Doc=unt of The World Bank FOR OMCIAL USE ONLY g~ - L/2^ 7 S C) -Z2 Rqpot No. P-6287-ME MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN IN THE AMOUNT EQUIVALENT TO US$368 MILLION TO BANCO NACIONAL DE OBRAS Y SERVICIOS PUBLICOS WITH THE GUARANTEE OF THE UNITED MEXICAN STATES FOR THE NORTHERN BORDER ENVIRONMENT PROJECT MAY 11, 1994 MICROGRAPHICS Report No: 1'- 6287 MX Type: MOP This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank atithorization. CURRENCY EQUIVALENT Currency Unit = Peso (Mex$) US$1.00 = 3.3 Pesos (May 1994) FISCAL YEAR January 1 to December 31 UNM OF WEIGRIS A-ND MEASURE Metric US Equivalent 1 kilometer (kn) = 0.62 mile (mi) I meter (m) = 3.28 feet (ft) 1 gram (g) 0.0022 pound (ib) 1 kilogram (kg) = 2.20 pounds Qb) 1 ton 2,205 pounds 1 cubic meter (M3) = 6.29 barrel (bbl) 1 cubic meter (M3) = 35.32 cubic feet (ft3 or cu.ft) 1 cubic meter (M3) = 264 U.S. gallons (gl.) ABBREVIATIONS AND ACRONYMS BANOBRAS Banco Nacional de Obras y Servicios Piblicos SNC (National Bank of Publics Works and Services) CElES Certificado de la Tesorerfa de la Federad6n (Treasury Bill, Mexico) CNA Comisi6n Nacional del Agua (National Water Commission) CONAPO Consejo Nacional de Poblaci6n (National Population Conunittee) ECU Executive Coordination Unit GIRA General Interest Rate Agreement INE Instituto Nacional de Ecologfa (National Ecological Institute) NAFTA The North American Free Trade Agreement PFPA T)rocuradurfa Federal de Protecci6n al Ambiente ('2*orney General for Envirommental Protection) PI Pov.rty Index PM-10 Particulate matter less than ten micrometers in size. PRONASOL Programa Nacional de Solidaridad (oTational Solidarity Program) SELIESOL secretarfa de Desarollo Social (Ministry of Social Development) SHCP Secretarfa de Hacienda y Cr6dito Piblico (Ministry of Finance and Public Credit) FOR OFFICIAL USE ONLY MEXICO NORTHERN BORDER ENVIRONMENT PROJECT LOAN AND PROJECT SUMMARY Borrower: Banco Nacional de Obras y Servicios Publicos (BANOBRAS) Guarantor: United Mexican States Executing Agencies: BANOBRAS, Secretarfa de Desarrollo Social (SEDESOL), Instituto Nacional de Ecologfa (INE), Procuradurfa Federal de Proteccion al Ambiente (PFPA); and Comisi6n Nacional del Agua (CNA). Beneficiaries: PFPA, the Government States of Baja California, Chihuahua, Coahuila, Nuevo Leon, Sonora and Taniaulipas, participating border municipalities, and private small and medium industries (SMIs). Amount: US$368 million equivalent. Terms: Repayment in 15 years, including five years of grace, with interest at the Bank's standard variable rate. Financing Plan Local Foreign Total ---------US$ Million------------- IBRD 134.2 233.8 368.0 Government of Mexico 394.0 -- 394.0 Total 528.2 233. 762.0 (% total) (69.3) (30.7) (100.0) Economic Rate of Return : 12% minimum for investment subprojects in the water, sanitation and urban transport sectors. Staff Appraisal Report : Report No. 12603-ME Map : IBRD No. 25240R Poverty Category : Not applicable. However, the project impacts on poverty in two different ways: (i) improvement in the quality and coverage of environmental services in poor areas in border cities; and (ii) improvement of living conditions in low income neighborhoods through the road paving component. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO BANCO NACIONAL DE OBRAS Y SERVICIOS PUBLICOS FOR THE NORTHER BORDER ENVIRONMENT PROJECT 1. The following memorandum and recommendation on a proposed loan to Banco Nacional de Obras y Servicios Publicos (BANOBRAS) for US$368.0 million equivalent is submitted for approval. The proposed loan, which would be guaranteed by the United Mexican States, would be repayable over 15 years, including five years of grace, at the Bank's variable interest rate and charges. Background 2. Mexico's extensive environmental problems are a major concern both nationally and globally. The Government is acutely aware of these problems, and, in a clear break from prior decades of neglect, is strongly committed to solving them. Mexico now has a much improved legal, regulatory, and institutional framework. This is reflected in: new legislation and regulations (especially the General Ecology Law); major institutional and administrative reforms; and national action plans (Plan Nacional de Desarrollo: 1989-94 and Programa Nacional para la Protecci6n del Medio Ambiente). These initiatives articulate a development strategy that recognizes the essential linkage between economic growth and environmental protection. 3. Other initiatives are now in process or being planned to address environmental issues in the various parts of the country. The needs of southern states are the focus of new efforts connected with regional development and poverty alleviation. The requirements of other regions, and urban and rural areas with special problems, are being emphasized in other initiatives. Government authorities and the Bank are collaborating in developing and implementing many of these new strategies and actions. New projects, supported by the Bank, are targeting improvements in key environmental sectors nationwide, including water supply and sanitation, solid waste management, and air quality and urban transport. The proposed project has been designed to coordinate with these sector operations and reinforce them in the northern border region, as described below. 4. The north, and particularly the border region with the U.S., has a number of urgent environmental priorities, including mitigation of some very serious environmental degradation. These problems stem in large part from the combination of fragile climatological conditions (very dry) and rapid, largely unplanned economic and urban growth involving the boom of the maquiladora industries. Water treatment and sanitation have been grossly insufficient, resulting in massive discharges of untreated wastewater into the region's ecosystems and causing economic losses and threats to human health. Solid waste management is so deficient that, of the estimated 3,000 tons of garbage generated daily, only about 16% is disposed of properly. Hazardous waste problems are notorious, with many firms dumping dangerous substances improperly. Air pollution is a serious concern due to heavy vehicle traffic and dust from the many unpaved roads, especially in unplanned, fast-growing settlements. Enforcement of env.:onmental regulations is improving, but still weak. -2- 