\ I NTERNATJONAL BANK FOR • RECONSTRUCTION AND DEVELOPMENT

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

Bank Press Release No. tA/11 Subject: Loan to for April 22, 1964 Port of Paita

The World Bank today made a loan equivalent to $3.1 million to Peru for the construction of a new port at Paita. Paita, the main harbor of northern Peru, now has only inadequate and antiquated lighterage facilities. The new port will have a deep water jetty capable of handling four ocean going vessels simultaneously. Public Disclosure Authorized It will speed up the turn-around time of ships, materially reduce cargo-handling costs, eliminate the long overland haulage of certain goods destined for northern Peru which now have to be imported through some six hundred miles to the south, and provide for the efficient handling of up to three times the present • volume of traffic. The Bank of America, New York, Fid.elity-Philadelphia Trust Company, Grace

Public Disclosure Authorized National Bank of New York, and The Royal Bank of Canada Trust Company; New York Office are participating in the loan, without the World Bank's guarantee, for a total of $16o,ooo representing the first four maturities which fall due between April 1968 and September 1969. Peru lacks good public port facilities other than the port of Callao near . Paita is one of the twenty regional ports located at varying intervals along the 1,300-mile coastline, moat of which are badly run down and equipped

Public Disclosure Authorized with obsolete facilities. Callao handles some three to four million tons of cargo annually, and the combined tonnage of the other ports is approximately two • million. The Paita project is part of a long range port development program de-, signed to rectify the present unsatisfactory condition of Peru's public ports. - 2 - ' Paita has the best natural harbor on the Peruvian coast. Unlike the other • ports, it is well sheltered against wind and waves and has never been closed be- cause of' the weather. Paita' s service area covers several coastal departments and some interior departments in ~he eastern foothills of the Andes. In striking contrast to the narrow and rugged terrain of the rest of the Pacific coastal zones, the service area is characterized by the gently rolling terrain sloping toward the Pacific from the Andes mountain range. The principal activity of the service area is agriculture; cotton and rice are the principal crops, while fruit, wheat and corn are also grown in substantial quantities. The area is well suited to irrigated agriculture; a large irrigation project, the San Lorenzo, has already been built With the assistance of an eexlier World Bank loan and one from the , and the Government is studying other irrigation projects and building roads to further develop northern Peru. A trans-Andean road now being buil·t will open the eastern slopes of the Andes to development, heretofore impossible because of their • geographical isolation, thereby enlarging the service area of Paita.

The amount of' dry cargo to be moved through Paita is expected to increase substantially as a result of increased agricultural production, the growth of local industries and trade in response to this development, and the diversion to the new port of imports of machinery, equipment a.nd other high value goods for northern

Peru now entering via Callao. The new port, which will have a capacity of about 300,000 tons of cargo a year, will be able to handle the expected incr·ease in traffic efficiently and provide for future growth. The project includes the dredging of the port area, the construction of a jetty egµipped to berth four ships simultaneously, the adaptation of existing sheds, warehouses and other buildings to port use, the construction of maintenance facilities, a new road approach to the port, roads and utilities in the port area, • - 3 - • and the purch~se of modern equipment tor cargo handling, workshops and fire fighting.

The project will be carried out by Direccion de Administracion Portuaria, with the assistance of consulting engineers. The total cost is estimated at the equivalent of $5 million. 'l'he Bank loan of $3.l million will cover the foreign exchange requirements including consulting se+Vtces to improve the management of all ports under the jurisdiction of Direccion de Administracion Portuaria.. The dredging contract has al.ready been awarded, after international compe~itive bidding, and contracts for the rest of the project will be awa+'ded on the same basis. The loan is for a term of 25 years and bears interest at the rate of 5·1/'Zf,, per annum, including the li commission which is allocated to the Bank's Special

• Reserve. Amortization Will. begin in March 1968 •

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