Durango-Mazatlán hwy tender to be under new format

Monday, January 23, 2006

The construction of northwestern Mexico's Durango-Mazatlán highway is set to be offered for tenders by the transport and communications ministry (SCT) in the first half of this year, but under a new development scheme, local press reported.

The new type of format would mean the SCT offering the project to bidders as a concession, but actually taking part in the construction of parts of the road under the long-term service provision projects (PPS).

To finance the parts of the highway that it would have to build, the SCT would take toll funds from nearby highways and use this money to contract loans or issue bonds, which would generate a cash surplus to carry out construction of the main road.

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"In this hybrid [scheme] we will take advantage of the legal form of the concession, but we will use the leverage of nearby highways," Oscar de Buen, SCT's highways development department head was quoted as saying by daily Reforma.

"We are very interested in taking part in the project, especially because these new schemes invite and ensure private investment in favor of highway development," newspaper El Norte quoted the director of construction firm Gutsa, Luis Rotter, as saying.

The Durango-Mazatlán highway is going to be a particularly complicated and expensive project because it will have to cross Mexico's western mountain range, the Sierra Madre Occidental.

The 239km road will require an estimated 8.5bn pesos (US$806mn) and will form part of the most important east-west road across the country, the Mazatlán-Matamoros highway. The cost of the route is expected to reach 35.5mn pesos per kilometer, double the price of north-south roads.

"Due to Mexico's orography, the majority of the consolidated roads run north-south, while the cross-country roads are lagging behind because they traverse the two mountain ranges [the Sierra Madre Occidental and Oriental]. That is very complicated and costly because of the works that are needed," de Buen said.

Although the intention is to call for bids on the project and start construction as soon as possible, there are doubts that it can be completed by 2007 as has been claimed.

"We have to be realistic, there are very abrupt parts; various tunnels are considered and the hills will have to be broken down and I don't think it will be finished in 2007," Gabriel Montes Casas, head of the Mexican college of engineers was quoted as saying by newspaper El Siglo de Durango.

The SCT awarded mid-October last year a similar 20-year PPS contract to Mexico's largest construction company, ICA, for the development and modernization of Guanajuato state's Irapuato-La Piedad highway.