TREND: PPPs, the road to renewing Mexico's highways

By
Tuesday, May 9, 2017

Mexico's federal non-toll highway network amounts to a little over 40,680km and is managed by the country's transport ministry (SCT) through its general directorate for maintenance. The network is comprised of 14 major highway corridors, which serve as a backbone for the country's federal roads. It also has a basic network of highways that connect state capitals, large cities, ports and border crossings, in addition to a secondary network of regional and local highways. 

According to SCT information, around 22% of the total network is currently in poor condition, which presents challenges to users in terms of longer travel times due to having to reduce speed, and this entails higher costs for the transport sector, among other problems.

Start your 15 day free trial now!

cta-arrow

Already a subscriber? Please, login

The SCT started awarding multi-year contracts to provide maintenance on its non-toll highway network back in 1996 in order to make the process more efficient. In 2002, the ministry began implementing the comprehensive maintenance pilot project PROPIMI, the name of which was then changed to PROMAI, grouping in one single contract all the activities necessary to maintain the roads in good condition, such as providing routine and periodic maintenance, rebuilding highway sections and bridges, and providing monitoring services to verify road conditions.  

This contracting model eventually evolved into the so-called multi-year road conservation maintenance contracts (CPCC) in 2010, which included international best practices and experiences and set pre-established performance standards to be met by the contract winners.

Although the ministry has lauded this type of hiring model, it has also said that the reduced public spending that the country has experienced in recent years meant that the model failed to deliver the expected results. 

In order to compensate for limited public funds, the SCT devised the implementation of public-private partnership (PPP) contracts to provide maintenance on non-toll federal highways. The contracts are awarded for a 10-year term and commit the private partner to provide comprehensive services to maintain, preserve and finance a certain asset. In return, authorities provide the winner with a monetary consideration for all the services delivered. The remuneration is estimated based on a compliance evaluation system, including a series of service standards. 

PPPs ALREADY IN OPERATION

Map showing road maintenance PPPs already in operation. CREDIT: SCT.

The first ever road maintenance PPP contract was awarded last year to a consortium formed by La Penínsular Compañía Constructora, Operadora de Administración Técnica and Constructora y Pavimentadora Vise for 10-year maintenance works on the 157km Querétaro-San Luis Potosí section of federal highway No. 57. 

Another 10-year contract for maintenance works on 134km of the Coatzacoalcos-Villahermosa section of federal highway No. 180 was awarded to a consortium formed by companies Mota-Engil México, Calzada Construcciones, Construcciones y Dragados del Sureste and Constructora y Promotora Malibran. 

Works on both projects were formally launched on December 1 last year. 

PROJECTS INCLUDED IN THE 2017 FEDERAL SPENDING BUDGET 

For this year, the federal spending budget allocates funds to four road maintenance projects to be carried out under the PPP model. 

The 10-year contracts for these four projects consist of performing rehabilitation works on the highways for the first two or two and half years, and then carrying out periodic maintenance works during the remaining term. 

One of the contracts calls for the rehabilitation of two highway sections: the 65km Pirámides-Tulancingo highway, which crosses part of the central states of Mexico and Hidalgo; and the 26km Pachuca-Tulancingo highway, located entirely in Hidalgo state. With a total price tag of 1.86bn pesos, congress allocated 257mn pesos for 2017.  

Another contract entails carrying out maintenance works on the 169km Texcoco-Zacatepec highway, which crosses parts of Mexico, Tlaxcala and Puebla states. The project's total price tag is 2.26bn pesos, and congress decided to allocate 371mn pesos to that for the first year.

Tenders for these two projects were launched in early March, with clarification meetings taking place late that month. Bids are scheduled to be submitted on May 30 and the winners are expected to be announced on June 20. The signing date for the contracts has been set for July 20.

A third contract calls for maintenance works on the 178km Matehuala, San Luis Potosí- Saltillo, Coahuila section of highway No. 57, which crosses a significant part of Nuevo León state. The project will require a 1.76bn-peso (US$85mn) investment, some 287mn pesos of which would be allocated this year, according to the budget.

The last contract involves performing works on three different highways connecting the northern city of Saltillo in Coahuila state to the border city of Nuevo Laredo, in Tamaulipas state: the 38km Saltillo-Monterrey highway, which crosses part of Coahuila and Nuevo León states; a 34km stretch of Monterrey's northern bypass, which runs from the Saltillo-Monterrey highway to the Monterrey-Nuevo Laredo highway in Nuevo León state; and the 181km Monterrey-Nuevo Laredo highway, from the Monterrey northern bypass to the Nuevo Laredo II bypass, crossing parts of Nuevo León and Tamaulipas states. The contract also entails carrying out construction works on several interchanges that have a combined length of 14.6km. The project will require a 3.23bn-peso investment, some 595mn pesos of which will be allocated for its first year. 

The tenders for these last two contracts were launched in late March and the respective clarification meetings took place last week. Bids must be submitted on June 21 and the winner of each contract is set to be announced on July 5.

Map showing PPPs to be awarded this year. CREDIT: SCT.

ADDITIONAL PROJECTS FOR THIS YEAR NOT INCLUDED IN THE FEDERAL SPENDING BUDGET

The SCT is planning to launch an additional six road maintenance PPP projects this year. Of these projects, two are unsolicited proposals and are already in the preparation stage so they can be registered with the finance ministry (SHCP) in order to obtain authorizations for the tenders to be launched.

One of them calls for maintenance works on the 89.1km Tulúm-Cancún section of federal highway No. 307, located in Quintana Roo state on the Yucatán peninsula.

The other entails performing works on the 154km Las Brisas-Los Mochis section of federal highway No. 15, in the northwestern state of Sinaloa. 

Another four projects are still pending allocation of additional funds so that the ministry can begin preparing them. These projects include the following: 

-The 187km San Luis Potosí (Libramiento Norte)-Matehuala section of federal highway No. 57 in San Luis Potosí state.

-The 224km Tampico (Altamaira)-Ciudad Victoria stretch, which comprises sections of federal highways No. 81 and No. 83 in the Gulf state of Tamaulipas.

-A 165km stretch that runs between the cities of Campeche and Mérida and comprises sections of different federal highways located on the Yucatán peninsula.

-The 264km Arriaga-Tapachula section of federal highway No. 200, which crosses the southern state of Chiapas. 

Map showing the location of all of Mexico's road maintenace PPP projects (included those currently in operation, being tendered and in the planning stage). CREDIT: SCT