The BAIRS/Trade Section conducted a fact-finding visit to Paraguay from June 22 to 24, meeting with government and business representatives. They found considerable potential for economic development from large infrastructure projects and recent government policies. Projects include a $4.1 billion aluminum smelter, industrial parks, and billions budgeted for roads, utilities, airports and more. While financing is uncertain, opportunities exist for Canadian engineering, construction, and other companies in these projects and concessions.

1. BAIRS/Trade Section Visit to Paraguay
SUMMARY
BAIRS/Trade Section conducted a fact-finding visit to the Paraguayan capital city
of Asunción from June 22 to 24; which consisted of meetings with both representatives of
the Government of Paraguay (GoP) and members of the local business community. After
meetings with several offices of the GoP and representatives of the private sector, the
team concludes that there is considerable promise for economic development in the
country, as related to a number of large-scale private- and public-sector infrastructure
projects as well as specific GoP policies of the last several years. (Please note that the
acronym AIA, “Additional Information Available,” can be found throughout this report and
refers to other documents and presentations that can be obtained by sending an e-mail
request to: bairs-commerce@international.gc.ca.)
The private sector-led projects include:
• The investment of $4.1 billion by Montreal-based mining company Rio Tinto Alcan
(RTA) into the development of an aluminum smelter at an as-yet-to-be-determined
location on the Paraná River, which runs along the south-eastern coast of the
country. (RTA has been engaged in negotiations with the GoP on the smelter’s
development since 2009 [AIA]).
• The potential development of a future industrial park downstream from the RTA
smelter, to be used by supply chain companies. The GoP is keenly interested in its
development, as companies would have access to both energy and aluminum.
The public sector-led projects include:
• Paraguay’s Ministry of Infrastructure and Public Works recently released a five-
year investment plan for the period 2008-2013 that details improvements to:
 Road infrastructure (with a proposed budget of US $1 billion)
 Sewage and waterworks (US $500 million)
 Energy-generation, transmission and distribution (US $1 billion)
 Airports, railways, waterways, ports and barges (US $1 billion).
It is important to note that it is not known whether and how much the GoP has
secured in terms of actual financing for the proposed projects listed above;
although the International Development Bank (IDB) is providing some financing for
a number of projects in Paraguay (see page 16 of this document), as have
governments of other countries.
• For electricity sector companies, the GoP has also initiated a call for bids on three
completed 220 kV high-voltage transmission lines (and is expected to initiate
another call for bids on another two 220 kV transmission lines that are currently in
construction in 2012 or 2013). As a result, there is and will be a demand for
suppliers of engineering and construction equipment, products and services. There
is also interest from the GoP to attract foreign business investors and operators of
transmission lines.
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2. • For engineering, procurement, and construction management (EPCM) companies,
Paraguay presents a number of concessions opportunities with regard to the
expansion and improvement projects planned for the country’s airports, waterways,
roadways, sewage and sanitation facilities, and Asunción’s historical district; and
the construction of both a national railway and a Bus Rapid Transit system (BRT)
in Asunción.
• EPCM companies can also find concessions opportunities in the GoP’s plans to
improve the electricity distribution market (as operated by the national electricity
entity, National Electricity Administration [ANDE]) and the development of a
regulatory framework for the exploration of oil and gas in the country.
Of the opportunities listed above, the most viable for Canadian business interests are
expanded upon in the “Report” section of this document (see page 5).
BACKGROUND INFORMATION
Paraguay as a Mercosur Business Hub:
Paraguay is a country of 6.7 million people with a total area of 406,750 km-
squared. It lies between Brazil, Argentina, and Bolivia; and is a member country of
Mercosur, an economic and political agreement promoting free trade between Argentina,
Brazil, Paraguay and Uruguay. The GoP
believes that Paraguay has the potential to
develop as a Mercosur business hub (AIA),
given its geographical location surrounded
by Mercosur’s other member countries and
general ease of access (with the
development of roads and railways
expanded upon on pages 9 and 15). It is
advised for readers to review the
presentation made recently by the Initiative
for the Integration of Regional
Infrastructure in South America on
Paraguay’s vision of becoming a Mercosur
business hub, as every major infrastructure
project in the country has the concept
embedded into it (available at:
www.iirsa.org.)
