Mexico rejects bids for FARAC III

The Mexican authorities have informed bidders for the FARAC III road concession that none of their offers met the required terms. The announcement came after transport operator Ascendi told the Portuguese stock exchange that it - together with Macquarie and CCR - was on track to win the concession.

The Mexican authorities have poured cold water on a consortium comprising Ascendi, CCR and Macquarie by announcing late last week that they were rejecting all bids for the FARAC III road concession.

Portuguese transport firm Ascendi – a joint venture between construction firm Mota-Engil and bank BES – had communicated to the Portuguese stock exchange last week that it – together with Brazilian toll road operator CCR and Australian investor Macquarie – had submitted the best offer for FARAC III and was expecting to be awarded the road in mid-April.

But Mexico’s ministry of transport (SCT) told bidders late last week that their offers had been rejected because “none of the contestants reached the Technical Reference Value (related to the initial payment to the State),” required by the authorities, Ascendi said in a subsequent statement to the Portuguese stock exchange.

Ascendi said in its statement it was now awaiting more information from the procuring authority, which should be forthcoming in the next 60 days.

FARAC III is a real toll scheme covering some 291 kilometres of road in the Mexican state of Tamaulipas, along the border with Texas. The package includes 188 kilometres of brownfield and 31 kilometres of greenfield roads. It includes roads to maintain and operate, roads to build and roads that will be delivered by the procuring authority after the construction phase.

In its previous proposal, the Ascendi/CCR/Macquarie consortium had priced total investment for the road at about Ps.$8.4 billion (€488 million; $667 million), with Ps.$4.51 billion to be financed by state infrastructure bank BANOBRAS and government infrastructure fund FONADIN.

The consortium was expecting to inject some Ps.$1.84 billion of equity into the project. Capex on FARAC III comprises Ps.$3.76 billion of the total investment amount with works to be finished by 2013.