds hossWha]rveYrd Rose 1275 0 - - 1.20 326 s550 257 296 247 35

,lenzth O oatal... trade cire.o Total length of ahar,e 330SSI 0 -o65-00 Are Of yards .2 s s 390 3510 -,0,00 0585- 657 se-32235i Are. f jus_tjo~l _.h ... a 2 74,220 ?3,47 9.704 08,-50 8,000 15600-I B.700 500 I0 of j I 300 Ara csta1 trade wurehouoes 50 1.020 , 000 -4a<2 Total area, arehouseo 109,09 0 27.00,00 7,300 2.300 5 620 2300 2 O whar,es and principal KArea, r_d.ays Jo2 710,0007,90 73.so ,33s 53,200 20 25a 24.000 47 3 200 internoational ~Capacity, ah.roe ts ~ Go5,0 6201--7560 3 0 142077 600 148 200 800 'Capacity, os- trade har-.e (tmry 203.100 393.700 .00,000 -150.000 l75 500 60750 5 3 4 50004 ortal -aapaity..af wharvs (tsns. ear) j .01005.700 99 3,600 333,000 Capacity 334 200 35 3.100 Of Y5-(osp-er ,840,000 208 950 .26 000 7 013. 00 4,750,000 1,48.0.00 Capacitty of bntmsstional_ea-h 626,~70 428.e00 ue,.,± - 3,577.200 320000 336 960 - 607,e6. 2,802650 30 Caacityof coata tad ereoues4? ~ 30,930 81,04B Total 33 770 -apaoity, aarehouses (tons p. year) 5,71 045 91 [.790 07850 26507 ioocto~.95 t-ofth Par yeas 1.9 761 9i?.300.00 333,000 120,400 NansooAs lO"I'IO 126000 ro,u foro(ade o at 571,4417220577,700 856,500 571620,054 PeOrtncge 32Ud4O 4925300 0642f0CI 208900, 353.100 57) 272241 of capaCity utili-ed (peak year) 1779 %~ 2.95, 14,0 22,500 (571723421 2e 40 43~,400(611 23,3 5,, e2, %§- 4.7'1. -4,. % 64,95,. 29,192 *.. 17500 (59) 59912 23965 355947 925002 6 5,. Se % o1.9%5, , 49057, 2.~ 5 330 7500 % . ~ 55,90 % 027 5, 772 %7, is,i', 28,67 Naasso un ltoog erlnaletr %, 7,495,. 46,28%1 16,50%1 247 2,85 433 305 ,0, 4r. .56,8 j 8,6 Rduced capacity -warehouses (toss P.s.) 7,3 960569,900 3 796890 7954,0, _____ Se10d-cd capacity -yards (tnsa p.s.) F 4 43,-5, 6664, 12700769,000 6641 34,43 22 2. 66,70 ,0,au ___ s20 0tS.laatln of reduoed caPeolty (4) 60 37907 25% ',.54.% 86.44 92,957. esec"-. 75%41 e47% I~-. 2, Notes: The capac.ity estimaRtes listed above 2 are those of'the ministerio de Obras P'iblicas, based on coe 'ficients of' ltilization gilen beluw. These estirnates havee not been reviewed in detail by the mission.

3 Yards: 24 cycles per Y-a x o height 3 storage x 1.5 I/rn a,. densityx 0).60 utilioatisn faotsr =64. T/c2/year Warehouoes: 24 rycles Per Year x 3 in storage hei1 ht . 1.67 av. densIty -- 20702 stiatlonf--ua = 33.77 T/m'/year Wharveo : (a) ooer....s: 603 tons Par lineal oue er year (A)costal trade, 450 tons par lineal .et.r par year I-ad,oslo f cargo handled durin.g the last 10 Years: includes experts, i.covrto. and loading. and nlodiogs Of cost9l cargo. Figure io brackets indicate the Paah yasr. trade

isGsa -Ioroesus8d by the osY not included. Coastal trede inoludes fishing ohsrf. L4aracaiho: SPeojaS sharacteristics of this part asre t.heo account to the C.culcaltions; oee,snte registered by the include cargo for other customs porte of the l.Ra, Approostatsly 705 traffic destined for Maracaiho.

The redued co-effiojents are giveo for ifll-trative parpose enly. Yards: 12 cycles p. Year xo1 o etorage height a :1 T1n3 av. dens.ity a 0.60 attlisaties flctor. 3 Whs.oes 15 oyclee Per year in 3 storagshightx 2 0.76 T/o a,. densitY x 0.70 utiliestio.n 21.105 T/5 /y-sr - L4 - E. AIR TRANSPORT

1. Present Position and Past Developments

General Description

121. Venezuelan internal air transport is relatively well developed. The expansion and improvement of the highway network has diminished the in- fluence of air transport in some sectors. At present, the position is broad- ly stabilized with air transport providing specialized services where speed or comfort are important. In the southern llanos air transport plays also an important development role.

122. Existing airport facilities are generally adequate. Administration of airports is the responsibility of the Ministerio de Comunicaciones, while their construction is the responsibility of the Ministerio de Obras Publicas. Airport pla3ning is coordinated between the ministries. The traffic control organization forms a part of the Ministerio de Comunicaciones. It appears to be competent and efficient.

Traffic Pattern

123. The most important airports in Venezuela are:

Nwaber of passen ers Cargo handled Airport handled (1964) (1,000 kR)(l964)

M4aiquetia 500,123 20,898 Maracaibo 232,328 5,270 Porlamar 103,345 910 Barcelona 85,176 2,098 Maturin 62,805 1,120 Barquisimeto 50,890 682 Ciudad Bolivar 49,224 2,429

124. Domestic operations are sh6rt .nd r,-edium haul. The most important air route is IMaracaibo-Maiquetia, whxich handles approximately twice the traffic of the next most important route. Traffic density on other domestic routes is lowJ. Air cargo plays a relatively minor part in air transport operations, except for air lifts, madnly of beef, from the southern llanos. Average levQls of fares and charter rates are reasonable and, in the case of charter rates for medium-sized cargo planes, compare favorably with Tlorth American rates.

125. DomesticaUly, two air lines share the traffic with parallel services cn nost of the routes - AVENSA, privately owned., and LAV, government-owned. Long haul intornational services are performed by VIASA, a joint government- private enterprise, which operates most of the routes in pool with K.L.M. 126. Competition betwieen LAV and AVENSA is keen. AVENSA has intro- duced jet service (Caravelle). LAV is at present retiring its DC3 passenger a,ircraft and replacing them by AVRO turbo-prop planes in order to increase the attractiveness of the service and to achieve operational savings. Even with an acquisition of AVROe, LAV will not be competitive with AVENSA on the Maracaibo-Maiquetia route. Both airlines need to replace their aging cargo fleet, The available volume of traffic over the present routes, which must be shared by the two airlines, is not adequate to enable the carriers to engage in equipment competition.

127. Recent air traffic developments are summarized below:

Passenger - km(100) Cargo ton/km Year Domestic International Domestic International

1961 195,163 145,544 20,434 32,793 1962 198,110 235,818 21,550 49,481 1963 210,958 251,330 23,208 56,397 1964 239,313 305,606 26,373 66,935

Sources: Banco Central de Venezuela, Informe Economico, and Ministerio de Comunicaciones.

128. During 1962-1964 public investments in air transport were as foliosa-.

Public Investments, Air Transport Year (In millions of Bolivares)

1962 14.9 1963 13.9 1964 26.0

Adequacy of Present Facilities

129. Available air transport facilities are on the whole adequate, although sorne improvements are required. The most important of which are list- ed below:

(a) A terminal building is needed at 1iaiquetia and also, within the next 5 to 10 years, another jet runwjay, in addition to the one now in use. The preparation of a long-term master plan for the airport is necessary in order to ensure its appropriate de- velopment.

(b) A new; airport at Niaracaibo is being developed since the ap- proaches to the present one are being absorbed by urban de- velopments. - 46 -

(c) A permanent airport for Ciudad Guayana has to be developed, either on the site of the present, private field or on a new site.

(d) A number of other airports will have to be redeveloped or new terminal buildings constructed. In some cases the existing airports will have to be relocated.

(e) The acquisition of modern equipment for the air traffic control system is necessary in order to maintain good current inter- national standards.

2. The Proposed Program

130. The program can be divided into two parts: (a) facilities program (airports and traffic control) and (b) government airline program (LAV).

Planned Investments (In millions of Bolivares)

1965 *966 1967 1968

(a) Facilities: Airport Construction (MOP) 14 28 38 52 Air Traffic and Aids to Navigation (MC) 9 9 12 16

(b) LAV: Aircraft acquisition 37 - - -

Facilities

131. The objective of the facilities program is to improve the existing system in line with traffic demands and technological progress. No radical expansion of' the system is proposed.

LAV

132. The LAV program is airimed at the modernization of tho carrier's fleet to attract traffic and achiove operating savings. It does not go i'arther, however, than the replacement of DC3 by AVRO, Ccnsideration will also have to be given to the replacoemnt of old cargo planes (C47 and C46) .nd the introduction of short-medium range jets. At present the carrier's f'leet composition is as follows: - 47 -

Aircraft Type Beginning of 1964 End of 1964

DC3 21 18 C47 3 2 C46 3 4 Viscount V700 4 4

133. The airline is run with substantial deficits; these are covered by the Government, which also has to furnish funds for the re-equipment program.

1963 19644

Operating Revenues Os. 1,000) 32,919 33,373 Operating Expenses (Bs. 1,0eO)_/ 37 373 39 ,909 Operating Loss 64536 Non-operating Lossb/ 18,056 394k Total Loss 22,510 6,930

Source: I.C.A.O.

.3. Evaluation of the Program

General. Evaluation

134. The overall size of the program appears consistent with the actual and probable aviation needs as far as general facilities are concerned. The costs of Maiquetia's new terminal building can only be estimated realistically when the airport master plan and the airport terminal plan are completed. On the basis of cost comparison with terminal facilities of similar size, the c:osts of the terminal complex, including equipment, are likely to be of the general order of Bs. 1-15 million, which is considerably higher than present- ly estimatecd. The air traffic control and aids to navigation program appears to be well conceived and coordinated with programs aimed at training personnel. 135. The expenditures included in the LAV re-equipment program must be regarded as only the first phase of this program. The second phase would involve the eventual replacement of obsolescent cargo equipment and the acquisition of short-medium range jets. An extension of the program in this direction should, however, depend on a consideration of the three following factors: (a) whether route competition between the two airlines could be rationalized; (b) whether the airline should continue air cargo a/ Includes depreciation. b/ Includes losses on disposal of assets. - 48 - operations; (c) what type of further equipment would be most suitable.

Organization

136. The present airport planning suffers to some extent from the divi- sion of planning responsibilities between the Ministries of Communications and Public Works. A coordinating committee exists. It would appear, how- ever, that better results could be achieved by a more clear-cut allocation of responsibilities. At present, both Ministries maintain their ofn airport planning units, one of whlich could be eliminated.

137. The management of airports forms part of a ministerial organization. In view of the planned development of modern facilities at Maiquetia, the following changes in the management structure appear to be indicated:

(a) Descentralization of airport management and establishment of a degree of fiscal autonomy which would make airport manage- ment more conscious of potential revenues from concessions, rentals, etc.

(b) Greater cooperation between the airlines, the airport manage- ment and customs and immigration authorities to expedite pro- cedures, traffic flow, cargo clearance, etc.

4. Recommendations

Airports

138. The division of planning responsibilities should be eliminated by the complete transfer of airport planning and development of functions to the Ministry of Communications, the Ministry of Public Works performing solely the functions of preparing detailed civil engineering designs, preparing bidding documents and supervising contracts.

139. Airport operations at Maiquetia, and eventually at Maracaibo, should be made the responsibility of autonomous, self-accounting local airport au- thorities.

140. Airlines' participation in airport planning including layout of ter- minal buildings should be sought and the possibility of airlines' representa- tives becoming either full members or observers in planning committees should be considered.

LAV

141. Consideration should be given to the extension of the re-equipment program in order to make possible the eventual replacement of cargo aircraft and the acquisition of short-medium range jets. Further equipment acquisition by LAV and new equipment importation by AVENSA should, however, be made con- ditional upon an agreement on the following measures: (a) A rationalization committee of the airlines witl Govern- ment representation should be created to coordinate equipment purchases, scheduling and fare policies.

(b) Equipment of both carriers should be standardized, and cross- leasing arrangements made if necessary to enable equipment interchange.

(c) Consideration should be given to the pooling of jet and larger turbo-prop equipment and of station facilities.

(d) The possibility of joint maintenance arrangements following equipment standardization should be studied.

The arrangemients suggested under (a) and (b) may be modeled on Australian practice with modifications to meet Venezuelan conditions, - 50 -

F. RAILWAYS

1. Present Position and Past Developments

142. The Venezuelan railway lines do not form a national or even a regional railway system. The existing railway lines are:

Valencia - Caracas 177 km. Narrow gauge, antiquated equipment Puerto-Cabello - Barquisimeto 174 km. Modern, recently con- structed Guanta - Naricual 27 km.

Ferrocarril de]. Tachira 120 km.

143. Only the first two are of any importance. The Valencia - Caracas line is antiquated and without major reconstruction will cease to be opera- tional in a few years time. The Puerto-Cabello - Barquisimeto line was built as the beginning of a national railway system. Later the idea of a national system was abandoned, and the line is clearly overbuilt.

144. Traffic growth of the Puerto-Cabello - Barquisimeto line has been rather satisfactory, while the old Valencia - Caracas line has shown some -traffic decLine, which may become accentuated with the completion of new expressways..

Puerto Cabello-Barguisimeto Caracas-Valencia Passgr/km ton/km Gross Passgr/km ton/km Gross (1,000) (1,000) Revenue (1,000) (1,000) Revenue Year (Bs.l,OO0) (Bs.l,OO0)

1959 14,766 2,165 52 6,090 9,715 663 1960 18,690 9,454 225 5,999 9,703 642 1961 21,905 1,430 125 5,668 11,459 720 1962 21,760 10,364 682 4,865 12,892 814 1963 24,377 8,836 718 2,945 11,588 766 1964 34,266 13,836 1,107 1,629 11,218 772

Source: IAAFE

145. Ihe cperating agency for the Venezuelan railways is the Instituto Autonomo de Administracion de Ferrocarriles Nacionales (IAAFN). The agency's profit and loss account for 1964 is summarized below: Revenues Operating Revenues Bs. 2,685,371 Non-Operating Revenues 666,035 Total 3,351,406

Expenses Operating Expenses 8,960,340 Administration 4,206, 969 rotal 13,167, 309 O'perating Loss 10,167,309 146. Some improvements in IAAFN financial position may be expected following the closing of the two short lines which produce heavy deficits, the construction of branch lines to the Puerto Cabello - Barquisimeto rail- way, and the upward revisions in railway tariffs now planned. Cost savings due to reduced requirements for labor can only be achieved gradually. In any case, even when all the planned improvements have been fully realized, it is highly unlikely that IAAFN can achieve a break-even position

2. The Program

147. The present program of IAAFN includes construction of two branch lines to the Puerto Cabello - Barquisimeto line. These plans are justified by the expected traffic guarantees of the sugar and chemical factories. In order to meet the expected traffic demands wihich wsould follow the construc- tion of the branch lines track Trould hiave to be improved and rolling stock acquired. No provisions appear to have been made for the financing of this part of the program.

148. The costs of branch line constructions are estimated as follows:

Central Rio Turbio Bs. 1,715,000 Promosa - Ch. racoa 126,000

149. The ro2ling stock requirements are estimated at 100 cars of 30-35 ton capac:ity. The est-L.ate;i cost would be Bs. 6 to 9 million.

3. Recommendations

150. The missionmakes the following recommendations with regard to the railway program:

(a) The Caracas-Valencia railway should be phased out of oper- ation.

(b) Operations of the Barquisimeto-Puerto Cabello line should be continued subject to subsequent review. The present modest expansion program of track and rolling stock should be carried out.