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3. Electricity Sector
The most attractive feature that Paraguay has in its efforts to become a business
hub for Mercosur, and more generally in attracting foreign multinational companies, is its
abundant and readily-obtainable clean source of power from the Itaipú hydroelectricity
plant. Built by Paraguay in conjunction with Brazil and co-operated by both countries, the
Itaipú plant is the largest operating hydroelectric facility (in terms of annual generating
capacity) in not only the Americas, but the world. More information on this particular
sector will be found on page 10.
Agricultural Sector
The agriculture sector constitutes about 23% of the country’s GDP, with its main
exports comprising soybean, cotton, beef, pork, cereals, sugarcane, fruits and
vegetables. This sector has been rapidly growing, especially the soy market, and as a
result there is a marked need for the expertise of foreign companies that can offer
financial products and services (e.g. grain warranties), as well as logistics operators.
These companies can find a local partner with relative ease, given a current shortage of
independent foreign operators in the market.
There are a few multinational grain traders currently active in the market, which
moves more than 6 million tons each year. In addition, port logistics, services and
equipment are needed to match the growth expected in Paraguay’s grain exports.
In order to facilitate the exporting of its agricultural products, private sector-led
infrastructure projects have been thriving in Paraguay’s prime production hubs.
Economy in Brief
Paraguay has undergone substantial economic growth within the last five years.
After a deep financial and political crisis in 2002, the country’s gross domestic product
(GDP) grew by 4.6% on average between 2004 and 2008. This is the strongest growth
seen in its economy since the 1970’s; and it’s largely been fuelled by rising domestic
consumption and investment, and a boost in exports resulting from high international
commodity prices, particularly in agriculture.
In 2010, the growth in GDP Paraguay was 15.3%, the highest in Latin America and
the Caribbean; however, the overall GDP remains relatively low and GDP rates for 2011
are projected to be more modest. Currently, trade to its neighbour countries Brazil and
Argentina account for 38% of Paraguay’s GDP.
However, it must be noted that despite this high-growth period, an outbreak of Foot
and Mouth Disease (FMD) in September 2011 is expected to have a significantly adverse
impact on Paraguay’s meat industry, especially with regard to trade, as the country
exports approximately 90% of its beef production.
Despite its recent economic growth, achieving success in social development
remains a considerable challenge for the country, due to the relative isolation of its rural
communities (about 40% of the total population in 2009), high population growth rate
(2.37% in 2007), and the impact that the 2008 financial crisis had of increasing food
prices while decreasing incomes. Attaining social development goals will require
redoubled efforts to provide services to poor and marginal areas beyond the eastern
region around Asunción.
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4. The GoP has outlined its key economic and social development priorities over a
five-year period in its 2008-2013 “Economic and Social Plan.” These include hastening
Paraguay’s transition to a modern economy by improving governance and reducing
corruption, addressing the needs of vulnerable groups, and restoring growth in light of the
effects of the global crisis. The plan includes clear objectives and measures for each of
these themes and reflects a pragmatic economic policy stance. It also aims to strengthen
the management of the country’s vast hydroelectric resources.
Canada’s Commercial Presence
Currently, Canada’s commercial presence in Paraguay is limited but the perception
of Canadian businesses in the country is positive. There are a few Canadian companies
operating in Paraguay, most notably RTA and its aforementioned potential multibillion
investment in the development of an aluminum smelter. In December 2009, RTA and
ANDE signed a Letter of Intent to confirm that they will begin negotiating a power
purchase agreement for a potential US $4.1 billion dollar investment in an aluminum
smelter. The mining company estimates that the project will generate 14 000 permanent
jobs over the next 50 years, with forecasted annual exports of at least $1.34 billion dollars
per year and annual tax revenues in the range of $100 million dollars. This represents the
single largest private investment in the country’s history.
If the project proceeds, construction could start in 2014, with the smelter coming
online in 2017. Significant Canadian sales of goods and services could be associated
with the project. In June 2010, RTA hosted a visit of Paraguayan officials to their smelter
facility in Saguenay, Quebec, as well as meetings with provincial authorities in Quebec
and Ontario.
