Metro de Salvador S.A. (Metrosal)

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MIGA has provided guarantees totaling $61.68 million to a consortium of Spanish companies for their respective investments in, and dividends from, Metro de Salvador S.A. (Metrosal) in Brazil. This amount includes $1.68 million in coverage for the consortium's performance bond. The total investment amount is $40 million. Construcciones y Auxiliar de Ferrocarriles S.A., which leads the consortium, has received a $9 million guarantee; the guarantees for Inversiones en Concesiones Ferroviarias and Fondo para Inversiones en el Exterior are for $24 million each, and the one for Dimetronic S.A. totals $3 million. The guarantee period is 15 years, and the coverage is against the risks of transfer restriction, expropriation, war and civil disturbance, and breach of contract. The project is a Build, Operate, and Transfer (BOT) scheme for the operation of the urban rapid rail transportation system in the municipality of Salvador de Bahma, and includes the supply and installation of rolling stock and signaling equipment, and commercial operation of the system for the 25-year concession. Currently, the urban transportation system in Salvador, Brazils sixth-largest city, is underdeveloped and largely road-based, causing significant congestion and delays. This level of road-based transport has significant impacts on the local economy and environment. For this reason the municipality and the state, together with the World Bank, have been involved since 1992 in the design and implementation of a transportation strategy. This project is an integral part of the strategy. The project aims to improve the quality of public urban transportation in the area by connecting currently-excluded low-income neighborhoods, and by furthering the development of a fully integrated urban transportation system. The fare system has been designed to ensure that the out-of-pocket cost to end-users will not be significantly higher than those already being paid. The local government stands to benefit directly from the project, as concession payments over the first eight years of the project are expected to total approximately $9 million. When the system becomes operational (currently anticipated for 2003), the project company will pay an annual concession fee averaging some $27 million. It will also employ about 350 full-time local staff, who will receive extensive training from the companies that make up the consortium.

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