Mexico’s 5 priority dam projects secure federal financing

The Mexican government plans to allocate up to 8bn pesos (US$374mn) from federal funds next year to continue or start work on five major dam projects. 

The five are the Santa María and Picachos dams in Sinaloa state, La Libertad in Nuevo León state, El Zapotillo in Jalisco and Tunal II in Durango. 

Construction of four of them started in recent years, while construction of the Tunal II project is expected to begin once a public-private partnership contract is put out to tender and awarded next year. 

Works are expected to speed up in the next three years thanks to a decree that President Andrés Manuel López Obrador signed last week to turn all priority works into a matter of national security.

The decree facilitates permitting to avoid bureaucratic delays and shields all work from potential legal action filed by citizens or NGOs. 

Santa María

This dam will receive the most funds, 5.1bn pesos, according to the 2022 budget. 

In previous years, capex for the Santa María dam was estimated at 20bn pesos. However, the document approved by the lower house a few weeks ago says that the total investment needed is 16.3bn pesos.

Of that, 4.3bn pesos have already been allocated under previous governments, meaning that 3.7bn and 3.3bn pesos will need to be earmarked for the project in 2023 and 2024, respectively. 

But on Tuesday, AMLO announced that the project would also be financed by whatever is obtained from the raffle of a house and 200 sites at Espíritu beach in Sinaloa. The raffle will be carried out by the national lottery on December 5.

“Everything that is obtained from the raffle of this land stays in Sinaloa, it goes to the Santa María dam that is being built, which will allow irrigation of about 30,000ha,” he said. 

The dam is also designed to generate 231GWh/y of power while improving access to drinking water for nearly half a million residents, as well as provide irrigation for over 24,000ha of farmland in El Rosario and Escuinapa municipalities.

The dam wall will be 784m wide and 120m tall with a reservoir depth of 152m, diverting the Baluarte river through three tunnels. Construction started in 2015 and was planned to finish in 2018. But lack of resources and legal measures blocking access to 16,000ha of the site led to various delays. 

The project reported 32% progress last week, according to news site Debate. 

Picachos

This 2.8bn-peso project will receive 787mn pesos in 2022, and, according to the budget, 1.6bn pesos have already been allocated to it in previous years. So only 405mn pesos will be needed to complete construction in 2023. 

Construction began in 2006 on the Presidio river in Sinaloa, with an original price tag of 570mn pesos.

The purpose of the 322Mm3 capacity dam was to supply potable water to the coastal city of Mazatlán, as well to irrigate 22,500ha. 

Although the dam wall has been completed, the aqueduct that will draw water from the reservoir to the irrigation district has been on hold for the past few years due to opposition from local communities, as well as lack of funding.

In early 2019, AMLO pledged to complete the Picachos and Santa María dams. 

La Libertad

This dam will receive 1.1bn pesos in 2022, marking the last year in which the federal government allocates funds to the project given that 1.7bn pesos have already been assigned to it, the budget shows.

The total capex of La Libertad is estimated at 5.3bn pesos, split equally between the state government of Nuevo León and the federal government. Apart from construction, capex also covers the acquisition of land, water rights and equipment.

In August 2020, water operator Servicios de Agua y Drenaje de Monterrey (SADM) awarded a 4bn-peso contract to build the 2,000m-wide and 47m-tall dam wall. Work reportedly started in September last year.

However, state governor Samuel García confirmed last week that the project had been suspended by environmental authorities. The goal was to reach 50% progress by the end of 2021.

Works are expected to take 1,000 days, and the inauguration of what will be Nuevo León’s fourth dam is planned for August 31, 2023. It will have water storage capacity of 220Mm3, enough to distribute 50Mm3/y to nearby municipalities and state capital Monterrey.

El Zapotillo

According to the budget, the federal government will earmark 625mn, 1.3bn and 704mn pesos to the 11.2bn-peso project in 2022, 2023 and 2024, respectively. Some 8.5bn pesos have been allocated so far. 

Construction started in 2011, but the federal government did not manage to resume work until AMLO reached an agreement in November with residents of the Temacapulín, Acasico and Palmarejo communities.

The unfinished dam – 100km from Jalisco state capital Guadalajara on the Verde river – was planned to have a 105m-tall wall. But under that design, the communities of Temacapulín, Acasico and Palmarejo would have been flooded. 

As a result, the wall will remain at 80m, guaranteeing water to the metropolitan area of Guadalajara and allowing the communities' residents to continue living there. 

• FOR MORE BACKGROUND: Local opposition emerges as biggest obstacle to Mexico dam projects

Tunal II

The AMLO administration will earmark 632mn pesos to the project next year and 376mn pesos in 2023. 

Combined with the 1.6bn pesos already assigned in previous years, the federal government will have secured its part of the financing needed to put the project into operation. 

BNamericas reported in September that authorities were readying the 3.6bn-peso PPP project to guarantee drinking water for state capital Durango, which faces supply issues due to groundwater contamination. 

Water authority Conagua will launch the 35-year concession tender during the first quarter of 2022, a winner is due to be picked the same quarter and works should start in the first half, with operations beginning by end-2025.

According to the financial model presented, the federal government will provide 71% of the total financing, the state government 12%, and the rest will come from private and other players.