May, 2007

PUBLIC-PRIVATE PARTNERSHIPS

FOR HIGHWAYS IN MEXICO

THE NATIONAL HIGHWAY NETWORK

Secondary11,227 km

Toll5,501 km

Toll-free13,744 km

31 State Networks

Rural and StateRoads (159,545 km)

FederalNetwork

47,527 km

RegionalNetwork

68,189 km

Low-Volume Roads(66,920 km)

National

Highway

Network

342,181 km

RuralNetwork

226,465 km

Toll432 km

Toll-free 16,623 km

Basic36,300 km

In Corridors19,245 km

Outside Corridors17,055 km

MAIN HIGHWAY CORRIDORS

2. México - Nuevo Laredo withbranch to Piedras Negras

4. Acapulco - Tuxpan

7. Acapulco - Veracruz

11. Puebla - Progreso

14. Y ucatán Peninsula

1. México – Nogales withbranch to Tijuana

10. Highland

9. Transpeninsular de Baja California

8. Veracruz - Monterreywith branch to Matamoros

6. Manzanillo - Tampico withbranchs to Lázaro Cárdenasand Ecuandureo

12. Puebla - Oaxaca - Ciudad Hidalgo

3. Querétaro - Ciudad J uárez

5. Mazatlán - Matamoros

Ciudad Hidalgo

Salina Cruz

Cancún

Mexicali

La Paz

Guadalajara

Tepic

Tuxtla Gutiérrez

Chetumal

Mérida

Campeche

Culiacán

Durango

Saltillo

CiudadVictoria

Zacatecas

Aguascalientes

J alapa

San Luis Potosí

Querétaro

Monterrey

ChilpancingoOaxaca

ColimaVilla Hermosa

Hermosillo Chihuahua

México D.F.

PueblaCuernavaca

Tijuana

NogalesCiudad J uárez

Nuevo Laredo

Matamoros

Piedras Negras

Mazatlán

Manzanillo

Lázaro Cárdenas

Acapulco

Tampico

Progreso

Tuxpan

Veracruz

Atlacomulco

Huatulco

Ecuandureo

MoreliaToluca

Torreón

13. Transisthmic Circuit

2. México - Nuevo Laredo withbranch to Piedras Negras

4. Acapulco - Tuxpan

7. Acapulco - Veracruz

11. Puebla - Progreso

14. Y ucatán Peninsula

1. México – Nogales withbranch to Tijuana

10. Highland

9. Transpeninsular de Baja California

8. Veracruz - Monterreywith branch to Matamoros

6. Manzanillo - Tampico withbranchs to Lázaro Cárdenasand Ecuandureo

12. Puebla - Oaxaca - Ciudad Hidalgo

3. Querétaro - Ciudad J uárez

5. Mazatlán - Matamoros

Ciudad Hidalgo

Salina Cruz

Cancún

Mexicali

La Paz

Guadalajara

Tepic

Tuxtla Gutiérrez

Chetumal

Mérida

Campeche

Culiacán

Durango

Saltillo

CiudadVictoria

Zacatecas

Aguascalientes

J alapa

San Luis Potosí

Querétaro

Monterrey

ChilpancingoOaxaca

ColimaVilla Hermosa

Hermosillo Chihuahua

México D.F.

PueblaCuernavaca

Tijuana

NogalesCiudad J uárez

Nuevo Laredo

Matamoros

Piedras Negras

Mazatlán

Manzanillo

Lázaro Cárdenas

Acapulco

Tampico

Progreso

Tuxpan

Veracruz

Atlacomulco

Huatulco

Ecuandureo

MoreliaToluca

Torreón

Ciudad Hidalgo

Salina Cruz

Cancún

Mexicali

La Paz

Guadalajara

Tepic

Tuxtla Gutiérrez

Chetumal

Mérida

Campeche

Culiacán

Durango

Saltillo

CiudadVictoria

Zacatecas

Aguascalientes

J alapa

San Luis Potosí

Querétaro

Monterrey

ChilpancingoOaxaca

ColimaVilla Hermosa

Hermosillo Chihuahua

México D.F.