(c) The railway administration head office should be moved to Barquisimeto to affect maximum economies from the combinatior. of system and local administration. APPENDIX

USER CHARGES

A. ASSIGNE14ET OF USERS' RESPON4SIBILITIES

General Considerations

1. The subject of road user charges is complicated and controversial. It is generally agreed that not all highway costs should be considered as user responsibility, although little agreement exists as to what percentage of the total costs should be borne by the users.

2. The main reasons why only a part of total road costs should be con- sidered to be user responsibility are the following:

(a) The existence of social or economic benefits accruing because of the availability and not the use of the facility. Among these are improvements in fire protection, medical services and police protection resulting from the existence of the road. These benefits result especially from the construction of secondary roads, and the construction of such roads may, therefore, for instance, be justified in record areas of rela- tively high population but low economic potential, even if vehicular benefits are low.

(b) Parts of the road system are built in advance of traffic demands in order to stimulate development. Thus there is likely to be a time lag between the completion of a road facility, the development sparked by it and the traffic generated by this development.

The Assumptions Used

3. It is generally assumed that in the case of high traffic trunk roads and more widely traveled secondary roads, vehicular benefits represent a large proportion of total benefits. In the case of Venezuela, however, parts of the trunk highway system have been constructed for reasons of general economic development, improvement of interregional communications, etc. There- fore, it is assumed here that only 75 percent of truik highway costs should be recovered from user charges. This percentage should increase, however, with the general development of the country and consequent traffic increases. The costs of all new additions and improvements to the trunk highway system, justified solely on the basis of traffic growth, should be considered as user responsibility. Thus, in the long run the percentage of highway costs to be allocated to the users may have to be increased to 90 percent of the total costs.

4. It has been assumed that 25 percent of the costs of the secondary system should be considered as chargeable to the users. This assumption may have to be revised upward as the result of further studies. This also applies to the further assumption used that 50 percent of road costs not allocated to individual projects should be considered user responsibility. In making both these assumptions, the benefit of doubt has been given to the highway users. APPENDIX page 2

5. A special problem is created by the existence of toll facilities. The costs of such facilities should be recovered from tolls, the collection of which amounted to Bs. 30 million in 1964. However, the users of the toll facilities pay fuel taxes on fuel used while travelling over toll roads. Furthermore, available data do not permit the breakdown of maintenance costs between the costs incurred in the maintenance of toll roads and other road maintenance costs. As a first approximation of the necessary adjustments which should be made because of the existence of toll facilities, the per- centage of maintenance costs to be borne by the users was assumed to be only 75 percent of total maintenance costs.

6. The following additional simplifying assumptions were made:

(a) Only highway investments made after 1948 were included in the calculations.

(b) Costs of highways built prior to 1959 were estimated as the same proportion of total road expenditure as that prevailing during the 1959-196h period. (c) Costs of trunk highways in 1959-1964 were estimated as the same proportion of all highway costs as for the 1965-1968 period.

(d) User responsibility for secondary roads built prior to 1959 was disregarded. For the following years 25 percent of sec- ondary highway costs were considered user responsibility.

(e) Finally, user responsibility for the new investment in roads to be made during the 1965-1968 period was not taken into account. These investments will gradually come into use during the period, and they will of course have to be taken into account when user responsibility in future years is calculated. The result of all these assumptions is that 30 percent of the annual expenditures on roads from 1948/49 to 1957/58 is considered to be user responsibility,and 56 percent of the annual expenditures from 1959 to 1964. 7. Costs of urban road works were excluded from the calculations for the following reasons:

(a) Road costs of states and municipalities were not available, and it was assumed for the purpose of the present simplified calculations that the proper proportion of these costs was recovered from local licence fees.

(b) Central Government expenditures on urban road works was assumed to be of the nature of "special assistance" to municipalities to be recovered through local licence fees. This assumption also represents considerable simplification and cannot be justified without further studies. APPENDIX page 3

8. Overhead costs of central ministerial offices, traffic police costs etc., were omitted from the calculations. The useful life of a highway was assumed to be 20 years and a 6 percent rate of interest on unamortized high- way investments was assumed.

Calculations

9. The details of the calculations are reproduced in the table below:

Estimate of Unamortized Highway Investments at the End of 1964 (In millions of Bolivares) Highway Amiual Investments Annual amor- Annual amor- investment expend- assumXed to be tization of tization of unamortized iture on users' res- new road past at the end Year roads ponsibility construction investment of the year C1) (2) (3) (4) (5) (6)

148/49 74 22.2 1e1 1o1 21.1 I49/50 138 41.4 2.1 3.7 59.3 50/51 301 90.3 4.5 7.7 141.9 51/52 289 86.7 4.3 12.0 216.6 '52/53 2(7 62.1 3.1 15.1 263.6 '53/54 217 65i.1 3.3 18.4 310.3 54/55 3(01 90.3 4.5 22.9 377.7 516/57 386 115.8 5.8 28.7 464.8 '57/58 684 205.2 10.2 38.9 631.1 1959 348.8 195.3 9.8 48.7 777.7 L960 256. 0 143.4 7.2 55.9 865.2 L961 250.6 140.3 7.0 62.9 942.6 1962 201.5 112.8 5.6 68.5 986.9 1963 2:9.2 122.6 6.1 74.6 1,033.9 1964 228.8 128.1 6.4 81.0 1,081.0

.Notes: (3) 1948/49-1957/58 30 percent of total road expenditures; 1959-1964 56 percent of highway expenditures (exclusive of urban road works and expressways). (4) Assuming 20 years useful life. (5) Accumulated amount of (4). (6) Found as: (6) of previous year + (3) - (5).

10. On the basis of the calculations shown in the table and assuming that 75 percent of maintenance costs are to be borne by the users, the follow- ing estimate can be made of what user charges would have to be in order to correspond to user responsibility. APPENDIX page 4

Bs. million

Amortization of past investments 81

I]nterests on unamortized investment (6 percent) 65

Maintenance costs (75 percent of total) 120

Total 266

B. PRESENT USER CHARGES

Fuel Taxes

:Li. The present fuel tax is a combination of a sales tax and an excise tax calculated as a proportion (50 percent) of customs duties. These are the schedules of the taxes:

Sales tax Excise tax Total Type of fuel (Bs.per liter) (Bs.per liter) (Bs.per liter)

Standard gasoline 0.0099425 0.0205 0.0304425 Premium gasoline 0.019885 0.0410 0.060885 Kerosene 0.00026 0.0005 0.00076 Diesel oil 0.00123 0.0020 0.00323

12. Gasoline prices ex pump are the following:

In Caracas In other parts of Venezuela (Bs.per liter) (Bs.per liter)

Low octane 0.10 0.10 83-94 octanes 0.15 0.155 95 octanes and above 0.25 0.255

Registration Fees

13. The Central Government collects an annual registration fee of Bs. 20 on all automobiles, trucks and buses. Registration fees of Bs. 25 per trimes- ter are also collected by individual states. In the Federal District and in the adjoining Sucre District of the State of Miranda, much higher fees are levied, however, varying with the weight of the vehicle. This has resulted in the common practice of registration in the parts of the country of ve- hicles usecd in Caracas. APPENDIX page 5

Federal District and District of Sucre (Annual registration fees)1/

1. Automobiles (according to weight)

Less than 1,000 kg Bs. 126.00 1,001 - 1,500 kg 154.00 1,501 - 2,000 kg 244.80 2,001 kg and more 316.30

2. iiicrobuses (camionetas mixtas)

Capacity less than 10 passengers 154380 Capacity of 10 passengers and more 180.00

3. Vans (camionetas para carga)

Capacity of less than 1 ton 144.00

4. Trucks (according to capacity)

Less than 2,000 kg 180.00 2,001 - 3,000 kg 270.00 3,001 - 4,000 kg 360.00 4,001 - 5,000 kg 450.00 5,001 - 6,000 kg 585.00 6,001 - 7,000 kg 700.00 7,001 - 8,000 kg 855.00 8,001 - 9,000 kg 990.00 9,001 -10,000 kg 1,125.00 10,001-11,000 kg 1,260.00 11,001-12,000 kg 1,395.00 12,001-13,000 kg 1,530.00 13,001-14,000 lcg 1,665.00 12.4,001-15,000 kg 1,800.00

1/ Annual lfees have been calculated as four times the trimester fee less 10 percent.

Present tax yields

1]4. The table below summarizes the yield of present fuel taxes: APPENDIX page 6

Year Gasoline Diesel oil (Bs. 1,000,000)

1959 25.1 0.7 1960 25.4 0.7 1961 42.5 0.7 1962 50.4 0.7 1963 46.7 0.7 1964 52.9 0.8

Source: Iiinisterio de Minas e Hidrocarburos, Petroleo y Otros Datos Estadis- ticos, 1964. 1964 figures (preliminary) supplied by CORDIPLAN.

In addition about Bs. 7 million are collected on lubricants. Howover, not all of this amount is related to vehicle operation.

15. Estimated yields from registration fees col:Lected by the Central Go- vernment and the states is contained in the table below:

Federal District type of vehicles and Miranda Other States Total

Automobiles 19.8 15.4 35.2 Vans 1.5 3.1 4.6 Trucks: less than 3 tons 0.8 0.8 1.6 4-5 tons 1.3 1.0 2.3 6-8 tons 1.4 0.8 2.2 0-10 tons 1.3 0.3 1.6 more than 10 tons 1.4 0.3 1.7 27.7 21.7 49.2

Central Governaent license fees Bs. 6.0 million Total Bs. 55.2 million

Source: Mission estimates based on vehicle registration statistics.

16. As explained above, it has been assumed in these calculations that the costs of urban roads construction should be matched against the state registration fees. In comparing user responsibilities and user charges, only charges received by the Central Government should, therefore, be taken into account, excluding, however, receipts from tolls, which should be charged against the investment in the particular expressways and toll bridges. In 1964 road transport revenues of the Central Government, thus defined, were the following: Bs. million Gasoline 53 Diesel oil 1 Lubricants 7 Registration fees 6 Other imposts 11 7W- APPENDIX page 7

Assuming an average growth of road traffic of 8 percent per year, these reve- nues would amount to Bs. 106 million in 1968.

C. POSSIBLE INCREASES IN USER CHARGES

17. In the previous sections it was estimated, on the one hand, that user responsibility amounted to Bs. 266 million a year, and, on the other hand, user charges according to present rates would in 1968 amount to Bs. 106 million. The difference between user responsibility and user charges is thus Bs. 160 million. It shouldbe borne in mind that this is a conserva- tive estimate of the difference and that it does not take into account the road investments which are scheduled to be made during the program period itself.

18. In order to elirninate the difference the following steps can be considered:

(a) Increase the fuel tax.

(b) Equalize the diesel fuel and gasoline tax.

(c) Equalize national differences between registration fees, and put the whole collection system under federal administration, the states being compensated for the loss of revenue by re- funds of fees which would have been collected under the pre- sent system. These funds could be earmarked for contributions of the states to urban road works or rural feeder roads.

(d) Increase the level of registration fees above the Federal District level.

19. Thle desirable combination of fuel tax and registration fee increases clepends on a number of considerations, including possible reaction of the users, as well as purely economic or fiscal considerations. The two alterna- 1;ives discussed below do not, of course, exhaust the range of all the possi- bilities. Both alternatives are based on the assumption that it is considered clesirable to eliminate by 1968 the road deficit, i.e.,the difference between the estimated user responsibilities and user charges.

Alternative 1.

20. This alternative can be briefly stated as follows:

(a) Equalize registration fees across the country by adopting the Federal District level of fees as the standard.

(b) Equalize diesel and gasoline taxes.

(c) Increase the level of fuel taxes to the level necessary to eliminate the road deficit. A?PENrDX

21. The equalization of local registration fees across the country up 'bo the leve:L of the Federal District would give an estimated yield of Bs. 36 million by 1968. Further small revenue increases may be obtained by minor changes in the structure of registration fees, say Bs. 4 million net by 1968. Thus the total additional revenue from the equalization of registration fees could be estimated at Bs. 40 million.

:22. The equalization of diesel and gasoline taxes at the present level would necessitate a tax increase from Bs. 0.00323 to Bs. 0.03044 per liter (11 times) and a correspondingly higher increase wheni the prospective higher gasoline prices are taken into account. Such increases would have to be introduced by stages over a long period of time. Therefore, it is assumed that the maximum increase in diesel tax yields would not be more than Bs. 8 million by 1968.

:23. Thus the deficit to be covered by fuel tax increases would be about Bs. 112 million. The 1968 gasoline tax revenues, if the present rates are in force, are estimated at Bs. 72 million, and total revenues would therefore have to reach Bs. 184 million, an increase of approximately 150 percent. Such a radical tax increase may affect the consumption of gasoline, e.g.,by shifts to more economical engines. Although the elasticity of demand for gasoline is usually assumed to be low, it is reasonable to expect that in order to obtain the desired level of revenues a tax increase of about 170 percent would be necessary.

24. A gasoline tax increase of 170 percent would have the following effects:

(a) The present level of combined gasoline sales and excise tax on standard gasoline would have to be increased from Es. 0.0304 per' liter to Bs. 0.0821 (equivalent to US$0.07 per US gal.). For premium type gasoline the required tax in- crease would be from Bs. 0.0609 per liter to Es. 0.1644.

(b) Assuming that the tax is passed on to the consumer in toto, the new price would be Bs. 0.15 for standard type gasoline (an increase of 50 percent) and Bs. 0.25 for medium type gasoline (an increase of 67 percent). This would still leave Venezuelan gasoline prices at about one-half of US prices and one-third of European prices.

(c) As fuels costs are about 10 percent of highway transportatioin costs, a gasoline price increase of this magnitude is likely to result in the increase in total operating costs of highwal carriers of at least 5 percent. It is not likely, however, that this increase would be passed on to the consumer in toto. More efficient truck operators would obtain an additional in- centive to acquire larger and more economical equipment, and where competition exists, their level of costs would set the upper limit of rate increases. The effects would be different in different parts of the country. On high density routes, and APYNDIX page 9

on runs over good quality higl-hways, where fuel consumption per ton/km is less, the carrier rates may rise by less than 5 per- cent, on low density routes in remote areas, where highway quality is poorer and fuel consumption per ton/km higher, and where competition by more efficient operators is non-existent, the rates may increase well over 5 percent. It is precisely one of the disadvantages of a higher fuel tax as compared witL higher license fees, that it tends to hit areas of poorer roads and lower stage of economic development harder than other areas.

Alternative 2.

25. In this alternative it is postulated that the road deficit should be covered to approximately one-third by increases in fuel taxes and by two- thirds from increases in registration fees. This would require an increase in fuel tax revenue of Bs. 53 million and in revenue from registration fees c,f Bs. 107 million.

26. As in the previous alternative, it cannot be assumed that a complete equalization of gasoline and diesel taxes can be achieved before 1968. The proceeds from diesel tax increases is estimated at Bs. 6 million, leaving 47 million for gasoline taxes, which together with the expected revenue from present rates would give a total of Bs. 119 million to be collected in 1968. This would imply an increase of 65 percent which would have to be slightly higher, say 70 percent, to take into account the effects of improved fuel economy. The taxes on standard gasoline would have to increase from Bs. 0.0304 per liter to Bs. 0,0517, and on premium gasoline from Bs. 0.0609 per liter to Bs. 0.1035. The price of standard gasoline would have to increase fLcr-( Bs. 0.10 to Bs. 0.12 per 'Liter (20 percent), that of medium type gasoline from Bs. 0.15 and Bs. 0.155 to approximately Bs. 0.20 (33 percent).

27. The Bs. 107 million required from increases of registration fees could be obtained in the following manner:

(a) By equalizing registration fees at the Federal District level. Estimated yield by 1968 - Bs. 36 million.

(b) By increasing automobile license fees after adjustment by 1.00 percent. Estimated yields by 1968 - Bs. 58.0 million.

(c) By increasing tax rate on trucks by about 25 percent after equalization. Exemptions or reduced rates could be given to trucks owned by farm marketing organizations. Estimated yield- by 1968 - Bs. 13.0 million. APPDNT1Xy page li

28. Automobile registration fees of this magnitude would result in Venezuelan licence charges being 3 to 4 times higher than the comparable US fees. On the other hand, it is not easy to estimate the effects of this alternative upon transportation costs. While the total amount of charges would be the same as in the other alternative, the distribution betwe3n road users would be different, and it seems likely thatthe increase in the costs of transporting goods would be smaller than in the case of a corresponding increase in fuel taxes. The Venezuelan motorist would still enjoy re'a- t1ively low fuel costs. ANNEX V

HOUS ING AD APPRAISAL OF THE DETELOPMENT PROGRAI4 OF VENEZUELA

AWNtEX V: HOUSING

TABLE OF CONTENTS

Page No.

