Mexico using 2 publicly funded flagship projects to attract private investors

The Mexican government is using two of President Andrés Manuel López Obrador's (AMLO) flagship projects in the southeast of the country to attract private investors to its project website to promote public-private partnerships (PPPs), even though both are being funded with public money.

National development bank Banobras recently uploaded profiles for the Maya train and the Tehuantepec isthmus rail corridor on its PPP promotional website Mexico Projects Hub, where all other major PPPs are published to inform investors about available opportunities. 

While publication of the details of these two initiatives would normally signal that authorities are seeking private investments for the works, the site states for each that “this project is being developed under a public works scheme, so it does not involve long-term private investment. The data is presented for informational purposes and is provided by the sponsoring agencies.”

However, private investors are being encouraged to participate in 10 industrial parks along the route of the Tehuantepec rail corridor, where firms will be awarded concessions to operate under a special tax regime, but as yet the private sector is not expected to have any direct involvement in the Maya train project. 

Ever since construction of the two projects began around two years ago, AMLO said the government would not take on any debt or call for private investment to complete the works, which are being funded with significant amounts of money from the 2023 federal spending budget. 

This trend has led to a reduction in PPP opportunities for the private sector under the current administration, as there are only a few exceptions for which the president has allowed certain works to move forward as PPPs.

In October, public finance consultant and PPP expert Ezequiel González Ruiz told BNamericas that “there is a rather poor list” of these contracts available in Mexico and that such partnerships had “died with the new administration.”