PueblaCuernavaca

TijuanaTijuana

NogalesNogalesCiudad J uárezCiudad J uárez

Nuevo Laredo

Matamoros

Piedras Negras

Mazatlán

Manzanillo

Lázaro Cárdenas

Acapulco

Tampico

Progreso

Tuxpan

Veracruz

Atlacomulco

Huatulco

Ecuandureo

MoreliaToluca

Torreón

13. Transisthmic Circuit

INVESTMENT NEEDS IN THE HIGHWAY SECTOR

Each year, Mexico needs about 5 billion US dollars for investments in road construction and maintenance

Public funds allow the federal government to annually invest less than half the required amounts

To close this gap, Mexico has put together two public-private partnership models that seek to attract private capitals to highway investments

The three models are: Highway concessions

Private service contracts (PPP)

Asset utilization

PUBLIC-PRIVATE PARTNERSHIPS FOR HIGHWAY DEVELOPMENT

Through its public-private partnership models, SCT seeks: To allow an earlier development of Mexico’s toll

and free roads

To increase the amount of highway investments with private participation

To add value to services offered to users

To create jobs in highway construction

To increase the efficiency and productivity of public service provision

To create new opportunities for the private sector

To take advantage of existing highways as a source of resources for new toll roads

MAIN CHARACTERISTICSOF THE NEW HIGHWAY CONCESSION MODEL

Concessions granted through public bids

SCT provides final designs and rights of way

SCT sets maximum average tolls and the rule for updating them

The time of concession can be the maximum allowed by law (thirty years)

The government provides an initial contribution of public funds paid through Finfra, a trust in Banobras, a public development bank

The government offers a minimum revenue guarantee (CAS) to facilitate involvement by private banks

MAIN CHARACTERISTICSOF THE NEW HIGHWAY CONCESSION MODEL

The concession is awarded to the bidder who requests the lowest amount of public funds, measured as the sum of the initial contribution and the net present value of the minimum revenue guarantee

When projects do not require public funds, the concession is awarded to the bidder who complies with the legal, technical and financial requirements of the bid and offers the largest monetary amount to SCT

HIGHWAY CONCESSION PROGRAMAWARDED CONCESSIONS AND BIDS IN PROGRESS

60.110.0 Reynosa-Anzaldúas International Bridge

16.34.0 Tecpan Bypass

247.360.0 Perote-Xalapa and Xalapa Bypass

199.093.0 Arriaga-Ocozocoautla

57.429.5 Irapuato Bypass

7.40.4 San Luis Río Colorado International Bridge

BIDS IN PROGRESS

256.192.0 Monterrey-Saltillo and Saltillo Bypass

AWARDED CONCESSIONS

543.5223.0 Northern Bypass of Mexico City

73.341.0 Mexicali Bypass

905.1

83.0

152.0

103.0

14.2

LENGTH(km)

39.6 Matehuala Bypass

171.6 Amozoc-Perote

AMOUNT(musd)

PROJECT

161.9 Morelia-Salamanca

2,114.6TOTAL

281.1 Tepic-Villa Unión

60.110.0 Reynosa-Anzaldúas International Bridge

16.34.0 Tecpan Bypass

247.360.0 Perote-Xalapa and Xalapa Bypass

199.093.0 Arriaga-Ocozocoautla

57.429.5 Irapuato Bypass

7.40.4 San Luis Río Colorado International Bridge

BIDS IN PROGRESS

256.192.0 Monterrey-Saltillo and Saltillo Bypass

AWARDED CONCESSIONS

543.5223.0 Northern Bypass of Mexico City

73.341.0 Mexicali Bypass

905.1

83.0

152.0

103.0

14.2

LENGTH(km)

39.6 Matehuala Bypass

171.6 Amozoc-Perote

AMOUNT(musd)

PROJECT

161.9 Morelia-Salamanca

2,114.6TOTAL

281.1 Tepic-Villa Unión

HIGHWAY CONCESSION PROGRAMBIDS IN PREPARATION

64.241.1 Chihuahua Bypass

148.0

89.0

18.0

LENGTH(km)

AMOUNT(musd)