THE HDUSING 'PROGRAM 1965-68 ...... 1

A. Ides...... *...... , 1

B. The Program Outline t ...... l i ne. . 2

C. Program Objectives and Balance ...... 3

D. Proposed Financing of the Housing Program...... , E. Feasibility of the Program . ....

F. Conclusions and Recommendations...... 10

STATISTICAL TABLES THE HOUSIXa PROGRAM l96K-468

A. Needs

1. In 1936 Venezuela had a population of 3.4 million, of which less than one-third, or 1 million, was urban. The population has now risen to an estimated 8.7 million in 1965, of which perhaps two-thirds, or almost 6 million are urban.

2. This rapid urbanization, combined with a high rate of population growth, widespread poverty and the inability of the market to meet the housing rneeds of low income groups have resulted in a reported housing deficit of some 500,000 or more units (800,000 by 1970). While there is no clear indication of how the housing deficit is measured, data provided by the Housing Census of 1961 suggest that the criteria employed were chiefly the lack of running water and adequate or private toilet facilities, and to a lesser extent, types of construction and space per person.

3. Out of 1,354,000 occupied dwellings in 1961, 483,000 or 35.7 per- cent were ranchos - improvised housing built by their occupants from make- shift and scrap materials. Less than half of all housing units had running water. Only one-third had private indoor toilet facilities, another third had private outside latrines, while the remaining third lacked any kind of privacy. Only a few of the ranchos (13 percent) had running water, and only one-third of them had some kind of private latrines.

4. In Caracas, some 54,000 ranchos comprised about 20 percent of all housing units. Only 15 percent of tihem had running water, and only 2 percent enjoyed private indoor toilet facilities. Some 72 percent had some degree of privacy for their outdoor latrines; 26 percent lacked even this.

5. The degree of over-crowding is suggested by the fact that in the c:ountry as a whole some 218,000 families of five or more persons occupied one-bedroom apartments. About half of these families were comprised of seven or more persons.

6. There is no reason to believe that the situation revealed by the 1961 Housing Census has changed in any significant degree. In view of the continued shift in the urban-rural population distribution and the failure of housing construction to keep up with new family formations (estimated at close to 50,000 yearly), the role of the rancho in the overall housing picture is probably somewhat larger than it was at the time of the last census.

7. Unsanitary and unwholesome living conditions, and the inevitable concommitants of disease, family instability, delinquency and crime have been aimong the results of Venezuela's housing deficiencies. There can thus be no question of the high priority of the 1965-68 program for 211,000 public and publicly assisted housing units designed primarily for lowi income families. Combined with the 41,000 units expected to be built by the private sector, the effect waould be to reduce the housing deficit by about 50,000 units by 1L968. - 2 -

B. The Program in Outline

8E. The program is mainly directed towards faamilies with income ranging f'rom Bs. 330 to Bs. 1,200 per month, who comprise some 75 percent of the total population. Three agencies are assigned responsibility for providing public or publicly assisted housing for the families in this income group: the Ban- co Obrero, in towns with population over 25,000; the Foundation for Community Development, in towns with population between 10,000 and 25,000; and the Vivienda Rural, an agency of the Ministry of Health, in small towns and rural communities with population below 10,000. For the very low income families, below Bs. 330 per month, no specific assistance is provided in the program, although there is mention of possible assistance in the form of land and credits for building materials. For the families with incomes between Bs. 1,200 and 3,900 a month, assistance would be given through loans granted by the Savings and Loan Associations System.

Q. The following table presents a summary o, the program:

Investments Approximate and Credits Average Cost Units Bs. million Bs.thousands

A.Incomes Bs.330-1,200 per month

Centers with population over 25,000 (population, 4.3 million in 26 metro- politan centers; housing deficit, 260,000 uniits)

Banco Obrero Direct construction 67,000 1,009 15 Banco Obrero Credit 5,250 147 28

Centers with population between 10 000 and 25,000 (population, 700,000 in 59 cities; housing deficit, 52,000 units)

Foundation for Community Develop- ment 27,000 220 8

Small townis and rural communities with population under 10,000 (population, 2 million; no official estimate of housing deficitj

Vivienda Rural 71,000 356 5 (Ministry of Health)

Table continued on the next page. -3 -

Investments Approximate and Credits Average Cost Units Bs. million Bs.thousands

B.Incomes Bs.1,200-3,900 per month

Savings and Loans Associations 30,000 1,162 39

Financed by Central Government (689) Financed by private deposits in the Associations (450)

10. These programs account for 200,000 of the 211,000 public and publicly assisted units in the housing plan. Another 11,000 units are to provided by miscellaneous minor programs, with a total investment of approximately Bs. 108 million. Land acquisition costs for the Banco Obrero program will add Bs. 200 million to the investments previously listed, and states and municipalities are expected to add another Bs. 270 million. The planned total public sector investment in housing is thus Bs. 3,474 million. Net of the estimated Bs. 450 million of private depositorst contribution to the Savings and Loan program, the total is Bs. 3,024 million.

Private Construction

11. In addition, private construction is expected to provide some 41,000 units representing an investment of Bs. 2,100 million (average cost, about Bs. 51 thousand). Combined public and private housing construction would thus amount to 252,000 units, representing Bs. 5,574 million of investment.

12. The Government has also indicated its readiness to grant appropriate incentives to private builders who stand ready to participate in social housing programs. Ihese promised incentives include partial relief from income taxes, freedom from municipal building permit fees and property taxes, free urbaniza- tion in the form of water, sewage and electricity services, and mortgage insurance guarantees. The 41,000 units projected for private construction do not reflect the possible response from private builders to such an incentive program.

C. Program Objectives and Balance

13. The program is well suited to meet urgent human and social needs except for the very lowest income group. More than 80 percent of the 211,000 units in the public sector program would be built at an average price below Bs. 16,000 (less than $3,600). The program also seems well-balanced, in general, as between urban and rural requirements. The mission has, however, some doubts about the practicality and even the desirability of the intention to offer all multi-family units as sales housing. A significant portion of these, it would appear, should be offered as rental units. The program is of, course weighted heavily in favor of public and publicly-assisted units, as against the anticipated unassisted private con- struction of only 41,000 units - a ratio or approximately 5:1. The mission however does not regard this distribution as unwarranted. Given the prevail- ing income distribution and levels of urban land and construction costs in Venezuela, it is clear that private builders cannot service the housing needs of the low income families for whom this prograti is primarily designed.

.15. The most serious gap in the program's composition is that which concerns families with incomes below Bs. 330 per month. This may reasonably be tiaken, so far as urban communities are concerned, to coincide roughly with the problem of the ranchos - the ramushackle huts which c'uster the hills of Caracas by the scores of thousands, and which are fouid in every urban area in Venezuela. These occupant-built dwellings, which lack water and sanitary facilities, a'lthough most of them appear to be electricity-connected, represent living conditions - and health hazards to the larger communities in w.dhich they are located - which should not be tolerated.

16. It ,was apparentlv anticipated that some of the rancho dwe'llers would return to a;ricultuz'al life as the land setbleim.nit proErani proceeded and that still others would f ixd ncw diell i ns of a more conventi-orial kind as the vol- ume of re-sleential const.ruction increased. The autho:ities al so see-m to have been deterrAd from any direct action by tie thought- that any attemapt signifi- cantly to Iz-prove the ranchos and to creat'e adeq'la-e spacing al-tong tijlem Tuould necessitato the :-emoval of perhaps half th_ir num.ber. The fear ti-at a rancho improvement progrsin might attrract ev*n more inrluc to the citieJ and increase unemployment and other problems there may -iell have been an addit%onal factor. It seems clear, ne-4erthe7ess, that the ranchos are in Vene uela's cities to stay for many years to come. The rmission believes, therefoie,that a sern.ous effort should be made to improve their condition.

D. Proposed Financinz of t'he Housing Prog-am

17. Nearly Bs. 3,100 million of the Bs. 3,47L million public housing investment and credit program are accounted for by the four major housing agencies. Slightly less than half of this is to be provided by the Central Government. The balance is to be comprised of Bs. 626 million of domestic 'borrowing by the Banco Obrero (20 percent); Bs. 450 million of private de- posits in the Savings and Loan organizations (15 percent); Bs. 239 million of loan recoveries (8 percent); and Bs. 245 million of foreign loans (8 per- cent).

18. The foreign financing is comprised of the B3s. 36 million unexpended portion of a $10 million Inter-American Bank loan to the Banco Obrero for urban housing construction; the Bs. 104 million unexpended portion of a $30 million U.S. AID loan to the Foundation for Community Development; Bs. 45 million resulting from a second $10 million Inter-American Bank loan for the rural housing program; and Bs. 60 million to be borrowed by the Savings and Loan organization, using mortgage bank instruments as security. - 5 -

19. Further details of the proposed financing of the four major housing agencies are shown in Table 7.

E. Feasibility of the Program

20. A number of problems concerned chiefly with organization and management, finance, specialized manpower and perhaps even of consumer pre- ference may seriously inhibit program implementation. Banco Obrero

21. Direct construction by the Banco Obrero is scheduled to rise from some 7,000 units in 1965 to 25,000 units in 1968. For the program period as a whole the total would be 67,000 units. This appears to be a very optimistic expectation. Since the Banco Obrero built only 2,900 units in 1963 and 1,500 units in 1064, about one-third of its assigned targets for those years, the magnitude of the task assigned to it will be readily apparent. The heritage of the Banco Obrero is not a good one. The problems inherited from the past by the relatively new management include a portfolio which contains a number cf reportedly uncollectable loans, a large number of occupants who are far behind on their rents, and many buildings with serious accumulated maintenance problems. Although the Banco Obrero carried into i965 more than 4,0CO units under construction and may therefore have little difficulty in achieving its target for this year, it owned as of April sufficient land to carry through only slightly beyond its 1965 construction program. Its financing depends heavily on the success of a new Bs. 600 million domestic bond issue to be placed during the program period. Further land acquisition at reasonable cost is dependent on new 'and procurement methods. Enabling legislation for both of these was yet to be enacted at tJie time of the missionls visit to Caracas. While the organ:ization's task with respect to new construction is complicated by the problem of managing previously sold and rented properties, outside appraisal is further complicated by the fact that the finances of the Vivienda Rural program (of the Ministry of Health) pass throuigil its books, as do even yet the affairs of the Savings and Loan Association as well. (Other nending legislation would establish the Savings and Loan Association as a separate legal entity.)

22. Another problem relates to tl.e possible unwillingness of buyers to purchase flats in Banco Obrero multi-family buildings on a condominium basis. Because of its poor experience with rental units and its belief that ownership of the units occupied will lead to fewer maintenance problems, the Banco Obrerc plans to sell rather than to rent its multi-family units. The Venezuelan cul- ture however is not conducive to multi-family unit occupancy. Families prefer if possible single family units which provide them a plot of ground where their children can play and where they may keep chickens and have a small garden. They are said also to dislike the rules which require quiet after certain hours and which inhibit their social activities. Water supplies to the flats lhave frequently been interrupted, elevators break down, and other maintenance pro- b:Lems abound. A sales program which concentrated on single and row housing Wuits might therefore be more successful than multi-family construction. Ccincurrently, rulti-family units might have more appeal on a rental than on a sales basis. While high urban land costs suggest the necessity of multi- family construction in central city areas, the Banco Obrero might do well to aim at more single and row unit construction in suburban areas or satellite towns.

23. In any event this complex of problems suggests that there will in all likelihood be a sizeable shortfall in the projected Banco Obrero con- struction program, quite apart from the problems of finance it may encounter.

Vivienda Rural

24. The Vivienda Rural program on the other hand promises to be highly successful. The Ministry of Health organization responsible for executing this program built 8,200 units in 1963 and 11,000 units in 1964, reaching about 80 percent and 90 percent of its assigned targets, respectively. It seems fully capable of building successfully the 71,00 units programed for 15965-68.

25. Vivienda Rural houses are small units of highly simplified design and construction with three bedrooms and indoor kitchen and flush toilet fa- cilities. They are sold at the low cost of Bs. 5,000 each on easy purchase terms - a small down payment in the form of labor contributed by the buyer and Bs. 20 monthly for 20 years. Purchasers are not charged any interest. Interest charges on the $10 million Inter-American Bank loan which has helped to finance this program are paid by the Ministry of Hacienda. Neither are they charged for the administrative costs borne by the Ministry of Health in supervising the construction program, or for the transportation costs involved in moving the required building materials from the nearest storage depot. These subsidy elements are stated to amount to about Bs. 2,000 per unit.

26. The origin of the Vivienda Rural housing program as a public health activity explains its social character. Social workers investigate candidates fcor this much-desired housing and carry on a program of visitation and aid in home economics after the houses have been built and occupied. In view of the dynamic and successful organizational performance in this segment of the housing program, there is little reason to doubt its successful implementation.

27. Vivienda Rural construction until now has been confined to communities of less than 5,000 population. In the new program they are to widertake con- struction in communities with populations up to 10,000. Foundation for Community Development

28. The Foundation for Community Development is a young and as yet un- proved organization with major problems of coordination with local community organizations and dependent on autonomous organizations of the Central Govern- ment to finance essential road, water, electricity and other services. Housirg is not the sole objective or function of this organization. It is concerned, theoretically at least, with various other aspects of community clevelopment as well. 29. The central organization functions through local community organ- izations for community development which it helps to set up in the various localities. At the same time of the mission's visit, the Founda-tion had 13 contracts with its respective local organizations calling for the construc- tion of 6,300 housing units. The local organizations, on the other hand, had not as yet concluded any contracts with builders for these units, since the central organization had not yet approved their building plans.

30.. The arrangements of the Foundation for Community Development call for the municipalities in which its projects are to be built to contribute the necessary land, and for INOS, CADAFE and other autonomous central govern- ment agencies to provide the essential water, electricity and other services. These contributions are reportedly equal to the investment which the Foundation itself makes. The Foundation loans are for 15 years. Local associations charge an interest rate of 6 percent to the buyers of their units and pay 4 percent to the central organization for the finances obtained. In addition to this 2 percent differential, the local organizations also retain a share of the amortization payments made by house purchasers in proportion to the land and serv:Lces contribution. Over tisile,therefore,they should accumulate fairly sizeable capital funds withliwhich to finance ihousing and other community development programs. For the time being, however, it is apparent that the contribution to the program originating in the localities is confined to the land contributed by the municipal governments. Despite their name, the local organizations do not appear to be mobilizing local finances or energies, or contributing :in a significant way to community development.

31.. The financing of the Foundation for Community Development program seems assured since it had available to it at the beginning of 1905 more than $2( million in unexpended funds of a $30 million AID loan which requires the Government to supply its own funds on a matching basis. Nevertheless, in view of the construction record achieved in 1963 and 1964 when a total of only 4,100 units were constructed against a combined goal of 18,600 units, and of its slow 1965 start, it seems doubtful whether this organization can achieve its target of 27,000 units for the program period.

Savings and Loan Association

32. This organization also is young and as yet untried. The central or- ganization hacd succeeded in establishing some 19 local member Savings and Loan associations and in accumulating deposits of approximately Bs. 70 million by the end of 1964. Some 300 housing units in 1963 and approximately 1,800 units in 1964 were built with Savings and Loan Association financing. Performance in 1964 was well in excess of the assigned target of 1,200 units. The program calls for Savings and Loan-assisted construction to reach 30,000 inits in the 1965-68 period.

