Quintana Roo bets on PPPs

The strategic project agency of Mexico’s Quintana Roo state, Agepro, has achieved significant success since it was created four years ago. 

It not only put together a portfolio of four vital infrastructure projects but also obtained in December the approval of the state's first public-private partnership, valued at US$225mn. The agency plans to tender a second PPP worth about US$2bn this year.  

The investment for the first PPP surpasses the entirety of federal highway investments in the state already, Agepro director Eduardo Ortiz Jasso tells BNamericas. 

Ortiz also spoke about tenders and planning progress on an 8.7km bridge and a light rail transport system for tourism hub Cancún.

BNamericas: What is Agepro’s most advanced project?

Ortiz: The Nichupté vehicular bridge is the most advanced project that we have in the agency right now. Basically, at this point, what I can tell you is that we are in the structuring phase. We are being very careful in monitoring the application and implementation of the Quintana Roo state PPP law.

We are also preparing the bidding process for this project, which we will publish in these first couple of months of the year. We are finalizing details of its preliminary bases and we expect to sign the contract with the winning company in the second quarter of this year. Works will kick off in the same period, with expectations of concluding them in September 2022, which is when the current state administration will leave office.

It is the first PPP work in the history of Quintana Roo.

BNamericas: According to your agency, the 8.7km Nichupté vehicular bridge will cross the Nichupté lagoon in front of the main thoroughfare of the Cancún hotel district. How could you and the state government convince congress to pass the state's first PPP bill last December?

Ortiz: Yes, we obtained the authorization of congress in December of last year. The truth is that the majority of the legislators saw it [favorably]. I think Quintana Roo has a very clear notion – at least the business sector and also the government – that there is a need for investments in infrastructure, that we need this type of investments with a totally viable model.

Since the beginning of the administration, we have dedicated practically a year to legal processings and to make our own PPP law, which was fully congruent and aligned with the existing federal PPP law and financial discipline law and heritage law. We generated all this legal scaffolding to provide the legal certainty required for these kinds of investments.

It will be a historic PPP not only because it is Quintana Roo's first, but because of the investments. We are talking about a little more 4.5bn pesos (US$225mn). The federal government, in the case of the Nichupté bridge, is supporting us with a 2bn-peso contribution.

BNamericas: What will be the agency's next priority?

Ortiz: The second project which we are working on is very interesting because it is part of a comprehensive mobility strategy for the city of Cancún. It is a circuit that we call the feeder of the Maya train.

The project will run 35km through the Cancún hotel district and 12km from downtown to the airport, where the 47km circuit will end. Due to these characteristics, it is being projected as a tourist urban circuit. Right now we are in a very interesting stage. We are defining the technology with studies that we are preparing and we are being very rigorous in the environmental and urban part of the analysis of this project. We are also preparing studies for the demand and origin and destination to know with precision the trips needed in the city and the hotel area.

What we are looking for with all these studies is to analyze the different technological alternatives that exist out there. We believe that it could be a light rail transit system that could be elevated in some sections and run at ground level in other parts. We are already doing very specific field studies, including the layout. With the demand, urban and environmental studies, we will surely have a clearer definition regarding technology.

We are working hand in hand with [tourism board Fonatur] because this is a project that will feed the Maya train. We are expecting to carry more than 100,000 passengers that could be transported from the city and the hotel district to the Maya train station planned for Cancún.

BNamericas: Agepro registered this 39bn-peso urban tourist light transport system in 2019. However, the project appeared on Mexican development bank Banobras' project tracker page in July 2020 as a PPP. What offers have you received? Is there interest from the private sector or distinguished companies?

Ortiz: We have received a lot of interest in this project from consortiums, just like we did with the bridge project. Basically, what we are looking for in this PPP project is to define the technology needed first so that in due course we can open ourselves to receiving an unsolicited proposal as in the case of the bridge project and then advance faster in planning afterward.

But I insist, there is a lot of interest in the stage where we are in. The truth is that there has been interest from consortiums, technology providers, construction companies and investment funds … there has been a bit of everything. But yes, the most important thing for us is the PPP model because we are looking for a consortium that, in the end, can provide us with everything including technology, financing, construction experience, operation, maintenance and all the components of a PPP.

We are moving toward that goal and at this moment we are doing our own studies to evaluate the different alternatives in due course.

BNamericas: So what would the calendar look like?