PROJECT

68.0 La Piedad Bypass and Access to Mexico-Guadalajara Highway

329.4 Compostela-Las Varas-Puerto Vallarta

461.6TOTAL

64.241.1 Chihuahua Bypass

148.0

89.0

18.0

LENGTH(km)

AMOUNT(musd)

PROJECT

68.0 La Piedad Bypass and Access to Mexico-Guadalajara Highway

329.4 Compostela-Las Varas-Puerto Vallarta

461.6TOTAL

HIGHWAY CONCESSION PROGRAMOTHER PROJECTS UNDER STUDY

313.9111.0 Guadalajara Bypass

78.537.0 Hermosillo Bypass

83.126.5 Tlaxcala Bypass and Xoxtla-Tlaxcala

27.726.0 Encarnación de Díaz-San Juan de los Lagos

60.045.0 Ciudad Obregón Bypass

267.834.0 Cuernavaca Bypass

73.922.0 Acapulco Bypass

92.353.0 Morelia Bypass

717.5

238.0

22.0

12.0

91.0

LENGTH(km)

175.4 Laguna Verde-Gutiérrez Zamora

AMOUNT(musd)

PROJECT

369.3 La Venta-Colegio Militar

369.3 Tuxpam-Tampico and Tampico Bypass

2,049.8TOTAL

138.5 Santa Clara-Indios Verdes

313.9111.0 Guadalajara Bypass

78.537.0 Hermosillo Bypass

83.126.5 Tlaxcala Bypass and Xoxtla-Tlaxcala

27.726.0 Encarnación de Díaz-San Juan de los Lagos

60.045.0 Ciudad Obregón Bypass

267.834.0 Cuernavaca Bypass

73.922.0 Acapulco Bypass

92.353.0 Morelia Bypass

717.5

238.0

22.0

12.0

91.0

LENGTH(km)

175.4 Laguna Verde-Gutiérrez Zamora

AMOUNT(musd)

PROJECT

369.3 La Venta-Colegio Militar

369.3 Tuxpam-Tampico and Tampico Bypass

2,049.8TOTAL

138.5 Santa Clara-Indios Verdes

HIGHWAY CONCESSION PROGRAMPROJECTS AWARDED AND BIDS IN PROGRESS

MEXICALI BYPASS(IN OPERATION)

MATEHUALABYPASS

(IN OPERATION)

MORELIA-SALAMANCA(UNDER CONSTRUCTION)

NORTHERN BYPASS OF MEXICO CITY(UNDER CONSTRUCTION)

AMOZOC-PEROTE(UNDER CONSTRUCTION)

MONTERREY-SALTILLOAND SALTILLO BYPASS

(UNDER CONSTRUCTION)

TEPIC-VILLA UNIÓN(UNDER CONSTRUCTION)

TECPAN BYPASS(UNDER CONSTRUCTION)

SAN LUIS RÍO COLORADO IIINTERNATIONAL BRIDGE

(BID IN PROGRESS)

REYNOSA-ANZALDÚASINTERNATIONAL BRIDGE

(BID IN PROGRESS)

ARRIAGA-OCOZOCOAUTLA(BID IN PROGRESS)

PEROTE-XALAPA AND XALAPA BYPASS(BID IN PROGRESS)

IRAPUATO BYPASS(BID IN PROGRESS

HIGHWAY CONCESSION PROGRAMPROJECTS UNDER PREPARATION

LA PIEDAD BYPASS AND ACCESS TO MÉXICO-GUADALAJARA HIGHWAY

BOJÓRQUEZ BRIDGE

CHIHUAHUA BYPASS

IRAPUATO BYPASS

COMPOSTELA-LAS VARAS-PUERTO VALLARTA

PROGRAM RESULTS

After almost 10 years of not concessioning roads to the private sector, the model has reopened the possibility of involving private resources for highway development in Mexico

The results of the bidding process show that participants have reduced their risk perception and that they are willing to participate in highway projects

The participation of an increasing number of commercial banks also reveals greater confidence by the financial sector

The new model of concessions is a viable mechanism for toll road development in Mexico, and SCT will review and improve it permanently

