LatinFinance - September/October 2013 - 46

MEXICO
INFRASTRUCTURE

The Mexican government has ambitious plans for revamping the country’s
infrastructure. But first it must get the investment framework right.
By Karen Schwartz

Ground rules

I

nvestors are watching mexico
closely — and with good reason.
President enrique Peña nieto in July announced a much-anticipated six-year plan
to invest four trillion pesos ($300 billion) in
the country’s infrastructure. the ambitious
proposal offers a blueprint for developing
projects in road, rail, ports, airports and
telecommunications that are estimated to
need some 1.3 trillion pesos in financing.
the proposal envisages seven hundred
billion pesos to revamp the nation’s telecommunications network in a bid to make
it more competitive — measures which raise
the prospect not only of greater efficiency
for the sector but also of fresh investment.
the communications projects include two
national communication satellites, increased broadband coverage as well as the
rollout of digital tV across the country.
the government’s infrastructure investment plan is also closely linked to a proposed reform of state oil company, Pemex.
energy reforms put forth by Peña nieto’s
institutional Revolutionary Party (PRi) in
august will require that the constitution is
changed to allow for profit sharing in the oil
and gas and power sectors.
if successful, such a reform would allow
private and foreign capital into areas — including shale gas, deepwater exploration,
oil production and more — that have been
the sole preserve of Pemex. Such changes

46 l atinfina nce.com - September/October 2013

would also open the midstream and downstream petroleum sectors and the power
generation sector to private participation
and investment.
the proposal would allow state-owned
utility comisión federal de electricidad
(cfe) to work with private parties. law
firm White & case expects bids for the first
profit-sharing contracts by mid-2014. the
mexican opposition, the national action
Party (Pan), has also set out an energy
reform bill, which proposes allowing international investors to bid for concessions
across the energy industry, and partially
listing Pemex.
the energy reforms still face deep-seated
opposition: any talk of opening up Pemex
has long been taboo in a country fiercely
protective of the industry it nationalized
in 1938. But under an agreement forged
by Peña nieto last December between his
party and the two main opposition groups
analysts say the odds for the reform’s success are better than they’ve ever been.
Yet as Guillermo ortiz, chairman of
Group financiero Banorte, told LatinFinance in august, the main risk now lies in
implementing reforms. “the government
announced an ambitious infrastructure
program and the energy reform if done
properly would bring huge amounts of
money and new investment in both oil and
gas,” he said. “that has to be implemented

ROLLING FORWARD: Kansas City
Southern’s Mexico operation is
considering infrastructure
investment as reforms take effect

and managed properly. the main risk i see
is the risk of [reforms] being implemented
correctly.”
Funding focus
So far, a number of major infrastructure
investors have expressed cautious optimism over the broad thrust of the infrastructure reforms. Jonathan Walbridge,
chief operating officer at macquarie mexican infrastructure fund, says his firm is
eyeing opportunities in road, railway and
port expansion opportunities, as well as
generation and combined cycle gas turbine
(ccGt) build-out possibilities.
“on the power side, market forecasters
are predicting that 40 gigawatts of new
build capacity will need to come online by


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LatinFinance - September/October 2013

Table of Contents for the Digital Edition of LatinFinance - September/October 2013

