OHL in Mexican legal tussle over cancelled road concession

The Spanish developer is taking legal action against the Mexican state of Puebla after it annulled a 35km expressway concession awarded to OHL in 2008. OHL, backed by ING and Scotiabank, had already invested some €37m in the project.

OHL Mexico, a subsidiary of Spanish developer OHL, has found itself in a legal tussle with the Mexican state of Puebla after the latter cancelled a highway concession awarded to the developer in 2008.

Earlier this month, the Puebla authorities announced they were annulling a 35-kilometre expressway known as the Libramiento Norte de Puebla, under a legal mechanism called “rescuing a public asset” without compensation. The government alleged a series of irregularities in the awarding of the road back in March 2008. 

OHL, for its part, described the cancellation as “arbitrary and illegal” as well as “surprising and unilateral” and said it was initiating legal action against Puebla: “Mexico is a country of solid legal institutions, respectful of the rule of law, and that’s why we are legally challenging the decision [taken by the Puebla government] on May 9,” OHL said in a statement.

The developer said it had already invested some €37 million in the project, backed by ING and Santander, and was expecting to start building the road this month, after having sorted out some right-of-way issues.

In its statement, the Spanish company implies that the cancellation of its road concession has to do with Puebla’s plans to build an elevated viaduct over the Mexico-Veracruz expressway. According to OHL, the concession contract it signed with the previous government “does not allow bidding on parallel roads with the same points of origin and destination”. 

But Puebla Infrastructure Secretary Antonio Gali Fayad told the Mexican media that Puebla’s proposed new 19-kilometre elevated viaduct does not violate OHL’s concession agreement.

OHL has a strong presence in Mexico since 2003, having won several road contracts across the country – both regional and federal government concessions. It currently manages some six expressways running over 359 kilometres and worth some €5.66 billion. The company also owns a 49 percent stake in Mexico City’s second-largest airport.