Excesses of construction companies

Despite the current framework in the construction industry allows contracting different consortia, this sector of the Mexican market is dominated by a few firms

Express Passageway in Cuernavaca - File photo/EL UNIVERSAL
English 09/08/2017 09:00 Mexico City Newspaper Leader by EL UNIVERSAL Actualizada 09:00

It's complicated to have the government of any country as the sole builder of public works since this would restrict private initiative and could lead to bureaucracy and mismanagement infecting the project construction.

Thus, Mexico sets up tenders in which several companies participate and the one offering the best cost-quality ratio is awarded the contract. The government might finance the entire project or a percentage; in the latter case, the construction company is allowed to profit from the project for a specific number of years, particularly if said project is a highway.

Despite this framework allows contracting different consortia with a presence in the Mexican market, EL UNIVERSAL publishes today information which points out to a construction market with dominant firms.

As an example, there is a company with a huge presence in the construction of highways, roads, tunnels, railways, underground sewage, energy projects with the Federal Electricity Commission (CFE) and in wind energy projects. We're talking about Aldesa, a member of the consortium which built the Express Passageway of Cuernavaca – which suddenly collapsed, killing two people.

Mexico has been for this Spanish-financed company the equivalent to a gold mine. In 2016, their billing in Mexican soil represented 56% of the total income of the company, a very steep growth if we compare it to their numbers from 2009, when Mexico barely represented 12% of Aldesa's billing. For 2012, the percentage had increased to 35%.

Mexico becoming a gold mine for Aldesa is certainly the result of the 31 contracts with the Federal Government that, together with Epccor, they won from 2013 to 2017. Six of these agreements were direct awardings.

The number of contracts wouldn't be an issue if the company delivered excellent results. Yet, last Tuesday EL UNIVERSAL made it known that Aldesa is famous for non-compliances and raising costs. Moreover, not only did they build the Express Passageway of Cuernavaca – which collapsed in less than three months after it was opened – in Morelos they're currently building the XXI Century Highway, a project comprising 61.8 kilometers which is still delayed, and which raised the cost from the initial 1 billion 900 million Mexican pesos to 3 billion Mexican pesos, according to a statement made in December 2016 by Mario Sugawara, director of the company.

In the search for foreign investment in the country, multinational companies are given favorable conditions for their businesses, as is the case with Aldesa, but in return, the country receives delays and excesses, which need to be investigated.