Other Canadian companies with a presence in Paraguay include mining
exploration companies Latin American Minerals and CIC Resources, and oil and gas
exploration company, Quincy Energy Inc. Additionally, Canadian producer of the natural
sweetener stevia, Northern Stevia Inc., is also reviewing a manufacturing facility in
Paraguay.
The country’s public and private sectors are considerably open to collaborating
with foreign companies. For example, ANDE has signed and implemented a refurbishing
contract with technology solutions company Wire Services Inc. (a Manitoba Hydro
initiative) to enhance the transmission capacity of its heavily-strained lines, and the Itaipú
hydroelectricity plant has signed and implemented an agreement with the University of
Manitoba to develop human resources training solutions.
REPORT
Following is an expansion of the most viable opportunities in the country for Canadian
companies, as briefly outlined in the “Summary” section. These opportunities are related
to private and public sector-led infrastructure development projects as well as recent GoP
policies.
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5. A Note on Concessions – a new concept for Paraguay: (AIA)
The GoP’s development policy gives priority to eliminating or reducing poverty and
meeting social needs using market-oriented economic strategies. In 2000, the GoP
passed a general concession law (Law 1618) that offered a common framework for all
concessions, although each project still had to have its own concession law passed in
order to be approved, and in 2009 it initiated internal deliberations to explore airport
concessions.
During the tabling of the airports concession law in September 2010, the GoP’s
former Public Works and Communications Minister, Mr. Efrain Alegre, said that the
government wanted "to mark the opening of the public sector to private investors, which
would allow [them] to inject capital to create jobs and development." The bill, which allows
the GoP to grant the concession of the country’s main airports to private companies, has
already been approved by the Paraguayan Senate and the Chamber of Deputies.
President Lugo must now sign the bill into law, which will make it possible for the
airports to be privately managed by as early as next year. Once the law is passed, the
government will work closely with the International Finance Corporation (IFC) to update,
prepare and launch the call for bids. The proposed date for the launch of the concession
to potential bidders is the end of 2011.
Although these initiatives have faced some opposition from labour unions and
leftist political parties (and still do, as of the writing of this report), President Lugo and his
cabinet have been determined to move ahead with it and other key infrastructure projects
in 2011, the year of Paraguay's bicentennial celebrations.
The successful implementation of the airports project will likely be used by the
Lugo government to support their subsequent plans, including two other public-private
partnership projects that deal with highways (a matter currently complicated by the
truckers union’s lobbying) and rivers/ports (at a more elementary stage of planning).
These are further detailed below.
Infrastructure Development Projects:
1. Airports Improvement Project (AIA)
There are different views within the GoP on how to enhance or refurbish the country’s
airports. There are two distinct projects: The first project already evaluated by the IFC is
to offer on concession the three most important airports (see Project 1). The second one,
which is still a concept, is to build a new airport in the Villa Hayes area across the Paraná
River in front of Asunción (see Project 2).
Project 1
The project will involve the improvement, expansion, renovation and eventual
maintenance and management of three airports: Silvio Pettirossi (Asunción), Guaraní
(Ciudad del Este) and airstrip Mariscal Estigarribia (Western Chaco). There are three
stages that present the possibility for Canadian participation:
1) Engineering studies:
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6. Although reference to feasibility studies will be provided to the public, prospective
bidders will be required to make their own studies of the airport. Usually the IFC would
also run a competitive process to hire an engineering consultant for their technical
advisory work. In this case, the Ministry of Public Works and Communications has
received a grant from the U.S. Trade and Development Agency to fund the consulting
work, so more than likely the IFC will be working with an American engineering
consultant. BAIRS/Trade Section will watch this closely for joint collaboration.
2) The bid:
A higher level of engagement (after preparing the feasibility studies) could be for a
Canadian engineering firm to team up with investors and form a bidding consortium.
3) Supplying the Equipment and Services:
Even if there is a lack of interest in forming a joint consortium or a Canadian
consortium does not win the bid, Canada's suppliers of airport equipment and services
could be sought out as a subcontractor by the winning company.
The Canadian Embassy has been engaged in discussions with the GoP on this and is
planning to revisit the discussions in the coming months to keep potential Canadian
participants informed of developments.