Latin Finance - September/October 2013
Contents
Front notes
People news
Debt news
Equity news
M&A news
After the storm
Advantage Mexico
Treading water
New structures
Mexico
Regaining the Initiative
Deficit Ahead
Building up
Switching Course
Brazil
Work in progress
Extreme makeover
Mind the gap
Brazilian life insurance
Andean
Breaking the fall
Reaching out
Market movers
Paraguay
Smoothing the cycles
Thinking big
Parting Shot
LatinFinance - September/October 2013 - Latin Finance - September/October 2013
LatinFinance - September/October 2013 - Cover2
LatinFinance - September/October 2013 - Contents
LatinFinance - September/October 2013 - 2
LatinFinance - September/October 2013 - 3
LatinFinance - September/October 2013 - Front notes
LatinFinance - September/October 2013 - 5
LatinFinance - September/October 2013 - People news
LatinFinance - September/October 2013 - 7
LatinFinance - September/October 2013 - Debt news
LatinFinance - September/October 2013 - 9
LatinFinance - September/October 2013 - Equity news
LatinFinance - September/October 2013 - 11
LatinFinance - September/October 2013 - M&A news
LatinFinance - September/October 2013 - 13
LatinFinance - September/October 2013 - 14
LatinFinance - September/October 2013 - 15
LatinFinance - September/October 2013 - 16
LatinFinance - September/October 2013 - 17
LatinFinance - September/October 2013 - 18
LatinFinance - September/October 2013 - 19
LatinFinance - September/October 2013 - 20
LatinFinance - September/October 2013 - 21
LatinFinance - September/October 2013 - 22
LatinFinance - September/October 2013 - 23
LatinFinance - September/October 2013 - After the storm
LatinFinance - September/October 2013 - 25
LatinFinance - September/October 2013 - Advantage Mexico
LatinFinance - September/October 2013 - 27
LatinFinance - September/October 2013 - Treading water
LatinFinance - September/October 2013 - 29
LatinFinance - September/October 2013 - 30
LatinFinance - September/October 2013 - New structures
LatinFinance - September/October 2013 - 32
LatinFinance - September/October 2013 - 33
LatinFinance - September/October 2013 - 34
LatinFinance - September/October 2013 - 35
LatinFinance - September/October 2013 - 36
LatinFinance - September/October 2013 - 37
LatinFinance - September/October 2013 - 38
LatinFinance - September/October 2013 - 39
LatinFinance - September/October 2013 - 40
LatinFinance - September/October 2013 - Mexico
LatinFinance - September/October 2013 - Regaining the Initiative
LatinFinance - September/October 2013 - 43
LatinFinance - September/October 2013 - Deficit Ahead
LatinFinance - September/October 2013 - 45
LatinFinance - September/October 2013 - Building up
LatinFinance - September/October 2013 - 47
LatinFinance - September/October 2013 - 48
LatinFinance - September/October 2013 - 49
LatinFinance - September/October 2013 - 50
LatinFinance - September/October 2013 - 51
LatinFinance - September/October 2013 - Switching Course
LatinFinance - September/October 2013 - 53
LatinFinance - September/October 2013 - 54
LatinFinance - September/October 2013 - 55
LatinFinance - September/October 2013 - 56
LatinFinance - September/October 2013 - Brazil
LatinFinance - September/October 2013 - Work in progress
LatinFinance - September/October 2013 - 59
LatinFinance - September/October 2013 - 60
LatinFinance - September/October 2013 - 61
LatinFinance - September/October 2013 - Extreme makeover
LatinFinance - September/October 2013 - 63
LatinFinance - September/October 2013 - 64
LatinFinance - September/October 2013 - 65
LatinFinance - September/October 2013 - 66
LatinFinance - September/October 2013 - Mind the gap
LatinFinance - September/October 2013 - 68
LatinFinance - September/October 2013 - 69
LatinFinance - September/October 2013 - Brazilian life insurance
LatinFinance - September/October 2013 - 71
LatinFinance - September/October 2013 - 72
LatinFinance - September/October 2013 - Andean
LatinFinance - September/October 2013 - Breaking the fall
LatinFinance - September/October 2013 - 75
LatinFinance - September/October 2013 - 76
LatinFinance - September/October 2013 - Reaching out
LatinFinance - September/October 2013 - 78
LatinFinance - September/October 2013 - 79
LatinFinance - September/October 2013 - 80
LatinFinance - September/October 2013 - 81
LatinFinance - September/October 2013 - Market movers
LatinFinance - September/October 2013 - Paraguay
LatinFinance - September/October 2013 - Smoothing the cycles
LatinFinance - September/October 2013 - 85
LatinFinance - September/October 2013 - Thinking big
LatinFinance - September/October 2013 - 87
LatinFinance - September/October 2013 - Parting Shot
LatinFinance - September/October 2013 - Cover3
LatinFinance - September/October 2013 - Cover4
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