Concession Model.

The model incorporates Mexican and international experience in this field during the last fifteen years and has been specifically designed by Secretariat of Communications and Transport (SCT) to meet Mexican needs under current laws. The model onsiders tolls to be fixed at levels that are accessible to users, with limits determined by SCT.

The new concession model for the development of road infrastructure with participation by the private sector has been based on the fact that the highway sections on the main road corridors susceptible to operate as toll roads, are not financially viable in and of themselves; as a consequence, the model seeks to combine public and private resources by mixing private risk capital, bank credits and federal and state resources in proportions based on the specific characteristics of each project. The mix shall allow to obtain a reasonable return on private equity and a more efficient use of public resources.

Concessions will be granted for the maximum term permitted under law in order not to press the recovery of the investment and to allow financial terms to be negotiated under optimal market conditions.

Its main characteristics are the following:

 Concessions are granted though public bidding processes.

  
 Engineering designs and environmental impact statements are provided by SCT to all bidders.

  
 To ensure that tolls are compatible with user willingness to pay the
government establishes the average maximum tolls to be charged on the road and the rules for periodic updates according to inflation.

  
 The concession term is fixed, to the maximum 30 years, in accordance with
the Law of Roads, Bridges and Federal Trucking.

  
 The government shall make an initial contribution of public funds to
each project.

  
 The government is committed to make a subordinate contribution, if necessary, to ensure payment of the credits used for the construction of the works.

  
 They are adjudicated to the bidder who presents a technical and financial proposal that complies with the requirements established in the bidding documents and requests the smallest total amount of public funds.

 
 Rights of way are delivered by the government to the winning bidder.

  
 In the event that private investment is recovered ahead of schedule,
excess revenues will be shared, according to previously determined rules, between the concessionaire and Banobras as the contributor of public resources to the project.

  
 The model offers private investors the opportunity to participate in
profitable business ventures.