Nueva Italia - Apatzingan Highway

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On October 5, 2007, the Mexican Secretary of Communications and Transport (SCT) signed a 20-year concession contract with a consortium led by Supra Construcciones SA de CV [Mexico] to operate, conserve, maintain, modernizate, and widen from two to four lanes a 31.7 km highway in the state of Michoacan. The Nueva Italia-Apatzingan highway concession was to operate under the terms of a private service contract or Contrato de Servicios de Largo Plazo (PPS). The PPS 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 contract was awarded through an international competitive tender that began on October 24, 2006 by SCT. 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. Three consortia presented offers: • Omega Construcciones Industriales SA de CV • AZVI, SA; Concesiones Intercontinentales, SL; and Tradeca Infaestructura SA de CV • Supra Construcciones SA de CV; Corporacion de Constructora de Vias Terrestres SA de CV; GAMI Ingeniera e Instalaciones SA and impulsora de Desarrollo Intergral SA de CV On August 22, 2007, the consortium led by Supra Construcciones SA de CV was formally awarded the public bid for the project. The remaining companies in the consortium were: Corporacion de Constructora de Vias Terrestres SA de CV [Mexico]; GAMI Ingeniera e Instalaciones SA [Mexico] and impulsora de Desarrollo Intergral SA de CV [Mexico]. Total investment commitments for the project were estimated at US $51.6 million. Under the PPS contract, the concessionaire of the the 31.7km “shadow toll” road from Rio Verde to Ciudad Valle was to receive revenues from two types of periodic payments from SCT: a minimum payment for the availability of the road according to the standards set by the contract; and a “shadow toll” or payment linked to traffic levels. Construction of the additional lanes was scheduled to start in 2008 and was expected to be completed within 18 months.