What Must Be Done to Promote Mexico's Transport Infrastructure?
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What Must Be Done to Promote Mexico's Transport Infrastructure?

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Wed, 11/01/2017 - 17:13

When Mexico’s National Infrastructure Program 2014-2018 was launched, MX$7.75 trillion was allocated to 743 projects over the course of the administration. As of March 2017, 70 percent of the plan was completed, according to Minister of Communications and Transport Gerardo Ruiz Esparza. Among the most important road projects are the first section of the Piramides-Texcoco highway, with an investment of MX$1.92 million, the rehabilitation of the Mexico-Queretaro highway, with an investment of MX$2.85 million, and the AtizapanAtlacomulco highway, with a MX$8.5 million investment. Mexico Infrastructure & Sustainability Review asked industry leaders how this kind of infrastructure can be optimized.

Angel Carrillo

Director General
INCA Ingeniería, Control y Administración

We were in charge of the operation and maintenance of the highways, thus rapidly expanding our expertise in the sector. The 2013-2014 NIP’s goal of transforming Mexico into a world-class logistics hub involved an aggressive road and highway development plan but it encountered the same problem other infrastructure plans have experienced. Road projects are always a priority in government agendas but the issue is that there are never enough public funds. It is not viable to expect a private company to invest such large amounts of money without a return for 30-40 years. Mexico has yet to develop a scheme to finish constructing its highway network.

Alfonso de la Parra

Alfonso de la Parra

Director General
Tecnopeaje

We are looking at the sector from a new point of view. Our vision is different from other consulting companies. Consulting companies tend to look at operational things through using traditional methods of research and point of view, which tends to be a sophisticated way to maintain the road infrastructure. We evaluate a highway based on the driver experience, the risk factors, the number of accidents. Many of the country’s highway problems are related to inefficient operations. For instance, the layout of the highways is split into three lanes, where cargo trucks use the right lane, slow cars use the middle and the left lane is for overtaking. The majority of Mexico’s highways are in really bad shape and have many accidents. Highway developers need to have a longterm vision and create a better flow for cars. The people who see this first hand are the highway users.

Othón Pérez

Othón Pérez

Director
Hill International

We can use international best practices to learn how to make an independent planning model more viable in Mexico. Mexico would also have to change its law to create space for an agency of this type. The constitution has to be tweaked as the National Development Plan does not contemplate the need for infrastructure. The current national infrastructure plan is only a small component of the National Development Plan. We would have to thoroughly analyze what laws need to be changed and discuss it with governmental authorities to obtain approval of these modifications. A modified legal structure and finding funds to finance an independent institution are important challenges that need to be overcome to create an independent planning model.

Adrián Garza

Adrián Garza

VP Senior Analyst
Moody's Investor Services

We make sure to differentiate between the various needs of the infrastructure industry in our methodology. Within the project and infrastructure team, Moody’s has over 20 approaches that adapt to the various types of assets and sectors in the industry and two of them are dedicated to PPP projects. One of them covers the construction stage and another one is for the operational phase. Our main focus is the distribution of risks among the governmental and private parties of a project. We asses this element because an unbalanced distribution of risks can put at risk the continuation of a PPP. Moody’s also evaluates the drivers behind the demand of a project, operating and financial performance and metrics. Serious construction companies and sponsors should be able to account for these important factors.

Luis Villalobos

Luis Villalobos

Partner and Director of Business Development
EXI

We rely on three project development models. One is completely built by the government, another built, operated and maintained by the private sector through the provision of services paid by authorities and the last model requires the private sector to assume the entire risk of the project. We select the model based on demand, fees and risk. We are not keen to invest in projects with a high percentage of merchant risk. The government can also intervene by reducing security issues that we cannot control. An alternative way to mitigate risk is through long-term PPPs but to win these tenders we would have to drop prices to a level that is no longer viable. We try to find a model that sits somewhere in between.

Alfonso Vélez

Alfonso Vélez

Director General
AutoTraffic

Mexico’s main problem is the lack of implementation of public policies. We are accustomed to creating projects depending on the priorities of the current administration. There are so many authorities at the federal, state and municipal levels who have different visions of how they want to tackle the mobility issues in their jurisdictions. By 2050, more than 90 percent of the Mexican population will live in the major urban areas and nobody is taking this into consideration when planning these projects. There is a huge need to start planning the future and implement public policies that maintain continuity across presidential administrations terms.

Jorge Acevedo

Jorge Acevedo

President and CEO
JA Group

Mexico needs to change its approach to planning and developing these kinds of projects. This country is used to solving problems and meeting demands rather than planning for the long term and generating demand. We must start planning ahead of demand so that Mexico stops building roads when a connection between two points is already needed, schools when children already need them and industrial complexes when foreign companies have already arrived. The country must start thinking of the present while planning for the future through major infrastructure projects. This can be achieved by approaching the development of real estate and infrastructure projects holistically

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