Mexican Road Reprivatization: A new attempt to Attract Private Investment to the Road Network Luis Calzada Alberto Gomez Isabelle Niño Mary Rachide Steve Smith

Agenda Background Current Situation Issues Discussion Conclusions Questions

Background Mexico Reform process during late 1980’s and early 1990’s The Mexican Peso crisis First Toll Road concessions CAPUFE and FARAC

Current Situation Government objectives Proposed plan Description of roads

Current Situation Mexico-Queretaro 222 km 24.5 million vehicles US$210 million

Current Situation Mexico-Puebla 125 km 33.6 million vehicles US$132 million Longitude of toll road is 125 km or 78 miles. Runs from Mexico City (Country Capital) to Puebla (State capital) 2001 traffic was 33.6 million vehicles, that represented 20% of the total traffic of the network The revenues generated represented 19% of the total.

Current Situation Queretaro-Irapuato 99 km 12.5 million vehicles US$78 million

Issues Risks Forecasts Possible options Operating Risks Political Risks/ Creeping Financial Risks/ Currency issues Forecasts Possible options

Operating Risks Revenue: Major and Minor maintenance Traffic Volume- accurateness of the forecast and reliability of the government figures Traffic Volume- GDP Growth Toll rate (flexible but with limitations) Major and Minor maintenance Force Majeure (flood, earthquake…)

Political Risks Creeping expropriation, fees and restrictions Direct expropriation- end of concessions Performance of Legal System Trade restrictions Force Majeure (sabotage, insurrection…)

Financial Risks Exchange Risk Senior Debt Service and Interest Rates Cash Control

Discussion

Questions