Industry Trend Analysis - Strong Interest Supports PPPs - SEPT 2017
BMI View: The strong response from the private sector to recent Mexican PPP projects is indicative of the strength of Mexico ' s business environment and attractive project development environment even in the face of an uncertain election to be held in 2018.
We have held a positive outlook on Mexico's public-private partnership (PPP) infrastructure programme for some time, noting that projects would benefit from Mexico's relatively low risk project development environment and strong government support for the programme ( see ' Private Investment Will Drive Road Infrastructure Growth ' , 19 April). We have seen this view play out so far in 2017 with the successful awarding of six PPP transportation and social infrastructure projects in recent months and participation of a number of significant infrastructure firms in project tenders ( see table below).
Given the apparent appetite we have seen for projects tendered so far in 2017, we expect similarly positive results for the government's plans to launch a number of other projects as PPPs later in 2017 and 2018. Given budgetary constraints limiting the Mexican government's ability to publicly fund infrastructure projects, the government has increasingly looked to the private sector to finance major projects in the country. As part of that effort, the government plans to award six more projects, also in the transportation and social infrastructure sectors, by September 2017 ( see chart below) and launch a second round of projects between 2017 and 2018.