Rail Projects Face Budget Shortfall

While there are rail projects that have continued their development despite a number of setbacks, such as the Mayan Train or the Transisthmic Corridor, there are other less visible rail projects this administration is hoping to build. 

In fact, when announcing key infrastructure projects last year, the government made it clear that all sorts of rail development projects were an important part of its infrastructure investment agenda. This includes entirely new rail projects, such as the train that will connect  Mexico City with its new airport in Santa Lucia, as well as old rail projects that previous administrations were unable to bring to term, such as the Mexico City-Toluca train and the Mexico City-Queretaro train. As we have previously reported, the Mexico City-Toluca train received a couple of presidential visits last year and appears to be progressing toward its completion steadily. Other projects, however, have not had that kind of luck.

An article published in T21 this week shares an official statement from SCT regarding the Mexico City-Queretaro train. Apparently, there is no currently existing proposal to build that train in any specific way, shape or form. SCT claims that they continue to “await proposals from the private sector”, since a lack of public funds means that the project will only go forward with private financing. Infrastructure Undersecretary Cedric Iván Escalante Sauri says that “the federal government has no resources to build the Mexico City-Queretaro train.” An investment of almost US$2.5 billion is being sought from private development consortiums that could independently handle a concession to manage the project, which unlike the original project would call for the construction of a medium speed train, from 160 to 200 km an hour, as opposed to the original project which called for high speed trains that could travel up to 300 km an hour and make the 210 km trip in considerably less than one hour. Another article from Obras goes into more detail regarding this open question; according to their reporting, construction of this train was scheduled to begin in June 2021 but SCT has now denied that they can guarantee any start date. Ignacio García Presno, managing partner in KPMG’s Infrastructure Advisory, explains that if the project is to be developed through a completely privatized concession then all of the project’s feasibility studies need to be remade. He also noted that the only rail project to have been developed so far in Mexico through this modality is the Suburban Train at the Buenavista Station in Mexico City, and even that project was significantly aided by funds from the National Infrastructure Fund. It has also yet to turn a profit. 

Meanwhile, other rail projects are readministering their assets, revealing possible budgetary issues. A good example of that came in the form of an announcement made this week that the aforementioned train from Mexico City to Santa Lucia will be using ten railcars that were previously delivered as part of the 30 railcars to be used by the Mexico City-Toluca train. According to an article from Expansión, the decision was justified with the claim that the projected use of the Mexico City-Toluca train is lower than originally expected and the remaining 20 railcars should be more than enough to satisfy the demand.