Mexico construction chamber confident in the return of infra and energy PPPs

Mexican construction chamber CMIC is confident in the return of public-private partnerships and increased private sector participation in the infrastructure and energy sectors during the next administration.

President-elect Claudia Sheinbaum will take office on October 1 and has pledged a continuation of President Andrés Manuel López Obrador’s policies that have seen the State play a key role in the two sectors.

The only way to develop infrastructure and energy projects amid the country’s tight fiscal situation is through private sector participation, CMIC president Luis Méndez Jaled told a press conference on Tuesday.

"The budget, and its design with major social spending items, represents a great challenge for the incoming administration, which can be mitigated by strategic co-investment schemes involving public and private funds,” he said. “It will be necessary to have more transparent regulations to carry out such projects.”

CMIC also welcomed the recent appointment of Jesús Esteva as the next minister of infrastructure, communications, and transportation. 

“It is reassuring for us that he is a civil engineer with a distinguished career and that he has a technical focus,” said Méndez Jaled. 

During the six-year term of López Obrador, private participation through PPPs in federal projects have been significantly reduced with the president accusing private firms of corruption and abusive market behavior. Instead, López Obrador chose the defense ministry (Sedena) to take charge of several major works. 

The army participated in the construction of the Maya train, built the Felipe Ángeles international airport in Mexico state and the Tulum international airport in Quintana Roo’s Felipe Carrillo Puerto municipality.

On Monday, Sheinbaum said the rail projects that are part of her infrastructure program – whose presentation is scheduled for next week – will be built via a mixed scheme: half will go to the army and the other half to private firms. 

“We will continue to insist that the army returns to its barracks,” said Méndez Jaled. “We are not comfortable with the army continuing doing [construction].”

Méndez Jaled said CMIC believes Sheinbaum will choose a different path from AMLO and promote more private participation.

“We want to believe in our president-elect, she has a very ambitious infrastructure plan and talks about collaboration, we as an institution asked her directly how much the private sector would participate and she responded affirmatively, 100%,” he said. “The second factor is the team she has appointed, which is mostly experienced and has previously worked with us.” 

Public investment in infrastructure was reduced by 30% this year compared to the budget allocated last year, according to the chamber. 

Mexico invests approximately 2.7% of its GDP in infrastructure, and CMIC estimates that the country should be investing double that amount.