Airport Improvement Project:
Legal and Regulatory Framework
Paraguay currently has in place a general concession law
(Law 1618 – Year 2000, AIA) that offers a common framework for
concessions, although each project must have its own concession
law passed before it is approved. All airports in Paraguay are
currently managed by the National Agency for Civil Air
Transportation (DINAC), which is a regulatory body that currently
works on behalf of the GoP on: Paraguay aerospace policy
management, national air traffic regulation, safety and control; and
airports management, operations and services operation.
DINAC will keep its role as national air traffic regulator, safety
and control while airports operations will be handled by a
concessionaire by law. The concession period would be 30 years
and all works would be financed by the company awarded the
project.
The awarded company will also be responsible for managing
human resources; for example, the transfer of some DINAC
employees and possible termination of others. As it currently stands,
DINAC employees and management are against the airports
concession law and are protesting the matter to the GoP.
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7. Project 2:
The concept is to build a new airport hub close to the Villa Hayes area on the left side of
Paraguay River opposite side of Asunción, which would be capable of handling larger
cargo planes and the distribution of cargo to smaller regional aircraft. At this stage in time,
however, it is still premature to evaluate the plan as a serious opportunity for Canadian
companies, although the Canadian embassy will keep clients informed if the status of this
changes.
2. Waterways Revamping (Hidrovía Paraná) (AIA)
Paraguay is an inland country without direct access to sea-ports, therefore it needs
to improve its exports logistics to ensure competitive access to ports abroad. Given the
difficulties that heavy ocean transport vessels have in reaching Paraguayan ports
navigating upstream on the Rio de la Plata (“Silver River”), Paraná and finally
Paraguayan rivers, it is of utmost necessity for Paraguay and its industry to enhance the
country’s navigational accessibility.
The Paraguay-Paraná waterways belong to a river transportation system
comprised of three rivers; the Paraguay River, the Paraná River, and the Rio de la Plata
River (“Silver River”), which flow into the Atlantic Ocean. The waterway is shared by five
countries (Argentina, Brazil, Bolivia, Paraguay and Uruguay) and measures more than
3.442 km in length.
In order to understand its geography, we will split the waterway into five sectors
below. Sectors two and three are the Paraguayan portions of the system, as can be seen
on the map on the following page:
1) Puerto Cáceres – Corumbá (BOL) 672 km (428 miles)
2) Corumbá (BOL) – Río Apa (PY) 603 km (375 miles)
3) Río Apa – Asunción (Both PY) 554 km (344 miles)
4) Asunción (PY) – Santa Fe Port (AR) 1 040 km (646 miles)
5) Santa Fé – Nueva Palmira (both AR) 590 km (367 miles)
The main objectives of the GoP’s waterways project are:
• To improve navigation from Río Apa to Asunción (554 km)
• To enhance the transportation capacity and improve logistics
• To upgrade the lighting system to allow all vessels to navigate by night, year-round, in
all weather conditions
• To enhance navigation depth to 11ft. (measured at lowest water level) at sector two
• To ensure the minimum channel width is 100 meters
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8. Previous studies made in 1996 identified at least 250 areas where either width
enhancement or dredging should be carried out between Paraná City, Argentina and
Corumbá City, Bolivia. There is a forecasted investment of US $40 million and
maintenance cost of US $2.5 million, per year; and the concession period is expected to
be 25 years. Concession payments would be done through a fee obtained from tons
transported.
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9. 3. Roadway Refurbishing and Expansion: (AIA)
Roadway routes 1, 2 and 6 are the backbone of the country’s road infrastructure.
They form an inverted triangle linking Asunción (in the upper-left corner of the map
below), Ciudad del Este (upper right), and Encarnación (lower-half). The objective is to
revamp and expand these roads from one-way directional traffic to two-ways. The GoP is
currently evaluating whether to concession them through an EPCM toll model.
Forecasted investments are:
• Route 1 (Asunción – Encarnación) (351 km): US $135 M
• Route 2 (Asunción - Ciudad del Este) (169 km): US $162 M
• Route 6 (Ciudad del Este – Encarnación) (250 km): US $104 M
Foreign competition is active at these project sites; for example, Korean International
Cooperation Agency (KOICA) recently signed an agreement with the Ministry of
Infrastructure and Public Works to engage Korean companies in a feasibility study.