33. For its financing, the plan provides for Bs. 688.5 million of Central Government appropriations and Bs. 24 million of cash on hand, However, the government will probably have to reduce radically ito fi- nancial aid to the Savings and Loan system so as to liberate funds to help solve the housing needs of lower income groups. According to the mission's latest information, government financial assistance will - 8 -

be limited to some Bs. 130 million of govermaent-owned mortgage bank instru- ments assigned to the Savings and Loan Association so that they may be pledged against foreign borrowing. The expectation is that approximately Bs. 60 million may be obtained by the central Savings and Loan Association in this manner. If the local associations were able to acquire the Bs. 450 million anticipated in savings deposits, total financial availabilities for the pro- gram period would still be less than Bs. 550 million. Even a reduction in the average size of loan extended to, say, Bs. 30,000 could thus result in a maximum construction of some 18,000 units, rather than the 30,000 units programed.

34. The mission would not expect Savings and Loan construction to reach even this reduced total, under the circumstances indicated. The prospect of housing loans is a major inducement to depositors in Savings and Loan associa- tions. The reduction in government financing which has now been determined may, therefore, result in a much slower rate of growth in private deposits with the system than has been projected, and curtail still further the volume of housing construction it is able to finance.

35. The mission is not,however,disposed to be critical of the Govern- ment's decision radically to curtail its financial help to this organization. Since resources are scarce, government assistance shouLd concentrate on pro- grams which will benefit those whose needs cannot be satisfied in the market place. The groups whlich have until now comprised the Savings arid Loan cli- entele, and which have borrowed from it to build homes averaging Bs. 77,700 in value, appear to fall outside this category.

Miscellaneous Programs

36. Four minor programs, involving less than 11,000 units and some Bs. 107.6 million of investment, make up the balance of the program. Three of these - the Guayana Corporation, the Centro Simon Bolivar and the Junta de Credito programs, accounting for less than 4,000 units - phase out in 1965 and require no further comment here. The remaining program, that of the Asistencia Tecnica Vivienda Rural, is designed to provide technical guidance to persons bu:ilding their own homes. Since this assistance is presumably to be rendered by the existing staff of the Vivienda Rural, no funds are budgeted for this program. A total of 6,800 units are programed for such assistance.

37., Assistance of this kind has been rendered to 1,176 units during the five years 1960-64 - never to more than 322 units per year. The organization concerned advises that it would be capable of increasing this level of aid only if it received additional funds for the staff required. The 1965 budget makes no such provision, although 2,400 units are programed for such assist- ance. Clearly, budgetai-y arrangements for 1966-68 should provide as much additional staff as can effectively be used to assist self-help housing cor,struction. -9-

Private Sector

38. Although the 41,0CO units projected for construction by private builders do not call for as sharp an increase as does the public housing program (private construction was in the range of 5,000-6,000 units annually in 1963 and 1964), this outcorne may be influenced by existing uncertaincies with respect to aovernment policy and controls in the housing field.

39. Private construction was affected some years ago by the imposition of' rent controols. Builders evaded this control, so far as multi-fami'y buildings were conce,ned, 'oy abandoning rental construction in favor of con- dominium housing. Owners of existing multi-family rental units have been converting them to condominium ownership, and have been evicting rent-protected families who decline to buy. At the tirae of the mission's visit to Caracas, private builclers and house owners were protesting vigo.ously proposed legis- lation which would prohibit this practice, even though it was proposed to apply such control only to existing properties. The mission can neither forecast the likelihood of enactment of the proposed legislation nor its prospective impact, if any, on new private construction. It does seem clear, however, that a considerable stimulus might be given to private multi-family construction if new constructior. was exdnpted from rent controls. Rent controls on nlew construction act to limit building and the housing supply, and thus defer indefinitely the solution of the problem with which they seek to cope. The mission suggests that consideration be given to such a change in policy.

40. Even more important, so far as the total housing progran is con- cetrned, is the degree to which private builders may or may not take advantage of the inducements offered to participate in the social housing program by undertaking the construction of housing units with sales or rental prices geared to the capacities of low-income families. The incentives suggested by the Government - income and property tax relief, urbanization ser7ices, mortgage insurance guarantees, etc. - could be attractive. Nevertheless, any builder interested in participation in this program would obvicusly have to spend a great deal of time exploring the possibilities with the va- rious central and municipal government agencies concerned, and in negotiating the arrangements. Under the circumstances, the mission suspects that the response of private builders to this aspect of the program is not likely to be considerable. On the other hand, if some special institutional arrangement was made so that potential participants could centrally negotiate appropriate arrangements covering the entire range of incentives offered, the response miLght be a significant one. In view of the highly probable performance short- fall in other sectors of the program, the mission believes the creation of an institutional arrangement of the kind indicated to be extremely important to a more successful outcome. General

41. Shortages of skilled manpower may prove to be even a more serious limitation on program execution than the several factors mentioned above. Requirements for skilled construction manpower do not appear to have been - 10 -

carefully analyzed. Government estimates show a projected rise in residential construction total employment from 42,000 in 1965 to 66,oco in 1968. This es- timate relies on an experience factor of one worker employed for each Bs. 25,000 of residential construction put in place. The projected increase, how- ever,should be measured from 1964, when such employment presumably totalled some 27,000. The additional employment called for by the present program would thus involve an increase of some 39,000 construction workers, or 144 percent. More importantly, no estimate has been made within this total re- quirement of the number of additional skilled workers of various kinds who would be required. The training programs presently contemplated, and on which the Government relies to solve the problem of construction skills, have not been geared to such a set of specific requirements for skilled workers. It cannot,therefore,safely be assumed that skilled manpower availa- bilities will be adequate to the demands of the program, or even to the lowrer volume of residential construction which might be achieved under the limita- tions of other factors previously reviewed.

42. The mission considers it essential,therefore,that estimates of skilled as well as total manpower requirements be made - for carpenters, brick- layers and masons, plumbers, electricians, and so on - and that appropriate -braining courses and apprenticeship arrangements be made with INCE, the Cham- ber of Construction and the trade unions concerned to ensure that these re- quirements will be met.

F. Conclusions and Recommendations

243. The mission subscribes in general to the objectives and design of the housing program, and would accord it a high priority. The program is justified on the grounds of human and social needs for which the market- place has failed to provide. This justification is strengthened by the role which, in the overall framework and structure of Venezuelats economy, public investment in the social sectors needs to play as a contributor to employment, enlarged dornestic markets, and economic growth.

244. The mission is,however, concerned about the substantial shortfalls which seem inevitable in view of implementation problems of the Banco Obrero and the Foundation for Community Development, the necessity to curtail finan- cial support of the Savings and Loan system and prospective shortages of skilled manpower. It believes also that determined action should te taken to improve the most deficient element in the Venezuelan housing situation - namely, the ranchos - beginning with the ranchos of Caracas, where they re- present the greatest social and health hazards.

245. To overcome the indicated shortfalls, which may total from 50,000 to 60,000 units,and to meet the needs of the lowest income groups who inhabit the ranchos, the mission strongly recommends: (a) the provision of an additional 13s. 100 million for alternative low cost urban housing of the Vivienda Rural type, whicih would be concentrated in satellite and smaller size towns, and in suburban areas of larger toans where land cost would not be a serious problem. For greatest effectiveness, responsibility for executing this added program would be assigned to the agency now executing the rural housing program. - 11 -

This could contribute some 20,000 units to the program-. (b) Aln initial pro- ject to provide piped water and toilet and bathing facilities to the ranchos of Caracas. A water tap could be installed for every twenty or thirty fami- lies, and communal toilet and showxer facilities could be installed at select- ed intervals to serve larger family groupings. The mission has estimated tentatively that such services could be installed at a cost of approximately Bs. 700 per family unit or, say, Bs. 40-50 million for the 60,000-70,000 ran- chos in Caracas. In addition, building materials would be made available on a credit basis to rancho dwellers to enable them to improve their dwellings. Discussions held in Caracas suggest that such a program might, through the Community Development program, be coordinated with self-help efforts in the rancho communities centering around labor participation in the water and sanitary facilities projects, home improvement and, later, maintenance of the new facilities. The mission recommends that Bs. 100 million be added to the program for this project in the years 1967 and 1968. (c) That the Government designate a central authority fully empowered to negotiate with private builders the various incentives which will be accorded them if they elect to participate in the social housing program. The nature of the incentives the Government has indicated its willingness to offer suggests that, provided an appropriated mechanism for their implementation is created, the response might be a considerable one. A contribution of, say, 15,000 to 20,000 units to the social housing program might then be considered quite realistic.

46. These recommendations might thus replace some 35,000 to 40,000 of the tnits which are likely to be lost, provided also the necessary actions are ta- ken to assure the skilled manpower needed,and benefit in addition some 60,000 to 70,000 units not presently included in the program. The adjusted program recommended by the mission would thus be comprised, say, of 190,000 i.ew units and 65,o00 improved units, as compared with the proposed program of 211,000 new units - yet it would require the public investment of some Bs. c. 8 billion as compared with Bs. 3.5 billion in the proposed program.

47. The mission's conviction that careful analysis of skilled construc- tion manpower requirements, and training and apprenticeship programs geared to them, are required, has already been noted. It recommends also the clear cut organizational and accounting separation of the Banco Obrero, Vivienda Rural and Savings and Loan programs; the organizational separation of Banco Obrero's construction operations from the management of completed structures; additional budgetary provision within the appropriate Ministry of Health di- vision to provide adequate staff for the programmed technical assistance oper- aLtion of the Vivienda Rural; greater emphasis on single and row house construc- tion, as against multi-family unit construction, the provision of rental as well as sales units in the multi-family construction program; and consideration of the removal of rent controls over new multi-family rental construction. Finally, it commends the stated intention of the Government to create a single central authority to coordinate and supervise execution of the entire housing program. The organizaticnal entity suggosted in reccmmendation (c) above might appropriately be located within this overall supervisory authority. lT7he ful cost, including the subsidy element of those units is of course DS, 7,000 per unit, or Bs. 140 million. The additional Bs. 40 million would be forthcoming, it is believed, from a shortfall in the Foundation for Community Development program which has not been included in the missionls financial adjustments. Table 1 THE HOUSING PLAN 1965-68 Units in Thousands Value in Bs. Million

Sector and Agency 1965 1966 1967 1968 1965-1968 Units Value Value Ualue Units Value UValue alue Units Value

A. Public Sector Direct Construction 10.9 257.6 17.4 332.3 21.0 420.3 25.9 496-3 75.2 1506 5 Banco Obrero 2 -Ti17 T68T5 2164T 6 15.0 20.0 351.0 72*9 425.0 6770 1229. 3/ C.Sirn n Bolivar?/ .2 8.0 ------.2 8.0 Corp. de Guayana 1.2 19.6 -- - - - 1.2 19.6 As.Tecnica Vivienda Rural 2.4 - 2.4 - 1.0 - 1.0 - 6.8 296 States and Municipalities n.a. 61.5 n.a. 67.5 n.a. 69.3 n.a. 71.3 n.a. 269.62

Credit Construction 26.1 395.6 28.0 412.7 37.0 547.7 45.0 611.6 136.1 1967o,61 Banco Obrero b8 37. 1. 3 7 1.5 36.5 "53 Vivienda Rural (Ministry of Health) 12.2 61.0 14.0 70.0 20.0 100.0 25.0 125.0 71.2 356.0 Foundation for Community Development 6.0 49.2 6.0 49.2 7.0 57.2 8.0 65.6 27.0 221.2/ Junta de Credito 2.6 80.6 ------2.6 80 6 Savings and Loan System 4.5 167.0 6.5 257.0 8.5 354.0 10.5 384.5 30.0 1162.5:

Total, Public Sector 36.9 653.2 45.4 745.0 58.0 968.0 70.9 1107.9 211.2 3474.1

3. Private Sector 8.2 436.0 9.9 490.0 11.0 552.0 12.0 624.0 41.1 21020

Total, Public and Private 45.1 1089.2 55.3 1235.0 69.0 1520.0 82.9 1731.9 252.4 5576.1

Durce: CORDIPLAN, adjusted by Mission as explained in footnotes. zIootnotes on the next page Table 1 - Footnotes

1/ Includes Bs. 200 million for land purchase, distributed Es. 50 million each year.

2/ After 1965, considered as private investment.

3/ The mission presumes that much of this investment is in the form of land urbanization services contributed to other housing construction programs, as in footnote 5.

4/ Yearly distribution of value by mission, in same proportion as in CORDIPLAN's distribution of previous total of Bs. 121.3 million.

5/ Local organizations, municipalities and government agencies will contribute the equivalent of another Bs. 212 million toward the cost of these unitse

6/ Of this, some Bs. 450 million are deposits of private savers in the Savings and Loan System.

7/ Private investment in housing is larger, by the Bs. 450 million mentioned in footnote 6. Table 2 THE HCUSING PROGRAM, 1965-1968 AND HISTORICAL PERFORMANCE DATA, 1961-1964 (Thousands of Units)

Program 1961 1962 1963 1964 1965 1966 1967 1968 1965-1968

1. Public and Public Assisted

Direct Construction 1.9 2.9 3.2 2.2 10.8 17.4 21.0 25.9 75.2

Banco Obrero 1.7 2.6 2.9 1.5 7.1 15.0 20.0 24.9 67.0

Centro Simon Bolivar - - - - .2 - - - .2

Corp. de Guayana - - - .4 1.2 - - - 1.2

As. Tecnica Vivienda Rural .2 .3 .3 .3 2.4 2.4 1.0 1.0 6.8 Credit 5.7 9.3 14.6 17.2 26.1 28.0 37.0 45.0 136.1

Banco Obrero - .3 .8 .4 .8 1.5 1.5 1.5 5.3

Vivienda Rural 2.0 5.6 8.2 11.0 12.2 14.0 20.0 25.0 71.2

Foundation for Comm.Developinent - - 2.5 1.6 6.0 6.0 7.0 8.0 27.0

Junta de Credito 3.7 3.4 2.8 2.4 2.6 - - - 2.6

Savings and Loan - - *3 1.8 4.5 6.5 8.5 10.5 30.0

Total Public 7*6 12.2 17.8 19.4 36.9 45.4 58.0 70.9 211.2

2. Private Sector n.a. 4.4 5-4 6.5e 8.2 9.9 11.0 12.0 41.1 Grand Total n.a. 16.6 23.2 25.9 45.1 55.3 69.0 82.9 252.3

,ource: CORDIPLAN and Mission Estimates Table 3 PERFORMANCE AGAINST TARGETS, 1963 AND 1964 (Housing, U-ni,ts)

1963 2963 Actual as 1964 1964 Actual as Public Sector Housing Plan 63-66 Acjal paFroent Plan 63-66 Actual percent cif -'an of plan

Direct Construction Banco Obrero 6.100 2.943 48.2 6e500 1.479 22.7 Corpe de Guayana 400 400 100.0

Vivienda Rural 10.800 8.531 78.9 12.500 11.339 90.7

C. Simon Bolivar - 1.200 - 0.0

Credit Construction

Banco Obrero:

Urban 1.600 759 47,4 1.700 355 20.8 Foundation for Ccnmm.Development 8.400 2.500 29.7 10.200 1.621 15.8

Junta de Credito 1.000 2.774 277h4 - 2.419 Savings and Loans 700 277 3905 1.200 1.793 149.4

Total 28.600 17.7814 62=1 33.700 19.406 57.6 Table 4 BLiICO OBRERO CONSTRUCTION PROGRAM, 1965-68 (Investment in Bs. Thousands) (Preliminary Estimates)

1965 - 1968 1965 1966 1967 1968 Locality Units Investment Units Invest. Units Invest. Units Invest. Units Invest.

