Economic Research
Mexico
Public Infrastructure Law – A swift approach
to implement the National Infrastructure Plan

Yesterday, President Enrique Peña-Nieto presented an initiative to
reform the Public Infrastructure Law (Ley de Obras Públicas y
Servicios Relacionados con las Mismas, LOPSRM)

This reform aims to speed up the procedures regarding the
procurement and execution of public works

The scope of the initiative is classified into 3 groups:
(1) New mechanisms for the evaluation and management of projects;
(2) Measures to increase their effectiveness; and
(3) Transparency in the procurement and execution of public works

We believe that this reform will accelerate the implementation of the
National Infrastructure Plan
November 5, 2014
www.banorte.com
www.ixe.com.mx
@analisis_fundam
Saúl Torres
Analyst, Mexico
[email protected]
President Peña-Nieto presented yesterday the initiative to reform the Public
Infrastructure Law (Ley de Obras Públicas y Servicios Relacionados con las
Mismas, LOPSRM). This proposal will set the new principles so that the new
public infrastructure project can be developed with the highest quality and
efficiency standards, optimizing the public economic resources. We highlight
that the current goal of the Federal Government is to implement the National
Infrastructure Plan. In this regard, in the first three quarters, the Federal
Government has spent MXN$638bn (around US$ 48.5bn) in investment
projects, which implies a 26%yoy expansion.
The principal goal of the reform is to speed up the procedures regarding
the procurement and execution of public works. This reform aims to promote
the formality of the contractors, and to safeguard the security of their workers
via the Mexican Social Security Institute (IMSS).
The scope of the initiative is classified into 3 groups: (1) New mechanisms
for the evaluation and management of projects; (2) Measures to increase their
effectiveness; and (3) Transparency in the procurement and execution of public
works. We highlight that this reform creates the institutional figure of "Project
Management" is included to strengthen the administrative process of the public
infrastructure programs. On the other hand, it also promotes the use of
CompraNet as the online system to carry out contracting procedures.
We believe that this reform will accelerate the implementation of the
National Infrastructure Plan Among the biggest challenges of this
administration are the goals established in the National Infrastructure Plan. This
reform pretends to speed up the process of creating the infrastructure projects
like the Mexico City’s new airport, the high speed train Mexico-Queretaro,
among others (refer to table below).
1
Document for distribution among
public
Mayor infrastructure proyects
Mexico City’s New Airport
MXN millions
169,000
High-Speed Train: Mexico-Queretaro
59,000
Express Train: Mexico-Toluca
36,608
The Expansion of the Port of Veracruz
23,933
The Transpeninsular Train
17,954
The Expansion of the Port of Mazatlan
10,667
Tuxpan-Tampico’s Highway
8,070
Second Floor of the Mexico-Toluca’s Highway
3,500
Second Floor of the Mexico-Cuernavaca’s Highway
2,000
The Expansion of the Port of Lazaro Cardenas
Total
1,921
332,653
Source: El Economista
Finally, we believe that with the approval of this reform the NIP will
heighten the implicit benefits of the NIP. The direct impact of the
implementation of this reform will be on the construction sector, which is one of
the major employers in the country; as well as the tourism sector and the
aviation industry. In this context, the development of the NIP will be positive
also for private consumption. In the longer term, the improved public
infrastructure will have a positive impact on household’s income by reducing
their utilization costs. Finally, we highlight that the current investment in the
projects mentioned earlier represents 2% of Mexico’s GDP, which will
eventually translate to better growth prospects for the Mexican economy.
Disclaimer
The information contained in this document is illustrative and informative so it should not be considered as an advice and/or
recommendation of any kind. BANORTE is not part of any party or political trend.
2
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Public Infrastructure Law – A swift approach to implement