Public Sector Lending in 2001*

Asia

*All public sector lending operations in 2001 concerned development project financing.

India

Sector: Education
Project: CIPET Expansion
Amount: $15 million
Terms: Interest rate of 1% per annum; 20-year maturity, including a 5-year grace period
Approved: June 14, 2001
Executing agency: CIPET under the Ministry of Chemicals and Fertilizers
Co-financier: Government of India
Loan administrator: OPEC Fund
Total cost: $16.7 million

India's Central Institute of Plastics Engineering and Technology (CIPET) has been responsible for providing post-graduate courses and other specialized instruction for more than three-quarters of the country's trained personnel in the industry. However, the demand for skilled workers has more than doubled in just three years and existing centers need to be upgraded and equipped accordingly. This loan will co-finance the expansion of CIPET in order to meet this growing demand and also encourage the enrolment of female students, who currently make up just 2% of the student body. Activities planned include the purchase of specialized equipment for training, processing, testing and mould making, as well as the construction of fully-furnished and equipped women's hostels at 11 CIPET Centers. A human resource center will also be built, together with a documentation center, and overseas training will be provided to CIPET faculty, senior officials and technicians, while other staff will receive in-country training and funded visits from international experts. This project will allow CIPET to play a pivotal role in the development of the Indian plastics industry, while correcting gender imbalance and contributing to the economic and social development of the country.

Korea, D.P.R.

Sector: Transportation
Project: Sinhung-Songgwan Road
Amount: $4.74 million
Terms: Interest rate of 1.5% per annum; 20-year maturity, including a 5-year grace period
Approved: August 28, 2001
Executing agency: Roads Department - Ministry of Land and Environment Protection
Co-financier: Government of Korea DPR
Loan administrator: OPEC Fund
Total cost: $7.52 million

The Sinhung-Songgwan highway is a key corridor within the South Hwanghae Province, Korea's largest producer of rice, maize and other crops. It provides links to Nampo and Songgwan, the country's two major seaports, and to marketplaces in the capital city Pyongyang. However, a lack of periodic maintenance and a shortage of funding, combined with flooding and other natural disasters, has led to the road's deterioration. This loan will help finance the rehabilitation of this corridor in order to facilitate the movement of people and goods throughout the province. Under the project, five segments of the 42.8-km long road will be upgraded based upon the results of a survey and design study conducted on each section, taking into account topography, pavement condition and drainage capability, as well as current and projected vehicle loads. Safety barriers and drainage works in flood-prone areas will be installed, and the implementation of a maintenance program will insure the rehabilitated road is kept in optimal condition. The newly renovated road will offer a more efficient and less expensive means of transport, providing farmers with improved access to inputs and marketplaces and giving a much-needed boost to incomes. In addition, food security will be strengthened through the facilitated distribution of produce to food-deficit regions.

Harvesting barley near Pyongyang. Korea D.P.R. plans to repair a road linking the capital to South Hwanghae, the country’s most productive agricultural area.

Lebanon

Sector: Transportation
Project: Northern Coastal Road
Amount: $10 million
Terms: Interest rate of 4% per annum; 20-year maturity, including a 5-year grace period
Approved: June 14, 2001
Executing agencies: Council for Development and Reconstruction, Ministry of Public Works
Co-financiers: IsDB, Government of Lebanon
Loan administrator: IsDB
Total cost: $64.55 million

Lebanon's roads play an almost exclusive role in the transportation of goods and people and provide important linkages between urban and rural areas of the country. Although the majority is paved, many sections are over 60 years old and, after years of neglect, require extensive rehabilitation. Drainage systems are defective, and road markings and signs virtually non-existent. This project aims to establish a new 51-km road to connect the Beirut-Tripoli Highway to the Syrian border, thereby improving links with neighboring countries. Twelve sections of the Northern Highway will be either newly constructed or rehabilitated by adding a 3-4 inch asphalt layer along the entire length of the road, and replacing ditches and drains to protect against flooding. In addition, road markings and signs will be installed, and overpasses, bridges, viaducts and barriers built. Once completed, heavy traffic currently going through the narrow streets of Tripoli to reach Beirut will instead be diverted to the upgraded road. The improved transportation links will help boost Lebanon's economic activity by providing better conditions for the development of export-oriented industries and the promotion of foreign and domestic trade. They will also benefit the population directly in terms of better access to health, education and other basic services.