Metropolitan Area 20,550 308,250 846 27,652 59231 63,503 6,377 959655 8,096 121,440 San Felipe 470 7,050 - - 121 1,815 157 2,355 192 2,880 Valera 1,130 16,950 396 6,134 160 2,206 243 3,645 331 4,965 Barcelona 840 12,600 - - 217 3,255 280 4,200 343 5,145 San Cristobal 1,860 27,900 96 1,300 450 6,890 584 8,760 730 10,950 Puerto La Cruz 1,800 27,000 588 7,400 270 5,470 404 6,060 538 8,070 Carupanc 420 6,300 20 350 101 1,465 134 2,010 165 2,475 Cumana 1,660 24,900 260 3,552 323 5,193 477 7,155 600 9,000 Punto Fijo 930 13,950 200 1,360 175 4,265 243 3,645 312 4,680 Coro 380 5,700 - 600 98 870 126 1,890 156 2,340 Maracay 2,600 39,000 866 10,724 423 8,611 605 9,075 706 10,590 Barquisimeto 3,740 59,100 444 5,631 806 16,119 1,098 16,470 1,392 20,88() Los Teques 960 14,400 - - 250 3,750 320 4,800 390 5,850 Valencia 3,350 50,250 739 11,743 499 6,827 931 13,965 1,181 17,715 Maturin 1,450 21,750 44 400 361 5,675 469 7,035 576 8,640 Acarigua-Araure 1,190 17,850 100 1,060 242 4,070 378 5,670 470 7,050 Merida 700 10,500 12 67 167 2,618 219 3,285 302 4,530 Ciudad Bolivar 1,880 28,200 170 1,535 429 7,450 569 8,535 712 10,680 Costa Oriental Lago 4,750 71,250 - - 1,230 18,450 1,583 23,745 1,937 29,055 Maracaibo 8,660 129,900 244 6,530 2,160 29,530 2,803 42,045 3,453 51,795 Puerto Cabello 1,430 21,450 394 4,696 239 4,799 345 5,175 452 6,780 i3anto Tome de Guay. 5,160 75,000 1,428 25,234 837 6,341 1,346 20,190 1,549 23,235 T.a Victoria 520 7,800 - - 147 2,205 185 2,775 188 2,820 3arinas 530 7,950 176 1,110 62 2,460 127 1,905 165 2,475 Ether locations 50 532 50 532 ------

Total 67,010 1,005,532 7,073(2) 117,610 14,998 213,837 20,003 300,045 24,936 374,040

Source; O.P.P. Banco Obrero Table 5 VIVIENDA RURAL - PROGRAM FOR 1965

Investment States Units (Bs. thousand)

- _ - A:nzoategui 750 3,750

Apure 450 2,250

Aragua 700 3,506

Barinas 600 3,0fJ

Bolivar 650 3,250

Ciaraboro 850 4,250

Cojedes 250 1,250

Falcon 600 3,000

Guarico 650 3,250

L.ara 800 4,000

M1erida 350 1,750

Miranda 610 3,050

Monagas 650 3,250

Nueva Esparta 210 1,050

Portuguesa 600 3,000

Sucre 995 4,975

Tachira 400 2,00C

Trujillo 400 2,0OC.

Yaracuy 615 3',75

Zulia 870 4,350

Federal Territory 200 l,OSO (Delta Amacuro)

Total 12.200 61,000

Source: Programa de Vivienda Rural 1965-1968. Table 6 CONSOLIDATED MDNTHLY REPORT january, 1965

a b c d e f g h i j k 1 nm Savi gs Accounts Appraisal Mortgage Loans Avera- Advances Ratio Average Avera- % Apprai- Code Name of Entity Number Amounts ge(d/c) OCAP (f/d) Amount (h/j) Number Amount ge(k/j) sal (k/h)

G 1 La Primera 2.773 13.685.096 4.935 12.159.200 8808 47.512.037 99.190 479 31*294.36E 65*333 65,9 G 2 La Vivienda 1.164 3.635,177 3.123 5.838.658 160,6 16.988.298 77.572 219 12.4650565 56.920 73P4 G 3 Caja Pop. Occidente 1.366 5*210.158 3.814 i 3.550*776 68,2 16.854.421 64.825 260 12.480.30( 48.001 74,0 G 4 Valencia 1.249 4.434.828 3.551 2.535.289 57,2 13.157.794 60.357 218 9.063*100 41.574 68,9 G 5 Casa Propia 920 2,340.762 2.544 4.273.161 182,6 11.691.101 53.629 218 8.443.70( 38.733 72,2 G 6 Pro-Vivienda 808 1.142.716 1.414 1.384.582 121,2 5.070.755 93.903 54 3.207.200 59.393 63,2 G 7 Horizonte 1.356 4.623.671 3.410 6.006.483 129,9 22.765.386 89.982 253 15.851.579 62.654 69,6 G 8 Montana 658 4.724.826 7.181 1 2.466.479 52,2 8.239.740 74.907 110 6.213.290 56.484 75,4 G 9 La Tndustrial 960 7o429.623 7.739 8.164.522 109,9 30.710.545 84.138 365 21l634*400 59.272 70,4 G 10 Asoc. Bancarios 2.606 4.760*927 1.827 1.953.009 41,0 8.543.545 89.932 95 5.547.60C 58.396 64,9 G 11 Merida 851 1.817.881 2.136 1 500.000 27,5 5o823.746 64.708 90 4109.600 45.662 70,6 *G 12 Magisterio 1.089 2.504.482 2.300 i 1.807.843 72,2 8.219.489 94.477 87 5.564.90C 63.964 67,7 *G 13 Maracay 655 1.369.119 2.090 750.000 54,8 3*610.258 69.428 52 2.513.10C 48*329 69,6 G 14 Fondo Comun 316 2.637.204 8.346 2.587.3C5 98,1 7.309.702 91.371 80 5.158.50C 64.481 70,6 *G 15 Asoc. Guayanesa 913 5.237.872 5.737 _ | 333.659 37.073 9 241.80C 26.867 72,5 *G 16 Oriente 329 1-024-965 3.115 1.461987 27.074 54 1.158.500 21.454 79,2 G 17 El Porvenir 396 625.778 1.580 _ _ 706.284 44.143 16 578,300 36.144 81,9 G 18 Llanos Occidentales 158 608.b47 3.851 _ _ 429.600 61.371 7 352.100 50.300 82,0 G 19 La Primogenita 291 801.365 2.754 _2074-752 36-39 57 1*656e900 29*068 80,0 G 20 Progreso 177 406,34h 2.296 _ I _ _ _ G 21 Coro 67 340.050 ______-

TOTALS 19.102 69.352.4711 3.631 j53977"3071 77,8 1211.503.0991 77.67312.723 I __7_534_802154_181 _____ Source: Sistema Nacional de Ahorro y Pr6stamo (SNAP) Oficina Central de Ahorro y Prestamo (OCAP) Secci6n de Estadistica (SE)

* Estimates Table 7 PROPOSED FINANCING OF THE UNADJUSTED PROGRAM BY MAJOR AGENCY, 1965-68 (In millions of Bolivares)

Banco Savings and Vivienga) Foundation for Obrero Loan Rural_! Com. Devel.

Current Receipts 257.1 5/ 59.6 Current Expenditures 366.6 " 17.2 Current Surplus or Deficit -109.5 i42.4

Capital Receipts 1,861.3 1,162.5 251.14 Surplus or Deficit on Current Account -109.5 +42.4 Internal Debt 626.01/ External Debt 36.02/ 104.02/ Recovery of Loans 239.0 Central Government 1,0414.81 688 5-/ 105.0 Other Sources 28.0 474.07/

Capital Expenditures 1,861.3 1,162.5 251.14 Fixed Investment 1,009.3 Financial Investment 503.34/ 1,162.5 220.4 Landc Purchase 200.0 Amortization of External debt 44.0 Internal debt 60.8 Credit,s Extended 43.9 Additions to Working Capital 30.2

Source: CORDIPLAN

_/ This consists of Bs. 26 million in borrowing authority carried into the program period, plus Bs. 600 million in new domestic borrowing authority for which legislation was pending at the time of the mission's visit.

2/ This is the unexpended portion of a $10 million Inter-American Bank loan to Banco Obrero for urban housing.

3/ This will be reduced by Bs. 45 million in consequence of a second Inter- American Bank loan of $10 million for rural housing.

4/ This includes Bs. 356 million for the Vivienda Rural program, and Bs. 147.3 million for Banco Obrero t s credit construction program.

Footnotes continued on the next page. Table 7 - Page 2

5- Current receipts and expenditures of the Savings and Loan system are incorporated in Banco Obrerots figures.

6/ The Government has since decided to provide here only Bs. 130 million in mortgage bank instruments to be used as collateral against foreign bcrrowing of some Bs. 60 million.

7/ This consists of Bs. 450 million of deposits by individual savers in the Savings and Loan system, plus Bs. 24 million of cash drawdown.

8/ All figures included in those of Banco Obrero. See footnotes 3/ and 4/.

2/ This is the unexpended balance of a $30 million U.S. AID loan. The decision radically to curtail the Government financing indicated for the Savings and Loan system (footnote 6) is equivalent to a decision sharply to curtail that component of the housing program. Exhibit 1 STATUS OF A.I.D. HOUSING LOANS IN VENEZUELA February, 1965

1. Foundation for Popular Housing - DLF Loan no. 175 - $5 million (Signed 3/5/6-1, eyears, 5%)

The first Popular Housing Foundation project was inaugurated in January 13, 1962. The loan, fully disbursed by December 10, 1963, pro- duced 2,810 family uunits. The Foundation, by impetus of the $10 million loan, has continued it.s construction activities during 1964 and 1965 at about the same level as in prior years, but with local or other financing.

2. Savins and Loan S stem - DFL Loan No. 212 - $10 million .Signed 12/17/61, 20Jyers4)

This loan was matched by funds from the Government of Venezuela. The first Savings and Loan entity in Venezuela was chartered on September 6, 1962. By December 31, 1964, twenty Savings and Loan Associations were operating, with three more in various stages of promotion; 17 932 accounts had been opened, with deposits of Bs. 64,919,544 ($14,426,5655. 2.616 loans amounting to Bs. 114,605,243 ($25,467,831) had been approved. As of January 31, 1965, the entire original loan had been drawn down; more favorable legislation has been drafted and the System is making renewed efforts to attract the individual savings necessary to meet loan demands.

3. Foundation for Community Development and Municipal Improvement - A.I.D. Loan No. 529-L-004 $30 million (Signed 11/30/62, 25 years, 075

Slum clearance and ldw cost housing activities have been underway since early 1963. In Caracas, eight projects, involving 3,451 family units are under construction or have been completed. In the interior, eleven projects, involving 2,733 units have been or are being financed. As of December 31, 1964, A.I.D. had obligated $17,699,721 for Foundation use of which $7,887,683 had been disbursed. Although the A.I.D. loan is primarily for housing, the loan assists with other significant Foundation activities which include support to nationwide community development activities, as well as the training of municipal administrators, legal advisors, and planners.

Source: A.I.D. Venezuela Exhibit 2 FOUNDATION FOR COMMUNITY E VELOPMENT AND MINICIPAL IPROVEMNT

A.I.D. LOAN 529-L-00. - t30,000,000,00 DISBURSPIENTS

As of March 1. 1965

Housing A.I.D.Loan Total Disbursed Sub-Loan Units Total Amount As of Mar. 1, 1965 Bs. Bo.

Balance of advance to Foundation - 1,584,361.10

A-00L Centro Simdn Bolivar, Caracas 2,095 29,406,389 18,426,951.63 A-002 IVIfA, Maracaibo 80 40(,000 392,344.60 A-00:3 Fund. Rotarfa, i4aracaibo 300 3,433,650 3,433,650.00 A-004 Nueva Esparta - 206,050 48,600.00

A-005 Centro Sironn Bolfvar, Caracas 1,250 17,960,900 8,297,655.81 A-006 Puerto Ayacucho 50 325,000 325,000.00

A-007 Fund. Sotillo - Puerto La Cruz 460 3,500,000 1,269,659.29

A-008 Fuerzas Armadas, Caracas 96 1,769,100 1,608,355.22 A-009 Cabimas - -

A-010 IVIGUA - Ciudad Bolfvar 200 1,714,404 171,440.00

A-01:L Fundacidn Guanare, Guanare 218 3,082,000 308,200.00 A-01;2 Fundalara, Barquisimeto 1,425 17,696,000 884,800.00

A-013 Bomberos, Petare 10 155,250 15,525.00

A-OL Fundamerida, i4grida 136 1,477,500 _ Allied Engineering Tech. Services - - 720,468.00

Tbta:L as of Aarch 1, 1965 6,320 81,126,243 37,487,010.65

($18,028,054) (48,315,457)

Source: A.I.D. Venezuela ANNEX VI

PUBLIC HEALTH AN APPRAISAL OF THE DEVELOPNENT PROGRAM OF VEINEZUELA

AIIEX VI: FUBLIC HEALTH, SAIETAIION AND WELFARE SERVICES

TABLE OF CONTENTS

Page No.

RPBLIC HEALTH AND SANITATION . . . 1

I. GENERAL BACKGROU..D... 1

II. M]INISTRY OF HEALTH AID SOCIAL 1 ELFARE...... 3

A. Activities ...... 3

B. Personnel ...... 7

C. Funds and Investment by Individual Programs... 9

III. HOSPITAL SERVICES . . . 12

IV. PROGRAMS FOR WATER AND SEWJAGE FACILITIES . . 17

A, Urban Water a&-d Sewage Facilities . . 17

B. Water Supply Systems and the Disposal of Excreta in Rural Areas ...... 19

STATISTICAL TABLES PUBLIC I)MALTH AID SA.DJITA'ION

I. GENERAL BACKGRUOND

1. Health conditions in Vonezuela have been progressively imiproving, partly as a result of the timely execution of specific programs for the eradication of diseases such as malaria and partly in consequence of progress made in the case of other programs which have been given priority, such as those concerned with environmental sanitation and the reduction of communi- cable diseases (see Table 1). The average life expectancy of Venezuelans has increased considerabLy over the past 25 years, rising from 47 years in 1941 tc) 66 years in 1965.

2. Since the establishment of the Central Office of Coordination and Planning (CORDIPLAN), attempts have been made to adapt health plans to the needs of a general program of development for the country. In cooperation with the Ministry of Public Health and other agencies working in this field, CORDIPLAN is at present engaged in preparing a health plan, with projections of future trends, based on modern methods of diagnosis and program priorities. It has submitted a preliminary study for the 1965-1968 period which is a considerable improvement over previous programs and which offers encouraging prospects for the completion of the final plan in the near future. This plan will require the firm support of the sector and regional planning offices in existence or to be established in the various deDartments concerned with health.

3. The country has undergone marked changes in the last 10 years; its population is growing at a rate of 3.4 to 3.6 per cent per annum, and its age structure has shown a very appreciable increase within the group between 5 and 24 years, which now comprises approximately 44 per cent of the total pcpulation.

4. Mortality has been sharply reduced, and the relative importance of its causes has changed. The mortality rate has fallen in almost all the spheres in which curative medical techniques have been effectively employed, as well as in those in which preventive health campaigns and environmental sanitation have reduced the opportunities for contagion or spread of disease. Thus, whereas in the period 1941-1958 gastroenteritis was the primary cause of mortality, with a rate of 235 per 100,000 in the beginning of the period and 160 at its end, by 1964 this disease had fallen to fourth place with a rate of 72 (see Table 1). In the 1 to 4 years age groups gastroenteritis continues. however, to occupy first place as a cause of mortality, which indicates the need for intensified health measures in the maternal and child programs and improved environmental health conditions.

5. The incidence of cardiovascular diseases has increased in absolute terms. These now occupy second place as a cause of death next after the diseases of early infancy. Cancer is in third place in order of importance, and continues to rise in relation to the total rate.

6. Tuberculosis has continued to decrease rapidly as a cause of death. The mortality rate in 1964 was 9 per cent of what it was in 1936, largely as a result of the preventive campaigns pursued by the health units and the rural - 2 - me:dical agencies throughout the country. In accordance with new techniques now in use, tuberculosis cases can be treated in general hospitals with re- cuperation at home. Special hospitals for this disease can, therefore, now be combined with other services in order to make better use of the available facilities.

7. For the 1965-1968 period the national planning authorities have estiraated mortality on the basis of a constant rate of 6.8 per 1,000, thc rate which obtained in 1962. As mortality rates have been falling and are likely to continue to do so, especially in the light of the health and environ- mental sanitation program planned for the period, this estirnate is likely to be on the high side.

8. As a result of heavy migration from rural to urban areas, approxi- mately two-thirds of the population lives now in urban areas and one-third in rural areas, exactly the reverse of the position that obtained sowm 30 years ago. This population movement has resulted in housing shortages and lack of health services for town inhabitants and the concentration of human beings living in unacceptable ccnditions around the major cities. In rural areas, health services also leave much to be desired, in spite of the great progress made in recent years.