Korean companies are already active in Asunción.
4. Opportunities in the Electricity Sector (AIA)
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10. The electricity sector plays an important role in Paraguay’s developing economy,
as the country benefits from one of the best hydrological endowments in the world. The
current installed power generation capacity stands at 8,116 MW, nearly five times
Paraguay’s peak demand of 1,810 MW (in 2009). Much of its hydroelectric power is
exported to Brazil and Argentina.
A significant share of Paraguay’s hydroelectric generation capacity comes from the
Paraná River at its south-eastern border, which provides abundant water for the operation
of the Itaipú plant, as well as of the Yacyretá and Acaray hydroelectric power plants. The
Yacyretá was built in conjunction with Argentina and is co-operated by both countries,
while the Acaray was both built by and is solely operated by Paraguay.
The Itaipu dam has an installed capacity of 7 000 MW (86% of Paraguay's
generation capacity); while the Yacyretá has 900 MW (11%), and the Acaray, 210 MW
(3%). Thermal plants contribute less than 0.1%. Revenues from electricity exports to
Brazil and Argentina represent about 23% of the GoP’s total revenues and 4% of the
GDP.
Access to cheap, abundant and clean hydroelectricity constitutes a clear
advantage in the country’s efforts to gradually move into activities with high value-adds,
such as manufacturing, agro-processing, metal and mechanical industries, and
packaging. In the mid-term, the GoP is also aiming to further harness Paraguay’s
abundant hydropower resources to generate economic benefits and improve the
country’s competitiveness.
Responsibilities in the Electricity Sector:
Responsibilities in the Paraguayan electricity sector are
concentrated in a single, vertically-integrated public monopoly, the
National Electricity Administration (ANDE). The Vice Ministry
of Mines and Energy (VMME), under the Ministry of Public Works
and Communication, is responsible for establishing and guiding
energy policy, as well as for the study of the technical, economic,
financial and legal aspects that promote energy use. In practice, all
the energy responsibilities are concentrated in ANDE, which is the
de facto electricity regulator and provider.
ANDE controls the country’s entire electricity market, including
generation, transmission and distribution. ANDE operates only one
hydroelectric dam, Acaray, and six thermal power plants, with total
installed capacity of 220 MW. It is also responsible for Paraguay’s
share of Itaipú and Yacyretá, the two bi-national hydroelectric
facilities. In total, ANDE operates 3 380 km of transmission lines in
the Interconnected National System and 1 078 km of distribution
lines. It is also responsible for all the distribution, with two
exceptions: Compania de Luz y Fuerza, and the Empresas
Distribuidoras Menonitas del Chaco Central.
The GoP’s strategy aims to develop an optimal and efficient electricity sector within
the existing institutional framework. The limited size of the market, the abundant power
10

11. available from the existing Itaipú and Yacyretá hydroelectricity plants, and the current
regulations have limited the potential interest from independent private generators in
investing in Paraguay’s electricity market.
The authorities have therefore sought to promote the efficient management of
resources within a public sector framework. This includes efforts to reduce losses,
optimize the purchasing agreements with the bi-national generators, and introduce more
efficient management practices in ANDE. The GoP also plans to strengthen the sector’s
institutions, in particular the role of the Vice Ministry responsible for Energy (VMME) and
the regulatory framework and oversight capacities.
Resolving electricity issues is a key priority for the GoP, as it seeks to transform
ANDE into an efficient and financially sustainable public sector enterprise. In January
2010, the Congress approved an emergency plan as a response to the increased
outages and frequency fluctuations of the December to February period, 2009-2010. The
US $40 million-plan includes the procurement of low-voltage transformers and reactive
compensation, and the renting or purchasing of generators for cities currently
unconnected to the electrical grid.
In addition to the GoP’s emergency plan, ANDE submitted a 10-year Master Plan
(2009-2018) built upon the following three objectives:
(i) reducing power losses in distribution and transmission
(ii) expanding transmission system capability
(iii) enhancing the company’s efficiency and revenues by increasing the
exporting capacity of ANDE to neighbouring countries
Total investment requirements over the 2009-2018 period are estimated at US $1.3 billion
(with relatively little financing currently secured); out of which generation investments are
estimated at US $280 million, transmission investments at US $763 million, and electricity
distribution investments at US $266 million. Mobilizing financing is therefore a critical
issue.
