Mexico sets suitability criteria for PPPs

Mexico’s finance ministry has published regulations that determine how it will assess the suitability of planned public infrastructure projects for public-private partnerships (PPP), according to a notice in the official gazette.

The guidelines codify the PPP law passed under President Felipe Calderón's government in January 2012, which gave the green light to the use of PPPs but provided little detail on the criteria and processes used to evaluate them.

So as to be eligible for federal budget allocation, potential projects must now be submitted by the last day of June each year, with the allocation to be decided in the following year's budget. Another registration will be necessary once the project has gone through the early planning phase, as a prerequisite to its application for funding.

A working group composed of at least seven senior public servants will then evaluate the suitability of the proposed projects, using a score card based on criteria such as cost-benefit analysis, risk profile, upfront and ongoing cost for relevant authorities, potential public revenue and sustainability.

A final decision will be made in a further review, which will compare the cost of running the project as a PPP to other funding alternatives.

The fresh regulations further underscore the government’s focus on infrastructure, following announcements last month that Mexico would assign around 15 billion pesos (€838 million; $1.14 billion) worth of public projects through bidding processes in the first weeks of January.

Government spending on infrastructure has been highlighted has a priority by President Enrique Peña Nieto since he took office in December 2012. Nieto unveiled a six-year plan to invest 4 trillion pesos in road, rail, telecom and ports last July, as part of a handful of sweeping reforms to support the country’s flagging construction industry and revive economic growth.