5. Since 1988, Mexico and the United States have been working together to implement the initial phase of a Border Environment Plan. The second stage, planned for 1995-97, calls for extensive further steps by both countries. Given the magnitude and complexity of this chalienge, the Government has requested Bank assistance. Rationale for Bank Involvement 6. The proposed operation is consistent with the Bank's Country Assistance Strategy which accompanies this MOP. The strategy aims at assisting Mexico to keep its economic restructuring process firmly on track, while supporting programs that contribute to poverty reduction, improved environmental management, and long-term sutainable economic growth and development, particularly through investments in human resources, infrastructure had natural resource management. The strategy also aims to push the reform process downward to the subnational (state and municipal) level and to support devolution of expenditure and revenue responsibilities to these local governments. Given the high priority the Government has assigned to addressing environmental issues, both in general and on the Border in particular, and given its commitment to the Border Environment Plan (and interest in having the Bank's help in meeting that commitment), the Government sees this project, and the Bank's involvement, as a vital part of its strategy to strengthen its environmental efforts. Also, the experience the Bank has in the sectors involved is important, and is perceived as such by the Mexicans. Other institutions, such as the IDB and Japan's EximBank, would also be supporting environmental improvements at the border, and the Bank's contribution would complement their initiatives. Project Objectives 7. The main objective of the project would be to improve environmental quality along the Border by assisting municipal, state, and federal authorities to (i) strengthen their environmental planning, management, and enforcement capabilities; and (ii) carry out priority investments and action plans efficiently -- all with a view to helping preserve the environment, reversing past degradation, reducing health risks, protecting biodiversity, and promoting key environmental policy objectives. 8. Addressing the principal border environmental issues in one operation rather than through a piecemeal approach is expected to have a number of important advantages, reflecting the underlying synergies among the issues involved and within the border region. First, strengthening municipal, state, and federal capabilities simultaneously is more effective than when each is taken separately. Government agencies need to develop broader understanding and heightened awareness of environmental problems, options, costs, and tradeoffs, particularly at the municipal level, and need to interact more constructively both with one another and with interests within their jurisdictions. Second, actions taken on one environmental problem often directly affect another. Experience has shown that when more stringent controls or fees are introduced for one medium (water, solid, or toxic waste), polluters divert more of their effluent to other media. For example, the maquiladora industries on the border include polluters with highly toxic wastes that are easily diverted from one method of disposal to another. Third, the border cities share common environmental, economic, and social experiences due to factors such as a shared river system, proximity to border cities on the U.S. side, and a history of rapid industrial growth around older urban centers. Helping them work together more effectively to pool information and knowledge would accelerate progress throughout the region. Fourth, the -3. border region and the environmental issues it faces are different from those faced elsewhere in Mexico. For instance, wastewater treatment uses different standards, to be consistent with the U.S. side; air, water, and toxic discharges have cross-border impacts that have to be addressed; pollution of the Rio Bravo/Rio Grande is a major issue; and tratisport-related pollution associated with border-crossing traffic and an inhospitable climate (with high levels of dust in dry seasons and mud in wet seasons) creates added problems. Project Description 9. The proposed project would have two main components. The first, institutional strengthening (para. 7), would consist mainly of studies and technical assistance. The second, environmental services (para. 8), would support about fifteen investment subprojects in five or six border cities in the areas of (i) water treatment and sanitation, (ii) solid waste management, and (iii) air quality and urban transport. Based on master plans analyzing environmental needs and priorities (within and across subsectors), cities would present investment proposals for financing under the project, They would be required to meet eligibility criteria concerning their financial soundness, implementation arrangements, technical appropriateness, and environmental goals. These criteria would be derived directly from, and thus be entirely consistent with, the extensive analytical and preparation work done in the three subsectors, each cf which has a country-wide sectoral operation that would be closely linked with the proposed project. Much of the effort that the cities need to do in planning and specifying subprojects is already well advanced. 10. Institutional Strengthening US$202 milon in total Doect -cot. This component would fund technical assistance and related activities to: (i) improve the capabilities of federal, state, and municipal authorities for effective environmental management; and (ii) accelerate progress in certain key areas (hazardous waste management, protection of biodiversity and endangered species, and planning and preparation of future steps). Federal Level Strengthening (US$124 million). The chief environmental enforcement agency (the Procuradurfa Federal de Protecci6n al Ambiente -- PFPA) would be extensively strengthened, through, inter alia, improvements in its existing environmental audit program, hazardous waste tracldng system, and capacity to identify and analyze contaminated sites. Recruitment of new staff, which would almost triple the number of inspectors and environmental lawyers (from 353 to 1,230 during 1994-97 at an estimated additional cost of $38.5 million), would be financed by the