Punta Cana Airpt

Summary of Proposed Investment

This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only.

Project number	27883
Company name	Corporacion Aeroportuaria del Este, S.A.
Country	Dominican Republic
Sector	Transportation and Warehousing
Environmental category	B
Department	Infrastructure
Status	Pending Signing

Date SPI disclosed	March 27, 2009
Projected board date	April 27, 2009
Previous Events	Approved: November 16, 2009

View Environmental & Social Review Summary (ESRS), click here

Overview

Sponsor/Cost/Location

Development Impact

Contacts

Attachments

Project description

The proposed investment is to help Corporación Aeroportuaria del Este, S.A. (“CAE”) finance its 2009-2010 capital expansion program. CAE operates the Punta Cana International Airport located on the east coast of the Dominican Republic. The airport serves the Punta Cana and Bavaro regions and is the country’s busiest and fastest growing airport. During 2008, CAE handled approximately 4 million passengers and accounted for 42.4% of total air passengers in the Dominican Republic.

Punta Cana is one of Dominican Republic’s key tourist areas along with Puerto Plata, La Romana and the developing Samaná area. As passenger arrivals increase with the growing popularity of tourist resorts in Punta Cana and Bavaro, CAE needs to invest in new infrastructure and facilities to expand its capacity and manage the increasing demand. The capital expansion program is expected to include (i) the construction of a new runway and taxiway suitable for larger aircraft, (ii) the expansion of the existing passenger terminal, (iii) the installation of additional safety equipment and (iv) the repair of the existing runway.

Anticipated development impact of the project

The proposed financing would benefit the Dominican economy and help develop the important tourism industry, one of the key earners of foreign exchange for the country. The expansion of the Punta Cana International Airport is also a high priority for the Dominican Government to increase passenger throughput and develop, and increase fiscal revenues from, the tourism industry. The capital expansion program will allow the airport to increase passenger handling capacity, raise service levels, and expand its ability to grow and diversify destination markets. It will also help the airport meet and maintain international performance and security standards to ensure the highest levels of service to all stakeholders (carriers, tenants and users). Furthermore, the success of this project will encourage foreign investments and further private sector participation in other infrastructure sectors such as roads and ports.

IFC's expected development contribution

The proposed investment fits squarely in IFC's strategy to support the tourism sector in the Dominican Republic through enabling ancillary infrastructure investments, as well as IFC’s broader strategy to increase investments in the Caribbean. IFC’s expected contribution is derived from the lack of suitable financing in the international and Dominican banking market. CAE invited IFC to the project as other lenders have been reluctant to provide longer term loans to Dominican companies. IFC has a strong role in supporting a high development impact project presented by a strong local sponsor and alongside Banco BHD, a local lender and an IFC investee company.

Environmental and social issues - Category B

This is a Category B project because a limited number of specific environmental and social impacts may result from upgrading the existing airport facilities and constructing and operating the new runway. The Airport is located in a relatively remote and already intervened area, which is fully owned by the sponsors, and where it has been operating for over 40 years. The new runway is being designed to reduced noise to the closest receptors, which are high-end residential or vacation homes within the Punta Cana Resort and Club complex. Because the project is limited to the construction of a new runway and upgrade of an existing terminal and related infrastructure at an existing and operating airport, there is no need for additional land acquisition or the construction of new access roads. There are no threats to biodiversity and no significant habitat destruction is expected. There are no indigenous peoples or sites of cultural or archeological importance affected by the airport’s development.

The principal environmental and social impacts and risks associated with the project are those typically associated with expansion of an existing airport, including: (a) pre-existing environmental contamination, (b) construction impacts, (c) noise and vibrations, (d) air emissions, (e) energy and water consumption, (f) storm-water and waste water handling and disposal, (g) solid and hazardous waste handling and disposal, and (h) fuel handling and storage (including emergency response). CAE has prepared and presented an Environmental Impacts Assessment to the Environmental Authorities of the Dominican Republic and has developed extensive Environmental Management Plans (Plan de Manejo y Adecuación Ambiental - PMAA) to appropriately address these impacts and risks.

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