9. The principal objectives of public health and sanitation in coming years is to expand water and sewage services in urban areas and to continue the building of rural water supply systems; to increase services of rural medical agencies and intensify rural health campaigns; to continue the es- tablishment of medical and welfare centers in the towns, giving preference to the establishment of diagnostic units and general hospitals in peripheral areas with heavy population. II. MINISTRY OF HEALTH AND SOCAL WELFARE

A. Activities

10. The Ministry of Health and Social Welfare is the agency responsible for organizing and coordinating at the national level all activities designed to promote, protect and improve the health of the population. It is at the same time concerned with providing social welfare faci:Lities for those who need them.

11. In order to carry out its work the Ministry has divided its activi- ties into three specific fields:

(a) Promotion and restoration of health.

(b) Protection of health.

(c) Social welfare.

Promotion and Restoration of Health

12. The Ministry provides medical treatment at 77 hospitals and health centers, 25 sanitoria and 19 state hospitals. An intensification of these activities would be desirable especially in respect of maternal and child programs, occupational health programs and the mobile and institutional treat- ment of patients.

Protection of Health

13.. Measures taken for the protection of health include immunization campaigns, veterinary programs to prevent the transmission of diseases from animals to humans, environmental sanitation programs including malaria eradica- tion, vector control, campaigns against other transmittable diseases, rural water supply programs, rural housing programs, campaigns for the sanitary disposal of refuse and programs to provide for the use of latrines.

14. The success obtained in the anti-malarial program is striking. The alrnost complete eradication of this disease has reduced mortality and opened up new and important areas for agricultural and industrial development. Only in two areas do cases still occur, one on the frontier with Colombia, where the malaria incidence has again risen, and the other in the Northeast, where extradomiciliary transmission occurs in conjunction with an apparent resist- ance to insecticides. The effective organization of the anti-malarial program in Venezuela provides a good example for countries that are still engaged in solving this problem.

15. Despite the efforts that have been made by the Government in cam- paigns against the Chagas disease, it has not yet been possible to reduce the incidence of this disease, which causes a serious reduction in the ability to work and an increase in the mortality rate. It is necessary to intensify this campaign. The rural housing program can make an important contribution to - 4 - this by extending its scope to include a large number of village dwellers and by coordinating it With improvements in urban housing in the peripheral areas.

16. The mission has been favorably impressed by the rural water supply program, the direct impact of which has been felt in a large number of town- ships of less than 5,000 inhabitants. In the course of 1964, 172 systems were built, and it is planned to bring water to 308 additional population centers in 1965. The picture in Venezuela in this respect is very different from that which obtained in 1959, when the first Bank missicn visited the country to meke a survey of economic development.

17. In view of' the soulnd organization of the rural wiater supply program, which has received economic assistance from international sources, the mission believes that it can achieve by 1968 its objective of providing 100 per cent coverage for towns of between 500 and 5,000 inhabitants. When this goal has been reached, it is intended to intensify the campaign for rural sewage facil- ities as the logical sequel to the program for potable water. At the same time, a program has been drawn up with a view to accelerating the rate of construc- tion of water supply systems in to-ns of less than 500 inhabitants, to which the Central Government, UNICEF and local and municipal goverriments are at present making a modest financial contribution.

Scocial Welfare

18. Social welfare activities are being undertaken by various government and private organizations wihose work is not well coordinated, thus detracting from the efficiency of their programs. The Department of Social Welfare of the Health Ministry has recently proposed to coordinate these activities through a committee of agencies connected with social welfare. The main emphasis is being directed towJards community development for which the Department has a special section with programs in urban and rural areas. There appears to be a need for a national program of community devel- opment supervised by CORDIPLAN and executed by the organizations with res- ponsibilities in this field, such as IAN, the Foundation for Community and Municipal Development, and the Ministry of Health and Social Wvelfare. At present each institution carries out a limited program of its own which is subject to only superficial review at the central coordinating level. The program of community development being undertaken by CORDIPLAN is well- oriented, but it would appear more appropriate that this agency should con- centrate its efforts on the introduction and continuous revision of a national long-term program, and that area and regional coordinating functions should be assigned to the various institutions that exist for that purpose.

19. The principal obstacle to the effective functioning and extension of a national program of community development is the lack of trained personnel with field experience. The graduates in social studies who are available have been trained by the National University in evening courses extending over four years which apparently fail to meet either general or specific training re- quirements, so that the Ministry has decided to establish its own initial Experimental School of Social Welfare. The mission believes that the problem of suitable staff should be solved at the central coordinating level by intro- ducing training programs that would meet all the country's requirements and preferably by arranging for such personnel to be trained by regular university or university extension courses. CORDIPLAN could take the initiative in the training of suitable personnel to carry out work in the social field. The training program should be an integral part of a national plan approved by the agencies that are to carry it out.

20. The Ministry of Health and Social Welfare has for some time been aCministering a program of family relief benefits. The mission has noted a newi emphasis to replace this system gradually byT a progiam wihich would train family members to undertake remunerative activities.

Autonomous Agencies

21. There are six autonomous agencies whose activities are coordinated by the Departmenr, of Social Affairs and Autonomo-u Ageicies of the Ministry of Health and Social We'lfare;

(a) Venezuelan Institute of Scientific Research

(b) University Hospital

(c) National Agency of School Cafeterias

(d) National Institute of Nutrition

(e) National Agency for the Aged and Disabled

(f) Venezuelan Council for Children

22. In view of the varied functions performed by these bodies, it will be useful to review their activities in conjunction with tihose Departments of the Hinistry of Ilealth and Social Welfare with which tliey are most closely associated.

23. The program for 1965 and the projectedactivities for future years of the Venezuelan Institute of Scientific Research depart to some extent from the health field proper, particularly in its study of radio-isotopes and sources of radiati.on. The mission, therefore, suggests thlat consideration be given to the exteint to which it wjould be possible to transform this Institute into a National Research Agency of a general character that m.ght be associated wi-th tihe Ministry of Development or with -he Nationial University of Venezuela.

24. In the case of the University Hospital, the mission believes, in the interest of better coordination, that instead of remaining an autonomous agency it should be under the suDervision of the Division of H'edical Care of the Departm.ent of Local Public Health Services. Such a relationship would make it possible to make more effective use of the couwtry s ho3pital re- sources. - 6 -

25. The National Agency of School Cafeterias and the National Institute of Nutrition pursue broadly siniilar prograrns. The mission, therefore, supports CORDIPLAN's suggestion that these services should be reorganized to form a single service under the sponsorship of the Department of Social Welfare.

26. Priority should be given to dietary services for pre-school age children in view of the def_ciencies revealed by the statistics for this age group. Similar services for school children of 7 to 14 years, who comprise 6 per cent of the total population of the country, are also needed, and should gradually be extended.

27. The National Institute of Nutrition is operating cafeterias on company premises. providing food at less than cost, as, for instance, in the CVG steel plant at Guayana. The authorities in question regard this as a contribution to the feeding of a low-income group of the population. On the other hand, industrial workers earn the highest wages in the country and can well afford to pay the real cost of the food provided by the emp'loying firm (or by a firrn to which a concession for such services has been granted). Subsidized cafeterias should, in the first instance, meet the needs of the less well provided for sector of the population previously defined by the Social Welfare Service. Where they have been introduced for industrial workers, the subsidy element has already been introduced into the wage struc- ture as a fringe benefit, and cannot, perhaps, readily be withdrawn. In such cases, the real question is who should pay the subsidy - the Government or the ernployer. On the other hand, the program of distribution of the PL 480 milk and of multiple vitamin tablets by the Institute of Nutrition, has achieved valuable results and should, therefore, be continued. In this instance, as in all those in which the Government is granting free benefits, the system cf controls should be studied with a view to limiting free grants to cases of genuine financial need.

28. The National Agency for the Aged and Disabled performs an essential role in a country in wiich compulsory social security provides coverage only to a small sector of the population. It is, however, limited to certain arear of the country and has only recently included disability servies. The Agency provides geriatric services, rehabilitation services for the aged, social wel- fare facilities for placing aged persons in special homes, for assistance in the form of food and for the granting of pensions. It is estimated that this Agency currently reaches only 10 per cent of those who really need such alssistance and it is, therefore, recommended that these services should be ex- tended to an increased number of needy persons. As a new Social Security Act is expected to be introduced in the course of 1965, providing for disability and old age care and gradually extending coverage to the working population. there is no need to augment the National Agency program beyond that already projected for 1968. Its activities should be coordinated with those of Soc-al Security, assuming responsibility for that part of aged population not covered by the Social Security. Act.

29. The purpose of the Venezuelan Council for Children is to protect and guide children of between 3 and 14 years of age in abnormal circumstance in teirms of their educational and social needs. It meets a very real need in Veinezuela where there is a very large proportion of families of limited re- sources with no legal basis and with children who have been born out of wed- lock. The exact nwaber of children who need this assistance is not known, but it is certainly in excess of the present financial capacity of the Council's organization, estinated at 61,000. The mission believes that an expenditure of' Bs. 253.4 million as the Government contribution to the children's program for the 1965-1968 period is fully justified, and recommends that states and municipalities shouLd col'aborate to make a supplementary contribution equiv- alent to 30 per cent of that allocated by the Central Government.

30. The new distribution of responsibilities recommended in the case of the autonomous agencies at present responsible to the Ministry of Health and Social W1elfare may be summarized as follows:

Grants from Sponsorship G__vernment 1965-196C Institution Present Recommended (in millions of Bs.)

1. Institute of Ministry Min.of Development Scientific Research of Health anld University 79.6

2. University Hospital Dept.of Social Division of Welfare Medical Treatment 137.2

3. National Agency of ) Organized as a single School Cafeterias ) Dept of Social service under the ) Welfare Department of 4. National Institute ) Social Welfare 241.1 of Nutrition )

5. National Association Dept.of Social Dept.of Social for the Aged and Welfare 'vWelfare 14.0 Disabled

6. The Venezuelan Council Dept.of Social Dept.of Social for Children Wlelfare Welfare 282.6

B. Perscnnel

31. To carry out the work assigned to the iinistry of Health and Socal Welfare, the followiLng staff were available, as of 1961:

Public Health Doctors 541 Interns 1,267 Surgeons 332 Pediatricians 84 Obstetricians 86 Specialists in other fields 283 Engineers 199 Nurses 1,376 Auxiliary nurses 5,131 -8-

Other professions 430 Inspectors 1,718 Auxiliary technical staff 2,705 Clerical employees 2,727 Workman (specialized and general) 11,581

32. There are in existence 121 hospitals, health and sanitary centers provided with staff by the Ministry of Health and Social Welfare, besides the 44,5 rural medical agencies.

33. The personnel at present working in Minrstry programs represent 3.3 employees per 1,000 inhabitants if workmen are included, and 2 employees per 1,000 inhabitants if workers are excluded. This proportion would appear to be very high in relation to other countries, but if we bear in mind the kind of programs in which the Miinistry is normally engaged, a ratio of this order can be justified. The campaigns for the eradication of malaria and of aedes aegypti, the control of Chagast disease, the rural water supply and rural housing programs, together with the operation and maintenance of hospitals, health centers and rural medical agencies, all increase the number of staff the country will require until the basic health problems are solved.

34. The number of doctors in Venezuela has doubled in the past 10 years whereas the population has increased by approximately 40 per cent. W4ith this increase in the number of doctors, the rate per 1,000 inhabitants compares favorably with that obtaining in countries which are regarded as well provided for from the medical and social welfare standpoint. Unfortunately, the geo- graphic distribution leaves much to be desired. There is a heavy concentra- tion of doctors in the major population centers, and too few in the medium- sized towns, although medical services in rural areas are at an acceptable leviel because of the rural medical agencies. The 6,700 doctors in the country could provide a medical service comparable in quality and quantity wi-th that of rnore highly developed countries if they were better distributed in relation to the population. Each year the universities produce 400 new doctors who may well create a problem of regional saturation if timely efforts are not made to secure satisfactory geographical distribution.

35.. On the other hand, the mission found the number of graduate nursing personnel extremely limited. On the basis of statistics, there were approx- imately 2,200 in 1959. By 1964 this figure had risen to 3,649 for the country as a whole, with an average annual rate of increase of 290 nurses. At the present time there are seven nursing schools producing a total of 200 new professional nurses per year. Even if the system of nursing education has improved as a result of programs undertaken in association with the Pan- American Sanitary Bureau and WHO, it has not yet proved possible to interest a sufficient number of young Venezuelan students in this field. The ratio of one nurse to two doctors is wholly inadequate. As a result of the shortage of qualified nurses, it is now necessary for auxiliary nurses or insufficently trained nurses to assume responsibilities beyond their capacities. This situation is still further aggravated by a poor distribution of properly trained personnel who are concentrated in the large population centers. The mission suggests that consideration should be given to introducing immediately, programs which would produce at least 400 graduate nurses per year. 36, At the same time the mission recommends a review of training pro- grams for the auxiliary personnel required in large numbers to perform very varied duties, such as laboratory assistants, field inspectors, etc. The services that require such personnel are making isolated efforts to train them, and it may well be that centralized coordination under the auspices of the Health Ministry's Planning Office could provide a common basis for these efforts to secure greater efficiency and continuity.

C. Funds and Investment b Individual_Programs

37. The Ministry of Health and Social Welfare divides its activities into seven sub-programs for which the appropriations in 1964 and 1965 were as follows (current and capital):

1964 1965 Millions of Bs. Per Cent Millions of Bs. Per Cenit l.General Administration 44.1 7.9 42.9 6.7

2.EIealth Promotion 34.6 6.2 38.0 6.0

3.Recovery of Health 177.2 31.8 204.4 32.5

4.Protection of Health 106.2 19.0 115.5 18.4

5.Malariology and Environ- rnental Sanitation 65.8 11.8 84.7 13.5 6.Social Welfare and (ommunity Development 17.1 3.1 18.3 2.9

7.Autonomous Agencies supervised by the IMinistry of Health and S,ocial Welfare 112.0 20,2 125,2 20.0

Total 557.0 100.0 629.0 100.0

Source: Ministry of Health, ilemoria 1964.

38. The Malariological and Environment Sanitation Service includes the following activities in its 1965 budget: - ).0 -

Millions of Bs.

1. Direction and Administration 4.0

2. Rural Endemics 5.2

3. Sanitary Eagineering 11.1

4. Ankylostomiasis 4.4

5. Rural Housing 24.9

6. Rural Water Supply Systems 34.5

7. School of Malariology .6

Total 84.7

With the exception of the rural water supply program, the Ministry had not yet worked out its sub-programs in detail for the years 1966-1968.

39. The sanitary engineering program includes a series of activities that have become increasingly important over the past ten years, i.e., the collection and hygienic disposal of urban refuse. These measures have been taken in order to correct a very serious technical and administrative short- coming on the part of the municipalities in Venezuela: their failure to provide adequate refuse disposal services for the population. The municipal- ities concerned have, therefore, concluded contracts with the Division of Malariology of the Ministry of Health and Social VJelfare, whereby the latter has undertaken to organize and carry out the collection and final disposal of refuse, the municipality assuming responsibility for collecting the domestic charges imposed which are transferred to the Niinistry to reinburse it for its e-- penditure. This procedure has gained wide acceptance and an extension of such activities is at present being negotiated for Caracas where the cleaning of streets and collection of refuse leaves much to be desired. These activi- ties of the Ministry appear justifiable only as a demonstration or pilot pro- gram to enable the municipalities to acquire experience with sound sanitary practices.

40. The program of rural water supply systems will be commented on in connection with the activities of the National Institute of Sanitary Work (INOS), and the rural housing program is considered in the sector report on housing.

