A Mexican engineering firm digging for water opportunities in Central, South America

Mexican engineering firm Cipro will play a key role in the development of at least three major water projects in Mexico: two desalination plants and one of President Andrés Manuel López Obrador’s priority projects, the Texcoco ecological park. 

But the firm is also focusing on Central and South America, where only the best compete, Cipro’s CEO Manuel Salas Flores told BNamericas.  

In addition to discussing the company’s portfolio, the executive also talked about the challenges, opportunities and requirements for companies in the water sector after the coronavirus pandemic.

BNamericas: You have several contracts for studies, designs and supervision of water projects, some even in Central and South America. Which of these contracts are the most important and why?

Salas: We have more than 250 projects in our portfolio spread throughout the different markets in which we operate. We're 85 engineers committed to the development of infrastructure in the water and energy sectors. 

In addition to being present in the Mexican market, in recent years we have attempted to compete in Central and South America and have already carried out projects in Panama and are about to start one in Colombia.

One project we currently have in our Mexico portfolio is the comprehensive improvement and management of the Los Cabos desalination plant in Baja California Sur state, and we recently started with the La Paz desalination plant, also in Baja California Sur. We won both projects through tenders, although the Los Cabos plant is a little more advanced than the La Paz plant. 

We also supervise works throughout the country for the rehabilitation of irrigation districts overseen by water authority Conagua, and we have won contracts from private companies to develop their potable water systems.

In Central America, we just finished the value engineering project for the David province water treatment plant and we're about to start the supervision of the matrix control project for the Bogotá aqueduct in Colombia.

BNamericas: Cipro also won a contract to supervise part of the construction of the Texcoco Lake ecological park (PELT), where the US$14.6bn international airport (NAIM) was supposed to be built. How is this project progressing and what are the important characteristics?

Salas: This is a flagship project of the Mexican government and the president recently spoke extensively about it. We're in an initial phase where we're participating in the development of some nurseries that will allow authorities to reforest the water area of Texcoco Lake. We have one of the first projects assigned in this development which, as the president said, is an important project that will transform the lake area. The results will be seen in a few months.

BNamericas: Baja California state recently canceled the Playas de Rosarito desalination plant which was being planned for five years, and it's reviewing the San Quintín desalination plant. Which message do these moves send to the private sector?

Salas: We're responsible for the initial feasibility studies for the La Paz desalination plant. Without talking too much in particular about what happened in Baja California, what's certain is that there are regions in Mexico where access to clean water is very limited. Water is, without a doubt, a very necessary element for the development of communities, regions and countries. There are regions in Mexico with no conditions to grow if no alternative source of water supply is provided. In these regions, desalination plants are an environmentally friendly solution at an affordable cost – undoubtedly more expensive than fresh water, naturally – but when you don't have that water availability [desalination plants are] a logical and proven solution. And desalination costs are becoming increasingly cheaper.

In the Middle East, for example, there are lots of desalination plants because there's no access to water. In that sense, desalination is one more alternative in a world of alternatives. In some places, water can be delivered through rivers, lakes or aquifers, and in others through desalination. In several cities in northern Mexico, the alternative is clearly desalination. Sooner or later, desalination plants will be developed in the north. I don't have any doubt, and Cipro is ready. Projects are going to happen sooner or later.

PPP projects in Mexico are supported by a law. This law guarantees that the private sector will be able to recover its capital and operating and maintenance costs. Not only desalination plant projects have proven to have strong and solid guarantees, but also wastewater treatment plants, aqueducts and water treatment plants, which are all viable and are an alternative. When there's a shortage of financial resources for infrastructure development, the alternative would be to use private investment. Mexico has proven to be efficient in the development of PPPs.

Efficiency in water operation is a must today. The goal is to operate each drop and each liter of water that comes into the system with international standards. That is, to supply the most and use the least possible, reaching both the population and industries in the area. As a consequence, water operators must be self-sustaining and have enough income to maintain and operate their infrastructure to make the necessary future investments to maintain their water, sewerage and sanitation coverage. At Cipro we want to help water operators become more efficient, collaborating in providing creative and innovative solutions that allow them to do more for less.

BNamericas: Many wastewater treatment projects are being launched this year in Mexico, but not that many tenders for water treatment plants, even though the Proagua program would help finance them. Why is there more interest in one type of project than the other?

Salas: I think it has to do with how infrastructure has developed in Mexico. There was a time when the main priority was to achieve greater coverage and to have drinking water systems that actually delivered drinking water. There were programs before the wastewater ones to deliver potable water and distribute it to most of the population and have wide coverage. Once that goal was achieved, the next step was to solve the problem of water use and pollution. Water is being used and it is being returned to water bodies, either aquifers, rivers or lakes, and water that should be used is being polluted.

Then came a very strong program to increase sewerage coverage and then one to increase wastewater treatment capacity. Later public-private partnerships came with a law to support sanitation and that's why many water treatment plants are being developed as PPPs. Before, it was a partially recoverable investment. Why? Because at the time, coverage was the priority and that was the need. Once the coverage of drinking water and the quality of drinking water were reasonably covered, the next infrastructure project would follow.

BNamericas: Have you identified opportunities despite the pandemic crisis?

Salas: There are opportunities. We've identified projects in Mexico, Central and South America. I do not want to mention any because in the end we'll compete for the tenders and we want our proposal to be the best from a technical and economic point of view. But there are important projects in Colombia and in Panama, in Costa Rica, in El Salvador and, of course, in Mexico.

BNamericas: What are the projects of greatest interest in Central and South America?

Salas: In all countries, an effort is being made to have better services for both water and sanitation coverage, which includes sewerage and wastewater treatment. The countries are betting on better facilities and much more efficient infrastructure, and to upgrade supply systems, water distribution systems, sewage systems and, of course, wastewater systems. A second or third generation of services is being carried out, depending on the country we're talking about. And that gives us engineering and construction supervision companies the opportunity to participate.

There are plenty of opportunities. Participating in the Central and South American markets requires world-class engineering. It forces us to compete with the best from around the world. And without a doubt, we're going to fight and participate in those projects we're fortunate enough to win. 

Cipro's strategic plan establishes that we should be present in Central and South America in the coming years. Our idea is not to go and do a project and return to Mexico, but to be an international water and energy engineering company and we are going for that dream.

BNamericas: Which obstacles have you encountered?

Salas: There are lots of challenges. We'll probably see a decrease in fiscal resources in the coming years, but we're not sure about it. That would force us to create much more competitive proposals.

BNamericas: If you could convince the government to invest in a specific project, what would it be?

Salas: It's very difficult to say which project in Mexico may be the best to develop. I think there are different needs to develop infrastructure in all the cities, so, my advice would be to do as many projects as possible, do them in a single stage and look for all available financing alternatives, all financial, contractual and legal tools that allow development. Many of these projects can be carried out exclusively with federal public resources, others with a mix of municipal, state and federal resources and others will need to be PPPs. What's my recommendation? Doing as many as possible so that the development of infrastructure in the country is sufficient because the need is immense.