Who loves you, baby?

Who loves you, baby?

Mexican President Enrique Peña Nieto presented the National Infrastructure Program (PNI) for his government, which covers the period 2013 – 2018, on April 28, 2014.  The PNI is highly anticipated in various sectors of the economy, due to the boost it is expected to bring to the affected industries, not to mention to the national economy as a whole.  The construction industry in particular depends on government spending on roads, subsidized housing and engineering projects for the big contracts that power major players such as ICA, IDEAL, OHL, PINFRA and others.  With the construction sector posting negative growth going back to the end of 2012, builders and government economists alike are hoping a healthy dose of public spending will help pull the industry out of the tank.

For those preparing PowerPoints, here is some material for the bullets: The PNI proposes overall spending of approximately US$587 billion (7.7 million million pesos) on 743 projects covering the following sectors: Energy, telecommunications, transport, housing, tourism, health and water.  Special emphasis will be given to the country’s historically less developed south and south-east regions, according to the official presentation.  Energy, a hot topic for investment given the recently approved energy reform,  will benefit from over half the total projected investment, with most of the resources channeled through state oil and gas monopoly Pemex.  Approximately US$17 billion is earmarked for the construction of gas pipelines under the plan.

One project conspicuously left out of the PNI is the proposed expansion of Mexico City’s international airport, which is once again on the table under the current administration.  All sides appear to agree that the existing airport has reached an extreme level of saturation, but what to do about it has instigated bitter debate and even bloodshed going back to the government of Vicente Fox (2000 – 2006).   The Communications and Transport Ministry (SCT) said that the airport expansion project, estimated at a cost of approximately US$9 billion, was left out of the PNI because it is still under analysis.

One project that is slated for financing under the new PNI is the high-speed passenger train between Mexico City and the central industrial city of Querétaro.  This project has us jumping for joy and we will have more to say about it in a future post.  In the meantime, satiate your thirst for detail with the following breakdown of proposed spending by sector, courtesy of Banamex Reporte Económico Diario.

 

National Infrastructure Program, 2013 – 2018, in Millions USD (approx.)

Funding source

Sector to receive funds

Total

Public

Private

Total

587,163

370,006

217,157

Energy

295,296

214,693

80,603

Water

31,648

28,044

3,605

Tourism

13,730

5,230

8,500

Housing and urban development

140,965

74,333

66,632

Telecommunications and transport

100,008

42,271

57,737

Health

5,515

5,435

80

Source: Banamex based on data from the Presidency of the Republic. Pesos converted to USD at 13.2