CHARACTERISTICS OF PPP MODEL FOR HIGHWAYS

A concession is awarded through a public bidding process which also grants to the concessionaire the exclusive right to sign the service contract

The duration of the service contract is fixed, from 15 to 30 years

The contract establishes an association between the Ministry and a private firm to design, finance, build, maintain and operate a highway

The private firm provides services in exchange for periodic payments

Periodic payments are based on availability of the road and its traffic levels

CHARACTERISTICS OF PPP MODEL FOR HIGHWAYS

Each bidder requests a periodic payment determined as a function of: Construction, maintenance and operating costs

Rate of return on equity, including financial costs

Estimated annual traffic

Duration of contract

The Net Present Value of periodic payments is the decision criterion used to award the concession, provided that the winner complies with technical, legal and financial requirements

After construction, the modernized road continues operation as a toll-free road

When the model is applied to a toll road, the periodic payment is made with a combination of toll revenues and budgetary funds

PUBLIC-PRIVATE PARTNERSHIP PROJECTS AWARDED AND BIDS IN PROGRESS

117.8139.693 Querétaro-Irapuato

117.047.732 Nueva Italia-Apatzingán

171.3315.9112 Rioverde-Ciudad Valles

105.458.375 Irapuato-La Piedad

558.4582.985 Nuevo Necaxa-Tihuatlán

PRIVATE INVESTMENTLENGTH

(km)PROJECT

1,696.4

110.9

369.7

71.4

IMPROVEMENT(musd)

392.8213 Zacatecas-Saltillo

118.8163 Mitla-Tehuantepec Junction

140.745 Tapachula-Talismán with branch to Hidalgo City

818

AWARDED CONTRACTS

BIDS IN PROGRESS

MAINTENANCE(musd)

UPCOMING BIDS

1,722.2TOTAL

117.8139.693 Querétaro-Irapuato

117.047.732 Nueva Italia-Apatzingán

171.3315.9112 Rioverde-Ciudad Valles

105.458.375 Irapuato-La Piedad

558.4582.985 Nuevo Necaxa-Tihuatlán

PRIVATE INVESTMENTLENGTH

(km)PROJECT

1,696.4

110.9

369.7

71.4

IMPROVEMENT(musd)

392.8213 Zacatecas-Saltillo

118.8163 Mitla-Tehuantepec Junction

140.745 Tapachula-Talismán with branch to Hidalgo City

818

AWARDED CONTRACTS

BIDS IN PROGRESS

MAINTENANCE(musd)

UPCOMING BIDS

1,722.2TOTAL

EXAMPLE OF PPP SCOPE: QUERETARO-IRAPUATO ROAD

The private service contract for improving this federal toll-free road includes: Widening of 48 kilometers of roads to four lanes,

including the Salamanca bypass

Maintenance of the 93 kilometer road during 20 years

Construction of 7 interchanges

Construction of 4 overpasses

Emergency assistance for users

Construction of a 4.4 kilometer boulevard in Apaseo el Alto

To adequately specify the services to be provided, the road is divided in 16 sections, 8 in each direction

PUBLIC-PRIVATE PARTNERSHIP PROJECTSBIDS IN PREPARATION

PRIVATE INVESTMENTLENGTH

(km)PROJECT

712.8

184.7

203.1

83.1

131.1

110.8

IMPROVEMENT(musd)

263.7170 Acayucan-La Ventosa

80.351 Apizaco-Calpulalpan

938

146

137

434 144.3 Macuspana-State limit

Campeche/Quintana Roo

MAINTENANCE(musd)

108.1 Arriaga-La Ventosa

269.9 Salina Cruz-Huatulco

866.4TOTAL

PRIVATE INVESTMENTLENGTH

(km)PROJECT

712.8

184.7

203.1

83.1

131.1

110.8

IMPROVEMENT(musd)

263.7170 Acayucan-La Ventosa

80.351 Apizaco-Calpulalpan

938

146

137

434 144.3 Macuspana-State limit

Campeche/Quintana Roo

MAINTENANCE(musd)

