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Mexico's three infrastructure projects: How are they doing?

 There are three projects that were lauched by AMLO:  The new Mexico City airport, Dos Bocas refinery and the Maya Train.

Obviously, with Covid-19 the immediate need for a new airport in Mexico City has abated; both the two largest carriers Interjet and AeroMexico have filed for bankruptcy protection -- Actually, AM filed last summer and Interjet last week.  Funny enough, and although certainly not ready in 2022, the Felipe Ángeles international airport seems to be proceeding as planned.  It seems that the airport will cost about MXN 89 billion pesos -- so far if you consider that the "old" new airport had a total bill of US$ 7 billion, you can see that this airport is cheaper (if you disregard the cost of new roads and rail links that are needed.  It would appear that the new airport will cost around MXN 110 billion to 120 billion in total including road and rail links (in US$ terms between 5 and 6 billion).  

For now that seems to be a win!

Dos Bocas which is probably the most necessary infrastructure project -- it's insane that Mexico is 100% dependent on US refinery -- security-wise it makes no sense!.  The cost is a real unknown, but it would appear that the only way it can match its target price is to reduce the size of the facility from 300,000 bbl per day to 100,000 bbl per day.

To say that the project has had a problem is an understatement.  The site was inundated more than 6 times during the rainy season that has been particularly hard on the region, still the project is not yet built and already water is a major issue -- that exactly what the outside contractors had indicated that the ground had to be raised by 3 meters and not one meter...in addition, many local contractors have resigned because they could not meet the cost estimates they had made.

The single most important project is probably over budget and seriously behind schedule despite the government overruling all environmental impact studies (the authorities that review the plans received the plans on Friday afternoon and had approved the project Monday morning -- usually this process akes 6/9 months.

The last (and funniest) is the Maya Train -- a solution looking for a problem!  So far a couple hundred kilometers of forest has been cleared out for the "new train" nice work for the locals -- they can do it again in a few years.  The big win for AMLO had been BlackRock's agreement to build the Cancun to Tulum leg as a PPP.   

In September BlackRock walked away from the project, the government will restart the bidding process, one problem, BlackRock had been the ONLY applicant (even the Chinese don't want this project).  With any luck this project will disappear as one of the forgotten projects...one can only hope!

In a nutshell, AMLO will get his airport somewhat behind schedule and it would appear to match 60% of the traveling public's needs.  We are still looking at a future recovery of the airline business, so 2022 and 2023 are good dates!  The other two projects are going poorly -- and the most necessary (Dos Bocas) is going very badly indeed.

Actually, this is the outcome you would expect.  Dos Bocas needs a lot more money to make the project viable, 25% of the "work is done" but from images that seem to be mostly earthwork, and there's still a lot of mud there.  The Maya train (not an original idea...it was touted in the 1980s) is going nowhere fast, thank God!


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