Public Investment Urgently Needed in ProjectsTue, 11/01/2016 - 16:47
One measure of the degree of development in a city is its water management infrastructure. Braulio Campos, Director General of Monterrey-based construction firm Hercules Construcciones de Monterrey, says that more than 90 percent of the water in the city goes through water treatment processes. This, he says, is a strong sign of development. Hercules has participated in the construction of water treatment plants across various municipalities in Monterrey, including a small watertreatment plant near Cadereyta that treats 150l/s and the Dulces Nombres plant that treats up to 14,000l/s. The company’s expertise also extends to other states. “In Puebla we worked on the construction of storm drainages,” says Campos. “When carrying out this project, we noticed that to avoid paying for public services, people connect their house drainage systems with storm drainage, contributing to clogging problems.”
Despite promises made by the NIP, Campos believes that actions have fallen short in terms of water and waste infrastructure. “There has been investment in drainage systems and water treatment plants but we cannot say that plant construction is a growing business,” he says. “There is a high demand for water treatment plants but there is not enough capital to invest. The government has different priorities.” The situation in Monterrey has reached the point where it is becoming common for associations of private citizens to buy water collectors with the purpose of trying to perform very basic water treatment so the water can be recycled, according to Campos. “In Mexico, bottled water is economical when compared to the necessary investment that is required to run water treatment plants,” Campos says. He believes this may go some way to explaining government reluctance to spend on this kind of infrastructure, especially in light of budget restrictions caused by low oil prices.
In fact, the main problem Campos perceives across the infrastructure industry is the lack of public investment coming from both federal and local authorities. “The few resources that are invested are allocated to projects that are sometimes not necessary or that will only provide a temporary solution to a perceived problem, rather than long-term solutions,” he says. “Few states are being favored by the authorities in terms of infrastructure investment. The government needs to participate in more PPPs that target the development of the most urgent projects. If federal authorities cannot allocate the required resources to meet infrastructure demands, then local authorities must try to combine efforts with the public sector to construct the needed projects.” He believes that Monterrey would benefit from this kind of partnership. “As part of the private industry, whenever we try to provide a solution for specific infrastructure problems the authorities often overlook our solution,” he says. “Solutions should always come from the authorities, regardless of the functioning or practicality of the proposed option.”
As a result, Hercules’ participation in public sector projects has been substantially reduced in recent years. “A few years ago, around 50 percent of our income came from projects with the government whereas now, this would be impossible,” Campos says. “For construction companies it is important to find new clients.” This has pushed Hercules to broaden its scope and take an interest in participating in new sectors. “At Hercules, we are interested in participating as investors in new real estate projects,” he says.
Despite the lowered level of public investment in infrastructure projects, the gap is quickly being filled by instruments like Fibras and this is beginning to create greater traction for the real estate industry. Campos expects this to quickly trickle down to benefit construction companies like Hercules. “We are taking place in a project to build the Torre Obispado tower in Monterrey, which will be the tallest building in Latin America,” says Campos. “We are contributing with land preparation and we hope we can continue our participation in the next stages of the project.” Nevertheless, he maintains the federal and local authorities must start investing more resources in the construction industry across all of Nuevo Leon where the company primarily operates. “Currently, private industry is keeping the infrastructure sector afloat and this is not sustainable,” he says. “We need the government to continue investing in projects.”