With regard to expanding the transmission lines, there are five projects already
underway; including the development of a 500 kV line and a 220 kV line. Opportunities for
Canadian companies within these projects include designing, building and operating the
transmission lines.
Power Distribution Sector, Losses Metering Management System, and Reduction
and Reactive Compensation Capacity:
Although the country is major electricity generator and exporter, its domestic
consumption per capita remains low at 1 000 kWh/year (about one third of the
consumption levels of Brazil and Chile). ANDE expects electricity demand to increase by
about 9% / year-over-the-medium-term corresponding to an additional 100 MW per year,
driven mainly by an increase in the residential and commercial demand. This projected
demand growth exacerbates the challenges faced by ANDE’s electric system, in regards
to increasing the network capacity, improving the quality of service and reducing system
losses.
System losses have increased steadily over the last 10 years, from 21% in 1999 to
34% in 2005. Through a loss reduction program launched in 2006 by ANDE with financial
support from the IDB, overall system losses slightly improved by one percent to 33% in
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12. 2009, of which about 10% are estimated to be transmission losses and 23% distribution
losses (technical and non-technical losses are estimated to split equally). However,
ANDE has no reliable system to meter losses at different voltage levels and geographical
locations, and no remote metering system. ANDE’s current target to further reduce
system losses in 2010 to 32% is a modest goal. Electricity service distribution also faces
significant outages and frequency fluctuations.
The current maximum capacity of the transmission system, estimated by ANDE to
be 1,700 MW, reached peak demand in 2009 peak at 1,810 MW. In 2009, customers saw
16.9 interruptions for an average of 11.4 hours per interruption. These outages are due to
the fact that transmission equipment are operating close to their thermal technical limits
causing shutdowns of the system whenever there is a shock. Warm summer weather,
heavy rains or thunderstorms regularly result in the activation of the transmission lines
protection devices and in interruptions.
In addition to outages, the long distances from the generating plants to load centers
(approximately 300 km) result in frequency and voltage fluctuations that have hindered
economic operators and households in the main load centers. This is particularly intense
in lines connecting Asunción area with the Western Chaco, reaching Mariscal Estigarribia
city, which is the site of the Canadian Mennonite community.
Additional transformation and reactive compensation capacity to support ANDE
transmission network is therefore critical to avoid a supply crisis and prevent the further
deterioration of the quality and reliability of the electricity service.
Interested companies can visit ANDE’s web-site at www.ande.gov.py, and the public
contractors’ web-page, which provides foreign companies access to national and
international bids: www.ande.gov.py/contrataciones.php. Any company interested in
working with ANDE should be previously registered as a supplier. It is strongly advised to
choose a local electrical company that can partner with a Canadian provider of products
or services and implement Canadian solutions on-site. Those local companies have
different providers’ certifications that can only be obtained with time and a record of past
projects successfully implemented for ANDE. BAIRS/Trade Section can provide a short
list of ANDE suppliers upon request.
_______________________________________________________________________
5. Renovations to Asunción’s “historical” riverfront (AIA)
The GoP has several projects related to enhancing the riverfront area in Asunción.
Recognized as the “historical” district, the area is currently occupied by old buildings and
downgraded construction. Revamping plans include:
• Refurbishment to the area’s basic urban infrastructure and the installation of sewage
facilities and energy from the electricity grid in newly-built areas:
o Riverfront
o Bicentennial Park
• Bus Rapid Transit (BRT) project (see below)
• New buildings to concentrate GoP offices (see below)
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13. The IDB recently approved a loan (under the loan number PR-L1044) to the GoP for its
project, named “Downtown Redevelopment, Modernization, Metropolitan Public Transport
and Government Offices.” The program has been structured into the following main
components:
(i) renewal of downtown Asunción
(ii) construction of the first metropolitan public transport corridor
(iii) administration
(iv) audits and evaluations
6. BRT – Bus Rapid Transit System construction and management (AIA)
Asunción’s urban transport system is operating at maximum capacity, and as a
result, the GoP and the City of Asunción are working together on what is being called the
“Bus Rapid Transit” (BRT) system; which will connect Mariscal Estigarribia Avenue to the
city’s port area, via Eusebio Ayala Avenue.