government. State and Municipal Level Strengthening (US$43 million). The environmental authorities of all the border states as well as ten major border municipalities would be strengthened, through improving staff capabilities, equipment for assessing and controlling environmental pollution, and strategy development. One subcomponent (Environmental Management - US$24.5 million) would strengthen the newly created environmental de.,artments in the border states and municipalities. Another (Finance and Administration - US$18.5 million) would address performance-related issues in municipal finance through measures to enhance revenue, improve cost control, and strengthen financial management. In all, ten border municipalities would be assisted, using model programs already developed for three. -4- Hazardous Waste Management (US$15 million). Support would be provided for: (i) development of a nationwide hazardous waste policy and implementation strategy, based on agreed principles; (ii) a treatment needs analysis, to identify the border area's requirements for off-site hazardous waste treatment, recycling, and disposal facilities through the year 2005; (iii) expansion of the environmental audit program through promotion of the program to eligible firms, technical assistance to firms in '.nplementing audit results and preparing documentation to qualify for a commercial bank loan, and limited financial asaistance, on a trial basis, for covering a portion of the costs of the audits in the case of firms too small to bear the cost entirely on their own; and (iv) a pilot program for mobile treatment of hazardous waste, under which -specially equipped trucks would treat some wastes on site (in cases where off-site treatment is less economic or unavailable, or where wastes would otherwise be dumped improperly). Protection of Biodiversity and Endangered Species (US$15 million). Support would be provided for (i) development and implementation of management plans for the protection of three ecologically impo;tant areas in Mexico which are contiguous with national parks and protected areas on the US side (Alto Golfo and El Pinacate, Sierra del Carmen and Maderas del Carmen, and Laguna Madre de Tamaulipas); (ii) studies to identify the needs and options for protection of endangered species in the Border area; and (iii) training in protected area management. Analysis and Coordination (US$5 million). Support would be provided to SEDESOL, BANOBRAS and INE to strengthen their capabilities to implement the project and for development of the next phase of the border improvement effort, since the actions covered under this proposed project will meet only a fraction of the total needs. 11. Enviromental Services Improvement (US$560 mlllon). This component would consist of an unsubsidized line of credit available for subprojects in five or six qualifying border cities to finance their most urgent environmental infrastructure needs. Water Supply and Sanitation (US$176 million). The sub-component would provide funds to support water supply, sewerage, and wastewater treatment investments in compliance with agreed eligibility criteria within the framework of master plans p;epared by the water utilities (WUs) with the assistance of the Comision Nacional del Agua (CNA). The sub-component would also include assistance to develop and implement a system to control wastewater discharges to the sewer system and to collect pollution fees. All these activities will be consistent with sectoral policies and agreements reached under the Second Water Supply and Sanitation sector project. International Waterways. The-northern border area of Mexico shares international waterways with the United States. International waterways as defined in OD 7.50 include not only rivers or other bodies of waters that form a boundary between countries, but also rivers or bodies of surface waters that flow through two or more states and tributaries or other bodies of surface water that are a part or a component of any such waterways. The proposed projet's investment component for improvements in water supply treatment and sanitation could affect Mexico's international waterways shared with the United States. While both the Mexican authorities and the Bank believe that, because of the nature of the project, these improvements would only have beneficial effects, if any, on the US, it is too -5- early to determine the possible impacts on the US until the actual investments have been identified and appraised. After discussion on this matter with Mexico, and at the request of Mexico, it was agreed that the Bank would inform the US of the proposed project, which was done. In its official response to such information conveyed by the Bank, the United States encouraged the Bank to continue with the preparation of the project and stated that it would review the project at the time of its presentation to the Executive Directors. In light of this statement, no special provisions for subprojects that may affect international waterways with the United States have been included in the project documents (A copy of the response of the United States is attached as Annex I to the MOP). Solid Waste (US$40 million). The component would help municipalities finance consulting services and investments in accordance with the sectoral policies and agreements followed in the Second Solid Waste Management project. The component will also support the development of social safety net programs for scavengers displaced by the investments. Air Quality, Urban Transpoil, and Paving (US$344 mil1on). Support would be provided for investment to reduce air pollution caused by inadequate urban transport infrastructure and services. The key air quality issue in the border cities is excessive dust. Many of the highest concentrations are from unpaved roads. The subcomponent would finance, inter alia, traffic management, road maintenance and rehabilitation, paving in poor neighborhoods, environmental assessment and pollution control measures, including vehicle inspection and maintenance in accordance with sectoral policies and agreements followed in the Medium-Size Cities Urban Transport Project. (MSCUTP) (Ln. 3559-ME). Project Cost and Financing 12. Total project cost is estimated at US$762 million. The Bank loan of US$368 million would financ about 48% of total project costs. Federal, state and municipal contributions