Creating Social Welfare Through Infrastructure ProjectsMon, 11/05/2018 - 18:12
As the government often lacks human and financial resources to plan the new projects the country requires, the private sector is jumping in with unsolicited proposals (USPs). “We have used this scheme to develop projects with a positive cost-benefit return, understanding that not all gains are monetary but are also related to security and inclusion,” says Iñigo Mariscal, Co-Director General of Marhnos. “We always build to operate in the long term so we make sure to build well and with high quality.”
When participating with USPs, Marhnos starts all projects in a way that makes sense socially. “We want people to live near their work and social sphere, so they can reduce commuting times and have a better life quality,” he says. But with exponentially growing populations and cities, this is becoming a titanic endeavor.
Marhnos believes that the solution is in recycling space. “Recycling the city is a time-consuming process as land is vacated and available at a slow pace,” Mariscal says. “We review over 30 properties a month but only about 2 percent is eligible to be recycled. We look at location, size and potential to fulfill our purpose of building welfare,” he adds. For example, for the Nueva Ribera development, Marhnos reused an old chocolate factory and turned it into a residential complex.
The firm has five business divisions: Habitat, Roads, Hospitalia, Public-Private Buildings and Properties. Amid such a broad diversification, the company’s secret for success is to have a specialized team for every business segment. More than a company, Marhnos endeavors to become a platform for talent development and leadership. “We want to have people who are well-trained and who are principled,” Mariscal says. “Our company is also a financial platform with a solid creditworthiness to back up our projects,” he adds.
To continue raising capital, Marhnos is in the process of issuing its second CKD. “This is a long process but we are working with most of the companies we collaborated with on our first CKD: Banamex, Profuturo and Afore XXI Banorte,” Mariscal says.
This CKD is expected to help the company finance its project pipeline in Mexico City and Guadalajara while continuing to bridge Mexico’s infrastructure gap through PPPs. “I think PPPs open the way to build the needed infrastructure without having the government disbursing any money,” he says. “Our goal is to build the best way possible on time, budget and quality. We do not get any money until we build and start operating.”
For example, Marhnos has extensive experience building and operating hospitals through this scheme, such as the only LEED-certified hospital in the country, the Regional Hospital of Tlalnepantla. “I think PPPs for hospitals help solve users’ need for health services. This is the way to create new infrastructure and provide good healthcare services,” Mariscal explains.
This is also a very responsible alternative, he says, as the constructor knows how much it will cost to operate the hospital over the whole concession so it can better administrate the asset. “We undertake the risk of a fixed operational tariff from Day Zero before the hospital is even built,” he says. “The government will pay us a monthly fee made by fixed operational costs and variable operational costs.” This scheme is favorable as the government makes one tender and once concessioned it can entrust the project to one company for its lifetime instead of having to re-tender it every year.