Infrastructure investment: Mexican infrastructure would boom thanks to large investments

07/02/2020

Mexico's infrastructure projects, with high expectations in the energy area, are on the verge of receiving a significant flow of investment, which could bring some relief to the economy, according to experts.

The measure includes 147 projects in the transport, telecommunications, basic services and tourism sectors, but there is still a second chapter in the area of energy, which could be more attractive for investment once it is announced. Photo: Pxfuel
The measure includes 147 projects in the transport, telecommunications, basic services and tourism sectors, but there is still a second chapter in the area of energy, which could be more attractive for investment once it is announced. Photo: Pxfuel

The administration of Mexican President Andrés Manuel López Obrador launched the National Infrastructure Agreement in November last year, a public-private partnership that commits some 859 billion Mexican pesos (about US$43 billion).

The measure includes 147 projects in the transport, telecommunications, basic services, and tourism sectors, but there is still a second chapter in the area of energy, which could be more attractive for investment once it is announced.

"The interesting thing will be to see which projects in the energy sector are going to be included, both in electrical energy and in hydrocarbons or clean energy, that is where we would have the possibility of having very important investment for our country," said the general director of the Bursamétrica firm, Ernesto O'Farrill.

The expert added, in statements to Xinhua, that "there are other countries that just by setting the goal in terms of clean energy, already generate an investment boom, an economic boom.

He described as "essential" for Mexico to have plans in infrastructure, since national and foreign investment could accelerate local economic growth, which has stagnated at an annual average of 2.3% in the last 30 years.

Mexican economic growth, said O'Farrill, could rise to at least an annual average of 3.5%, with the acceleration of the infrastructure plan.

"The Mexican economy is equivalent to $25 trillion pesos, so the fact that almost one trillion pesos is allocated to these projects is of great importance, but could be double," he said.

Regarding the expected energy plan, which could be released in the coming weeks, he said that "China is willing to participate, along with other economies such as Singapore, Norway, and even some Middle East countries.

López Obrador's administration plans to start the first phase of the bidding process for the "Tren Maya" project in February, one of his government's main infrastructure works.

The ambitious project integrates 1,500 kilometers of rail logistics, from the archeological zone of Palenque, in the state of Chiapas (southeast), to the popular Mexican resort of Cancún, on the Yucatán peninsula.

In addition, the Mexican government formed a special cabinet on Jan. 29 to stimulate economic growth and the arrival of investments, which could be accelerated with the implementation of the future Mexico-United States-Canada Free Trade Agreement (T-MEC).

The head of the cabinet, Alfonso Romo, who is also the head of the president's office and the president's liaison with the national business community, said that at least 137 energy projects, worth up to US$100 billion, are being prepared.

The government's National Bank of Public Works and Services (Banobras) has listed another 227 new infrastructure projects to be developed, which are open to the participation of both the local and foreign private sector.

"We have plans in different sectors but also in different stages of the project life cycle, normally we classify them in four stages," said Mauricio Vázquez, director of project information at Banobras, one of the government's financial support institutions.

"It is not necessary for us as a development bank to participate in the projects, the percentage of what we finance is even less than 5%," he added to Xinhua.

Banobras even has a "sustainable infrastructure" section together with the Inter-American Development Bank (IDB) and Gesellschaft für Internationale Zusammenarbeit (GIZ), the German government agency specialized in technical cooperation for sustainable development worldwide.

The Mexican government set up the platform "www.proyectosmexico.gob.mx" where interested investors can track projects to decide on their participation, with information that seeks to facilitate understanding by foreign participants.

"This, for Chinese companies or Chinese financial institutions that are not familiar, for example, with the issue of health in Mexico, in the portal they can find more detail in English of the prospectus," said the deputy director of Investor Relations of Banobras, Luis Ampudia.

Meanwhile, the commercial director in Mexico of the Bank of China, Liu Yuxuan, explained that the Asian institution is giving "follow-up" to the various infrastructure plans being developed in the country, to consider its participation along with other Chinese and even Mexican partners.

"The Bank of China wants to be an investment bridge between Chinese and Mexican companies, we hope that with our efforts we can promote the implementation of projects between the teams," said the executive on the sidelines of a public event of investment promotion.

By Mexicanist Source Xinhua