would cover the balance. Financing of investments would be on the same terms and conditions as in the related parallel sectoral projects. Thus, for water supply and sanitation investments, localities with a population above 80,000 would receive Bank funds as loans for investments in water supply and primary wastewater treatment plants; sewerage systems would be funded through federal and state grants. For localities with less than 80,000 inhabitants, federal, state grant funds and WU's internal cash generation would be combined with Bank loan funds according to the poverty index (PI)' developed by CONAPO (Comite Nacional de Poblaci6n), the National Population Committee, for all water investments (water supply and wastewater treatment as well as sewerage systems). For solid waste, the financing arrangements would also be based on SEDESOL's matching funds system and CONAPO's poverty index. In the border zone, municipalities with more than 80,000 inhabitants (the target group of the proposed Solid Waste Management II project and this project) have PIs that place thiem in the "very low 1. The Poverty Index (indice de marginacion) is an weighted average of nine indicators, five of which are related to the availability of public infrastructure in a municipality, and the remaining two to income. The relative measure of poverty of a given municipality is based on the degree of 'marginality' ranging from high marginality (poor) to low marginality (wealthy). -6- marginality" category, except for one which is in the "low marginality" category. The municipalities in the low marginality category are eligible for a financing formula with: 50% credit (to be funded by the Bank loan); 25% fiscal grant; and 25% municipalities' own funds. The municipality in the medium marginality category receives the following mix: 50% credit; 35 % fiscal grant; and 15 % own resources. For air pollution and urban transport, Bank funds would be provided to states and municipalities as loans and would finance about 50% of the investment costs. Subloans would be channeled through BANOBRAS and made available to the states and municipalities in Mexican pesos at a variable interest rate not lower than the Government Treasury bill (CETES) or CPP (costo promedio porcentaje) rate plus two percentage points, with repayment up to 15 years, including grace periods of up to three years. Financing for the paving subcomponent would follow the PRONASOL (Programa Nacional de Solidaridad - National Solidarity Program) system under which up to 90% are grants from the federal government and the remainder contributions (cash and self help) from the beneficiaries. Funds for the strengthening of PFPA and of states and municipalities in environmental management would be passed on to the beneficiary institutions as grants, while those for the strengthening of states and municipalities in financial management would be passed as loans at the interest rate of CETES plus one percentage point. The Mexican Government would bear the foreign exchange and interest risk on the Bank loan. BANOBRAS, SEDESOL and CNA's capacity will be strengthened under the parallel Water Supply and Sanitation Sector II and Solid Waste Management II projects. 13. Up to 10% of the loan (US$36 million) would be eligible for retroactive financing to avoid any possible delay in getting the project underway. Retroactive financing would be used for the preparation of (i) master plans or integrated transport plans for investments in water supply and sanitation, soiid waste management, and air quality and urban transport; (ii) studies for the diagnostic and design of strengthening programs for states and border municipalities in environmental management and finance and administration; and (iii) decrees, management and operating plans for the protected areas to be supported by the project. Retroactive financing would also be used for the first batch of machinery, equipment, constructiun materials, and civil works for subprojects initiated in 1994. All retroactive financing would be in accordance with Bank guidelines arLd would cover all eligible expenditures incurred for any of the project's components after February 10, 1994. Project Organization and Management 14. BANOBRAS, the borrower, would be the executing agency responsible for overall coordination of the project's activities and for review and approval of the investment sub-loans and technical assistance/training proposals. BANOBRAS would also be the implementing agency for the states and municipalities' financial management strengthlening sub-component. Four technical implementing agencies would help implement the project in their respective areas of responsibility: CNA (water), SEDESOL (solid waste, urban transport and paving); PFPA (hazardous waste management and PFPA strengthening), and INE (protected areas, strengthening of states and municipalities in environmental management, studies and hazardous waste policy). 15. To monitor progress of the project as a whole and to coordinate the activities of the agencies involved in the implementation of the project, a Project Analysis and Monitoring Office (Oficina de Andlysis y Seguimiento del Proyecto, OASP) would be set up in SEDESOL and located in the General Directorate of Infrastructure and Equipment (Direccion General de -7- Infraestructura y Equipamiento). OASP would be responsible for overall coordination with BANOBRAS and with the implementing agencies within SEDESOL. 16. OASP would liaise with project units in SEDESOL, INE, PFPA, and BANOBRAS's Directorates in charge of solid waste management and of the Executive Coordination Units (ECUs) for the Medium Size Cities Urban Transport and Water Supply and Sanitation projects, alerting them in a timely manner to implementing and coordination problems it identifies. The process would be facilitated by a Management Information System which is being developed and expected to be in place by September 1994. The system would be based on impact/performance, physical and financial progress indicators. It would be designed to be consistent with existing sectoral MIS systems and would present the information gathered in a form suitable for analysis of project impact and the production of semi-annual reports. 