41. The Ministry itself has not prepared expenditure estimates going be;yond 1965. Such estimates have, on the other hand,been prepared by CORDIPLAN for the years 1966-1968. These estimates are shown here (current and capital expenditures and transfers to the six autonomous institutes described above) with budget figures for 1964 and 1965. - 11 -

1964 1965 1966 1967 1968 1965-1968

Estimated (in millions of Bs.) 557.0 629.0 680.9 734.3 816.3 2,860.5

Annual percentage increase - 12.9 8.3 7.8 11.2

42. The expenditures of the Ministry of Health and Social Welfare in 1964 represent a gross outlay of Bs. 65 per capita, of which Bs. 31 per capita was for promotional and preventative programs. According to CORDIPLANts pro- gram these outlays would increase to Bs. 84 per inhabitant in 1968. In 1964 they were equal to about 3 per cent of estimated private consumption and 1.6 per cent of the gross domestic product, which may be regarded as acceptable proportions, if we bear in mind the fact that hospital construction is not included in these figures. Programmed outlays by the Ministry for 1965 re- present 8.8 per cent of the total Central Government budget. III. HOSPITAL SERVICES

43. There are seven different organizations in Venezuela providing hospital services:

(a) Ministry of Health and Social Welfare (b) State Governments (c) National Institute of Social Security (d) Municipalities (e) Industrial enterprises and petroleum companies (f) Ministry of Development - Ministry of Defense (g) Private Organizations (Clinics)

44. The hospitals of the agencies listed as (a), (b), (c) and (f) above are built by MOP with Central Government funds but are operated and maintained by the agencies themselves. Since 1951 the number of hospital beds provided by the states and by industrial enterprises and the petrolelxm companies has declined, whereas there has been no change in those provided by the municipal- ities and a marked increase in the other cases (Table 4).

45. The average cost of construction of general hospitals in Venezuela can be estiamted at Bs. 50,000 per bed, of which Bs. 40,000 are direct buildUln costs and Bs. 10,000 for equipment. The average stay of patients is 15 days, excluding childbirths. The rate of utilization of beds is 85 per cent as an average for the country, including cases of chronic illnesses. Operating costs of general hospitals can be estimated at between Bs. 60 and Bs. 120 per bed per day. For emergency hospitals and in cases of major surgery the costs per bed per day reach as high as Bs. 160. The construction and operating costs of psychiatric hospitals are much lower than for other hospitals.

46. The number of beds per 1,000 inhabitants was 3.3 in 1964 (see Table 5). This must be regarded as a satisfactory relation which compares favor- ably with other countries, even those carrying out good hospital programs. The hospital construction program for 1965-1968 calls for 9,335 additional beds, which would raise the number of beds to 3.9 per 1,000 by 1968. The costs of this bui-lding program are estimated at Bs. 298 million for the pro- gram period as a whole, divided as follows: 1965, Bs. 58 million; 1966, Bs. 100 million; 1967, Bs. 80 million; and 1968, Bs. 60 million.

47. In view of the high costs of building and operating hospitals in Venezuela, particular emphasis should be placed on the better utilization of available beds. This becomes even more important in view of the shortage of nursing personnel and auxiliary technical staff, aggravated by the maldistri- bution of doctors. An improvement of one percentage point in the rate of occupation of hospital beds is equivalent to the provision of 255 additional beds. As far as hospital construction is concerned, the emphasis should ob- viously be on the completion of hospitals already started. On the other hand. the mission considers it quite doubtful to what extent the construction of new hospitals should be initiated during the next few years, and would rec- oimnend a review of the 1965-68 hospital building program from this point of view. - 13 -

48. Quite apart from the findings which may arise from this review of the new hospitals to be built or extended in the 1965-1968 period, the mission believes it is already clear that some of the presently planned hospital work could be postponed with a saving of Bs. 20 million. This should be achieved in the following manner:

(a) Federal District: Postpone to 1967 the start on the hospital at Catia with 500 beds,reducing the investments to Bs. 7 million in 1967 and Bs. 12 million in 1968.

Reduce investment in the psychiatric hospital at Caracas in 1966 from Bs. 4 million to Bs. 2 million, planning its completion for 1969 and projecting an invest- ment of Bs. 1 million in 1968.

(b) State of Apure: Reduce the investment in the Psych atric Center of San Fernando de Apure in 1966 from Bs. 1 idillion to Bs. 0.5 million, postponing its completion until 1969.

(c) State of Bolivar: Reduce the investment in the San Felix General Hospital in 1966 from Bs. 6.3 million to Bs. 2 million, programming its completion for 1969 with an investment of Bs. 1 million in 1968 and of Bs. 3.3 million in 1969.

(d) State of Falcon: Reduce the investment in the Coro General Hospital in 1966 from Bs. 5 million to Bs. 2 million, pro- gramming its completion for 1969 with an investment of Bs. 1 million in 1968 and of Bs. 2 million in 1969.

(e) State of Guarico: Postpone the start on the Calabozo General Hospital to 1967, projecting its completion for 1969.

(f) State of Merida: Reduce the investment for 1966 in the Merida General Hospital from Bs. 10.6 million to Bs. 5.3 million, programming its completion in 1969.

(g) State of 1Miranda: Postpone the start on the Ocumare del Tuy General Hospital from 1966 to 1967.

(h) State of Zulia: Reduce the investment in rehabilitation of the Maracaibo General Hospital in 1966 from Bs. 1 million to Bs. 0.6 million. Postpone a start on the Chinquinquira Hospital in Maracaibo from 1966 to 1967. - 14 -

49. Taking these suggested revisions of the program into account, the adjusted program of hospital investment would be as follows compared with the unadjusted program.

Bs. million

1965 1966 1967 1968 1965/68

Unadjusted 57.6 100.0 80.0 60.0 297.6 Adjusted 57.6 76.0 80.0 64.0 277.6

Further Comments on Hospital Services

50. In considering the 1965-68 hospital building plan, it should be noted that the present trend is to provide gener_al hospitals, suitably distributed, and with a capacity vaiying between 350 and 400 beds, as the principal basis for a system of medico-social services. These hospitals should have surgical, medical, obstetric and pediatric services and be supplemented by outpatient and clinizal services. In new ar6es of indus- trial development, such as the Guayana, a start could be made with hospitals of a general type on the basis of two beds per 1,000 inhabitants, ard with a view to increasing this subsequently in accordance with1 actual needs.

51. Besides this system of general hospitals, a group of regional hospitals would be established. These might be located at Caracas, Maracaibo, Barquisimeto, Ciudad Bolivar and IIerida. These regional hospitals should provide all the services indicated in the case of general hospitals, together with services in all special medical fields, excluding neurosurgery. Their capacity could be much greater than that of the general hospitals.

52. To supplement this organization it would be necessary to have specialized hospitals, although only in a very limited number of cases, to provide for those diseases in which the rate of incidence would justify such measures, such as mental illness. Specialized neurosurgical and cardiovascular surgical services should be located in specialized hospitals or established as separate departments within the general hospitals. Can- cer patients should as a rule be treated in general hospitals, except for special treatment and operations, which would be handled by a single spe- cialized hospital in Caracas. Beds should be reserved for tuberculosis in the general hospitals. Existing hospitals that deal with this special field can be incorporated into other services, except for those facilities concerned with a treatment of acute cases. - 15 -

53. At a lower level this hospital prograra should be complemented by a system of mobile services in the urban centers and of rural medical agencies in the country, so that the hospitals in fact receive mainly patients that require in-hospital treatment, thus relieving the congestion of curative services. In view of the country's epidemiological problems, the public health doctors must receive specialized training and cLevote full time to their work. For the same reason it is important that the general hospitals provide vaccination services.

Coordination of Hospital Services

514. As the majority of hospital beds providing services for members of the population with limited resources are part of the organization either of the i4inistry of Health, or of the Venezuelan Institute of Social Security, or of the state governments (Table 3), the mission recommends that an agreement should be reached between these three authorities with a view to securing flill coordination of public services in the urban centers. It is desirable that in each city there should not be more than one authority providing hos- p:ital services to members of the population of modest means. If in fact there is a Ministry of Health and Social Welfare hospital in a particular place, it should provide all the services, giving treatment to insured per- sons and charging the Venezuelan Institute of Social Security (IVSS) for these. If, on the other hand, an IVSS hospital exists in a particular place, it should provide treatment for the entire population, charging the Miiiistry of Health in accordance with a preagreed scale of charges for the service it gives to persons not entitled to IVSS benefits. In cases in which both these institutions have hospitals in the same locality, their activities should be fully coordinated so that the population's needs are met on the basis of providing all applicants with effective treatment, the responsible institution being billed, as appropriate, for the services rendered. The state governments can arrange for the administration of their hospitals either by the Ministry of Health or by the Social Security Institute (IVSS).

55. Tlhe mission recommends that a minimuni scale of charges should be introduced in the hospitals of the Ministry of Health to be applied on a gen- eral basis for the partial recovery of direct expenditure. Even persons in very modest circumstances should be required to pay a small entry charge for the first day. Exceptions to this would only be made when inability to pay has been demonstrated by investigation by the Social Security services.

The Activities of the Social Security Institute

56. Great changes are expected in the medico-social services in Vene- zuela as a result of the introduction of the new compulsory Social Security Act which was under discussion at the time of the mission's visit. This bill extends the services at present being provided by the Venezuelan Institute of Social Security and will require payments on the part of insured persons ar-d employers, representing a sizeable financial contribution. The capital accu- mulating in the technical reserves will represent a positive addition to the resources available for investment in the country. - 16 -

57. The present contribution to the Institute of insured persons and employers averages 8 per cent of the payroll. This will be increased to 12 per cent over a period of 10 years to meet the cost of the allowances con- templated in the new law. Tentatively the intention is to utilize accunu- lated reserves in the following way:

30 per cent - loans to the Government for the construction of hospitals 30 per cent - loan to the Governrmient for housing and sanitary workts 20 per cent - purchase of Government bonds 20 per cent - deposits in private banks on fixed terms

53. The new law will also have the advantage of reducing the costs of hospital treatment to the Ministry of Health and Social Welfare as a result of the increased number of insured persons who will be subject to IVSS pro- cedures. By 1968 it is calculated that the insured population will have in- creased by some 17 per cent and as medical treatment will be extended to all members of the family, a large proportion of the population will be covered by the insurance system. These programs will make possible savings of Bs. 93 million in the expenditures the Ministry of Health would otherwise have to make, should the newz Social Security Act not come into operation. IV. PROGRAMS FOR WATER AND SEWAGE FACILITIES

A. Urban Water and Sewage Facilities

59. Prior to 1943 urban water and sewage facilities were designed and built by the Ministry of Public Works at no cost to the municipalities, who undertook their operation and determined the appropriate scale of charges. In 1943 the National Institute of Sanitary Works (INOS) was established by law for the purpose of centralizing and organizing the operation and main- tenance of water facilities in towns with more than 5,000 inhabitants be- cause of the inability of the municipalities to manage them efficiently. At the same time INOS was made responsible for the design and the construc- tion of new services of this kind. Towns with water supply services built prior to 1943 could decide whether they wished to hand these over to TWOS for admi-nistration, or whether they wished to continue to manage them di- rectly. In :1961, 52 towns had water mains operated under the INOS system and 42 had sewage facilities. The agreements made by the municipalities with INOS are of the agency contract type, the former retaining the right to approve water rates. If a municipality operating such a facility under INOS procedures wishes to obtain its independence, it must pay INOS the capital invested, either by means of the water charges or by special amor- tization payments.

60. In 1963, there were 127 urban water supply systems in the country, of which 113 (89 per cent) had made agreements for their administration with BIOS. These systems were supplying a population of approximately 3.5 million inhabitants.

6:1. Taking as a basis the Punta del Este Charter which laid down the minimum potable water and sewage program targets which the Latin American countries should seek to achieve by 1971 by means of a phased ten-year pro- gram, Venezuela fixed a minimum limit for urban areas of 10 per cent above the Charter's minimum objectives, with a view to providing 80 per cent of the urban population with potable water and 60 per cent with sewage facili- t:ies. The mission has reviewed the practical prospects of achieving this target and considers it feasible since a suitable organization is in exis- tence as weLL as an adequate number of professional specialists; moreover it should be possible to import the plant and materials not produced within the country and a group of experienced contractors is also already in exis- tence. All these factors should assure the success of this program. In 1964, 86 new services were completed in medium-size towns.

62. Up to the present INOS has obtained loans for its water supply pro- grams from IDB and Export-Import Bank that have been, in effect, sufficient to meet the cost of imported components representing some 40 per cent of the total cost. At present, negotiations are under way for a sizeable loan from the IBRD to expand the sources and distribution system of potable water for the metropolitan area of Caracas. INOS has continued to modify its rate structure with a view to achieving ultimately the goal of self-financing of its water supply services. In spite of this, the total income from sale of - 18 - water is below operating and maintenance costs, even if some systems, such as that of Maracaibo, do in fact show a favorable balance. The mission feels that it is highly desirable that water rates be promptly raised to cover oper- ating costs and a satisfactory portion of future capital requirements. The most serious rate problem is that of Caracas, where the average charge needs to be raised from Bs. 0.27 per cubic meter to approximately Bs. 0.75 in order to finance operating and capital costs of water and sewerage.

63. The mission considers that the program for the construction of urban water and sewage systems prepared by INOS for the 1965-1968 period is justifie:, both in terms of the need and of the prospects of izmmediate use being made of these services by the beneficiaries (see Table 6). The average cost of urban water systems per inhab-itant served is Bs. 270 which is higher than that obtain- ing in the majority of Latin American countries. This figure is partly explain- eci by the higher cost of labor. There are little possibilities of reducing costs in the near future as wages are tending to rise and domestically manufac- tured equipment (particularly asbestos-cement piping) is not yet being produced on a scale where the production could compete favorably with imports.

6l. The assistance provided by external loans enabled INOS to complete 63 new potable water supply systems in 1964. The total amount of these loans has been US$23.5 million of which US$16.0 million has been obtained from the IDB and US$7.5 million from the Eximbank. These sums have contributed to a total works investment equivalent to US$58 million providing for 81 new po- table water supply systems. The construction and investment programs have been maintained within the amounts forecast with the exception of some special cases such as that of the water supply system at Maracaibo in which the work has fallen behind schedule.

65. There has not been in Venezuela any program of pre-established pri- orities for the construction of water and sewage systems based on technical and health criteria. It has been possible largely to solve the problems of small- and medium-size communities, but only recently has a start been made in providing an over-all solution to the problems of the big cities, which are compounded by the rapid increase in their population, which in a nlumber of cities has reached two or three times the average rate of growth for the country as a whole. The most important problem at present is that of the metropolitan area of Caracas, where the water supply is inadequate, and it is with increasing frequency found necessary to ration water by zones, pro- viding water for only a few hours in the course of the day. In the hills where there is a heavy concentration of population with limited means, liv- ing in what are known as "ranchos"g, there is generally no public water supply. Water is supplied by INOS by means of tank truncks. The more unfortunate inhabitants of this area have to pay as much as Bs. 10 or more per cubic meter to impromptu retailers21

66. The estimated income of INOS is Bs. 508 million during the period 1965-1968, while its current expenditure will amount to Bs. 6h0 million. It is expected that the operating deficit will be eliminated by 1968 by

1/ For the mission's recommendations in this field, see Annex V on Housing. - 19 -

establishing more adequatc water rates. Even so, INOS will not be able to provide funds for financing or investments from its operations. For this reason, all the investment will have to be financed from other sources, mainly from Central Government transfers and partly from external and internal loans. The capital investment in water and sewage systems is estimated to be Bs. 818.8 million in local currency and Bs. 208.7 million irn foreign currency, or a total of Bs. 1,027.5 million for the period.

O6. Inc:luded in this capital investment program is a fully engineered project for supplying more water to Caracas, which has been presented to the IERD for financing. It provides for an extension in the services, through an increase of 50 per cent in water sources by means of an investment of Bs. 260 million that will also cover treatment and improvements in distribution facili- ties. It would be followed by a second project tentatively estimated at Bs. 1l0 million, for development of an additional water source. The projected fi- nancimng provides for an increase in average charges adequate over the long-term to meet operating costs and earn an 8 per cent rate of return of capital. This project merits high priority in view of the pressing need to assure as soon as pcossible the supply of water to the metropolitan area with a present population of some 1.5 million inhabitants.

68. In re-structuring the scale of water rates so as to make the ex- panded svstem economically self-sustaining, efforts should be made to impose only moderate increases on water users in the low income categories. The con- templated average charge of Bs. 0.75 per cubic meter is high in comparison with charges at present in force generally in Latin America, although it is the in- evitable result of a system that involves raising water to a height of 900 me- ters from reservoirs that have been specially constructed for this purpose so that it can be distributed, after suitable water treatment, through a complex system by means of the secondary pumping stations and pressure and storage tanks made necessary by the local topography.