108.1 Arriaga-La Ventosa

269.9 Salina Cruz-Huatulco

866.4TOTAL

PUBLIC-PRIVATE PARTNERSHIP PROJECTS(AWARDED, IN BIDDING PROCESS OR UNDER PREPARATION)

TAPACHULA-TALISMAN WITHBRANCH TO HIDALGO CITY(UNDER CONSTRUCTION)

NUEVA ITALIA-APATZINGÁN(BID IN PROGRESS)

QUERÉTARO-IRAPUATO(UNDER CONSTRUCTION)

ZACATECAS-SALTILLO(IN PREPARATION)

RIOVERDE-CIUDAD VALLES(BID IN PROGRESS)

NUEVO NECAXA-TIHUATLÁN(BID IN PROGRESS)

IRAPUATO-LA PIEDAD(UNDER CONSTRUCTION)

MITLA-TEHUANTEPEC JUNCTION(IN PREPARATION)

PUBLIC-PRIVATE PARTNERSHIP PROJECTS(UNDER PREPARATION)

APIZACO-CALPULALPAN(IN PREPARATION)

ARRIAGA-LA VENTOSA(IN PREPARATION)

SALINA CRUZ-HUATULCO(IN PREPARATION)

MACUSPANA-STATE LIMITCAMPECHE/QUINTANA ROO

(IN PREPARATION)

ACAYUCAN-LA VENTOSA(IN PREPARATION)

COMPARISON OF CONCESSION AND PPP MODELS

No minimums set A minimum is established Equity requirements

SCT provides conceptual design and list of requirements

Delivered by SCT Project design

A small part is transferred to the concessionaire

Totally transferred to concessionaire

Traffic risk

None Initial contribution and

revenue guarantee (CAS) Government support

SCT(annual budget)

Highway user Revenue source

PPP MODELNEW HIGHWAY

CONCESSION MODELITEM

No minimums set A minimum is established Equity requirements

SCT provides conceptual design and list of requirements

Delivered by SCT Project design

A small part is transferred to the concessionaire

Totally transferred to concessionaire

Traffic risk

None Initial contribution and

revenue guarantee (CAS) Government support

SCT(annual budget)

Highway user Revenue source

PPP MODELNEW HIGHWAY

CONCESSION MODELITEM

CHARACTERISTICS OF UTILIZATION OF HIGHWAYS ASSETS

SCT terminates the concession of highway assets to Farac in exchange for an indemnization

SCT prepares concessions formed by existing highways with more than 10 years of continuous operation, and new highways to be constructed

SCT grants the concessions to the private sector through public bids and pays Farac

The concessionaire is responsible to operate, maintain and exploit the existing toll roads, as well as to build and later operate the new highways in the concession

UTILIZATION OF HIGHWAYS ASSETS

The first bid is all already in progress; it includes a 30 year concession of the Maravatío-Zapotlanejo, Zapotlanejo-Lagos de Moreno, Guadalajara-Zapotlanejo and Leon-Lagos-Aguascalientes toll roads

LEÓN-LAGOS-AGUASCALIENTESlength 103 km; 4 lanes

MARAVATÍO-ZAPOTLANEJOlength 309 km; 4 lanes

ZAPOTLANEJO-LAGOS DE MORENOlength 118 km; 4 lanes

GUADALAJARA-ZAPOTLANEJO length 26 km; to widen 6 lanes

The resources obtained as a result of the bidding process will be allocated to build the Durango-Mazatlán highway

UTILIZATION OF HIGHWAYS ASSETSOTHER PROJECTS

10

9

8

7

6

5

4

3

2

1

2

1

23,350799.2UNDER PREPARATION

Cadereyta-Reynosa800.042.02 lanesAllende-Juárez

San Martín Texmelucan-Tlaxcala500.0450.0

15.012.04 lanes

Xoxtla-Tlaxcala andTlaxcala bypass

Cuernavaca-Acapulco2,800.0800.0

1,500.0

34.022.020.0

2 lanesCuernavaca bypass,Acapulco bypass andChilpancingo bypass

Querétaro bypass2,000.080.02 lanesPalmillas-Apaseo

Cárdenas-Agua Dulce550.028.02 lanesVillahermosa bypass

4,500.0

1,000.0

300.0

3,500.0

3,400.0600.0

800.0800.0

800.0130.0

1,880

INVESTMENT(mop)

