McALLEN, RGV – The Border Trade Alliance has welcomed the decision of Presidents Obama and Peña Nieto to double the North American Development Bank’s general capital to $6 billion.

Obama and Peña Nieto agreed to support the capital increase at a January 6 White House meeting. The capital increase agreement must still gain congressional approval in both the U.S. and Mexico.

The increase in funds, to be apportioned by both the U.S. and Mexican governments over an estimated period of five years, includes $450 million in paid-in capital and the rest in callable capital.

Noe García, III
Noe García, III

“The Border Trade Alliance is very encouraged that President Obama and President Peña Nieto have agreed to expand the operating capital of the North American Development Bank,” said BTA President Noe Garcia, III.

“The BTA has been a longtime supporter of the bank and its critical mission of improving the environmental infrastructure of the border region, including, in some cases, port of entry improvements.

“With the NADB poised to expand its efforts in projects that not only have a positive impact for the environment but for cross-border commerce, as well, we look forward to supporting the institution in whatever legislative policy endeavors might be required to ensure the NADB continues to be impactful in the U.S.-Mexico border region.”

The BTA has served as a grassroots, non-profit organization that provides a forum for discussion and advocacy on issues pertaining to the environment, border development, quality of life and trade in the Americas since 1986.

NADB was created in 1994 as part of negotiations of the North American Free Trade Agreement. It works to develop and finance environmental infrastructure in the U.S.-Mexico border region, including water, transportation, solid waste and clean and renewable energy. Established with an initial capitalization of $3 billion, the two presidents have agreed to support a doubling of the bank’s capital to $6 billion.

NADB Managing Director Gerónimo Gutiérrez said his bank strives to finance environmental projects along the U.S.-Mexico border at the lowest possible interest rates. By pumping the extra capital into the bank, NADB’s debt-to-equity ratio will remain healthy, which in turn will mean its credit rating remains good, thus allowing the bank to offer the lowest interest rates.

“We welcome this decision on the part of the two governments” Gutiérrez said. “This capital increase will position the bank to continue fulfilling its mission of improving environmental infrastructure and the quality of life on both sides of the border in a way that fosters public participation and transparency.”

Gutiérrez said that in recent years, NADB has seen significant growth in its loan portfolio as it has worked to improve basic environmental infrastructure in communities along the border.

“To date, $2.4 billion in loans and grants has been provided for the implementation of 203 projects throughout the border region, benefiting an estimated 15 million residents. The proposed capital increase will bolster the bank’s capital adequacy so that it may continue to provide loans for needed projects,” NADB states, in a news release.

Gerónimo Gutiérrez
Gerónimo Gutiérrez

An example of the sort of projects NADB gets involved in came last November when the bank partnered with El Paso County Tornillo Water Improvement District (EPCTWID) to sign a $3.25 million grant to construct an arsenic treatment facility with the capacity to treat 600 gallons per minute. The goal is to reduce arsenic concentrations in Tornillo’s drinking water.

Another example, from 2013, was the $51 million loan NADB provided to allow a wind farm to be built in Tamaulipas. Thirty wind turbines are producing electricity to allow Soriana to supply 163 of its superstores throughout Mexico. The wind-generated electricity displaced 100,00 tons of carbon dioxide a year, equivalent to taking 29,000 cars a year out of circulation.