Ortiz: Step one would be to conclude the technological definition and the demand studies in this first two-month period. By the end of February at the latest, we need to have more clarity, and once we have made that leap, we would be entering into the next stage by March, which will basically coincide with the beginning of works of the Nichupté bridge.

Of course, we want to launch the tender and the same whole process that we did with the bridge project, which has required the approval of state congress, and begin works this year.

BNamericas: Agepro has also a Tulum-Cancún tourist train and the expansion of the Bacalar-Tulum stretch of federal highway 307 on its PPP agenda. Both were proposed before the confirmation of the Maya train, which already considers a Cancún-Bacalar rail line and a highway modernization. Did the Maya train change Agepro's plans?

Ortiz: That is a very good question. The truth is that since the state administration started, we have set ourselves the task of defining a portfolio of projects. We defined which were the priority projects for the state and, indeed, the one that we proposed as a railway project in 2017 was the Cancún-Tulum tourist train.

When we finished our PPP law, we had already made progress in this project's studies – train analysis, demand studies, and the pre-feasibility studies established under the PPP law. But when the new administration of President Andrés Manuel López Obrador took office (end of 2018), it announced the Maya train as a strategic federal project. And what we did was meet with Fonatur immediately, review all our progress and agreements. Of course, we reached an agreement that the Cancún-Tulum train should be a part of the Maya train.

In reality, we aligned our projects and contributed all our progress to Fonatur and we began to coordinate. We have progressed very well and now there will be a train not only for the Cancún-Tulum section – which is what we wanted – but the rail line will also extend all the way to Chetumal. We will have nine stations throughout the state of Quintana Roo and basically 500km of the 1,500km of the Maya train will be in our state.

What at first we proposed as a 120km tourist train will now be a railway project of more than 500km for Quintana Roo as part of the Maya train.

The instruction of our governor Carlos Joaquín González was that we have advanced in the state and the strategic projects that we included in our state development plan has been aligned with this federal strategic project. Coordination with the government and with the municipalities is very important, and that is one of the tasks and steps that we are also carrying out at Agepro.

I can tell you that we are working on the project for the Tulum-Bacalar highway section, which we have already worked on from the beginning, initially seeking the inclusion of this project in the federal government's projects portfolio. In the same way, we are analyzing territorial reserves and evaluating the models for their contribution to the Maya train terminals and to its polygons around the terminals. Without a doubt, the connection with the Maya train has been of greater relevance.

BNamericas: Are there other projects Agepro is working on?

Ortiz: At this time just the ones we already mentioned. We will start the bridge project shortly and we will see faster progress for our Maya train feeder transport system. Now, at the end of January or the beginning of February, we have our ordinary governing board meeting chaired by governor Carlos Joaquín González. At that meeting, we are going to define our calendar and work portfolio for this year. We are evaluating an important project for the south of the state. It is also something that the governor has instructed us to do and that the southern business sector has also been asking us to do.

BNamericas: Agepro is one of the few state agencies that was created to plan and promote infrastructure investment. It has already made progress on several fronts. How do you feel about this achievement and how does the agency’s future look? Could similar agencies provide legal certainty and contribute to economic development?

Ortiz: The instruction of governor González was to look for the figure that could generate precisely that certainty for investments in the infrastructure projects that Quintana Roo requires. We are a decentralized body, [part of] the economic development ministry, with a very clear vision of promoting the state’s economic development.

The truth is that we are very happy because we have seen interest. We signed an agreement with Banobras and its project tracker website Mexico Projects since we started. Our governor signed the agreement so that we could present projects on behalf of Quintana Roo state. The truth is that our work has confirmed that there is still investment interest in our state and that the only thing that was missing was an agency that took care of all planning and studying to create legal certainty so projects could advance.

We are specialized in that. We have a great work team, a professional technical team in financial, environmental and urban areas. Basically, we are a 100% technical team and the truth is that we have had results thanks to that. We are dedicated to generating these studies that provide certainty and clarity, which are linked, as is the case of what we discussed about the Maya train. But also we have that flexibility toward the municipalities. I think we are doing very well and we are convinced that we are generating results.

To put what we have achieved in perspective, in the 45 years of [Quintana Roo’s existence], highway projects have been carried out by the communications and transportation ministry (SCT) that are equivalent to around 4.5bn pesos, including overpasses, bypasses and some roads. With a single PPP in two more years, we will have the same investment. With that rhythm and need, we continue to advance more projects, which is what we are focused on. There will be more investment to meet the needs of Quintana Roo.