Bank of China provides $85 million buyer's credit loan for Falcon State Water Pipeline Project (Linked to Record ID#35849)

Project narrative

On December 23, 2002, Bank of China signed a buyer's credit loan agreement with the Government of Venezuela to provide a $85 million buyer’s credit loan for Phase 1 of the Falcon State Water Pipeline Project. China Export & Credit Insurance Corporation (Sinosure) provided buyer's credit insurance. The maturity of the loan was to be 9.5 years. An MOU for the project was signed December 27, 2001. The commercial contract cost for phase I was $100 million, of which $85 million was provided via the BOC buyer's credit loan, and the remaining 15% was to be covered by the Government of Venezuela. The commercial contract cost for phase II was $80.3 million. The phase II supplementary engineering contract for phase II had a value of $12.5 million. The commercial contract for phase III was worth $108.05 million. The total cost for all phases was originally estimated to be $240 million, but project costs ultimately exceeded that amount. CAMCE was the contractor responsible for project implementation. This project was launched on June 8, 2003, and it was completed on May 29, 2006. Phase I involved a feasibility study, engineering and construction of 60 km of pipes to take 8,000 l/s of water from the Maticora reservoir in the south of Falcon state to the Paraguana peninsula in the north, benefiting some 150,000 people. The contract was signed on July 3, 2002 and the work came into use on June 5, 2003. The contract for Phase II was signed on June 22, 2005, and it consisted of provision of 37km of steel pipes and 20km of PEAD pipes, installation work, and the construction of three water treatment plants with capacities of 16 1/s, 100 l/s, and 100 l/s. The contract for supplementary engineering work for phase II was signed on August 20, 2006. The Phase III contract was signed on March 8, 2007 and involved the supply of 59 km of steel pipes and installation work. The project has resulted in much controversy. Due to poor engineering the pipeline does not continuously function, leaving communities without water. In addition, there has been allegations of corruption, citing the money allocated towards the project is greater than the amount actually needed.