Last night history was made in Mexico as the President-Elect came from a party that was neither PAN nor PRI, ending a decades-long duopoly. Andrés Manuel López Obrador (AMLO) was named president after winning more than 53 percent of the total votes, with Anaya coming in second and Meade third. In what was AMLO’s third attempt at reaching Los Pinos, his campaign rested on cracking down on corruption and tackling the country’s high poverty and violence rates. Throughout his campaign, AMLO alluded to some of his policies in infrastructure development.
Here is what AMLO has to say about infrastructure:
Water & Waste Management
- Water availability is a high priority for AMLO. He wants to make sure there is clean water across the 13 hydric regions in Mexico. His plan includes the construction of desalination plants in the north of the country and various aqueducts throughout the center and southern regions. Ensuring water distribution in urban areas is also a priority.
The Current Situation
- Mexico’s cities’ fast expansions have challenged their abilities to keep up with infrastructure development. The sector that has been most affected is the country’s water and waste systems. Pena Nieto’s term targeted the construction of important water projects, that have faced difficulties in the last years. AMLO will be inheriting the East Drainage Tunnel, Monterrey VI and El Zapotillo as he tries to quench the thirst of the country’s northern region.
- AMLO wants to increase the country’s connectivity and boost economic activity by modernizing the country’s federal road network. This will help lower transportation costs for Mexico’s industries. He wants to give priority to the country’s marginalized and indigenous communities.
The Current Situation
- Although Mexico has a robust road infrastructure network, many of its roads are in urgent need of maintenance and expansion to truly transform the country into a logistics hub. Many roads such as the Barranca Larga-Ventanilla (Oaxaca-Puerto Escondido) highway have been under construction for many years due to the difficulty not only in construction but in financing. The Peña Nieto administration began placing maintenance and conservation contracts under PPP schemes, increasing the participation of the private sector in the upkeep of the federal network. Rights of way and negotiations with ejidos continues to be the main challenges SCT and construction companies are facing to finish projects on time and budget. The important factor is ensuring the National Expenditure Budget continues to provide SCT with the budget it needs to finish its projects.
AMLO’s Inherited Infrastructure Projects
Mexico- Toluca Interurban Train
- This MTS project that was expected to be completed by the end of 2018, but has been postponed to mid-2019. ROW issues have changed the project’s path various times throughout its construction phase. In June, AMLO assured the project would be completed due to the amount already invested.
- After various changes during his campaign, AMLO has stated the importance of the construction of NAIM for Mexico.The Mexico City Airport Group (GACM) ensures the country that the cost of NAIM has not elevated from US$13 billion. So far, 90 percent of the preliminary projects are completed and some of the most important contracts are advanced to 50-80 percent according to SCT and GACM.
- AMLO’s proposal is to increase connectivity through expanding wide band coverage to marginal zones in Mexico at accessible prices. He wants to create the Social Coverage Wide Band Fund to incentivize operators to increase coverage through a more efficient use of the bands. Through this fund, he wants to create social concessions that would be sub-leased to communities and non-governmental organizations in marginalized states. Some critics have stated that this would be unfeasible due to the capital-intensive projects that individually would not be able to sustain their own networks.
The Bottom Line:
Infrastructure is crucial to support the country’s economic development and it is clear AMLO also believes it is a priority. The main topics that must be defined are the projects that will be made priorities and how will they be financed.
Infrastructure development not only takes years to plan and construct, but it costs the country a great deal of money, especially when projects are not viable though PPPs. Historically, infrastructure development has been slow due to low government expenditure budgets for development and the financing gap has been slowly been breached through the participation of the private sector.
In the coming months, AMLO’s cabinet will develop its own National Development Program that will show us exactly what he plans for the country’s infrastructure industry. Along with the development of infrastructure, AMLO says no social or industrial project will be developed unless it is sustainable and that higher standards will be placed on developers.
AMLO’s main proposal for the country was to abolish corruption and restore the country’s rule of law. Transparency is one of the biggest concerns for the country’s construction sector. Mexico currently ranks 123 of 176 countries according to the Transparency International Corruption Perception Index. Making this one of one of the most important goals for the AMLO administration.
“There is budget, but unfortunately there is a lot of corruption,” said AMLO in Tlaxcala in June. “They steal the money that belongs to the people and it is a pity that Mexico is considered one of the most corrupt countries in the world. But I am going to end corruption; I am tired.”