WASHINGTON, D.C., August 2 -- The International
Finance Corporation (IFC), continuing its support of Argentina's wide-ranging
privatization program, has approved three new infrastructure investments
in the water, power and port sectors. With these projects, IFC has now
invested in 10 infrastructure privatization projects in Argentina, mobilizing
US$900 million in financing. The total cost of the projects is an estimated
US$2.2 billion. "IFC has played a signficant role in financing private
infrastructure projects in Argentina," according to Mr. Everett J.
Santos, Director of IFC's Infrastructure Department. "We recognize
the importance of the government's program both in terms of providing the
modern infrastructure necessary for a competitive economy and in terms
of bringing better services at lower cost to the citizens of Argentina.
These projects also demonstrate the viability of private financing for
infrastructure," he added. In the water sector, IFC has approved a
loan of up to US$150 million, of which u
p to US$110 million will be syndicated to international financial institutions,
for Aguas Argentinas, which was awarded a 30-year concession in 1993 to
operate the water and sewerage system of Greater Buenos Aires. This was
the first major privatization in the water sector in the developing world.
During its two years of operation, with funding in part from IFC, Aguas
has added 500,000 residents to the potable water network and 300,000 residents
to the sewerage network. The company also has reduced the pollution in
discharges to the Rio de la Plata and has achieved significant improvements
in the quality of drinking water and in customer service. In addition,
thanks to increased water production, summer water shortages in Greater
Buenos Aires were avoided in 1994-95 for the first time in 15 years. (More)
Press Release No. 96/11, page 2 of 2 The project, which is estimated to
cost US$540 million, is designed to improve the primary and secondary networks
for water and sewerage and expand and rehabilitate waste
water treatment plants. 800,000 additional residents are expected to have
access to potable water, while 120,000 more residents will have sewerage
services. Overall, the success of the Aguas Argentinas project has made
it a model for water privatization efforts underway in many other Latin
countries. In the power sector, IFC has approved up to US$120 million in
loans, of which up to US$80 million will be syndicated to international
commercial banks, for Edesur, the electricity distribution company responsible
for the southern half of Buenos Aires. Edesur is carrying out a US$327.8
million investment program to reduce electricity losses, which occur primarily
due to theft and poor metering/billing. Edesur will install a new electricity
distribution network in certain high-loss areas, with the goal of reducing
losses from a current level of approximately 15 percent to 12.5 percent
by year-end 1997. The project will also expand Edesur's grid, modernize
the grid to improve reliability, and improve customer servic
e. Since Edesur was privatized in 1992, it has provided new electricity
connections to approximately 290,000 homes, primarily in low-income neighborhoods.
The availability of power in some of these low-income neighborhoods has
facilitated improvements in community services, at schools and health clinics.
Also, commercial and industrial customers' use of expensive backup generators
has declined as the electricity distribution network has become more reliable.
In the port sector, IFC has approved a loan of up to US$10 million and
an equity investment of up to US$2 million for Terminales Portuarias Argentinas
S.A. (TPA), which was awarded a 25-year concession by the government of
Argentina to operate one of five recently privatized general cargo and
container handling terminals in the Port of Buenos Aires, Argentina's largest.
TPA will redevelop and operate Terminal 3 in the Puerto Nuevo section of
the port. The project, which has an estimated total cost of US$50.3 million,
consists of the repair and improvement
of existing terminal infrastructure and cargo storage facilities and the
purchase of cargo handling equipment. The government decided to restructure
and privatize the Port of Buenos Aires by creating five stand-alone terminals
and holding a competitive bidding process for each. The privatized port
operations will reduce costs and greatly improve the efficiency of transporting
goods to and from Argentina. IFC is a member of the World Bank Group and
is the leading multilateral source of equity and loan finance for private
sector projects in the developing world.