17. A formal review of project implementation would be held in May and November of each year (to coincide with annual reviews of the parallel sector projects). The agenda for the review would include, inter alia, (i) agreement on the federal budget submission and assessment of state and municipal budgets planned for thc coming year; (ii) an evaluation of proposed targets for the agreed indicators for the demand driven components in which plans have been approved during that period; (iii) review of progress in the institutional strengthening programs, priority investments and action plans at the municipal, state and federal levels; and (iv) compliance with on-lending conditions. A mid-term review will take place during May 1997 semi-annual review and will provide an opportunity for a more comprehensive review of the project's achievements to date, and of the prospects for its successful completion. Project Sustainability 18. By improving the sectoral frameworks for water resources, solid waste and urban transport management, as well as the local institutions that deliver these environmental seivices, the project is expected to contribute to a sustainable development process. Project sustainability is further enhanced by the strengthening of the federal and local regulatory and enforcement agencies, the adoption of adequate tariff structure and other cost recovery measures, and the technical assistance to the states and municipalities, and (through the sectoral projects) CNA, SEDESOL, and BANOBRAS. The strong commitment of the Mexican Government to the project provides a more fundamental assurance of sustainability. Lessons Leamed from Previous Bank Involvement 19. The Bank has been supporting environmental initiatives in Mexico since the early 1970s, but the sector has begun to be prominent in Bank strategy and lending in recent years. Projects addressing environmental issues include: (i) the completed Industrial Pollution Control Project (Ln. 2154-ME; FY82); (ii) the on-going Municipal Strengthening Project (Ln. 2666-ME; FY86); (iii) the pilot Solid Waste Project (Ln. 2669-ME; FY86); (iv) the six Water Supply and Sanitation Projects, with the last one approved in FY91; (v) the free-standing Mexico Environmental Project (Ln. 3461-ME; FY92); and (vi) the Transport Air Quality Management Project for the Mexico City Metropolitan Area (Ln. 3543-ME; FY93). -8- 20. The lessons derived from this experience have been taken into a.count in prtparing the proposed project. (a) A stable economic environment is essential to making progress in environmental protection. This was underscored by the failure e< the FY82 Industrial Pollution Control Project, which was overtaken by the econuinic crisis of the 1980s. Good policies are now in place and the Government is committed to improving environmental conditions, particularly at the border with the U.S. (b) Importance of adequate legal, regulatory, and Institutional framework. The proposed project strongly emphasizes institutional strengthening. It includes an important component to improve the environmental management capabilities of federal, state, and municipal authorities. (c) Reliance on strong agencies to deliver enviromnental infrastructure services. Fligibility criteria have been established to ensure that only well-managed and financially strong agencies have access to funds for mfrastructure investments under the project. (d) Competing sources of rfancing should be avoided. This is evidenced by the difficulties encountered by the PY86 Municipal Strengthening Project which did not follow tha federal matching fund system and had to compete with cheaper sources of fiance. This project will follow the existing matching fund system and has the same terms and conditions as the sectoral projects under preparation. Actions Agreed 21. At negotiations, agreement was reached on the following: (a) PFPA strengthening: (i) arrangement for establishing a coordination function in Procuradur(a de Verificacidn Norrnatva to monitor PFPA's project activities; and (ii) agreement on its terms of reference; (b) State and Municipal Strengthening: (i) appointment of responsible staff in INE/DGPE to help implement the Environmental Management Sub-component and a Task Manager in BANOBRAS/DAPPAT to manage tne Finance and Administration Sub-component; (ii) implementation of the component in six phases, with the Bank approving the operations manuals for the two sub-components, all the technical assistance packages under the Environmental Management sub-component; the first two strengthening programs and all the strengthening programs for cities with 250,000 inhabitants or more for the Finance and Administration sub-component; (iii) agreement that funds to states and municipalities would be passed on as grants for environmental management strengthening and as loans for finance and administration strengthening; (c) Hazardous Waste: (i) agreement to help SMIs pay a portion of the cost of environmental audits and that of technical assistance needed to implement the resulting action plan; and (ii) agreement to buy the truck- mounted treatment units and to decide on operating arrangements based on the results of an implementation study to be carried out in mid-1994; (d) Protected Areas (i) timetable for the preparation of decrees and management plans for all the protected areas under the project; (ii) eligibility criteria for financing of studies on species; and (iii) terms of reference for studies on prioritization of natural areas at the border and financial sustainability of protected area management; (e) Environmental urban services (Water Supply and Sanitation; Solid Waste; -9- and Air Quality and Urban 7ranspoil: Agreement that the terms and conditions of these components are identical to those of the sectoral projects; and (f) Paying In Colonlas Populares: (i) eligibility of criteria for streets to be paved under the component; (ii) Bank to paray finance a 7 meter running strip, plus additional roadway up to a maximum width of 11 meters and SEDESOL to recommend to the relevant municipality that the additional paved width be delineated for parking; (iii) SEDESOL to encwurage Solidarity Committees to pave, stabilize or treat the areas between the curbs and the property lines on both sides in order to minimize dust; (iv) SEDESOL to ensure that the out-turn pattern of paved streets be considered at annual reviews to determine the extent to which the clustering of paved streets is being achieved; (v) SEDESOL to encourage sweeping of streets paved under the component; and (vi) preparation of a study to monitor dust levels (PM-10). For All Components: (i) implementation arrangements; (ii) procurement, disbursement, and auditing requirements; (iii) reporting requirements; and (iv) timing and agendas of the annual and mid-term review of project progress and issues. 