Tougher Playing Field Produces New PartnershipsTue, 11/01/2016 - 22:41
Mexico’s infrastructure companies are facing a tougher playing field as falling oil revenues force the government to tighten its purse strings, putting the squeeze on public spending that once was earmarked for roads, highways and other projects. To adapt, the sector is gearing portfolios toward private investment, which is soaring, says Santiago Villanueva, Director General of construction and engineering firm VISE.
The government previously directed extra capital from oil revenue to the infrastructure segment but with the oil and gas industry suffering a dip in income, the government’s priority is to satisfy fixed expenditures. This has resulted in a deflated infrastructure budget, lower prices and more competition for companies. To fight the downsizing and lack of government support, large businesses like VISE are restricting their participation to major public sector projects, such as the New Mexico City International Airport (NAICM), a major development of global significance that will be an important hub once completed around 2020, highway concessions and PPPs, says Villanueva.
“Unlike traditional public bids where winners receive fiscal resources from the government to complete the proposed project, PPPs are a public-private partnership in which a company works with the government to develop construction projects through concessions that involve maintenance, rehabilitation and operation,” Villanueva says. “VISE has a presence in many PPPs throughout Mexico. It strives to create and design unsolicited proposals that require a PPP because upon approval, concessions are easily won by the companies that developed it. We prefer complex projects that attract less competition and do not demand significant price sacrifices.”
The company’s infrastructure involvement includes the Celaya Highway Bypass in Guanajuato, a 30-year project that was its first concession in consortium with Rubau, the Obregon Bypass in Sonora, which is under construction, and the Guadalajara-Colima highway, a 12-year maintenance and rehabilitation concession Vise won with BANOBRAS and on which it is working with four other partners. Vise also is working with Grupo México on the Salamanca-Leon highway and is bidding for the conservation of the San Luis Potosi-Queretaro highway, a PPP being designed by the SCT to rehabilitate the highway and preserve it for 10 years. 177
VISE maintains a complete chain of services that facilitate the completion of its projects. Around 70-80 percent of its business is in western-central Mexico. With many projects on the go, a reliable and motivated staff is indispensable. “We go the extra mile by creating internal programs that boost morale. Having a motivated group that can manage heavy workloads and make projects a reality is essential,” says Villanueva. Its employees help in the completion of complicated projects such as the port and military zone access being built as part of the Mexico City-Tuxpan, Veracruz highway project. VISE is collaborating with Group PINFRA to build a highway to improve the connectivity of NAICM in Texcoco. The company is also participating in runway tenders for the new airport.
Partnerships are a key to VISE’s desire to bring synergy to its projects. Its partners must bring technical congruencies, expertise, local knowledge and the financial capacity to act as an associate. Villanueva says that potential alliances are thoroughly analyzed before any agreements are made. “It is not enough for companies to have a substantial bank of knowledge. This factor does not compare to an alliance with players that have more successful track records or a philosophy that matches ours,” he says.
The majority of VISE’s work is carried out in collaboration with other key companies as it eases the process of construction, maintenance and creating financial plans. “In Guadalajara-Colima, for example, we rely on the help of external experts that understand pavement design and can carry out routine maintenance that is essential for highways,” says Villanueva. VISE positions itself as a socially responsible business, making sure to create positive relationships with any community affected by its projects. “Our target is to work with those communities and with the government to provide fast and effective answers to any issue or requirement that arises during a project,” says Villanueva.