Appealing to Reason for Infrastructure Projects

Q: As a 100 percent Mexican construction and infrastructure company, what added value does PRODEMEX offer?
A: Compared to foreign companies our key added value lies in our interests related to the country as we are focused on promoting Mexican growth. We plan to operate in the country for life, so it is in our best interest to collaborate with local companies and foster their development. Foreign companies come to Mexico and often outsource most of their staff and services, while we do everything directly.
Q: What areas of opportunity has PRODEMEX uncovered in social infrastructure and what would it do to improve it?
A: I am also Vice President of PPPs at CMIC. We are carrying out a study with PwC and Currie & Brown to evaluate this scheme’s performance and will present it to the incoming administration. After reviewing the first draft of the study I can say that it is necessary to ensure the Mexican Infrastructure Council is turned into a nonpartisan and long-term body that can implement long-term planning in Mexico. This must be approved and validated by Congress. We must define where we want the country to go at least over the next 30 years, or we will have contradictory efforts that get us nowhere.
Q: What hospital project can act as a showcase for PRODEMEX?
A: The Issemym Hospital in the State of Mexico is already operating perfectly. I think that our expertise in BOT for hospitals was crucial for the success of this project as we developed it with all the strength that only experience provides. For example, when starting a PPP, it is normal to underestimate the initial risk assessment. SCT road projects are constantly updated in terms of tariffs and inflation. But there are price changes, such as a sudden 30 percent increase in asphalt prices, that are not covered by these assessments. When tendering a project through a PPP, the government makes a risk transference to the private sector, which we must carefully analyze.
Q: What is your assessment of the NAIM project and its challenges?
A: The first challenge was to create the structure and allocate responsibilities to support such a huge project. I think NAIM is a spectacular project that is very much required by the country but it has been unjustly politized. All the experts and technicians have already said that Texcoco is the right place to build the airport. Although there is a judicial path that can be pursued if the project is canceled, I think the industry must appeal to reason. If every technical player in the country says the project must continue, it would be unreasonable for the incoming administration to say the opposite. To start a new airport in another area would delay its construction for at least five years, which would be expensive and detrimental to the entire country.
I must point out that AICM operates on a similar terrain. It was not built with pre-load, creating the need to fix airstrips every year. NAIM’s engineering has enabled the maintenance times for the airstrips to be around seven years. I think that a public consultation is a must for major infrastructure projects but not at the stage in which NAIM currently is. At this point, the decision of continuing the project must be technical and made by experts and not left to the opinion of the people.
Q: What are your expectations for the infrastructure industry and for PRODEMEX in 2019?
A: The change of administration is the main challenge the industry faces. There are great expectations for the new government, accompanied by doubts about how projects will be developed. I think 2019 will be very tough for SMEs. Those finishing projects at the moment will struggle with pipeline while those that start projects will face the challenge of adapting to a new government while doing so. As for PRODEMEX, we recently launched several PPP projects for roads and hospitals. We are involved in some public works, such as NAIM’s Airstrip 3 and the terminal building. We are also working on a 4km section between Observatorio and Mixcoac for Mexico City’s Metro Line 12.