22. The following are Conditions of Effectiveness: (i) presentation to the Bank of satisfactory signed and legally binding contractual arrangements between BANOBRAS and the Guarantor plus presentation of pertinent legal opinions; and (ii) establishment of OASP in SEDESOL under terms of reference agreed with the Bank. 23. Disbursement for specific components are subject to, inter alia, the following conditions: (a) PrQtected areas: Prior to disbursements on expenditures covered by an emergency plan, management plan, or operating plan, the following conditions would be fulfilled: (i) existence of emergency plans, management plans, or operating plans satisfactory to the Bank; (ii) the ecological area covered by such emergency, management, or operating plan meets the eligibility criteria referred to in Annex F of the Implementation Letter; and (iii) for management and operating plans, satisfactory administrative arrangements of the protected area are in place. (b) State and Municidal gtrenthLenin: (1) Finance and Administration subcomponent: (i) appointment of a task manager responsible for the subcomponent in BANOBRAS; and (ii) existence of an operational manual satisfactory to the Bank. (2) Environmental Management: (i) establishment and equipment of the unit responsible for implementing the subcomponent in INE and appointement of the responsible staff; and (ii) existence of an operational manual satisfactory to the Bank. Enviromnental Aspects 24. The proposed project would result in substantial environmental improvements through both the institutional strengthening and the investments in water, solid waste, and urban transport improvemenis. Environmental impact assessments would be prepared for major investments in water and solid waste. The project is rated A because of the risk of leachates from landfills to be built under the solid waste subcomponent and because of the possible need so relocate scavengers living in or near open dumps which will need to be closed. In early February 1994, the Mexican Government prepared three site specific EIAs and a sectoral EIA for solid waste investments. The Government also prepared a Resettlement Manual containing policies and practices to be applied if scavenger relocation is required. Plans for three other border cities (San-Luis Rio Colorado, Juarez, and Ensanada) are near completion. An Executive Summary was sent to the Board of Directors prior to appraisal. -10- 25. The majority of investments in the water sector will consist of expansion of existing water supply systems or institutional strengthening sub-projects. A limited number of sub-projects will require an EIA as they will involve construction of wastewater treatment plants. All sub-projects will be based on a Master Plan, including a preliminary assessment of the environmental impacts of the proposed investments. With regard to air quality and urban transport investments, an EIA for Juarez has been completed. Furthermore, consistent with the Medium-Size Cities Project (Ln. 3559-ME), Integrated Transport Plans, including EIAs, will have to be prepared before a subproject could be approved. Program Objective Category 26. The project impacts on poverty in two different ways: (i) the quality and coverage of environmental services in poor areas, which are sizable in border cities, would improve; and (ii) the road paving component is expected to substantially improve living conditions in low income neighborhoods. Benefits and Risks 27. The project would address problems that are presently the source of serious levels of contamination of water, air, and soil; threats to public health; ioss of environmental quality; and, where toxic wastes are concerned, danger of calamities such as the 1992 tragedy in Guadalajara. The project's benefits would include: (i) significant reductions in environmental risks for an estimated 3 million people living in the border cities, resulting in better health and productivitye; and (ii) stronger federal, state, and municipal capabilities and improved institutional framework for environmental protection. 28. The technology involved in the investments for wastewater treatment, solid waste management, and urban transport is standard and does not present any particular risk. The main risk of the project is institutional and relates to increased pressures that the project will exert on (a ) the technical implementing agencies (SEDESOL, CNA, INE, and PFPA) to carry out their responsibilities, given their limited staff; and (b) local authorities to sustain the investments they would be making. This risk is being addressed by measures to strengthen the implementing agencies in the parallel sectoral projects and in the MEP and by the provision of technical assistance in the project to improve the border cities' capabilities to manage environmental infrastructure investments. Reinforcing these specific measures are the strong commitment of the Mexican Government and the broad concensus within Mexico on the need to improve environmental conditions and strengthen environmental quality in the northern border area. Recommendation 29. