Spanish Companies Essential for AMLO’s Mega ProjectsBy María José Goytia | Mon, 02/14/2022 - 15:58
Mexico´s president expressed his decision to “pause” relations with Spain by protesting the behavior of certain Spanish energy companies in the country. The declaration has raised concerns in the Spanish business community, since his decision could affect investments in multiple sectors, for instance, infrastructure.
Spanish investment in infrastructure is fundamental for the development of three of President López Obrador’s mega-infrastructure projects. Several Spanish companies have been awarded contracts for the Mayan Train, the Interurban Train Mexico-Toluca, and the Railway at the Isthmus of Tehuantepec.
For the Mayan Train, there are three Spanish companies that lead the construction for sections 2, 3, and 5. Section 2 was awarded to Operadora CICSA (a Spanish business group based in Barcelona) under an association agreement with Fomento de Construcciones y Contratas (FCC). Both companies are responsible for the construction of the platform and railroad tracks, supply of materials, drainage systems, among others.
Section 3 was awarded to a consortium formed by the Mexican construction company Gami and the Spanish company Azvi through its subsidiary in Mexico Construcciones Urales, for US$495 million. Likewise, Azvi is also part of the consortium that was awarded the contract for the construction of the Mexico-Toluca Interurban Train for US$767.4 million. The contract includes the construction of the 57.7 km railway line, as well as the electromechanical installations and supply of materials. Azvi is part of six companies in charge of the rehabilitation of the Isthmus of Tehuantepec Railway, and will be in charge of the section between Medias Aguas-Ubero.
In addition, the Spanish company Acciona is partly in charge of the construction of Section 5 of the Mayan Train in the state of Quintana Roo. The adjudication of the route from Cancun to Tulum is approximately US$865 million. Meanwhile, the management office of the Mayan Train was awarded to Mextypsa for US$28 million. This firm is a subsidiary of Typsa, another Spanish company.
In regards to the Mexico-Toluca Interurban Train, Avzi is not the only Spanish company involved. The Ministry of Infrastructure, Communications, and Transport (SICT) awarded in December 2021 to the Spanish firm OHL and its subsidiary Constructora de Proyectos Viales de México the construction of a 36 km section of the Interurban Train for US$11.3 million. The Spanish company Construcciones y Auxiliares de Ferrocarriles (CAF) is also participating in this project, as the consortium leader.
Regarding the Isthmus of Tehuantepec Railway, in addition to Avzi, the Spanish company Copasa through its subsidiary Caltia, will be in charge of improving 56 km of the Isthmus Railway, in addition to rehabilitating another 146 km connecting the port of Salinas Cruz.
Spanish FDI in Mexico
Spain is the second most important investor in Mexico. Until the beginning of 2021, Spain had the most foreign direct investment (FDI) in the energy sector, until it was displaced by the US in the second quarter of 2021. Data from the Mexican Ministry of Economy (SE) indicate that the accumulated FDI in the energy sector between 1999 to the third quarter of 2021 amounts to US$49.4 billion, and Spain accounts for 19.7 percent participation (US$9.74 billion).
According to the president, this “pause” does not represent breaking relations, but instead a respectful, fraternal protest for the abuses and wrong doings committed against the people of Mexico.
“Right now, the relationship is not good. Let’s give ourselves a little time, perhaps relations will be reestablished when the administration changes,” said the president in a press conference.
In response, the Spanish Foreign Ministry wrote in a statement that Spain “categorically rejects the criticisms for Spain and Spanish companies.” José Manuel Albares, Spain's Minister of Foreign Affairs, has affirmed that these statements do not affect the cordiality between the two nations. "The relationship between Spain and Mexico is a strategic association, which goes beyond this type of expressions.
In support of the Ministry of Foreign Affairs, the Spanish Institute for Foreign Trade (ICEX) defended Spanish investment in Mexico, arguing that the country's participation in Mexico is not limited to Repsol and Iberdrola. According to the institute, there are around 900 Spanish companies in Mexico. Aside from the Spanish companies in the energy sector, which have been constantly targeted by the president´s administration, there are dozens of other companies spread across strategic sectors in Mexico, like telecommunications, banking, tourism, textiles, automotive, and infrastructure.