WASHINGTON MAY 27, 1997 -- The World Bank today approved two loans totaling US $64.5 million to Turkmenistan for an Urban Transport Project (US $34.2 million) and a Water Supply and Sanitation Project (US $30.3 million). The loans will help finance improvements in urban transport in Ashgabat, Mary, and Chardjou and in water supply systems and sanitation in the Dashkhovuz Velayet, the region of Turkmenistan most severely affected by the enviromental crisis of the Aral Sea basin.

In cooperation with the World Bank, the Government of Turkmenistan is committed to efficiently developing its agriculture, oil and gas, social and infrastructure sectors -- high priority sectors which will improve the standard of living and accelerate Turkmenistan's transition to a market economy.

The Bank-assisted Urban Transport Project will be important in not only reforming the urban transport sector, but also in reforming other areas of the public sector by demostrating the effectiveness and benefits of such reforms. Similarly, the Bank-assisted Water Supply and Sanitation Project will support the government's sector strategy of increasing access to potable water, particularily in under-served rural areas, while initiating institutional and water sector policy reforms to reverse the degradation of the environment and improve the health indicators.

The Urban Trasport Project will preserve and improve, on a sustainable basis, the efficiency and effectiveness of the urban trasport fleet in three of Turkmenistan's main cities through the following three components:

• Transport vehicles (US$20.4 million) will:
  increase the supply of buses through the purchase of 80 diesal buses, 10 compressed natural gas buses and 40 trolley buses;
• Maintenance and Rehabilitation (US$16.4 million) will:
  refurbish buses already in the transport fleet; replenish spare parts and provide tools, computers, and other equipment for improving availability of trasport vehicles; and establish a metropolitan trasport organization, the Ashgabat Passenger Autotransport Production Organization, which will be responsible for the overall management of bus operations.
• Technical Assistance and Training (US$1.5 million) will:
  Reform the management of the agencies in charge of urban transport operations; encourage private sector participation in providing urban trasnport services; establish a system for public input and consultation, and provide training to staff in urban related activities.

The total project cost is approximately US$38.3 million, including physical and price contingencies of US$5.39 million. The Bank's loan of US$34.2 million will finance 89 percent of the total project costs. The Government of Turkmenistan and transport companies in Ashgabat, Mary and Chardjou will contribute financing totalling US$4.1 million.

The Water Supply and Sanitation Project will improve the health of the population in the region most affected by the Aral Sea disaster by investing in water and sanitation infrastructure. This is the first infrstructure investment project in Turkmenistan; therefore, it is designed to be focused and simple to implement both technically and administratively through the following four components:

• Water supply improvements (US$20.1 million) will: provide a supply of safe reliable water to 180,000 people in seven cities, and to 82,000 people in 47 villages in nine collective farms of which 62,000 people will be receiving water from piped systems for the first time.
• Sanitation and health (US$3.4 million) will: improve sanitation and hygiene by installing hand washiing basins in approximately 35 schools; encourage community-based participation in improving hygiene through health education activities in schools and local market places; and provide technical assistance, equipment, and training for monitoring the quality of the water supply; improve public health data collection analysis and reporting; and conduct environmental epidemiological studies.
• Institutional Stengthening (US$2.4 million) will improve the effectiveness of the delivery of the water and sanitation services by: conducting a national water sector reform study, and a public awareness campaign, and providing training, equipment, and technical assistance to establish the Dashkhovus Regional Water and Wastewater Authority
• Project Management and Construction Supervisor (US$3.0 million) will: provide training, technical assistance and equipment to the project implementation unit; and provide technical assistance for supervising the construction of water supply systems.

  The total project cost is US$33.7 million, including US$4.8 million in physical and price contingencies. The Bank's loan of US$30.3 million will finance approximately 90 percent of the totoal project cost. The Government of Turkmenistan will contribute financing of US3.4 million.

  Both of the World Bank's laons will be repayable in 20 years, including a five-year grace period, at the Bank's standard rate for the LIBOR-based US dollar single currency loans.

  Since Turkmenistan joined the World Bank in September 1992, Bank commitments total US$89.5 million for three projects.