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Bank and recommend that the Executive Directors approve it. Attachment Washington, D.C. Lewis T. Preston May 11, 1994 President -11- Schedle A Page I of 2 MEXICO NORTHERN BORDER ENVIRONMENT PROJECT Summary Project Cost (US $ Million) LOCAL FOREIGN TOTAL 1. Insttional Strengthening and Hazardous 24.0 174.2 Waste Management (a) PFPA Strengthening 89.0 24.0 113.0 (b) State and Municipal Strengthening: 20.5 13.3 33.8 - Environmental Management (11.7) (7.8) (19.5) - Fmance and Adminiration (8.8) (5.5) (14.3) (c) Hazardous Waste Management 4.3 7.4 11.7 (d) Protected Areas 9.9 1.7 11.6 (a) Coordination and Studies 1.5 2.6 4.1 H. Envromental Sevices Improvyent 159.3 441.4 (a) Water Supply/Sanitation 80.0 80.0 160.0 (b) Solid Waste 28.8 2.2 31.0 (c) Air Quality/Urban Transport/Paving 173.3 77.1 250.4 - Urban Transport (119.8) (70.3) (190.1) - Paving (37.9) (6.8) (44.7) - Land Acquisition (15.6) () (-) TOTAL BASE COST ESTIMATES 407.3 2086 15.6 Physical Contingencies 29.2 14.0 43.2 Price Contingencies 26.4 1 1.5 37.9 Duties and Taxes (65.3) (-) (65.3) TOTAL PROJECT COSTS 528.2 233.8 72 -12- Schedule A Page 2 of 2 Financing Plan (US$ Million) LOCAL FOREIGN TOTAL IBRD 134.2 233.8 358.0 Mexico 394.0 - 394.0 - Federal Government (270.0) - (270.0) - State Governments (35.0) - (35.0) - Municipalities and WUs Internal Cash Generation (89.0) - (89.0) Total 528.2 233.8 762.0 (69.3) (30.7) (100.0) Note: The mix of federal, state and municipalities/WUs financing is indicative. It is based on assumptions regarding the size of the cities participating in the project and the type of subprojects being financed. -13- Schedule B Page 1 of 3 MEXICO NORTHERN BORDER ENVIRONMENT PROJECT Procurement Arrangements (US$ Million) Procurement Method NBF ICB LCB OTHER TOTAL COST Civil works 162.4 225.1 40.0 427.5 (135.8) (55.7) (16.3) (207.8) Goods 82.7 28.0 26.8 137.5 (50.6) (15.7) (20.6) (86.9) Consulting -- -- 96.2 96.2 Services --(73.3) -- (73.3) Recurrent Expenditures - - - 100.8 100.8 TOTAL 245.1 253.1 163.0 100.8 762.0 (186.4) (71.4) (110.2) (-) (368.0) Note: NBF = Non Bank Financing Estimated World Bank financing in parenthesis. -14- Schedule B MEXICO Page 2 of 3 NORTHERN BORDER ENVIRONMT PROJECT Initial Allocation of Loan Proceeds (US$ Millions) Category Amount Allocated % Total Expenditures to be Financed Enviromnental Infrastructure Consulting Services 22.0 100% Equipment 48.8 90% Civil Works 128.1 50% Unallocated 26.1 Total 22S.0 PFPA Stre tIng Consulting Services 24.8 100% Equipment 26.2 90% Total 51.0 State and Municipal Strengthening Envirounmental MNnagement (INE) Consulting Services 6.8 100% Equipment 10.2 90% Total 17.0 Fbnance and Administration Consulting Services 8.7 100% Equipment 5.8 90% Total 14.5 Hamrdous Waste IE Consulting Services 1.0 100% PFPA Consulting Services 10.0 100% Equipment 4.0 90% Total 14.0 Protected Areas Consulting Services 5.0 100% Equipment 1.5 90% Civil Works 1.0 50% Total 7.5 Paying Consulting Services 1.7 100% Civil Works 33.3 90% Total 35.0 -15- Schedule B Page 3 of 3 Category Amount Allocated % Total Expenditures to be Financed Analysis, Coordination and Studies Banobras Consulting Services 0.5 100% INE Consulting Services 0.2 100% Equipment 0.1 90% Total 0.3 OASP Consulting Services 1.7 100% Equipment 0.5 90% Total 2.2 Grand Total 368.0 Estimated Bank Disbursement (US$ million) Bank FY 1994 1995 1996 1997 1998 1999 2000 2001 2002 Annuai 40.2" 81.4 81.1 74.7 42.7 19.0 18.6 6.9 3.4 Cumulative 40.2 121.6 202.7 277.4 320.1 339.1 357.7 364.6 368.0 a/ A special account would be opened in the Central Bank with an initial deposit of up to US$16 million equivalent. Retroactive financing of up to US$36 million is proposed for eligible expenditures incurred after February 10, 1994. -16- MEXICO Schedule C Page 1 of 1 NORTHERN BORDER ENVIRONMENT PROJECT Timetable of Key Project Processing Events (a) Time taken to prepare 11 months (b) Prepared by : SEDESOL, INE, PFPA, and CNA with the assistance of the Consultants financed by Japan's PHRD Fund and Bank missions. (c) First Bank Mission : March, 1993 (d) Appraisal Mission Departure February 7, 1994 (e) Negotiations : March, 1994 (f) Planned Date of Effectiveness July, 1994 (g) List of Relevant PCRs and PPARs Loan No. Project PCR Date Report No. 909-ME Mexico City Water Supply Project June, 1983 4623 1186-ME First, Second and Third 1913-ME Medium Cities Water 2281-ME Supply and Sewerage Project December, 1993 11448 2154-ME Industrial Pollution Control Project April 12, 1991 9495 3101-ME Water, Women and Development June, 1992 10819 Schedule D 17 Page 1 of 3 STATUS OF BANK GROUP OPERATIONS IN MEXICO A. STATEMENT OF BANK LOANS (As of March 31. 1994) Amount in US$ Million floes cancellation) Credit/ Fiscal Loan No. Year Borrower Purpose Bank IDA Undisbuned 107 loanrs fully disbursed 13,414.72 Of which SECALs, SAL., Program Loans, and Interest Support a> Ln. 1929-ME 1981 BANOBRAS RailwaV IV 149.88 Ln. 2331-ME 1983 BANCOMEXT Export Development 349.33 Ln. 2882-ME 1988 BANCOMEXT Trade Policy Loan II 500.00 Ln. 291 8-ME 1988 NAFIN Agricultural Sector Loan 300.00 Ln. 3159-ME 1990 BANCOMEXT Interest Support Loan 1,260.00 Ln. 3207-ME 1990 BANOBRAS Road Transport & Teleoom. 380.00 Ln. 3087-ME 1989 NAFIN Industrial Soctor Pollay 497.51 Ln. 27465ME 1987 8ANCOMEXT Trade Policy Loan I 498.83 In. 3088-ME 1989 NAFIN Public Enterprise Reform 499.39 LIn. 2777-ME 1987 BANCOMEXT Export Development II 248.37 Un. 2919-ME 1988 NAFIN Fertilizar Sector 240.20 In. 3309-ME 1991 BANCOMEXT Export Sector 25.00 Un. 3367-ME 1991 NAFIN Agricultural Sector Adj. II 400.00 Subtotal 5,340.31 Ln. 2526-ME 1986 NAFIN Chiapas Agricultural Dev. 58.00 3.22 Un. 2576-ME 1985 BANO8RAS Railways V 300.00 3.28 Ln. 2658-ME 1986 NAFIN Agricultural Dev. Proderith II 88.30 39.38 Ln. 2666-ME 1986 BANOBRAS Municipal Strengthening 40.00 17.34 Ln. 2669-ME 1986 BANOBRAS Solid Waste Management Pilot 25.00 10.91 Ln. 2824-ME 1987 BANOBRAS Urban Tranport 90.98 24.49 Ln. 2858-ME 1987 NAFIN Small/Medium-Scale Industry IV 100.00 20.14 Ln. 2875-ME 1987 BANO8RAS Highway Maintenance 135.00 2.78 Ln. 2910-ME 1988 NAFIN Stal Sector Restructuring 321.01 69.27 Ln. 2946-ME 1988 BANO8FAS Ports Rehabilitation 60.00 4.17 Ln. 3047-ME 1989 NAFIN Industrial Restructuring 250.00 33.51 Ln. 3083-ME 1989 NAFIN Hydroeloetric Development 46o.00 89.95 Ln.3085-ME 1989 8ANOCOMEXT Financial Sector Adjustment 487.14 0.73 Ln. 3115-ME 1990 NAFIN Forestry Development 45.50 35.98 Ln. 3140-ME 1990 BANOBRAS Low-lncomne Housing Il 350.00 40.13 Ln. 3141-ME 1990 NAFIN Agricultural Marketing 11 100.00 0.49 Ln. 3189-ME 1990 NAFIN Transmission & Distribution 450.00 108.66 Ln. 3208-ME 1990 BANOBRAS Tdelcomm. Technical Assistance 22.00 3.50 Ln. 3271-ME 1991 BANOBRAS Water Supply & Sanitation 300.00 21.27 Ln. 3272-ME 1991 NAFIN Bsic Health Care 180.00 94.18 Ln. 3310-ME 1991 NAFIN Decentralization & Regional Oevelop. 