Bumps ahead for a toll-road push in Mexico
Many citizens, wary of past bailouts and present
look askance at Calderon's steps toward
By Marla Dickerson, Los Angeles Times Staff Writer
LA AUTOPISTA DEL SOL, MEXICO — This was supposed to
be Mexico's toll road to the future, a four-lane,
privately built ribbon of asphalt connecting
Cuernavaca with the Pacific resort city of Acapulco.
But now, just 14 years after opening, the Autopista
del Sol, or Sun Highway, is a 163-mile mess.
Motorists complain of blown tires and ruined
suspensions. A national newspaper last year called
the thoroughfare, on which a round trip costs $70,
"a calvary of cracks, potholes and risks."
The government has been forced to spend more than
$60 million to shore up the crumbling motorway
linking Morelos and Guerrero states after its
operator walked away. Overall, Mexico assumed $14
billion of debt after bailing out nearly two dozen
other such projects in the 1990s.
So it may come as a bit of a surprise that President
Felipe Calderon is touting toll roads as a solution
to Mexico's infrastructure woes. His administration
is moving aggressively to award contracts to private
companies to finance, build and maintain highways
and charge motorists to use them.
It's a strategy being embraced by cash-strapped
governments worldwide. France, Italy and Spain have
privatized former state-owned toll road companies.
New urban expressways in Australia are operated by
private companies under long-term concessions from
the government. India is looking to upgrade more
than 6,000 miles of existing roads with similar
toll-road contracts. Public-private partnerships are
helping fuel China's infrastructure boom.
But it's highly controversial in Mexico, where the
Autopista del Sol remains a potholed reminder of the
potential hazards of privatization.
"Mexico is the poster child for how to do [highway
privatization] wrong," said Robert Poole, a
transportation expert at the Los Angeles-based
Reason Foundation, a libertarian think tank. "Now
they have a chance to redeem themselves."
Proponents cite a variety of advantages to involving
the private sector. Structured correctly, long-term
concessions can shift most of the risks of
cost-overruns and faulty construction to private
operators. For-profit companies have pioneered
innovations such as electronic billing and
But mostly, Mexico's motivation boils down to a lack
of money in government coffers.
Mexican officials have budgeted a record $2.7
billion for highways this year. But experts say that
is only about half of what the nation should be
spending annually to upgrade and expand its
The infrastructure deficit is hurting the nation's
competitiveness. Mexico trails most of its Latin
American peers in laying asphalt. China, which
recently supplanted Mexico as the United States'
second-largest trading partner, is spending big on
superhighways and other infrastructure to speed
people and commerce.
The Calderon administration is aiming to close the
gap with three types of private-sector investment.
It's planning to convert as many as 16 public
freeways into toll roads that are to be managed by
private firms. It also wants to turn over some
existing government-run toll roads to private
operators. And it's looking to construct as many as
24 privately managed toll roads.
"With private resources we can do more: elevate the
quality of the services offered to users, generate
more [construction] jobs and … obtain more resources
to construct new highways," said Luis Tellez,
Mexico's secretary of Communications and
Transportation, in a recent presentation to
That upbeat assessment belies Mexico's disastrous
experience. Calderon's political opponents have
criticized the plan and are demanding transparency
and vigilance, which were lacking in the past. They
note that some of the same companies that saddled
the government with billions of dollars of debt in
the 1990s are looking to score new highway projects.
"We are against these concessions because it has
been proved throughout the history of Mexico they
only represent corruption and fraud," said Sen.
Ricardo Monreal of the leftist Democratic Revolution
Proponents counter that there is nothing inherently
wrong with privatization — just with the manner in
which Mexico went about it.
Poole, who has studied the Mexican debacle, said the
nation's biggest mistake was the short duration of
concessions granted in the 1980s and 1990s — some as
little as 10 years. The tight time frame encouraged
builders to cut corners knowing they weren't
responsible for long-term upkeep. And it forced them
to charge high tolls to recoup their investment
Unwilling to pay the high fees, drivers shunned the
pay roads, and revenue didn't meet projections. But
the death blow was Mexico's 1994 currency
devaluation. Interest rates soared, making it
impossible for private operators to pay their
bankers. The government in 1997 assumed their
liabilities as part of a massive bailout.
Federal officials say the rescue was necessary to
prevent financial and transport chaos, and that all
costs have been paid out of motorist tolls rather
than general tax revenue. They also say they have
learned from past mistakes. The new concessions
would last as long as 30 years, and officials say
the government would ensure strict quality control.
Some Mexicans are dubious.
A crew of laborers shoring up the shoulder of the
Autopista del Sol on a recent broiling afternoon
hooted at the prospect of another round of
privatization. They cited a laundry list of the
motorway's shortcomings: unstable soil, poor
drainage, cheap building materials, shoddy
workmanship and the threat of rockslides from the
"This highway wasn't well constructed," workman
Jesus Hernandez Almanza said. "I've been told this
is the most expensive highway in the world. But I
don't see it in the quality."
Motorists are skeptical too.
Stretching his legs at a rest stop on the Autopista
del Sol on his way to a weekend in Acapulco, Mexico
City accountant Miguel Gonzalez said he just wanted
toll roads that were safe, fast and affordable. But
he doesn't trust the government to provide them, or
the Mexican companies that failed the last time
around, or the foreign firms that are eager to get a
piece of Mexico's highway industry.
"Somebody else is going to win and we're going to
lose," he said, speaking of citizens.
Coming up with a formula that benefits everyone is
critical for Mexico's development, said Sergio
Sarmiento, a political analyst and columnist for the
national daily Reforma.
"For some politicians, [privatization] is taboo,"
Sarmiento said. "But many legislators in Mexico know
that we need to build the roads and they know the
government doesn't have the money…. It's absolutely
indispensable that this work."