Mexico rejects sole bid for Pacífico Sur concession

Mexican infrastructure developer IDEAL had presented the only bid for the Pacífico Sur project, which involves the construction and operation of 300 kilometres of roads. But the transport ministry said IDEAL’s bid payment was insufficient.

Mexico’s transport ministry has rejected the sole bid for the massive Pacífico Sur highway construction project.

The concession’s only bidder, Impulsora para el Desarrollo y el Empleo en América Latina (IDEAL), did not meet the government’s price expectations, Mexico’s Ministry of Transportation and Communications said in a statement.

However, the government is “evaluating options” for restarting the tender and will reach a decision within the next few days, according to the statement. The current tender for Pacífico Sur project was launched in June 2010.

IDEAL, the publicly-traded infrastructure developer spun out from billionaire Carlos Slim’s holding company Grupo Financiero Inbursa, submitted a proposal including an initial payment of Ps.$4 billion (€237.7 million; $343.4 million), according to a document from the undersecretary for infrastructure.

IDEAL did not respond to a request for comment as of press time.

The 30-year Pacífico Sur concession included construction of two roads totaling 140 kilometres, and operation of 168 kilometres of roads connecting the central-western cities of Guadalajara and Tepic. Parties interested in the concession included OHL Concesiones México, México Constructora Industrial, and Mexicana de Global Vía Infraestructuras, according to Mexican government procurement website.

The Pacífico Sur roads were previously part of the FARAC II concession, which was cancelled in 2009. The original FARAC II tender also included another set of roads known as the Pacífico Norte package.

Last year, Mexico also rejected all bids for the third FARAC concession, including a bid from a consortium comprised of Macquarie, Portuguese transport operator Ascendi, and Brazilian toll road operator CCR. 

The Fideicomiso de Apoyo para el Rescate de Autopistas Concesionadas (FARAC), or the Trust for Supporting the Recovery of Licensed Highways, took over Mexico's private toll roads in the 1990s and was charged with the task of re-privatising them. It was previously part of Mexico's ministry for roads and bridges but is now part of FONADIN, Mexico's national infrastructure fund.

The FARAC III concession involved the construction and rehabilitation of nearly 300 kilometres of roads in the state of Tamaulipas, and the Macquarie/Ascendi/CCR consortium was expected to commit about Ps.$1.8 billion of equity to the project.