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 Business News | March 2007 
Calderón Unveils New Road-Building Projects
 Kelly Arthur Garrett - Herald Mexico
| | The major new scheme, announced earlier Thursday morning by Transportation Secretary Luis Téllez., will return an as-yet unannounced number of formerly private highways back to the private sector as concessions. |
President Calderón announced Thursday a vigorous road-building program that could double the number of major national highways, with most of them financed, built and operated by the private sector.
Speaking in the Nuevo León town of Santa Catarina, where work is set to begin on the new Saltillo-to-Monterrey freeway, the president said the nation´s economic stability and current low interest rates create a favorable atmosphere for long-term infrastructure investment.
But the government, he said, is in no position to embark on the kind of highway-building program needed to modernize ground transportation and take better advantage of Mexico´s proximity to the U.S. market.
"No matter how much we may wish it did, the truth is that the budget doesn´t stretch far enough," Calderón said. "But we´re going to take advantage of other investment schemes."
The major new scheme, announced earlier Thursday morning by Transportation Secretary Luis Téllez., will return an as-yet unannounced number of formerly private highways back to the private sector as concessions. These are roads mostly built during the 1980s and 1990s that went broke during the mid-90s crisis and had to be rescued by the government.
The new private companies will presumably improve the road conditions more efficiently, but since the highways are already built, more of the toll revenue will be pure profit for the concessionaires.
The government, meanwhile, will get a quick influx of cash by selling the concessions.
"This provides highway investment money without any cost to the taxpayer," said Calderón.
Also, since the roads will be concessioned to the private companies, not sold outright, they will revert back to the government in 30 years.
Other projects, Calderón and Téllez said, will be privately financed and built from scratch, with the private company recovering all the toll costs for 30 years. This scheme provides the government with no cash, but the highway gets built and operates at no cost to taxpayers.
Joint public-private projects are also planned, Calderón said, especially for roads through difficult terrain.
Solons question highway proposal
Kelly Arthur Garrett - Herald Mexico
Legislators demanded an explanation Friday for the government´s sudden decision to return to the private sector bankrupted highways that the taxpayers had to bail out over the last 10 years.
César Horacio Duarte Jáquez , secretary of the Chamber of Deputies´ Communications Committee, said Transportation Secretary Luis Téllez will be asked to come before Congress to explain how the nation will benefit from turning over many current highways, and most of those to be built in coming years, to for- profit companies.
Three parties in the Senate - the Institutional Revolutionary Party (PRI), the Green Party (PVEM) and the Democratic Revolution Party (PRD) - issued statements warning of "red flags" in the scheme announced by Téllez and President Calderón on Thursday.
The legislators are primarily demanding assurances that there will be no repeat of the mismanagement of private toll roads that forced the federal government to take control of the highways in the mid-1990s. By some estimates, the taxpayers spent 165 billion pesos putting the roads back in order, including the toll road to Acapulco that still has problems.
Calderón announced Thursday that he would like to double the number of major highways in the nation to take better advantage of trade opportunities with the United States, as well as internally.
Because of budget constrictions, he said, the private sector will have to play a major role in financing, building, operating and profiting from the roads.
One of the schemes he proposed was to sell to private operators concessions for existing highways that are now public but were once private. The concession price will provide cash to start construction on new highways.
Returning the highways to the private sector has legislators worried that the government is making the same mistake twice.
"We still haven´t finished paying to rescue the (Carlos ) Salinas administration (1988-1994) and he (Calderón) wants to give more concessions," said Deputy Hugo Martínez, a PRD member of the Communications Committee. |
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