2 lanes

2 lanes

2 lanes

4 lanes

2 lanes

2 lanes

2 lanes

TYPE OF WORK(construction)

Pátzcuaro-Uruapan53.0Morelia bypass

Gutiérrez Zamora-Tihuatlán238.0Tuxpam-Tampico and Tampico bypass

74.0UPCOMING BIDS

Chamapa-Lechería80.0Atizapán-Atlacomulco

Champotón Campeche13.2Champotón bypass

Guadalajara-Tepic111.025.0

Guadalajara bypass andTepic bypass

31.022.0

37.010.0

LENGTH(km)

Reynosa-Matamoros andReynosa-Pharr International Bridge

Reynosa bypass andRio Bravo Donna International Bridge and Access

EXISTINGHIGHWAY

PROJECT

Mazatlán-CuliacánMazatlán bypass andCuliacán bypass

10

9

8

7

6

5

4

3

2

1

2

1

23,350799.2UNDER PREPARATION

Cadereyta-Reynosa800.042.02 lanesAllende-Juárez

San Martín Texmelucan-Tlaxcala500.0450.0

15.012.04 lanes

Xoxtla-Tlaxcala andTlaxcala bypass

Cuernavaca-Acapulco2,800.0800.0

1,500.0

34.022.020.0

2 lanesCuernavaca bypass,Acapulco bypass andChilpancingo bypass

Querétaro bypass2,000.080.02 lanesPalmillas-Apaseo

Cárdenas-Agua Dulce550.028.02 lanesVillahermosa bypass

4,500.0

1,000.0

300.0

3,500.0

3,400.0600.0

800.0800.0

800.0130.0

1,880

INVESTMENT(mop)

2 lanes

2 lanes

2 lanes

4 lanes

2 lanes

2 lanes

2 lanes

TYPE OF WORK(construction)

Pátzcuaro-Uruapan53.0Morelia bypass

Gutiérrez Zamora-Tihuatlán238.0Tuxpam-Tampico and Tampico bypass

74.0UPCOMING BIDS

Chamapa-Lechería80.0Atizapán-Atlacomulco

Champotón Campeche13.2Champotón bypass

Guadalajara-Tepic111.025.0

Guadalajara bypass andTepic bypass

31.022.0

37.010.0

LENGTH(km)

Reynosa-Matamoros andReynosa-Pharr International Bridge

Reynosa bypass andRio Bravo Donna International Bridge and Access

EXISTINGHIGHWAY

PROJECT

Mazatlán-CuliacánMazatlán bypass andCuliacán bypass

EXAMPLE OF ADVANTAGE OF HIGHWAYS ASSETS SCOPE

Another upcoming bid is of the package formed by the Reynosa-Matamoros highway and the Reynosa-Pharr International Bridge (existing) and the Reynosa bypass and the Rio Bravo Donna International Bridge (to build)

REYNOSA-MATAMOROS 44 km; 4 lanes

REYNOSA-PHARR INTERNATIONAL BRIDGE 10 km; 2 lanes

REYNOSA BYPASS 37 km; 2 lanes

RIO BRAVO-DONNA INTERNATIONAL BRIDGE AND ACCESS 7.5 km; 4 lanes

CONCLUSION

Public-private partnerships are key to increase highway infrastructure investment levels in Mexico

Today, existing conditions are favorable for road development through public-private models in Mexico because of: A stable macroeconomic environment Models and projects that are attractive to the

market Key national and international players are

interested Existing highway assets can support new project

development

As a consequence, in Mexico there is a window of opportunity that can be seized to increase competitiveness, promote employment and contribute to regional development

FOR MORE INFORMATION

WEB ADDRESS http://dc.sct.gob.mx

For general information

José San Martín Romero jmartinr@sct.gob.mx

tel.: +52 (55) 5482-4343

fax.: +52 (55) 5482-4392

For PPP projects

Amado Athié Rubio aathie@sct.gob.mx

tel.: +52 (55) 5482-4344

fax.: +52 (55) 5482-4392