How Mexico’s 1st BRT project in the southeast could spur financial innovation

The first bus rapid transit (BRT) system in Mexico’s southeast could help unleash new financing schemes for electromobility projects in less developed states, an event was told. 

The 2.8bn-peso (US$164mn) Ie-Tram electric bus corridor that Yucatán state is building in its capital Merida became possible thanks to a PPP model that allowed the government to obtain funds for a photovoltaic solar plant, Rafael Hernández Kotasek, head of the state’s mobility and territorial urban development institute IMDUT, said at a sustainable finance conference. 

The 120km BRT system will be inaugurated in December and comprises 30 electric units for three routes.

“It is practically being paid for by three schemes. The first is private financing for the rolling stock, the second is the federal government through [national infrastructure fund] Fonadin, and the state government,” Hernández said.

Yucatán’s legislature approved financing last year of up to 1.7bn pesos for the BRT infrastructure, representing around 60% of the project’s total. 

The contributions of the federal government and the private sector are 24% and 16%, respectively, said Hernández.

“If we wanted to make this project profitable, we had to obtain the cheapest and sustainable energy through a photovoltaic park,” he said.

The 7.5MW photovoltaic park is currently being built and will allow the state to expand the BRT lines by up to three times in the future, Hernández said, adding that Yucatán is among the states in Mexico with the highest energy costs. 

The administration of governor Mauricio Vila, who leaves office next year, has guaranteed the project’s continuity by creating an independent agency to oversee the BRT system. 

"In Yucatan we have separated the issue of transportation at the constitutional level, creating an autonomous transportation agency,” said Hernández.

The head of the agency can serve for up to 15 years and this kind of continuity “opens the door for various financing schemes," he said.