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Agreement for Economic Reactivation
On October 5, 2020, President Andrés Manuel López Obrador, together with the Business Coordinating Council, executed the Agreement for Economic Reactivation (hereafter the "Plan"), which includes a set of actions and infrastructure projects to be financed primarily by private capital.
The Plan seeks to finance public infrastructure projects in which the private contribution must be at least 50% of the total cost of the project. In this regard, the Plan announced 39 projects to be developed during the remainder of this year and the following, representing an aggregate investment of approximately $297.3 billion pesos ("MMP") in the sectors of (i) communications and transportation, (ii) energy, and (iii) water and environment.
Faced with the current challenging circumstances caused by the COVID-19 pandemic, the Plan intends to implement actions such as: (i) the implementation of the USMCA, through strategic alliances aimed at investment; (ii) the promotion of tourism, including the maintenance of highways, passenger trains, rehabilitation and construction of airports, and strengthening of public security; and (iii) achieving a continuous investment of 25% of the gross domestic product, based on the country’s competitive advantages.
In terms of the Plan, the 39 projects are distributed in three sectors, of which only 7 transportation projects are in progress. The rest of the projects were announced for the first time. The following projects and their corresponding investment are considered for each of the sectors:
- Transport: 32 projects, representing an investment of 196.2 MMP.
- Energy: 5 projects, representing an investment of 98.9 MMP.
- Water and Environment: 2 projects, representing an investment of 2.1 MMP.
From the projects listed in the Plan, the following stand out in each of the sectors:
- Transport (in progress): Siervo de la Nación Urban Highway (AIFA Connection), with an investment of 8.7 MMP and works commencement date by December 2019; Ecuandureo - La Piedad, Zitácuaro - Maravatío and beltway Lagos de Moreno highway modernization, with an investment of 8.9 MMP and works commencement date by July 2020; and Highway Mitla –Tehuantepec II, with an investment of 7,670 and works commencement date by July 2020.
- Transport (Highways): AIFA Connectivity Works, with an investment of 9.2 MMP and works commencement date by November 2020; Construction of the La Pitahaya-Eastern beltway of San Luis Potosí section highway bypass, with an investment of 7.1 MMP and works commencement date by January 2021; and Viaducto Elevado Zaragoza, with an investment of 8 MMP and works commencement date by April 2021.
- Transport (Railways and suburban trains): Construction of the Mexico Queretaro Light Rail, with an investment of 51.3 MMP and works commencement date by June 2021; Railroad Corridor García Monterrey International Airport, with an investment of 19.8 MMP and works commencement date by December 2021; and Construction of the Suburban Train Lechería -AIFA branch, with an investment of 12.5 MMP and works commencement date by March 2021.
- Energy: Installation of a Coker Plant in the Tula refinery, with an investment of 54.7 MMP and scheduled for 2021; the Liquefaction Unit in Salina Cruz, with an investment of 25.2 MMP and scheduled for 2021; and the Rehabilitation of a Coker in the Cadereyta refinery, with an investment of 15.4 MMP and scheduled for 2021.
- Water and Environment: Comprehensive Management and special management of Urban Solid Waste at Naucalpan, Estado de México, with an investment of 1.6 MMP and works commencement date by December 2021; and Construction of the Water Supply System to the AICM, with an investment of 0.49 MMP and works commencement date by August 2021.
Finally, the Agreement sets forth the following steps for economic reactivation: (i) carrying out investment packages; (ii) the preparation of new projects for the energy sector among the public and private sectors that strengthen the Federal Electricity Commission (Comision Federal de Electricidad) and PEMEX (Petróleos Mexicanos); (iii) the creation of a working group responsible for ensuring that projects start their execution on time; and (iv) monitoring the execution of the projects to achieve their operation.
Gustavo Neyra Lopez (White & Case, Legal Intern, Mexico City) contributed to the development of this publication.
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