Oaxaca special zone expected to boost investment

Tuesday, June 14, 2016

The Mexican government's creation of a special economic zone (SEZ) in Oaxaca will boost investments in energy and infrastructure, according to local authorities.

The federal government in October proposed a series of SEZs, similar to that created along the northern border that facilitated the installation of US assembly plants as part of Nafta in 1994, aimed at boosting local industry and economic development in strategic regions.

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The establishment of an SEZ in Oaxaca's Tehuantepec isthmus represents an important boost to the region's development and will facilitate the creation of new energy infrastructure, including gas pipelines, transmission lines, wind farms and petrochemical facilities, as well as commercial and agricultural infrastructure, according to the state's tourism and economic development department (STyDE).

The Oaxaca SEZ was created to take advantage of the region's strategic geographical position, according to the STyDE's deputy secretary of industry and trade, Víctor Vásquez Bocanegra.

He cited the planned US$643mn, 200km Salina Cruz-Jáltipan natural gas pipeline that will link Oaxaca city, site of one of federal oil company Pemex's six refineries, to a power plant in Jáltipan in the Gulf coast state of Veracruz, which is slated to enter operation in 2017.

The pipeline has yet to be put up for tender by state utility CFE, however.

Other planned projects are an airport in Ixtepec, and a highway linking Mitla and Tehuantepec, which is under construction.

Negotiations are also underway for the acquisition of land to build the Xipe substation, Vásquez Bocanegra said.

The Tehuantepec isthmus is the country's wind farm hub, with a total of 27 farms in operation generating around 2,500MW of electricity, according to the Mexican wind power association (Amdee).

The STyDE's director for renewable energy, Sinaí Casillas Cano, said the federal government is also planning to renovate the railroad between Salina Cruz and the Gulf coast oil port of Coatzacoalcos, which is also the location of a Pemex petrochemical complex.