Recent developments
 
The Ministry of Treasury published the National Infrastructure Program 2014-2018 (the "Program") in the Official Gazette of the Federation on April 29, 2014. The Program describes the different industry sectors, projects and geographic areas that the Mexican Federal Government wants to promote acting together with the private sector. Said Program contemplates: (i) communications and transport, (iii) energy, including power, oil & gas, (iii) water, (iv) health, (v) urban development and housing, and (vi) tourism, as the key sectors to uplift. Likewise, it is particularly aimed to strengthen regional development in the south-southeast of Mexico[1] and increase productivity and competitiveness in such area, taking into consideration the abundance of natural resources.
 
Implications for sponsors, developers, contractors, suppliers, O&M companies and lenders, among others
 
There is no doubt on the relevance and the deep and long-term impact of the Program. The development of infrastructure is a key element to increase the quality of life and, at the same time, an essential ingredient to achieve economic growth. Based on the 743 investment programs and projects that are being contemplated, and an estimated investment of $7.7[2] billion pesos (USD$594 billion) between the public and private sectors, the Program is the most ambitious ever launched in Mexico. The Program is expected to create 350,000 additional jobs per year and to add between 1.8 and 2.0 percentage points to the growth rate. Infrastructure development, in all its sectors, represents a wide variety of business opportunities for all participants within the industry including sponsors, developers, contractors, suppliers, operators and managers and lenders. Said Program makes particular emphasis to public-private partnerships ("PPPs") and, in this regard, it is key to mention that the PPP legal framework is already in place. Likewise, the Program contemplates various different energy projects (power, oil & gas) that will become a reality upon the approval of the secondary legislation to the Energy Reform that is already under review and discussion.
 
Effectiveness of the Program and involved agencies
 
The Program became effective on the same date of its publication (April 29, 2014) and there is no other legal requirement that could impede or delay its application by the respective Mexican agencies, including, the Ministry of Treasury, Ministry of Communications and Transport, the Ministry of Energy (that heads PEMEX (Mexico's National Oil Company) and the CFE (Mexico's power utility state company ) and the Ministry of Health, among others.
 
Actions to consider
 
As stated above, there are a number of different projects that will be promoted and launched under the Program's umbrella. Out of the total 7.7 billion pesos estimated investment, the private sector is expected to contribute in the amount of $2.86 billion pesos.[3] We highly recommend all industry participants to read and analyze the Program very thoroughly to capture the projects of interest. The Program provides they key characteristics of the most relevant projects including their nature and structure, geographic area of impact, estimated investment and, very important, the origin of financial resources. Some of the projects described in the Program are already under bidding process such as civil works related to the Mexico City-Toluca Passenger High Speed Railway, and some others will be launched shortly, such as the public bidding processes to award 5 natural gas transportation pipelines by the CFE. For instance, some of the most relevant communications and transport, energy (power, oil & gas) and water projects are[4]:

  • Communications and Transport(i) the Atizapan-Atlacomulco Highway (central Mexico), as an alternative to the Mexico-Queretaro and Mexico-Toluca highways that are now saturated; estimated investment $5,860 million pesos, (ii) Tuxpan-Tampico (Gulf of Mexico); estimated investment $8,070 million pesos, (iii)Extension of the Altamira Port, that together with the Veracruz are the two most important ports in the Gulf of Mexico; estimated investment $10,700 million pesos,(iv) extension of the northern part of the Veracruz port; estimated investment $60,000 million pesos, (v) Aguascalientes-Guadalajara railway; estimated investment $11,593 million pesos, (vi) overhaul of the Mazatlán port in the Pacific coast; estimated investment $10,667 million pesos, (vii) the Mexico City-Toluca Passenger High Speed Railway (estimated investment $38,608 million pesos), the Mexico City-Queretaro Passenger High Speed Railway (estimated investment $43,580 million pesos) and the Transpeninsular Passenger and Cargo Railway in the Yucatán Peninsula (estimated investment $17,954 million pesos), (viii)extension of the electric train urban system in Guadalajara (estimated investment $17,693 million pesos), (ix) extension of the optic fiber network (estimated investment $9,750 million pesos), and (x)  railway by-pass at Coatzacoalcos in the State of Veracruz.
     
  • Energy (power, oil & gas)(i) combined cycle (CC) plant Noreste (1,006 MW; estimated investment $18,629 million pesos), (ii) combined cycle (CC) plant Norte IV (957 MW; estimated investment $11,000 million pesos), (iii) hydro plant Nuevo Guerrero (455 MW; estimated investment $14,227 million pesos), (iv) 4 wind power plants Sureste (II, III, IV and V) with a total capacity of 1,169 MW (estimated total investment $25,955 million pesos) and 14 solar power plants of 30 MW each (estimated total investment $12,378 million pesos), (v) drilling and minor and major repairs at wells and other related activities at the Cantarell field (estimated investment $233,179 million pesos), (vi) operation and maintenance of productive wells, drilling and other related activities at the Ku-Maloob-Zaap field (estimated investment $247,945 million pesos), (vii) minor upgrading at 8 diesel plants, major upgrading of 6 diesel plants and installation of 4 new plants at the Madero, Minatitlán, Salina Cruz, Salamanca and Tula refineries to produce ultra-low sulphur diesel (estimated investment $45,623 million pesos), and (viii) 18 natural gas transportation pipelines including the Ojinaga-El Encino pipeline (254 kms, estimated investment $5,160 million pesos), the El Encino-La Laguna pipeline (423 kms, estimated investment $8,385 million pesos), the Waha-Norte III pipeline (300 kms, estimated investment $7,095 million pesos), the Waha-Ojinaga pipeline (230 kms, estimated investment $5,160 million pesos), the Ehrenberg-Los Algodones-San Luis Río Colorado pipeline (160 kms, estimated investment $3,225 million pesos) and the Jáltipan-Salina Cruz pipeline (247 kms, estimated investment $8,333 million pesos).
     
  • Water(i) Monterrey VI Región Norte aqueduct (372 kms, estimated investment $18,282 million pesos, (ii) third line at the Cutzamala System Region Centro (estimated investment $4,830 million pesos), and (iii) Túnel Emisor Poniente II Región Centro to discharge waste water and rain from the Valley of Mexico (5.5 kms, estimated investment $2,228 million pesos.

Conclusion
 
Based on the results of the National Infrastructure Program of the past administration, and Mexico's poor economic performance during the first year of this new administration, President Peña Nieto is fully devoted and committed to make the Program a huge success. Mexico has the opportunity to take full advantage of this "momentum" and cannot afford to waste any time whatsoever. We are positive that the Mexican agencies will support the Program by launching the projects and fully exercising their budget. From our end, we are monitoring, and will continue to monitor, the status of the most relevant projects and will keep you timely appraised regarding any developments. However, if there is any specific project that you would like us to follow, please contact us as indicated below.