The ongoing question of what will happen to NAIM has been tossed around for several months. AMLO has analyzed the advantages and disadvantages presented by associations and experts worldwide, but ultimately the fate does not lay in the hands of his cabinet. Are the Mexican people prepared to decide the fate of the next Mexico City airport?

Experts Continue Investigating

Today the College of Civil Engineers (CICM) announced their verdict on revamping Santa Lucia Air Base as the city’s new airport. According to CICM, the cost of transforming Santa Lucia into an airport would be 66 percent more expensive than what is would cost to finish the original NAIM project in Texcoco. The Santa Lucia alternative would have a cost of approximately MX$385.7 billion, while NAIM would have a cost of MX$232.2 billion. “We consider that it is a mistake to only compare the costs directly related to the construction of the terminals of NAIM vs Santa Lucia. Taking into consideration all of the related costs of their infrastructure and corresponding recoveries, the Texcoco option presents fewer costs,” says CICM.

Why is the Santa Lucia Alternative More Expensive?

  • It’s Not as Cheap as Expected

According to CICM the cost of the construction of the Santa Lucia infrastructure would cost approximately MX$217.4 billion and NOT MX$70.3 billion like AMLO’s team had predicted. CICM gave an example that the average cost per m2 of construction of the terminal was estimated at MX$4,600/m2, while the current market prices are at MX$15,000- 20,000/m2.

  • More than Just a Terminal

The project consists of one terminal building and two airstrips, which is modest. But when added to the estimated cost of connectivity to AICM and access infrastructure to the rest of the city, the price tag increase to MX$63.3 billion according to the Mexican Transport Institute (IMT).

  • What About the Existing NAIM Contracts?

Canceling an airport is not that easy and is extremely expensive. NAIM’s project finance is intricate and has hundreds of intertwined contracts. According to GACM it would cost more than MX$100 billion to cancel all existing contracts.

  • It’ll Cost More than Just Money

Removing actual monetary count, as one of the most ambitious projects in Latin America, NAIM would hurt more than just the country’s coffers. This project was able to unite capital from all over the world, issue one of the first green bonds and place Mexico on the map for infrastructure development through PPPs. Investors’ trust would decrease and the security that projects in Mexico will have coherence and continuity would make investors and companies think twice before participating in projects. “The cancelation of NAIM would provoke an alert among investors regarding the rule of law in the country, apart from a negative sign about the direction taken by the new government,” says Jaime Reusche, analyst at Moody’s Investor Service Mexico.

A Risky Fate

Before the decision is made through the citizen consultation on Oct. 28, the government has asked experts to disseminate the proper information about the projects to the public including opinions, appraisals and discussions forums.

But here’s where it gets tricky. According to the OECD, 53 percent of young adults between the ages of (25-34) have at least high school studies and 16 percent of the same age group did not finish secondary school, which is a higher dropout rate than the OECD average. The Center of Public Policy Analysis (CAPP) says that Mexicans are limited in making the right decisions due to mostly a lack of resources, schooling and information.

How the government decides to communicate the information about the airports will play a vital role in citizens’ understanding and will ensure that the right project is chosen for the country.

 

 

Sources: Expansion, El Economista, Moody’s 

 

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