Will 2025 be the year for infra PPPs in Mexico?

Mexico’s President Claudia Sheinbaum, who took over from Andrés Manuel López Obrador on October 1, faces a challenge to balance the books that could drive her administration to include more private participation in infrastructure projects in 2025, BNamericas was told. 

“The last administration’s megaprojects absorbed a lot of funds and savings from the federal government and, in parallel, there are the social programs that now have constitutional support,” Sergio Chagoya, an infrastructure expert at law firm Santamarina + Steta, told BNamericas.

“It will be a challenge to have sufficient funds for the works that president [Sheinbaum] has mentioned, plus the plans that the government has.”  

This administration took office with a fiscal deficit of close to 6% and has welfare program and benefit commitments of close to 3.8tn pesos (US$186bn) allocated in the 2025 budget – approximately 40% of the total – according to think tank IMCO. 

In November, Sheinbaum said her administration had allocated only 836bn pesos for welfare programs and 811bn for infrastructure, including roads and highways, while assuring the public that the funds were sufficient to carry out the works.  

“It should be known that the budget for next year is guaranteed,” she said on December 13, according to news outlet Nación321. “It’s a budget that resonates with republican austerity, with Mexican humanism and with the second stage of the fourth transformation.”

However, the private sector highlights that the “ambitious” infrastructure plan presented by Sheinbaum would require more resources than the government could provide. 

“There will not be sufficient funds [for every infrastructure project]… That's where mixed investments can be used and we’ll approach her team with these proposals,” the president of construction chamber CMIC, Luis Méndez Jaled, said in October.

Chagoya also believes that private participation will be needed to build the administration's flagship projects.

“I believe that we will eventually need private participation. The Morena [ruling party] governments don’t like PPPs and they have demonized them,” he said. “But I believe that they will have to continue using that scheme. They can stamp another name on them or change them a little bit, but the private sector will be needed.” 

Some of the projects that will start construction in 2025 are at the core of Sheinbaum’s infrastructure plan. According to the timetable released by authorities, work on three projects involving 786km of passenger rail lines will begin next year: the AIFA-Pachuca, Mexico City-Querétaro and Querétaro-Irapuato-Saltillo-Nuevo Laredo links.

“The projects are not profitable because they are subsidized and they will bring large costs to the [national] coffers and the country’s public finances,” said Chagoya.