Maldives

Sector: Telecommunications
Project: Information Technology Development
Amount: $2.5 million
Terms: Interest rate of 2% per annum; 20-year maturity, including a 5-year grace period
Approved: August 28, 2001
Executing agency: Ministry of Finance and Treasury
Co-financiers: AsDB, Government of the Maldives
Loan administrator: AsDB
Total cost: $11.96 million

The Maldives comprises an archipelago of 1,200 small coral islands spread over an area of around 107,000 km² in the Indian Ocean. Around one-quarter of the 280,000-strong population resides in the capital Malé, with the remainder spread among some 200 populated islands, many of which have an area of only around one km² and are inhabited by fewer than 500 people. The country's primary constraint to development is its geographic dispersion, as no viable system exists for the exchange of information. Telecommunications services are prohibitively expensive and the only means of conveying information among the islands is by ship. Aims of this project are to set up a fiber optic computer network among 66 government ministries and parastatal organizations in order to achieve an efficient exchange of information among the islands, thereby strengthening overall governance and helping integrate the country. The nerve center of the network will be in Malé where a National Computer Center will be established to relay Internet services to 20 outer atolls. This will allow government agencies to process information quickly and in a unified fashion, and to provide citizens with immediate services such as passport control, recording of births/deaths and the updating of health records. Individuals will be able to apply for vehicle and vessel registration online, and applications for public health services will be linked via a public hospital in Malé to the government network, thereby making health records accessible among the islands.

Pakistan

Sector: Transportation
Project: Railways Development
Amount: $15 million
Terms: Interest rate of 1.25% per annum; 20-year maturity, including a 5-year grace period
Approved: June 14, 2001
Executing agencies: Pakistan Railways, Ministry of Railways
Co-financiers: Unit Investment Fund of the IsDB, Government of Pakistan
Loan administrator: IsDB
Total cost: $60.68 million

Pakistan's 7,757-km railway network represents the backbone of its transportation system and plays a pivotal role in the country's economy. Due to resource constraints, though, Pakistan Railways has fallen behind in routine and periodic maintenance, leading to deterioration of the entire infrastructure. Tracks are in poor condition, necessitating speed restrictions that result in undue delays and high transportation costs. Obsolete signaling and telecommunications equipment compromise travel safety and efficiency, and railway workshops lack the modern machinery needed to turn out enough spare parts. These deficiencies have led many businesses to shift their goods traffic from the railways to the country's already overtaxed road network. This loan will support an extensive scheme to modernize and increase the carrying capacity of the rail network. The project will address the various shortfalls by re-commissioning locomotives that are no longer fit for use, renovating or purchasing new rolling stock, in particular freight and high capacity oil-tank wagons, restoring severely deteriorated stretches of track, and modernizing plant and machinery at a number of workshops. These efforts will serve to expand the network's carrying capacity, and improve speed and safety standards.

Pakistan Railways will replace obsolete rolling stock and signaling equipment to improve rail services and ensure safety.

Sri Lanka

1.

Sector: Multi-sectoral
Project: Northeast Community Restoration and Development
Amount: $4 million
Terms: Interest rate of 1.5% per annum; 20-year maturity, including a 5-year grace period
Approved: August 28, 2001
Executing agency: Ministry of Provincial Councils and Local Government
Co-financiers: AsDB, Government of Germany, Government of the Netherlands, Government of Sri Lanka
Loan administrator: AsDB
Total cost: $38.6 million

Sri Lanka's northern and eastern provinces have sustained considerable damage during years of civil unrest. Health indicators are worsening due to shortages in medical care and supplies, and the incidence of infectious diseases is rising from the lack of clean drinking water and safe sanitation facilities. Housing is in short supply, with the majority of the country's 800,000 displaced residing in overcrowded welfare centers, and many agricultural and fishing communities have lost their livelihoods after irrigation systems and other important infrastructure were destroyed. Although Government has implemented an extensive relief and rehabilitation program, its capacity is over-stretched. This multi-faceted development scheme aims at establishing large scale initiatives as well as smaller, demand driven, community sub-projects that comprise capacity building, institution strengthening and replacement of infrastructure. Hospitals will be reconstructed and refurbished, and village health centers and mobile clinics rehabilitated. Water supply and sanitation services will be restored and schools rebuilt. Farming villages will be helped through the provision of agricultural extension services and the repair of damaged irrigation systems. Transportation will be improved by the construction and upgrading of rural roads, bridges and highways. A voluntary resettlement program will be created for the displaced, encouraging their involvement in the construction and design of their new homes. Once completed, these schemes will help thousands of people re-integrate into settled communities and rebuild their lives.