350.00 111.09 Ln. 3358-ME 1991 NAFIN Technical Training III 152.00 101.42 Ln. 3359-ME 1991 NAFIN Mining Sector Restructuring 200.00 114.39 Ln. 3407-ME 1992 NAFIN Primary Education 250.00 148.29 Ln. 3419-ME 1992 NAFIN Irrigation & Drainage Sector 400.00 234.84 Ln. 3461-ME 1992 8ANOBRAS Environment/Natural Resource 50.00 37.84 Ln. 3465-ME 1992 NAFIN Agricultural Technology 150.00 141.21 Ln. 3475-ME 1992 NAFIN Science & TehnologV Infrastructure 189.00 187.42 Ln. 3497-ME 1992 BANOBRAS Housing Market Development 450.00 231.13 Ln. 3518-ME 1993 NAFIN Initial Education 80.00 71.98 Ln. 3542-ME 1993 NAFIN Labor Market & Prod. Enhancement 174.00 146.76 Ln. 3543-ME b> 1993 NAFIN Transport Air Pollution Control 220.00 220.00 _n. 3559ME 1993 BANOBRAS Medium Citis Transport 200.00 188.01 Ln. 3628ME 1993 BANOBRAS Highway Rehab. & Traffic Safety 480.00 405.65 Ln. 3704-ME b> 1994 NAFIN On-Farm & Minor Irrigation Network 200.00 200.00 Ln. 3722-ME b> 1994 NAFIN Primary Education 412.00 412.00 Totad 21,224.65 3,554.40 Of Wvl/hh he been repaid 6.490.43 Total now hold by the Bank 14,734.22 Amount sold : 92.34 Of which has been repaid: 92.34 Total Undisbumsd 3,554.40 3,554.40 a> Approved dudng or after FY8 nd fully dibured. 'SAL. SECAL. er Program Loan under implemntatdon. b > Not yet effectve MdeS: LA2C1: File: WS-03-04ada 14-Apr-94 18 AEXICO Schedule D SUMMARY OF IFC INVEST£MNS Page 2 of 3 as of lh , t 1 904 - ~ ~ ~ ~ ~ ~ ~ ~ ~~~~~~~~~ r~~~~~~~~Lo s}oc awo _ r it r rJw niiii_ Ftcal You rWlFC .IFC rP - by Po t nck dng C-orniind Comnpany i co SunTyp .a so Loan E0uy p!L*2 TotW IFC p Pe 156/s3 lndustrus P- Cicle SA /A IndutraUl Equipuit 0 80 - - 0.80 1OU briatol di Moxico SA. /a AwcraftEnginhOvrhul 0.52 - - 0.52 - - - 1961 Acaro Sol"tS_A_Il Twutsril - - 0.28 0.28 sea5e15/8 Fundidoxa Mantarrey SA/a St"l 2.30 21.44 - 23.74 1903 Tubot deAcero de M oo Stiunl Steel Pipu 0.71 0.10 0.10 1.00 - - - 19c3 Ouimix del Ray SA. /a Sodium Sulphate 0.07 - 0.68 0.75 - - - 1964100 Indus"r dii rieoSA oA. ConstructonEquipmmnt - 1.6 - 1-9 1970 Minra di Nor.- /a Iron Orx Mining 0.75 _ 0.75 1.50 1071 Calaneu.MexicanaSA /a Thxtil 8.00 - 4.00 12.00 1972 Prometota Papl Peiodico SACV /a Pulp & Papor lb - 0.C3 - 0.03 1973/79 Cam*ntos Vwacuz S.A. /a Cement 11.35 - 4.50 15.8S 1974/81 Cancun Aista Hotcl /a Touuism 1.00 0.30 - 1.30 1075178 M*xinoxS.A /a StaineSt"l 12.00 3.18 - 15.18 1976/81/84 Paples Ponderosa SA./a Pulp & Pe 8.16 5.00 4.50 15.66 1978 Tcrstklato Mexicanoa.SA./ Pegochemicals 19.00 - - 19.00 1979/81/87 Hotel Camino Real Ixtpa, SA. Tourism - 4.20 - 4.20 4.20 1079/S4 EmpesasTolteca,SA. /a Cement 30.00 7.95 138.00 175.95 - i979 Conductow"Monterrey.SA. EiocricalVWAu&Cable 8.41 - 13.00 21.41 2.35 1980 Industrs Rgidjol, SA. (A Pariclo Bord 8.00 - 17.00 25.00 - - 1980 ViWrio Piano de Mexico, S . a/ F'.at G;a 15.00 - 29.00 114.90 - 1980 MineuaR".ld Angeles,SA/a Mining 30.00 - 80.00 110.00 - 1981/86 Cclulosico Cantewo, SA. /a Pulp & Paper 15.50 - 44.00 59.50 - 1081 Covpoacion Agroindustr1. SA. Agribusiuen 6.30 3.00 5.00 14.30 - 1984 Capital Goods Facilty /a Capital Goods Finarcing 34.00 - 68.00 100.00 - 1984/88 Metala,SA. AutoChaois 8.00 1.40 - 9.40 1.88 10985 Proteison. SA. de CV. /a Agibusimhn 2.00 0.77 - 2.77 - 108s Prom.indcusrilsMaxicanas,SA. Petrochemicals 32.00 - 4.40 36.40 16.10 108s/l.s Cclulosa Y Papl di Duwango.SAXCV Pulp & Papo 10.00 3.07 - 13.07 13.08- 1987 Agromax (AESA) /a Veg. & Fruit Processing 1.50 0.50 - 2.00 - 1989 Cicaa Constr. Guar. Fac/a Cons'L Guauantae Facility 20.00 - - 20.00 - - _ 1087 Industias SuKamnx. S.A. 0E C.V. a/ Chemicals & Petroch*micalb 2.00 0.50 - 2.50 - 1988 Sealed Power do Mexico Auto Assmbly 0.00 - - 9.00 225 19U8 CrescentMarketAggrgatos ConstruclonMat rial* 73.00 - - 73.00 48.82 108 Apasco. SA. de C.V. Cement & Conet Materials 46.00 - - 48.00 20.08 1001/92Jt3 Apaso, SA. d C.V. /c Cement &CotiS MatariahD 40.91 - - 40.91 10.00 - 1004 Apasco,SA.deC.V. /c Cnment&ConnaLMqwriala 10.00 - 40.00 50.00 10.00 40.00 40.00 19ga SigmaAlirrnnto ,SA. deC.VSalumi) Food&FoodProetairg 20.90 2.00 - 22.9e 5.00 - - 1090/92 Porunw(ASS),SA d C.V. Pevochemicalb 19.10 - - 10.10 12.49 - - 1989 Grupo F*nmsiVi:m Consumer Goods Congomnab 80.00 Z7.60 - 107.60 69s5 - - 1980 anca Sefin D0evlopmenti: Ftno 60.00 - - 80.00 50.00 - - 1080 CemiftOs M axicoC Cement & CoraL. Mat 60.00 - 8.00 68.00 1420 - - 1990/01 CondumxnS.Sd C.V./o ElIctromanAsiaing 31.00 9.54 18.00 0±54 284S 12.0 - 100 Indelpro,SAdeC.V. PurocmloAj 31.00 - 3.0 34.00 = .4 1.8. - 1900 Beco Nai de Maxeio D iW Mr_e 600 - - 60.00 4482S - 7.50 z40 1990 enm CretLb" Dvelpmntpm. 20.00 - - 20.00 -. * - - 101 LexicoFund /a Mon y&CpinMsrk - - es5 0eS." - r - 1001 Pelrocul. SA. Chemiculs a Phrodlulmle 32.00 - - 32.00 3Z00 1001 VitrooFbdo SAd C.V. Gma&RllaisdMal shndglhr 25.00 - 101.00 120.00 25.00 ' 8.W8 - 1001 Vito. SA. Gle & RultaMmbeW - 10.17 8.04 18.2t 10.17 - - 1002 Celular de T nlis, SA. de C.V. TOa COMMunkaon 15.00 1.00 3"00 53.00 1106. 37.00 4.00 1002 Grupo Industial Smbo.SA. de C.V. BraMy 25.00 - 75.00 100.00 25.00 75.00 - 102 IAisnte Lon SA de C.V. Battery UAnrhnlng 10.00 7.03 - 17.03 10.00 - 190U03 Grupo Posada SA de C.V. Toirsmnm 20.00 - 322 S7.22 20.00 3350 - 1002 GrupoinaFlciPrort aSAdi CV 0 W t - 7.50 - 7.50 7.50 Schedule D 19 Page 3 of 3 CMCO SUMMARY OF IFC INVESTMEN1S as of Merih31,1004 Pimi Ye.,~~~~~~~~~~~~~~~~n bU sna unw- va FMO r xFs- by Po d- lNdh Comm7bd Coman Ty" o d Bwln, LeZn Equ I pab TOW, IFC pw PwiP&ft) 1902 Banoo Mrclantl del Naoe, S.N.C. DOvelopment Fewics 20.00 - - 20.00 20.00 _ 10.30 1092 M.4ooCityTolucaTogRoad Transport&S hag. 13.75 - - 13.75 0.70 - - 1003 MasbrpkSA. deC.V. TedlPal_*Ig 12.00 - 28.00 40.00 lZ00 25.03 2.00 1093 Ciulom y Oewido SA. de C.V. T.idlejpsdglng 11.00 - 26.00 37.00 11.00 24.07 1.00 1093/94 Grupo Opeador de Temrnales Maritimas SA. (GOTU) Indusril SWAm 4.00 2.00 a.00 12.00 0.00 - Z24 1004 Gidee Ch.micais&PePachemloals 15.00 8.00 42.50 6.50 2S.00 4250 57.50 1004 Aurum Hllw Finanol S rvic. - 0.8 - 0.08 0.98 - La": Cancel ens. TwmInallons, Repayment. & Sale. 501.42 74.71 530.17 1.106.30 Not CmmbrAitnentW NowHeld 50 4 3.3 ,2J , UNITED SIAIES OF AMEEICA '>, ~~~~~~~~~~olumbu!--.__ ......... ___s ,<4x 0:) >*>No e$Nalas Dou bs jj $El Posoo - M : . EXICO Nogoles Noco 2 nLos Palonon T E X A S . A.,C 1 7 Ag~~~~~~~~~~~~~~~oo uo Cindad Prieto Ju6rez 30, L 95 30 SONORA o S O N ~~~~~~~~~~~~~~~~~~~~~~~~O RAoi ndog Del Ric 27 | C ~~~~~~~~~~~~~~~~~~~~~~~~~Ciudad Acuic _ , A j ~~~~~~~~~~~~C H I H U A H U A /Piedras Negros COAHUILA Nu redo Gulf -2s- zI (<-_ / <~ <0N U E;+Mexico 70 UEVO ~~~~~~~~~~~~~~~~~~~~~~~~~~~oaoros 25- 25' DURANGO Eabou-daries, colors denroin..ions ond any oterinfalionsBownon -, -^ \i thb. nop do not imphy on th. pat of The World ..k Grop, ony jndps-ent o th. lhnilahB s ofo ny trriloqor any rndo--n, morocpIcsof -ZACATECAS A N -oe b-udori-s _I_ _ ____ _ L 10 POTOSi 1 FEBRUARY 1993