Mexico PPPs 'died' under AMLO, claims expert

Public-private partnership opportunities offered by the administration of Mexican President Andrés Manuel López Obrador (AMLO) are at a low despite interest from the private sector, according to an expert. 

“There is a rather poor list. PPPs died with the new administration,” public finance consultant and PPP expert Ezequiel González Ruiz told BNamericas. 

Although the López Obrador administration has awarded several partnership opportunities, 2022 has seen by far the fewest bidding processes in recent years, procurement records show.

When compared to the past three administrations, the current government has the smallest portfolio, González, who heads EZEGR Consultores and advises public sector companies, said. 

PPPs were introduced to Mexico under the administration of Vicente Fox (2001-07), but according to González, the current government has not worked hard enough to refute the misconceptions surrounding the alleged privatization of assets.

“Twenty-one years have gone by and today we cannot mature [PPPs] and I think we wasted 20 years discussing things,” he said. 

Asked about the main obstacle preventing more PPPs in the country, the expert said “a clearer explanation of the benefits of PPPs is lacking.”

PORTFOLIO

A boom in partnerships under the current administration came in 2021 after the government presented the first and second packages of the 2020-24 national infrastructure plan, involving PPPs with 50% minimum private investments.

Package one included 39 projects and package two another 29, involving total combined investments of 526bn pesos (US$25.7bn). Several of the projects have already been awarded, but others have not been updated or tendered. 

An example of the halted PPPs is the 25bn-peso García-Monterrey airport rail link in Nuevo León state, which was included in the first package. There is also the estimated 4bn-peso Progreso port expansion and modernization in Yucatán state, the 8bn-peso Zaragoza elevated viaduct in Mexico City and the more than 50bn-peso Mexico City-Querétaro train, among others.

“The mistake that is being made today is trying to return to traditional public works with cost overruns and a lack of experience in operating. What the government has to do is administer and let the experts operate, instead of trying to do everything itself,” González said. 

The private sector has been awaiting the plan’s third package, which even though private-sector leaders said it was ready, its presentation remains on hold on Lopez Obrador’s orders. 

Yet, PPP opportunities can come from any level of government, as long as a state or municipality has a law or regulation to carry them out. For example, Jalisco state awarded last month a public-private partnership contract to design, plan, construct, equip and operate the 21bn-peso line No. 4 of Guadalajara’s light rail system.

"The projects must mature, the works must play a fundamental role and in some way, [the government] is doing so, but not strongly enough," González said.