Morelia-Salamanca Tollroad

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In June 2005, the Mexican Secretary of Communications and Transport (SCT) awarded a 30-year concession contract for a 83 km. length two lane highway between Morelia and Salamanca to the consortium headed by La Peninsular Compania Constructora SA de CV. The highway connected Morelia, capital city of the state of Michoacan, and the Bajio region east of Salamanca in Guanajuato. The concession contract included two components: The first was a 30 year period to build operate and maintain 51.2 km of the Morelia-Salamanca highway between km 58.3 and km 109.5. The second was a 20 year period to operate and maintain 31.8 km of Morelia-Salamanca highway between km 26.5 and km 58.3. The wining company was formed by La Peninsular Compania Constructora SA de CV, Grupo Profrezac SA de CV, and Pavimentos de la Laguna SA de CV. There was no public information on the stake of each consortium member. The Consortium headed by La Peninsular Compania Constructora will have to invest an estimated amount of US$83.8 million (883.4 million pesos). The wining consortium secured financial backing from HSBC bank in 2005. The 83 km. stretch was expected to starto operating in 2006. The project cost was estimated in a public tender through which the highway concessionaire was selected. The consortium headed by La Peninsular won the tender by offering the lowest construction cost. SCT selected the winning bid based on the second bidding criteria (lowest construction cost) because two bids (the consortium headed by La Peninsular and Promotora Inburas) were tied on the first bidding criteria (lowest amount of public funds requested). The amount of public funds requested was calculated as the sum of the initial government contribution and the net present value of the subordinate contributions –to ensure debt service of loans used to finance construction work. According to the tender basis, a trust (Fideicomiso de Infraestructura –FINFRA) in Mexico’s National Bank of Public Works and Services (Banco Nacional de Obras y Servicios Publicos –Banobras) was responsible for providing requested public funds. Five other participants presented offers: OHL-Compania Contratista Nacional consortium; Grupo Mexicano de Desarrollo; Promotora Inbursa; Omega Corp.; and a consortium between Operadora y Administracion Tecnica, and Consorcio de Obras y Dragados Maritimos, SA de CV. Under the concession contract, SCT provided final designs and rights of way, and set maximum average tolls as well as the rule for updating them. The concessionaire agreed to pay 0.5% of gross revenues to the government for exploiting the road. The contract also stipulated that in the event that the concessionaire’s investment was recovered ahead of schedule, excess revenues were set to be shared between the concessionaire and Banobras.