2.

Sector: Multi-sectoral
Project: Southern Province Rural Economic Advancement
Amount: $5 million
Terms: Interest rate of 1.5% per annum; 20-year maturity, including a 5-year grace period
Approved: November 6, 2001
Executing agency: Ministry of Plan Implementation
Co-financiers: AsDB, beneficiaries, participating financial institutions, Government of Sri Lanka
Loan administrator: AsDB
Total cost: $41.74


Although Sri Lanka is traditionally rural, with an economy based primarily on agriculture, over the past two decades the sector's contribution to the country's GDP has declined. The Southern Province has substantial agricultural potential, but production is undermined due to limited infrastructure, a lack of credit extension services and inadequate access to markets; thus, poverty levels in this region are inordinately high. Under this current initiative, an environment will be created to assist micro and medium enterprises, particularly those relating to agricultural activities that enhance economic growth and offer employment opportunities. Over 8,000 small businesses will be eligible to receive lines of credit, and a range of enterprise development services will provide entrepreneurs with the knowledge and skills needed to help develop their businesses. Infrastructure will be enhanced through the rehabilitation of over 1,000-km of roads that provide important transport links to marketplaces and social services. Some 92 rural markets, which not only provide outlets for the sale of local produce, but also act as accumulation depots for the transport of goods to other parts of the country, will be upgraded, and surrounding access roads built/repaired. In addition, the institutional capacity of the Province's public sector entities will be strengthened. Once completed, an estimated 300,000 new employment opportunities will be created, making a significant impact on household incomes.

Sri Lanka is working to restore housing, roads, water supply facilities and other vital infrastructure that was destroyed during the years of conflict.

Tajikistan

Sector: Transportation
Project: Shkev-Zigar Road
Amount: $4 million
Terms: Interest rate of 1% per annum; 20-year maturity, including a 5-year grace period
Approved: March 27, 2001
Executing agency: Ministry of Transport
Co-financiers: Kuwait Fund, Saudi Fund, Government of Tajikistan
Loan administrator: Kuwait Fund
Total cost: $33.95 million

For landlocked, mountainous Tajikistan, its 26,000-km road network comprises the most important mode of transport, supporting agricultural production and providing the rural population with access to commercial centers and markets. Although the majority of the roads are paved, most are over 30-years old and badly deteriorated, a problem exacerbated by the country's harsh climate, recurring natural disasters and inadequate maintenance. Traversing several passes that reach elevations of over 4,500 meters, the Shkev-Zigar road, a 38.5-km stretch in the Gorno-Badkhsan Oblast, is often inundated with heavy snowfall that causes road closures for over two months per year, effectively isolating outlying villages. Vehicle operating costs are high since traffic must be diverted through longer, more circuitous routes. This loan will help finance rehabilitation of the road to all-weather bitumen standard, with a 7-m wide carriageway and 2.5-m shoulders on either side. Drainage works will be installed to prevent flooding, and eight bridges in lengths varying from 12 to 66 meters constructed. Once the project is completed, the region's economy will receive a boost through cheaper and improved transportation of agricultural goods, which will also help increase food security. In addition, remote rural populations will be able to enjoy year-round access to social services and jobs.

High elevations, heavy snowfall and frequent natural disasters make road maintenance in mountainous Tajikistan a difficult undertaking.

Vietnam

1.