69. The present administrative organization of INOS needs modification in order to increase its efficiency. At the present time the changes proposed in a study made by specialized consultants are in fact being made: the establish- ment of four departments, i.e., technical, operating and maintenance, finance and administrative. This would simplify the present organizational structure. In such a reorganization, consideration should be given to estab'lish an inde- pendent organization for the potable water supply and sewage service in the Caracas metropolitan area which, by reason of its great size and complexity, requires to be treated as a special case. Such an independent organization could be responsible to INOS but still have a sufficiently broad measure of technical, administrative and financial independence to act as an autonomous body. Observations of the mission in the field, indicate the need for better maintenance of equipment and measuring instruments in the treatment plants.

B. Water Supply Systems and the Disposal of Excreta in Rural Areas

70. Programs for rural water supply systems and latrines are being undertaken in rural areas of Venezuela in support of health programs directed against bilharzia and ancylostomiasis. The last five years have seen the canpletion of projects primarily intended to supply potable water to rural - 20 -

centers of between 500 and 5,000 inhabitants that have formed part of inde- pendent programs known as "rural water supply programs" under the auspices of the Division of Malariology and Environmental Sanitation of the Ministry of Health.

71. In 1961, 952,400 rural inhabitants were being supplied with pota- ble water, i.e.,some 75 per cent of those living in towns of 500 to 5,000 inhabitants. In 1965, this figure had risen to 1,706,866 representing about the same proportion of the now larger population of such towns. 72. The 1965-1968 program proposes to cover 1,155 additional localities of 500 to 5,000 inhabitants and 367 localities of less than 500 inhabitants, making a total of 1,522 localities in all. This plan represents an increase from 225 localities in which work was being carried out in 1964 to 475 in which work is projected for 1968. By 1968, 100 per cent of the population in towns of 500 to 5,000 inhabitants will have been provided with potable water.

73. A special feature of this program is the policy of providing water for each dwelling, thus avoiding the use of public fountains. The supply is at the rate of 150 to 200 liters per capita per day, and is generally obtained from the ground wiater table, preferably using asbestos-cement pipe for the distribution system.

74. Financing is being obtained in the form of a grant from the Ministry of Health and Social lWelfare to meet administrative, design and supervision costs as well as a part of the construction costs; part of the cost of con- struction will be met by a contribution from the states to meet local costs; other sources of financing will be external loans (IDB) for the purchase of materials and equipment and a contribution in thle form of equipment from UNICEF. For the 1965-1968 period the projected contributions are as follows: Ministry of Health and Social Welfare States Loans UNICEF Total Bs. million Administration 27 10 - - 37 Construction 17 88 90 5 200

Total 44 98 90 5 237

75. Administration costs include management, plans and works super- vision and represent 15 per cent of the total investment. Construction is carried out by contract. The technical and administrative organization for the design and construction of the work is well planned, is provided with suitable personnel and is on a scale adequate to carry out the program with- in the forecast period.

76., When a service is completed it is placed in the hands of a water supply board consisting of three members representing the state, the Central - 21 -

Government and the community. The Department of Rural Water Supply retains responsibility for supervising these local authorities, which provide a monthly report indicating the turnover of subscribers and funds. The suc- cess of this rural water supply program over a period of years will largely depend on the soundness of the administration exercised by these authorities. Their operations are becoming increasingly difficult to control because of their large number. In the 1965-1968 period, 1,522 new local authorities of this kind will need to be set up. For these reasons it might be advisable tc) form a special department for the administration and supervision of the services in operation, provided with staff experienced in managing the accounts and finances of small undertakings of-this kind.

77. The unit cost of rural potable water supply works has continued to increase: whiereas it was Bs. 300 per inhabitant in 1963-64., it is estimated that it will rise to Bs. 320 in 1965-66 and to Bs. 350 in 1967-68. Comparing these costs with those obtaining in other Latin American countries, the Vene- zuelan figures appear very high for similar standards of domestic service. The majority of Latin American countries are carrying out rural potable water supply programs in stages, the first of these being the provision of a supply from public fourntains, which reduces the cost by at least half in com.parison with domestic mains connections. On the other hand, from the health stand- point it is more desirable to make water directly available to the dwellings as early as possible. In Venezuel'a's circumstances, the mission believes that rural water supply programs can initially be developed to this advanced stage.

78. The basic rural water rate is Bs. 4 per month, plus an additional payment for extra faucets of Bs. 0.50 per month. This sum should cover oper- ating and maintenance costs. There is no provision in the charge to meet either construction or capital costs. These rates are reviewed periodically and must be accepted by the local authority, the state and the Ministry of He!alth and Social Welfare.

79. The mission agrees in principle with the administrative machinery for operating these rural water supply systems. However, in view of the difficulties experienced in the past by the larger municipali-ties in managing their own systeris, which led to the creation of IiNOS, it wishes to stress the serious problems that are likely to arise under the present mechar.ism for rural communities, unless special preventive meas-ures are taken. It also suggests that the charges should be increased, in successive stages, to cover the rest of extsnding the service and of the capital invested, taking as a practical limit at any given time the capacity to pay of the population served.

80. The budget of the Division of Sanitary -rgineering includes the sum of Bs. 1 million for rural sewers in towns of 500 to 5.000 -nhabitants for 1965, the decision to go ahead with construction to be made af-ter a study of the actual prospects for sewers connections in the case of ea Th town. By 1966 it is intended to double this sum and to continue to inciease it in sub- sequent years, as in 1967 special emphasis is to be given to water supply in towns of less than 500 inhabitants and to sewers in towns of 500 to 5,000 in- habitants. It is estimated that a sum of Bs. 10 million will be invested in rural sewage facilities in the 1965-1968 period. - 22 -

81. In villages where it will not be possible to introduce rural sewage facilities within the next ten years, latrine programs are being undertaken, all or part of the cost of such latrines being borne by the individuals concerned according to their economic status. In exceptional cases benefi- ciaries will not have to pay for the construction of these facilities. Some 23,000 latrines a year are being constructed at a unit cost of Bs. 180 to 190. As a general rule the users are contributing some 60 to 65 per cent of the cost. In areas that are subject to bilharzia, public laundries are also being built. These, together with the latrines, represent an outlay olf Bs. 3.5 million per annum.

82. The mission suggests that these sewerage mains and latrine programs should be continued in the form programmed by the Ministry of Health and Social Welfare and that work on the building of sewers should be intensified as a logical outcome of the installation of potable water systems. Ta bLe 1 lORTALITY AIID IIIFANT iMORTLITY RATES Years 1945 1950 1963 -_ . - _ _ .

Mortality Rate * 14,8 10,9 6,9

Infant Mortality Rate ** 98,6 79,7 48,1 Per thousand inhabitants * Per thousand live births

Note: More than 50 per cent of the infant mortality rate is in respect of infants of less thal one month.

Source: Ministry of Health

TEN PRIMARY CAUSES OF MORTALITY IN VENEZUELA

Mortality Rate (per 100,000) 1964

1. Diseases of early infancy 95,5

2. Heart Diseases 92,8

3. Cancer 76,9

4. Gastroenteritis (excluding diarrhea in early infancy) 72,0 5. Accidents 45,3

6. Pneumonia 37,3

7. Vascular l]esions 34,1 8. Tuberculosis 22,2

9. Dysentery 18,6

10. Influenza - Grippe 18,3

* Data for year 1963.

Source: N[emoria, Ministry of Health, 1964. Table 2 PRINCIPAL CAUSES OF MORTALITY AND MORTALITY RATE BY AGE GROUPS

Estimated Per Cent Age in of Total Population Years of the Country Cause of Death and Per Cent of Total

1 - 4 17 Gastroenteritis (2.4) Pneumonia (1.12) Accidents (1.07)

5 - 14 27 Accidents (1.19) Dysentery (0.61) Gastroenteritis (0.28)

15 - 24 17 Accidents (1.61) Suicides (1.10) Cancer (0.25)

25 - 44 23 Accidents (2.54) Cancer (1.55) Heart (1.41)

45 - 64 11 Cancer (4.84) Heart (4.82) Vascular (1.49) 65 - 74 ) ) 5 Heart (6.55) Cancer (3.68) 75 and over ) Vascular (2.57)

Source: CORDIPLAN Table 3 SCALE OF PRIORITIES FOR ANALYSIS OF HEALTH HAZARDS ACCORDING TO EXTENT, IMPACT AND SUSCEPTIBILITY - 1962

Less than 1-4 5-14 15-24 25-44 45-64 Over 64 one year years years years years years years

Di.seases of Early Infancy (1) - - - - -

Gastroenteritsis (2) (1) (3) 7 8 7 10

Pneumonia (3) (2) 4 6 6 6 6

Congenital Malformations 5 8 8 10 10 9 (1)

Grippe 4 5 6 8 9 8 9 Dysentery 6 (3) (2) 4 5 5 8

Accidents 7 4 (1) (2) (1) (3) 7

Tuberculosis 8 6 7 - (2) (2) 5

Cancer 9 7 5 5 (3) (1) 4

Suicides ------

Heart Diseases 10 9 9 (3) 4 (1) (3)

Central Nervous System 11 10 10 9 6 4 (2)

Source: CORDIPLAN Table 4 STATISTICS OF HOSPITAL BEDS IN VENEZUELA

Organization 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1 1964

Ministry of Health and Social Welfare 7,500 9,900 10,600 10,100 10,300 12,300 12,500 13,000 113,400 14,600 15,200 15,500 16,800 16 217*

States 4,200 3,500 3,600 3,700 3,200 3,200 3,100 3,200 3,300 3,300 3,400 3,300 3,100 3,100*

1,352* National Social Security Institute 4OO 500 600 500 600 800 800 900 1,000 1,100 1,100 1,100 1,200 I -~~~~~~~~~~~~~~~~~~~~~1-,2T79"

Municipality 2,100 1,900 1,800 1,900 1,700 2,000 2,000 2,300 2,500 2,500 2,hOO 2,500 2,400 2,400*

862* Industry and Petrole=m 1,100 1,200 900 1,100 800 900 800 800 800 800 900 800 800

Ministry of Development - Ministry of Defense 300 300 400 300 400 400 100 100 100 1,200 1,200 1,300 1,300 1,300*

2 61 Private Clinics 1,100 l,400 1,700 1,600 1,600 1,800 1,900 1,900 2,000 2,400 2,600 2,700 2,600

Total 16,700 18,700 19,600 19,200 18,600 21,400 21,200 22,200 23,100 26,000 26,800 27,200 28,200 26,494a)

Beds per 1#000 Inhabitants 3,02 3,26 3,30 3,10 2,88 X 3,19 | 3,04 3,08 3,11 3,4o 3,39 3,34 3,35 3,30

Increase in Beds Per Annum - 2,000 900 -iOO -600 2,800 -200 1,000 900 2,900 800 4001 1,000| 294

Source: CORDIPLAN, adjusted by mission on basis of information received from the Ministry of Health.

* First number indicates physical capacity; second number, beds in service. (a) 6L9 beds to provide attention for aged persons have been added. Table 5 INHABITANTS SERVED BY BEDS IN HOSPITAL AND HEALTH CENTERS - VENEZUELA

Estimated Population No. of Total no. of the beds per Number of beds Pr gram of New Beds 1965 1968 of Beds Country in 1,000 Federal Population in Number of beds in 64 (capacity) per Extension of General Psychiatric Health Total no. Available 1968(in Inhabitants Agencies 1964(thousands) Capacity In service 1,000 hab .196b Existing Hosps. Hospitals Hospitals Centers of Beds in 1968 thousands) in 1968

Federal District 1,524.3 8,710 7,867 5.7 - 1,930 - 1,930 lo,640 1,824 5.8 Anzoategui 427.1 879 709 2.0 - 410 100 _ 510 1,389 464 3.0 Apure 138.3 238 205 1.4 - - 100 _ 100 338 162 2.1 Aragua 359.7 716 649 1.8 _ 400 _ 400 1,116 403 2.8 Barinas 167.3 113 108 0.7 - 160 - _ 160 273 201 1.3 Bolivar 261.1 977 921 3.7 50 280 - 50 380 1,357 312 4.3 Carabobo 430.6 3,589 3,062 8.3 - 550 - - 550 4,139 472 8.8 Cojedes 83.0 158 158 1.9 - - - - - 158 93 1.7 Falcon 363.1 545 528 1.5 - 280 100 - 380 925 371 2.5 Guarico 282.7 457 416 1.6 - 300 - - 300 757 322 2.3 Lara 533.4 1,527 1,504 2.8 - - 600 - 600 2,127 560 3.8 Merida 299.1 715 572 2.4 - 600 100 80 780 1,495 321 4.7 Miranda 573.2 1,094 1,049 1.9 - 200 500 - 700 1,794 654 2.7 3.0 Monagas 276.7 564 548 2.0 - 350 - _ 350 914 301 Nueva Esparta 95.1 172 172 1.8 _- - - 172 96 1.8 Portuguesa 239.5 253 210 1.0 - - - _ - 253 279 0.9 Sucre 4444. 815 743 1.8 - 610 100 _ 710 1,525 475 3.2 3.5 Tachira 451.3 1,417 1,106 3.1 7 - 320 _ 320 1,737 497 1.9 Trujillo 354.5 721 650 2.0 _ - - - - 721 372 Yaracuy 191.9 308 302 1.6 - 235 - _ 235 543 202 2.7 Zulia 1,102.3 3,790 3,338 3.4 200 350 260 _ 810 4,600 1,299 3.5 Amazon Territory 12.9 50 34 3.9 - - - - - 50 13 3.8 Amacuro Delta 5.4 Territory 34.6 65 65 1.9 _ _ _ 120 120 185 34 General _ 6-493 61±9* - - 69 Total 8 3.3 250 | 6,655 21 _Ray___ 1 9035 37,57 9,727 3.9

Source: Information supplied to mission by Ministry of Health, Social Security Institute and CORDIPLAN.

efi Beds to provide attention for aged persons. Averate rate in 1964 - 3.3 beds per 1,000 inhabitants. Average rate in 1968 - 3.9 beds per 1,000 inhabitants. Table 6 POPULATION SERVED AND PROJECTED POPULATION TO BE SERVED WTTH POTABIE WATER AND SEWAGE FACIIZTIES IN VENEZ-TELA-

______Rural Population Population Provided with Potable Water (a) Urban Population Between 500 Urban Population (b) Total Population (more than 5,000 and 5,000 In- Less than 500 Rural Provided with Sewage Year of the Country inhabitants) Total habitants Inhabitants Urban 500-5,000 LAss than 500 Trotal Facilities

1961 7,899,000o* 4,339,572*- 3,559,h28 1,2L6,000 2,313,428 2,404,000 725,000 227,400 3,356,400 1,383,X00

6 1965 8,907,000* 5,194,858** 3,712,142 1,301,24 2,lo0,896 3,652,914 1,250,767 456,099 5,359,780 1,557,914

1968 9,727,000* 5,945,231** 3,781,769 1,350,000 2,h31,769 5,141,995 1,350,000 880,354 7,372,349 2,459,732

1971 10,650,000* 6,803,993** 3,801,007 1,370,000 2,431,007 5,443,319 1,370,000 1,500,000 8,313,319 4,100,396

Increase 1965-68 820,000 750,373 69,627 48,754 20,873 1,489,081 99,233 424,255 2,012,569 901,818 Increase 1969-71 923,000 858,762 19,238 20,000 -762 301,32b4 20,000 619,646 940,970 1,640,664

* Information from CORDIPIAN Information from INC0

(a) The urban Population to be provided with potable water between 1965 and 1971 has been calculated on the basin of the INCS target (80 per cent of the population by 1971).

The rural population to be provided with potable water has been calculated on the basis of 100 per cent coverage in centers between 500 and 5,000 inhabitants by 1966 and approximately 60 per cent of the population in towns of less than 500 inhabitants.

(b) The urban population to be provided with sewage facilities has been calculated for the 1965-1971 period on the basis of the INOS target (60 per cent of the population to be provided with sewage facilities by 1971).