• On transportation, power, housing and telecommunications infrastructure:
  • 3,045 dead, 18% of population affected
  • 151,215 homes damaged(roughly 30,000 destroyed)
  • US$ 326 million (UNDP) in damages, 94% of which in the road sector
  • Two thirds of the road network affected (5,695 km)
  • 29 bridges destroyed(1,933 meters)
  • Three hydro plants suffered major damages (150 MW affected)
  • 10 high voltage transmission lines interrupted by the collapse of towers
  • Serious damages to the electricity distribution network in affected communities
  • For several days, 172 towns and villages were isolated
• On the rural economy:
  • Losses in the 1998-1999 crops
  • Longer term losses due to:
    • Damage to permanent plantations
    • Loss of topsoil
    • Loss of herds
    • Other capital losses

• Required to increase efficiency and obtain capital needed for improvement and expansion of infrastructure services.

Achievements to date:

• Laws enacted to:
  • Separate regulatory from operational activities in telecommunications and electric power (1995)
  • Allow the concessioning of roads to the private sector (1996)
  • Regulate the exploration, extraction, and commercialization of hydrocarbons (1998)
  • Allow the leasing of the fuel distribution company PETRONIC (1998)
  • Segment the electric power company (ENEL) into separate enterprises for generation, transmission, and distribution (1998)
  • Permit the concessioning or divestiture of generation and distribution activities (1998)
  • Allow the privatization of a 40% controlling share of equity capital of the telecommunications company (ENITEL)
• Schedule approved to bring rate structures closer to long-term marginal costs in power and telecommunications

• In the road network:
  • Privatization of all but three of government-owned construction enterprises, and transformation of remaining ones into minimum-capacity provincial road maintenance units, by end-2000
  • Private concessioning of:
    • Rehabilitation, widening, or construction, and operation and maintenance, of a few road links (Managua-Masaya, Managua by-pass, etc.)
    • Maintenance of a larger number of links (promote participation of small and micro enterprises)
  • Implementation of Road Maintenance Fund
  • Other cost recovery measures
• In energy:
  • Regulatory framework for wholesale market of electric power in place by mid-1999
  • 43% of electric power generation capacity supplied by private agents by end-1999
  • Segmentation of electric power company (ENEL) into separate enterprises for generation, transmission, and distribution completed by end-1999
  • Privatization of distribution companies in 2000, followed by generation companies
  • Part of the proceeds from privatization to provide seed capital for rural electrification
  • Future private investment opportunities in power generation concentrated in clean energy sources: biomass, geothermal, hydro, and wind
  • PETRONIC leased to a private operator in 1999
• In telecommunications: Privatization of ENITEL in 1999
• In ports and airports: Preparation of their privatization in the rest of 1999

• In roads:
  • Most of the major maintenance, rehabilitation, and improvement works
• In ports and airports:
  • Core initial investment needed to put the ports of Corinto and Rama in acceptable operating conditions while privatization can proceed
  • Urgent rehabilitation in other ports and airports
• In electric power:
  • Repair of hurricane damages
  • Expansion and improvement of transmission network
  • Seed capital in rural electrification
• In telecommunications:
  • Repair of hurricane damages
  • Possibly some seed capital in rural telecommunications

Presented priority criteria can help adjust the program to fit within macroeconomically viable ceilings.

Policies and public investment needs

Non urban

-- Before Mitch US$ 400 to 600 million

-- Replacement cost of damages US$ 300 million

Urban US$ 200 to 400 million

TOTAL: US$ 900 to 1,300 million

(Estimated costs depend on standards assumed for rehabilitation.)

