Irapuato-La Piedad highway

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In August 2005, the Mexican Secretary of Communications and Transport (SCT) awarded a 20-year concession of the Irapuato-La Piedad highway to Ingenieros Civiles Asociados SA de CV (ICA). The initiative was part of the new Public-Private Partnership (PPP) program began in 2005 to improve the quality of public services through long-term partnerships between the government and private sector companies. The Irapuato-Piedad highway was the first such venture. The Irapuato-La Piedad project was a 73.4 km. length highway in the state of Guanajuato. In addition to building supporting infrastructure determined in the contract (ramps, illumination, bus stations, etc.), ICA was also responsible for building two additional lanes in a 15 km. stretch and rehabilitating 59.3 km. of road. The rehabilitation work was expected to begin on November 2005 and was expected to be completed by July 2007. SCT carried out the public tender for the project. To participate in the public tender, each bidder had to calculate and submit a requested payment as a function of construction, maintenance and operating costs, rate of return on equity, estimated annual traffic and duration of contract. The concession was awarded to the bidder who presented a proposal that complied with the technical, legal and financial requirements established in the bidding documents, and requested the lowest net present value of periodic payments. Four groups presented offers: ICA, the consortium formed by FCC-Acciona, Transportaciones y Construcciones Tamaulipecos SA de CV, and the consortium formed by Construobras de la Garza-Construobras Santander-Materiales y Construcciones Villa de Aguayo-Gifer-GMC. The concession contract established an association between the SCT and the private participant to design, finance, build, rehabilitate, maintain and operate a highway. In exchange for those services, the private participant receives periodic payments from SCT. Periodic payments came from two parts: The first part of the payments were a minimum payment for the functioning of the road according to the standards set by the contract; the second part consisted of payments linked to traffic levels as determined by the SCT (or shadow tolls). ICA had to invest an estimated amount of US$70 million (735 million pesos). It reached financial closure in April 2006 by securing a 14-year loan from Banco Santander Serfin for US$48 million (500 million pesos). Banco Santander Serfin later financed the Queretaro-Irapuato highway for ICA. In January 2016, the project company was granted a US$ 14.7 million loan whose proceeds were used to refinance previous debt committments. The loan was granted by Banco Santander and Banco Mercantil del Norte. Investment in facilities was adjusted to US$67.4 million (instead of 85) based on the 2006 IMF exchange rate and based on the information provided in the description.