Eduardo Andrade
View from the Top

Strategic Alliances at the Forefront of Infrastructure

Wed, 11/01/2017 - 16:13

Q: How is Sacyr supporting Mexico’s infrastructure development?

A: Sacyr’s operations in Mexico are still incipient but we are starting to grow and profit from the country’s significant market. Mexico requires first-world infrastructure, which is something I believe all the administrations of the past 20 years understood. That is why the plans are very ambitious. Sacyr is committed to helping Mexico achieve its goals. To be more precise, we have several projects under construction. These include four hospitals, involving an investment of MX$3.5 billion, a freeway that will cost about MX$1.3 billion and the elevated and underground trains in Guadalajara, worth about MX$8 billion. We have also completed several transmission lines with a value of MX$500 million.

Q: What alliances have you fostered to create consortiums?

A: We are creating alliances with Mexican companies, a goal that complies with GACM’s requirements. They are helping us to be more competitive and to understand the country’s construction market. In an association, we seek an emphasis on work-related safety, the quality of the work, efficiency and commitment and we ask that the company partner with us on an attractive price proposal. Our goal is to combine our international experience with the local knowledge of our potential partners.

Q: How will your decision to participate in PPPs impact Sacyr’s strategy in Mexico?

A: The legal framework for PPPs in Mexico is welldefined but still new, so many realizations are being made in the process regarding infrastructure financing, design and expectations. Also, many of the proposals lack a cohesive thread. Nevertheless, we believe this scheme is the future of infrastructure development in the country. We have won tenders for a freeway and a hospital, and our goal is to continue growing. PPPs require previous experience of two to three years. We presented un unsolicited business proposal for a project in Bahia de Banderas more than a year ago. We did not win the tender but this case exemplifies our vision for the Mexican market and how we have been working on this idea for several years.

Our goal is to be leaders in infrastructure development in Mexico, so we plan to take advantage of the related reforms, such as the Energy Reform. Also, the legal certainty that the country offers fosters a better investment environment. Sacyr is a major global player, which I believe is important when participating in PPPs.

Q: What were the main challenges when competing for NAICM’s tenders?

A: There is a high level of competition for the tenders, but what I find remarkable is the quality of the companies that are bidding. For the airport tenders, the system works through prices and points awarded for the qualitative part of the proposal to ensure the winning company represents the highest value. The winning bid must include a competitive price, the guarantee that the cost is worth the excellent quality delivered and compliance with a deadline. I believe this scheme is very useful, as it promises Mexicans will have an airport built by knowledgeable firms that were fully prepared to face such a challenging project.

Regarding how we obtained the concessions, we had to be more creative than our competitors. We provided a more efficient use of time and presented modern designs that incorporated the use of the newest materials and technologies. In my opinion, the challenge is to dream big while comparing our infrastructure with other countries in the region, such as Chile, that have accelerated their development processes. We understand that Mexico requires infrastructure development to be efficiently intercommunicated. Sacyr is committed to advancing this goal.

Q: How do you plan to implement a greenfield-projects approach in Mexico?

A: Sacyr looks for concessions that can create jobs in the construction field, so we look for greenfield projects because these allow us to have control from the beginning of the development. There is uncertainty surrounding brownfield projects and uncertainty hinders our capacity to be completely accountable. When we build greenfield, Sacyr is present from the inception of the project, so we can answer any questions about the quality of its execution and the decisions made to complete it. Also, the fact that we are vertically integrated allows us to be present in the design, financial, execution, operations and maintenance of projects.

Q: When do you expect to finish Guadalajara’s light train?

A: We will finish on time and according to plan, as we use a raise bore drill that helps us to make fast progress. President Peña Nieto visited the construction site and asked us whether we would meet the deadline and we were able to respond with confidence. The project is on track as we have regained the time lost at the beginning of the construction stage. It is a very interesting development and it is an honor to be able to participate in a project of such a magnitude in a country like Mexico.

Q: What role does Sacyr want to play in Mexico in the long-term?

A: We want to be market leaders in the development of infrastructure for basic and energy services. We are a company that possesses strong leadership in several countries and we intend to translate this to the Mexican context. I believe the market, given its growing needs and its high-quality competition, is perfect for the application of this strategy.

Q: What are your expectations for the next administration’s infrastructure program?

A: We expect aggressiveness and ambition. I believe all candidates understand the difference between the infrastructure we have today and what we aspire to have in the future. I expect an ambitious administration that accelerates the infrastructure development in the country. I would also like to express my gratitude to Mexico and its institutions for welcoming Sacyr and for providing a high-quality and industrially safe environment. The private sector should continue to invest in Mexico's infrastructure to increase the quality of life of the country's citizens.