• Cofinancing by bilateral donors and multilateral agencies
• Mobilize private sector financing
  • Use bilateral cofinancing to obtain the necessary degree of concessionality
  • Give road links in concession
• Evaluate possible cost recovery schemes:
  • Tolls for using specific road links or bridges
  • Toll charges to border-to-border transit traffic
  • Surcharge on fuel
  • Annual fees according to vehicle types and their contribution to road deterioration
  • Special charges on large vehicles, to recover the cost of extra capacity
  • Traffic fines
  • Direct charges to individuals or communities whose property increases in value
• Cost sharing with local governments and communities
  • Pilot program for such projects as:
    • Paving access roads, village squares, and pedestrian lanes
    • Building shoulders and bicycle lanes
    • Improving dangerous intersections
    • Reducing dust formation in roads
• Road maintenance fund

• Urgent flood protection
• Urgent bridge reconstruction on main corridors
• Complete reconstruction or repair of larger bridges on main corridors and important feeders
• Nation-wide paved road major maintenance (sponsored by World Bank)
• Rural road rehabilitation (sponsored by IDB)
• Rural road stabilization and improvement (sponsored by World Bank)

• Full rehabilitation or improvement of main corridors and feeders. Reconstruction, major rehabilitation, widening, or paving, as can be financed and is economically and socially justified
• Suburban network around Managua.(some World Bank and IDB projects)
• Pacific natural corridor and feeder roads (World Bank, DANIDA)
• Pan-American North corridor and feeder roads (IDB)
• Eastern corridor and feeder roads (DANIDA, IDB, World Bank)
• North-eastern corridor
• Urban road improvement and maintenance fund.
• Nation-wide road safety program.

Ports and airports

• National Priority: Access to the Atlantic at competitive costs
• Short term options:
• Reducing transportation costs to Cortés (Honduras) and Limón (C.Rica)
• Expediting procedures at border crossings
• Improving road conditions
• Promoting competition among truck operators
• Reactivating services at El Rama river port (on the Nicaraguan Caribbean)
• Improving road
• Dredging the river mouth (El Escondido)
• Promoting private development of the port and services
• Improving port services at Corinto (on the Nicaraguan Pacific)
• Installing additional container crane
• Improving efficiency: Load and unload 200-300 TEUs in 12 hours
• Attracting additional cargo volume from other Central American ports on the Pacific
• Attracting weekly service between Corinto and hub port of Manzanillo, Panamá
• Privatizing port and services
• Medium term options:
• Privatizing development and services of ports and airports
• Private project for barge navigation through San Juan river
• Private inter-oceanic railroad corridor projects: feasible with only C.A. cargo?

• There was a housing deficit equal to 378,627 homes before Hurricane Mitch
• Damaged Home Repair Project:
  • A voucher equal to $750.00 will be given to rural home owners to repair their damaged homes. 17,566 homes will be repaired with an estimated cost of $12.3 million in 1999
• Emergency Housing Project
  • 10, 000 kits of construction materials will be given to families that are in shelters for the auto-construction of homes. Estimated cost of $25 million in 1999
• Reduction of Housing Deficit Project
  • Build 15,000 per year at an estimated cost of $4,500.00 per house. The estimated cost is $22.5 million per year (2000-2002)
• Social Fund for Housing
  • Private home developers can present projects to be approved so that the State will contribute from 20 to 37.5 % of cost of the house.

Cost of house Usd$	Government subsidy %
10,000	20.0
7,000	25.0
4,000	37.5

• Creation of a competitive electricity market
  • As of May of 1999, 20% of the 396 MW domestically generated potential is supplied by private sector
  • For the remaining of 1999, further contracts are being negotiated with the private sector for an additional capacity of 115 MW
  • By end-1999, there will be an estimated capacity surplus of 57 MW, necessary for a major overhaul or scrapping of some of the old thermal plants
  • Expansions, from 2000 onward, through private investment in a competitive market

• Rural electrification
  • Goal: 400,000 additional connections
  • Cost: ~US$ 400 million
  • Financing: US$ 100 million from ENEL privatization, US$ 150 million from the private sector and beneficiary communities, US$ 150 millions from donors

• Goal: Increase density from 4 lines per 100 persons as of end-1998, to 16 lines by 2004
• Annual investment requirements: US$ 122 million
• Private investors will have to finance and implement this expansion
• To this end, 40% of ENITEL will be privatized in 1999

Investment priorities in telecommunications (Mill. US$)