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News Article

Oaxaca Invests in Infrastructure to Bolster Economic Development

By Alessa Flores | Thu, 10/15/2020 - 10:10

The Government of Oaxaca is planning to allocate billions of pesos in infrastructure this year to sustain the state’s growth for the third consecutive year. “This is one of the best years in Oaxaca's history, if not the most important one in terms of investment in infrastructure. We will be investing around MX$13-14 billion (US$610-660 million) in the state this year,” said Alejandro Murat Hinojosa, Governor of Oaxaca, in an interview with La Jornada. The Government of Oaxaca also announced various infrastructure projects that are expected not only to generate economic benefits but also to increase the state's tourist attractiveness and to connect Oaxaca with the region.

The Tehuantepec Isthmus Development Program is one of the state’s most outstanding projects. In collaboration with the federal government, this project aims to grow the regional economy while honoring the history, culture and traditions of the Isthmus of Oaxaca and Veracruz. According to Rafael Marín Mollinedo, Director General of the Tehuantepec Isthmus Inter-Oceanic Corridor, free economic zones will be created along the Isthmus to attract investment from the private sector. The government through PPPs will provide infrastructure and guarantee the provision of energy, water, digital connectivity and other basic resources to meet the needs of businesses and the working population. This program will use economic dynamics and the state’s strategic position to boost Oaxaca’s competitiveness.

Juan Pablo Guzmán Cobián, Minister of Economy of Oaxaca, told MBN that the Isthmus Program proposes a different dynamic for the development of Oaxaca and the region, one that focuses “on generating conditions of well-being, improving the welfare of the local population, reducing stagnation due to lack of investment and detonating the region’s economic potential.” This is specially relevant considering CONEVAL’s Oaxaca Poverty and Evaluation 2020 report, which revealed that the state is 24.4 percentage points higher in poverty than the national average of 41.9 percent and that 66.4 percent of the state’s population lives in poverty, which is approximately 2.7 million people. 

The Isthmus Program seeks to “host 10 industrial parks, a rehabilitated train, two ports and two airports, as well as urban developments in the 10 development poles, which will impact 79 municipalities, 33 in Veracruz and 46 in Oaxaca,” explains Guzmán Cobián. The Federal Expenditure Budget (PPEF) 2021 allocated MX$4.7 billion (US$220 million) to the Isthmus of Tehuantepec in Oaxaca, 70 percent of which is intended to rehabilitate and modernize railway infrastructure and the port areas of Salina Cruz and Coatzacoalcos. 

President Andrés Manuel López Obrador reported on his Oct. 12 press conference that the Tehuantepec Isthmus Interoceanic Corridor was 86.8 percent advanced at the 80m dock of the Port of Coatzacoalcos, which had received 4,092 pieces of rail, and 75.6 percent advanced in terms of road infrastructure. The project includes several infrastructure works such as modernizing the Isthmus of Tehuantepec railroad and the ports of Coatzacoalcos and Salina Cruz, strengthening the road infrastructure and rural roads and building a gas pipeline to supply businesses and domestic consumers, according to Marín Mollinedo. In addition, a fiber optic line will be installed along the isthmus to reinforce digital connectivity in the region and benefit businesses and communities currently lacking internet services.

In addition to the infrastructure investment in Oaxaca, the federal government announced that as part of the Agreement for Economic Recovery, it would allocate MX$297.34 billion (US$13.96 billion)to the communications and transportation, energy, water and environment sectors. It also announced that MX$158 billion (US$7.42 billion) will be allocated to the construction of 20 mobility projects that include beltways, highways, connection works and road junctions,  MX$54.7 billion (US$2.57 billion) to the installation of a cooker in the Tula refinery and MX$2.13 billion (US$100.1 million) to solid urban waste management in Naucalpan, State of Mexico and to the construction of the water supply system for AICM.

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Alessa Flores Alessa Flores Senior Journalist and Industry Analyst