\i INTERN1\TIONAL BANK FOR , . RECONSTRUCTION AND DEVELO 11 u 1818 H STREET, N.W., WASHINGTON D. C. 20433 TELEPHONE: EXECUTIVE 3-6360 Bank Press Release No. 71/63 Subject: $23,250,000 loan for a pipeline '1/ July 1, 1971 tc:, transmit natural gas from Bolivia to Argentina The World Bank has approved ~f-,$23,250,000 loan to replace a loan in the ~-~ri-e amount originally made in July 1969 to Coq,ania Yacibol Bogoc Transportadores (YABl1G) for the construction of a natural gas pipeline from Santa Cruz in Bolivia to.- Yacuiba on the Bolivian-Arge·ntine bordet. Yacimientos Petroliferos Fiscales Bolivianos (YPFB), the Bolivian state oil e9,t~rpr'Je, and the Bolivian Gulf Oil Comparly (BOGOC) wer~ ·the owners of '/YAtiUG at: j \; the time of the original loan and guaranteed it jointly and severally. In • October 1969, before the original loan became effective, the Bolivian Government: nationalized· the properties of BOGOC and terminated its concession. In Se;,tember 1970, the Bolivian Govemment provided by decree for the coq,ensation of BOGOC. The project has now been reconstituted with the active cooperation of 1..tle Governments. of Bolivia and Argentina, and the Inter-American Development. Bank. The Santa Cruz-Yacuiba pipeline is a proj el~t of international interest which s;1ould prove of great 1,benefit to both Bolivia and Argentina and requires the close co·'-'peration of both countries to achieve success. Tne project will help Bolivia -il."Jel'.."Sify and expand expqrts and also firovide additional. tax revenues, thus mak.i11g a key c.ontr:i;bution to the country's economic growth. At the sanP-- time tl;le project ~;:UJ. help Argentina to satisfy increasing demand for natural gas. The project consists of the construction of a 330-mile long high pressure • natural .gas trm.k. line f~\o.m .Santa. Cruz to Yacuiba, a 12-mile long lateral line to . i! Nara..'l.j illos and a number of river crossings~ together· with metering and. :regulating ~ta~lons and other.appurtenant facilities. /fJJIJre Bank ~.R. No. 71/&3 - Bolivia - gas pipeline • (~: - 2 - The cost of the pr,;-pject, presently estimated at about $56 million will be financed with 1the proceeds of a $14 million loan made to YABOG in 1969 by the I, N~w York State Common,.,,K~tirement Fund, a $19 million loan by the Inter-American r Development Bank and the $23.25 million World Bank loan. In the spring of 1969, after international competitive bidding, concltlded in c1ccordance with J:he Bank's guidelines, YABOG awarded the construction .con tract \ to Williams BrothL:1 of the United States and placed orders for pipe with Ferrostaal A.G. of the Federal Republic of Germany. Substantial investment in 1"/ the project was made in the course of 1969 and constr-0ction resumed in April 1'971 under· interim financing arrangements. The project is expected to be completed in t.he first half of 19 72 • • ;_·, Under the existing 20-year sales agreement which provides for deliveries cf gas to Gas del Estado, the Argentine state $as enterprise, Gas del Estado wfl ,_ ·:\ ',/, purchase the gas -- 141 million cubic feet per day for the first seven years and 159 million cubic feet per day for the following 13 years -- at a fixed price in United States dollars. Part of the proceeds of the sales will be devoted to the service of the loans made for the project. The Bank loan, which will be guaranteed by the Republic of Bolivia and the Argentine Republic, will be for a term of 20 years, including a two-year grace ~eriod. As under the original loan agreementi the incerest rate will be 6~%. - 0 - •