DALLAS - The World Bank has approved $918 million in environmental loans to Mexico, including a large program to provide wastewater, water, and other project funding for up to six cities that border the United States.
The loans are part of a joint environmental program agreed to last fall by Mexico and the United States that will provide up to $1.8 billion in World Bank loans to the Latin American country in the next three years.
The loans also represent partial fulfillment of a pledge made by the Clinton Administration to get the North American Free Trade Agreement approved last year and could complement projects funded by a new North American Development Bank scheduled to open later this year.
Under the loan programs announced last week, an approximately $2 billion line of credit will be available for environmental projects when the World Bank funds are combined with $1.05 billion in matching funds from the Mexican government.
"Mexicans, like their neighbors to the north, are acutely aware of the serious environmental problems that urgently need attention. People want action ... These three new projects will be a major building block in helping them do that," said David Ferranti, the World Bank's division chief for Mexico.
The World Bank loans would be disbursed over a five-year to eight-year period through the National Bank of Public Works and Services in Mexico to three programs:
* $368 million to help finance the northern border environment project;
* $350 million to help improve water and sanitation services across Mexico, particularly in poorer areas;
* $200 million to assist a Mexican national program to modernize solid waste services in medium-sized cities throughout Mexico.
Under the border program, the loans are expected to be used for about 15 water, wastewater, air pollution, hazardous waste, and other projects in five to six Mexican cities that border California, Texas, New Mexico, and Arizona.
About 10 cities, including Tijuana, Juarez, Nuevo Laredo, Mexicali, Nogales, and Reynosa, are eligible for the loans under the border program. In addition, other bank and Mexican funds would go toward establishing new national reserves across parks such as Big Bend and Padre Island in Texas.
"The cities would have to apply on a first-come and first-serve basis," said Leandro Coronel, World Bank information officer.
Coronel and others said the loans could benefit the U.S. side of the border by cleaning up the regional environment and possibly prompting similar projects on the the U.S. side.
"I think twin projects will come about because of what is going on with the North American Free Trade Agreement. That will generate the impetus for cooperative efforts," said Jorge Rodriguez, a first vice president for Masterson Moreland Sauer Whisman in San Antonio.
In addition, Carlos Melcer, a director of international business development for Public Financial Management in San Francisco, said that companies and individuals from the U.S. side of the border could potentially purchase services from the Mexican facilities for water or wastewater treatment. "It would make the projects easier to finance," he said.
Melcer, who is an adviser to Mexican governmental agencies and the World Bank as well as a developer of the NAD Bank, said he expected the various financial and government institutions could complement their efforts.
He said the World Bank loans provide a service to poor, developing communities, but they also have drawbacks, including the length of time to get the loans, the costs, and the necessity of the sovereign guarantees.
However, "the NAD bank would be more amenable to public and private ventures and does not require a sovereign guarantee," Melcer said.
As a result, Melcer said he envisions the NAD Bank working in conjunction with World Bank programs to expedite projects financing along the border. The NAD Bank is scheduled to open this fall in San Antonio, Tex., when a manager is hired and the United States puts in the first capital.
Both the NAD Bank and the environmental loans from the World Bank were announced last fall when Congress was debating Nafta.
Last fall, Clinton Administration officials said the World Bank and NAD Bank loans would be part of an $8 billion, 10-year project to clean up the border.