The BRT acronym applies to a variety of public transportation systems using buses
to provide faster, more efficient service than an ordinary bus line. Often this is achieved
by making improvements to existing infrastructure, vehicles and scheduling. The urban
bus route is among the busiest ones and would be a test case for further projects.
The GoP plans to initiate a call for bids from interested companies that can finance
the development and construction of the public-use transit buses, as well as manage the
service to re-coup their initial investment.
At the request of the Ministry of Public Works and Communications (MOPC), the
IDB is supporting the development of studies related to public transportation and access
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14. to the metropolitan area of Asunción. As part of this collaboration, the bank and the
MOPC are in the process of designing and planning the project "Restructuration of the
Downtown, Modernization of the Metropolitan Public Transportation and Government
Offices" (internal number PR-L1044).
7. Sewage and sanitation waterworks
There are numerous projects planned by the GoP’s Ministry of Public Works, with
some having already secured financing. The IDB has approved a US $40 million loan
under the internal number PR-X1003 for the “Water and Sanitation Program for Rural and
Indigenous Communities” (PAySRI).
The scope of the operation includes:
(i) extending the coverage of water and basic sanitation systems in rural and
indigenous communities without such services
(ii) promoting their sustainability
(iii) developing a pilot program for solid waste management
(iv) strengthening the project execution capacity of SENACSA (National Animal
Health and Inspection Agency).
The IDB also has two loan programs that are currently in the preparation stage.
Loan program PR-G1001 offers US $60 million of a total infrastructure development cost
estimated at US $62 million, and PR-L1060 offers US $20 million out of US $ 80 million in
total costs. Both programs have the following components:
• Component 1: The construction of water and sanitation systems, sewage treatment
plants and individual wastewater solutions
• Component 2: Technical assistance to new and existing water and sanitation
operators in governance, legal, accounting, financial, commercial and operational
subjects; aiming to improve their operational and commercial performance
• Component 3: Technical studies for the physical and financial planning of
investments. These studies will include tariff and subsidy studies, human
resources training, design of campaigns to promote the efficient and rational water
use, as well as the importance of waste water treatment to protect the environment
8. Gas pipelines construction (AIA)
Gas pipeline design and construction skills would be required among engineering
companies if announced gas resources get confirmed as reserves. There is a demand for
a supply of gas in the Western Chaco region of Paraguay and Canadian Mennonite
communities may be willing to the share the costs for pipeline construction with the GoP,
in order to enhance its own access to gas and product competitiveness. (Additional
information is available and prepared by Quincy Energy Inc. on gas discoveries made in
Paraguay.)
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15. At this moment in time, there is no oil or natural gas production in the country,
despite Paraguay’s favourable location just east of Bolivia. The latter country has been
producing oil and gas for more than 70 years from a deep and productive geographic
horizon that extends into western Paraguay (at much shallower depths), which Quincy
Energy Inc. has been exploring. Since initial explorations commenced in Paraguay in
1944, only 28 exploratory wells have been drilled in the Carandayty sub-basin, where
Quincy exploratory sites are located. Two of these wells, located on Quincy properties,
had hydrocarbon shows.
Paraguay consumes 30 000 barrels of oil per day, in the equivalent in refined
products – all of which are imported. It has a refinery capable of producing 7 500 barrels
per day owned by Petropar, the state oil company, located near Asuncion. The
Paraguayan Hydrocarbon Law 779/95 requires that domestic oil production will first
satisfy the its own needs before exporting to other countries, however the refinery
purchases the oil at the well head at world prices so there is no transport cost to the
producer.
Oil royalties are payable to the state on a sliding scale from 10% to 14% of gross
sales. There is a limited market for light petroleum gasoline, which is imported from
Argentina and Bolivia.
9. Railways (AIA)
There is a railway construction project planned that will link Paraguay to
neighbouring countries Brazil and Argentina’s railway grids. A portion of the line that is
currently in evaluation would link Presidente Franco and Curupayty cities. The first portion
of a pre-feasibility study was conducted by KOICA (the Korean Development Agency).