Sector: Energy
Project: Rural Electrification, Phase II
Amount: $10 million
Terms: Interest rate of 1% per annum; 20-year maturity, including a 5-year grace period
Approved: March 27, 2001
Executing agencies: People's Committee, Rural Electrification Board of Quang-Nam Province-Da Nang City
Co-financiers: Beneficiaries, Government of Vietnam
Loan administrator: OPEC Fund
Total cost: $10.92 million

Vietnam possesses relatively abundant sources of energy, including coal, fuel-wood, charcoal and hydropower. However, the distribution of electrical power among rural inhabitants and urban dwellers is unequal. Only around one half of rural households are connected to electrical services, leaving some 25 million people without power. The Quang Nam Province, together with its provincial capital, Da Nang City, has a population of around 1.5 million people, and electrical coverage remains one of the lowest in the country. Inhabitants of this primarily agricultural region must run their power-driven irrigation equipment and other machinery on expensive and less efficient sources such as diesel engines, oil and batteries. This loan will help finance the second phase of an initiative to expand services throughout this province. In all, some 445-km of high voltage transmission lines will be connected and integrated into the existing electrical network and 361 substations installed to insure the delivery of electricity with a minimal loss of power. Over 570-km of low voltage lines will also be installed. Upon completion, some 45,000 households in 13 districts will have access to a reliable power supply that will substantially raise the quality of living, help reduce poverty and ensure food security.

2.

Sector: Agriculture
Project: Multipurpose Rural Development
Amount: $10 million
Terms: Interest rate of 1% per annum; 20-year maturity, including a 5-year grace period
Approved: August 28, 2001
Executing agency: Rural Infrastructure Development Project Management
Co-financier: Government of Vietnam
Loan administrator: OPEC Fund
Total cost: $12.31 million

Agriculture plays a key role in Vietnam's economy, providing employment for the majority of the population and producing crops both for subsistence and export. However, rural poverty has remained inordinately high due to a combination of outdated farming practices, an irregular water supply and monsoons that regularly destroy crops and vital infrastructure. These hardships are especially prevalent in the Ninh Hai district, situated in the Ninh Thuan Province, one of the poorest regions in the country. Relying primarily on shrimp farming and rice cultivation, farmers must obtain irrigation water from unreliable sources such as hand-dug wells and water traps. The current irrigation system functions poorly and, even though the Trau River lies nearby, no system is in place to harness its resources. Under this initiative, a reservoir, capable of storing some 31 million m³ of water, will be built on the Trau River, and some 55-km of irrigation canals constructed. About 370 households will be relocated to a new, settled community equipped with a kindergarten, school, clinic and running water supply. Agricultural extension services will also be provided and the irrigation network upgraded and repaired. As a result of the various activities, numerous farming communities will be able to enjoy a far better standard of living through increased food production and higher incomes, as well a safe supply of drinking water.

Vietnam will combat rural poverty in Ninh Hai district by building a water reservoir and modernizing irrigation systems.

Yemen

Sector: Water Supply and Sewerage
Project: Hodeida Sanitation
Amount: $12 million
Terms: Interest rate of 1% per annum; 20-year maturity, including a 5-year grace period
Approved: November 6, 2001
Executing agency: Ministry of Electricity and Water
Co-financier: Government of Yemen
Loan administrator: OPEC Fund
Total cost: $14.25 million

Sanitation coverage in Yemen's western city of Hodeida is low, with only around one-half of its 420,000-strong population connected to the network, a situation that is worsening due to a rapidly deteriorating infrastructure. The city's current wastewater system, which was installed in 1982, was poorly designed with materials ill-suited for the region's climate and system load. As a result, at least 88 sewer pipelines have collapsed, while others have become severely corroded and blocked, necessitating the use of temporary sewage lines that lie above ground. Backups often cause sewage to overflow in the streets, constituting a considerable health hazard. Pumping stations are in urgent need of rehabilitation, and existing manhole covers allow sand intrusion, causing premature wear of the system. Under the project, some 15-km of main sewer lines will be replaced, using materials that will be capable of withstanding extreme conditions. Additionally, 230 solid manhole covers will be installed and a broken valve replaced to halt the flow of raw sewage into the sea. Three pumping stations will be entirely refurbished and re-equipped, including new power systems and standby generators that will prevent sewage flooding during power outages. The rehabilitated sanitation system will benefit not only the surrounding population, but will also curb pollution of the region's environment.

Yemen recently completed the construction of a new sewerage treatment facility near Sana’a with co-financing from the Fund.