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Mega infrastructure projects for Mesoamerica presented in Guatemala

ANTIGUA, GUATEMALA – Authorities from Mesoamerican countries today presented an ambitious series of proposals for major infrastructure project to enhance competitiveness in the region.

The initiatives, which are both regional and national in scope, cover numerous sectors and range in estimated cost from $7 billion for an oil refinery to $60 million for the Mesoamerican Information Highway, a fiber-optic cable that would run from Guatemala to Panama.

The projects were presented at a workshop organized by the Inter-American Development Bank and the Central American Economic Integration Secretariat to promote discussion of mega projects and how to ensure their technical, financial, environmental and social viability.

Some 300 people participated in the event, including Central American government authorities, executives from international and regional banks and construction firms, representatives of nongovernmental organizations and officials from multilateral and regional organizations.

In his remarks, IDB President Luis Alberto Moreno urged Mesoamerican countries to act “boldly, rapidly and responsibly” to implement the mega projects the region needs both to increase its productivity and to improve the quality of life of its peoples.

Moreno noted that the region faces serious economic and social challenges with respect to energy, transportation, telecommunications and water and sanitation. These challenges demand a sense of urgency so that the mega infrastructure projects serve as major agents of social change at the same time.

The IDB President called for measures to fight corruption, appropriately distribute the economic costs of works, ensure that their benefits actually reach the poor and responsibly manage the environmental risks inherent in mega infrastructure projects.

“Acting rapidly does not mean sacrificing responsibility,” said Moreno. “I am convinced that we now have the practical experience and social consensus necessary to convert these mega-projects into virtuous laboratories of transparency and citizen participation.”

Guatemalan Minister of Finance Hugo Beteta noted that a recent study by the United Nations Economic Commission for Latin America on infrastructure development and economic growth found that the quantity and quality of investment in infrastructure “has a decisive impact on improving the economy and the quality of life of the population affected.”

“Inadequate infrastructure and inefficient provision of infrastructure services represent major obstacles to effectively implementing development policies and obtaining high economic growth rates,” he added.

Mega infrastructure projects

In the area of inter-oceanic transportation, the project to expand the Panama Canal was presented. Recently approved by Panamanian voters in a referendum, the initiative will require an estimated $5.5 billion in investments and will generate thousands of jobs until the works are completed in 2014.

Alternative proposals were also discussed, such as the Great Inter-Oceanic Canal of Nicaragua and the Transoceanic Corridor on Mexico across the Tehuantepec Isthmus, linking the port of Coatzacoalcos on the Gulf of Mexico with the port of Salina Cruz on the Pacific Coast.

In energy, both regional and national projects were presented. Among the regional projects a proposal to build a Central American oil refinery was discussed, along with several projects to introduce natural gas to the region, either through liquefied natural gas terminals or a gas pipeline from Colombia.

Projects were also presented for electric power interconnection among Central American countries and between Guatemala and México, initiatives to be financed by the IDB. A possible interconnection between Panama and Colombia that would link the isthmus to the South American power transmission grid was also discussed.

Energy projects of national scope included hydropower plants such as El Diquís in Costa Rica, the Chaparral and Cimarrón dams in El Salvador, a dam system in the Sula Valley in Honduras and the Copalar dam in Nicaragua.

Salvadoran, Guatemalan and Panamanian authorities presented various transportation projects, such as the Northern Transnational Highway in El Salvador, the Metropolitan Beltway in Guatemala and the highway system in Panama.

Among the initiatives for social infrastructure were projects for water supply in Tegucigalpa, Honduras and sanitation in the Panama Bay.

The IDB and infrastructure

The IDB has set a goal of approving $12 billion in financing over the next five years for critical infrastructure projects in Latin America and the Caribbean. To this end, it created InfraFund, a $20-million fund to support identification, development and preparation of bankable, sustainable infrastructure projects proposed by governments, semipublic entities or private enterprises.

InfraFund resources may be used to finance specialized consulting services, studies and innovative mechanisms to promote private sector participation in infrastructure financing.

The IDB finances infrastructure projects through loans to member countries in the region and to private companies. Private sector loans are handled by the IDB’s Private Sector Department, which provides loans and guarantees without sovereign guarantees.

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