The second portion, also undertaken by KOICA, began in September 2011 and will end
by March 2013, with a US $2 million budget.
As can be seen in KOICA’s document (AIA), the possibility to connect Presidente
Franco city in Northwestern Paraguay with Cascabel in Brazil (a distant of 140 km) and
also Curupayty in Southeastern Paraguay with Resistencia in Argentina (85 km) would
allow railway transit to flow from the Atlantic to Pacific Oceans. Paraguay is particularly
interested in railway construction to facilitate the exporting of its grains and minerals
(including the potential production of aluminum) by transportation methods other than
using the waterways.
10.Industrial Park – Villa Hayes (AIA)
An industrial park is planned for development in the Villa Hayes area located
across the river from Asunción. This industrial park could potentially host in-bound
companies (“maquilas” or subcontractors) that would be inclined to use either Asunción’s
Petirossi airport or a future airport in Villa Hayes.
Re-cap of IDB’s Support for Infrastructure Projects in Paraguay (AIA):
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16. The IDB (International Development Bank) supports several infrastructure projects
in Paraguay:
Power sector:
The IDB’s National Electricity Administration Multiphase Power Transmission Project (US
$105 million for Phase I), aims to meet the growing demand for electricity by expanding
and upgrading the transmission grids, reducing loss levels, and supporting actions to
modernize ANDE. Over the 2006-2011 period, the project will finance a 198 km-long 220
kV transmission line and two 35 km-long 66 kV transmission lines, as well as the
replacement of 220 km of transmission lines. It will also establish ANDE's environmental
and social unit and aims to improve the company’s financial corporate management. The
IDB has one additional program in preparation to support the power transmission system
in Paraguay, and will be offered to ANDE under the loan number PR-L1058. It offers US
$100M out of a total cost of US $350M.
Historical district and BTR project:
The IDB approved a loan to the GoP under the loan number PR-L1044 for its “Downtown
Redevelopment, Modernization, Metropolitan Public Transport and Government Offices”
program, which as mentioned earlier in this report, seeks to revamp several facets of
downtown Asunción, construct the first metropolitan public transport corridor, and improve
administration, audits and evaluations.
Sewage and sanitation:
The IDB has approved a US $40 million loan under the internal number PR-X1003 for a
GoP program named “Water and Sanitation Program for Rural and Indigenous
Communities” (PAySRI). As aforementioned on page 14 of this document, it also has two
loan programs in the preparation stage: PR-G1001 offers US $60 million toward a total
cost of US $62 million in sewage and sanitation facility upgrades, while PR-L1060 offers
US $20 million toward a total cost of US $80 million in other upgrades
.
For further information on IDB participation in Paraguay, visit:
www.iadb.org/en/countries/paraguay/paraguay-and-the-idb,1039.html
Drafted: Alejandro D’Agostino/BAIRS, Trade Commissioner
Date: Oct. 28, 2011
Edited: Mary Nguyen
Approval: Ross Miller/BAIRS
KEY CONTACTS
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17. Canadian Government Contacts:
Canadian Embassy in Argentina
Phone: (+54-11) 4808-1051
Email: bairs-commerce@international.gc.ca
Internet: http://www.buenosaires.gc.ca
Foreign Affairs and International Trade Canada
125 Sussex Dr.
Ottawa, ON K1A 0G2
Argentine Government Contacts:
To contact the Government of Paraguay directly, companies can send their
requests in English or Spanish to the following…
Mr. Felix Zelaya, Eng.
Ministry of Infrastructure and Public Works
fzelaya@mopc.gov.py
Mr. Luis Anazco; Architect
iirsa@mopc.gov.py
For further information on GoP projects, please visit: www.mopc.gov.py
Other useful web-sites:
Initiative for the Integration of Regional Infrastructure in South America (IIRSA):
www.iirsa.org
National Electricity Administration (ANDE): www.ande.gov.py
ANDE’s public contractors’ web-page: www.ande.gov.py/contrataciones.php
International Development Bank (IDB)’s web-page listing its participation in Paraguay:
www.iadb.org/en/countries/paraguay/paraguay-and-the-idb,1039.html
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