Mexico: Mexico 2013-18 National Infrastructure Programme (NIP)

The government of recently inaugurated President Enrique Pena Nieto is expected to release the 2013-18 National Infrastructure Programme (NIP) within a few months. This investment plan, which will continue along a path set by the ambitious 2007-12 NIP, is likely to provide a number of opportunities for local and international engineering and construction firms.

In recent years, Mexico has invested heavily in upgrading and expanding its infrastructure. According to figures published by the Ministry of Finance and Public Credit, spending on infrastructure as a portion of GDP increased from 4.1% to 5% between 2007 and 2010.

Most of the work carried out under the 2007-12 NIP was focused on energy-related projects, with $110.9bn of its $233.7bn budget earmarked for investment in hydrocarbons infrastructure. Other major expenditures were directed toward the electricity sector ($35.1bn), highways ($26.5bn), telecommunications ($26.1bn), water and sewage ($18.6bn), ports ($6.6bn), airports ($5.5bn) and railroads ($4.5bn).

One of the stated goals of the 2007-12 plan was to improve Mexico’s infrastructure score in the World Economic Forum (WEF) World Competitiveness Rankings, aiming to lift the country from its rank of 64 to a position closer to those of regional leaders Chile (35) and Panama (46). However, next successive years of increased spending, Mexico actually dropped slightly to rank 65 in terms of in general infrastructure in the new WEF statement.

Early indications suggest that spending could be raised to $416bn under the new government’s NIP, with as a lot of as 60% of projects to be carried out as public-private partnerships (PPPs). Some of the anticipated investments include a 278-km extension of the trans-peninsular high-speed train line from Mérida to Punta Verado, a metro line in Monterrey, numerous energy projects and the construction of data and communications technology parks.

A new PPP law, passed in January 2012, should serve to stimulate further private sector participation in infrastructure development by providing better legal stability and an improved framework for cooperation between the government and private sector.

The new legislation introduces several significant changes. Businesses will presently have an additional avenue for participation, in addition to the existing concession system. For the prime time, private sector partners will be able to propose designs and plans of their own, while they will as well have better capabilities in negotiating land purchases. Moreover, projects approved under the PPP system will maintain priority of payment within the national budget.

As the current government works towards completing the NIP 2013-18, companies both foreign and domestic from a variety of industries will be paying close attention, as opportunities are likely to increase thanks to higher spending and the new PPP framework. According to a study published by Mexico’s College of Civil Engineers in 2012, the country will require roughly $400bn worth of infrastructure over the course of the next six years, across additional than 1000 projects. Though it is still early days, it seems as if Mexico’s infrastructure uptick is just getting started.