Construction on one of Oaxaca's new highways Construction on one of Oaxaca's new highways. noticias oaxaca

ICA’s financial woes affect Oaxaca highway

Super-highway to the coast facing 700mn-peso shortfall

When the Oaxaca governor met earlier this year with federal transportation officials and representatives of the construction firm ICA, there was optimism that two new super-highways were nearing completion.

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But like previous pronouncements regarding the two massive projects, the optimism was overdone.

One of them is a 104-kilometer highway through the mountains that will provide a new link between the city of Oaxaca and the coastal city of Puerto Escondido. Construction began in 2010 and completion was slated for 2013.

That date was later amended to the end of 2014. Two months later, in February this year, Governor Gabino Cué said it would be operational by the end of 2015.

But last month, nine months after that promise, the highway was only 60% completed. The new completion date: the beginning of the third quarter of 2016.

Now, it turns out, ICA’s financial problems have thrown another wrench in the works. The state said on Saturday it was working with the federal Communications and Transportation Secretary to find the 700 million pesos needed to finish the road. ICA is no longer able to provide it.

Mexico’s largest construction company missed a US $31-million bond payment in late November and entered a 30-day grace period. Thirty days later, it defaulted.

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The firm said it did so “to preserve liquidity, prioritize ongoing operations and fund projects currently under development.”

The second highway, linking Oaxaca city with the Isthmus of Tehuantepec, was reported to be 54% complete. It was scheduled to be operational during the first half of next year, but that date was amended last week to the third quarter of next year. However, there was no indication that it was facing a funding shortfall as well.

It, too, is a big project in difficult, mountainous terrain requiring 54 bridges, 11 viaducts and three tunnels over the course of the 169-kilometer route. The 9.3-billion-peso highway will reduce travel time between the state capital and the isthmus from four and a half hours to two.

While a third-quarter completion is still anticipated for the highway to the coast, that is now subject to coming up with the funds to finish it. And while the state said in November that it had resolved land ownership disputes with communities located on the route, it has said so before only to be faced with new ones.

Slated to cost 5.25 billion pesos, the highway will shorten the trip between the capital and Puerto Escondido from six or seven hours to just over two.

Source: Business News Americas (en)

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  • Herradura Plata

    Oaxaca, a poor state where many socio-economic indicators are almost in negative numbers, surely doesn´t need to to build — or try to build — these mega projects, which mainly serve people-with-cars-in-a-hurry.
    How about putting those billions into health, education and decent housing?
    What´s that you say? Kickbacks to political friends in construction projects? Really!?

  • PintorEnMexico

    The Oaxaca project is one of several initiated under Calderon, administered under the national infrastructure fund combining private and public funding sources. Transportation is indispensable. It will benefit many more than just tourism, especially the Isthmus project. If the Feds had skipped over Oaxaca there would have been a political storm over keeping Oaxaca locked out of infrastructure projects. The real boondoggle, the convention center, was successfully defeated by a coalition led by Toledo.

  • swsl

    Calderon wanted this for economic (to save Fonatur’s investment) and practical governmental reasons. The better the transportation, the deeper the invasion of mainstream culture into the rural states, the more money and control the feds get. Same anywhere. Their interests are not in the locals, though many locals get dollar signs in their eyes, to be sure. Greed is rampant.

    The longer it takes the flood of cars and trash and crime to get to the coast of Oaxaca, the better. The last thing we will see is local government capable of or even interested in dealing with it. This is an extremely corrupt and ineffective culture here. Each round of local government will suck more money and leave a bigger disaster. This culture cannot deal with modern scale of problems created by large populations. We currently have no place for garbage, no pickup at any price, no treatment for black waters generated by hotels catering to modern flush toilet crowds. Only those who put lining their pockets ahead of quality of life or those who can’t understand why they chose to live in Oaxaca and not Acapulco want this to finish. The super highway is the harbinger of big problems for the coast. Hope it takes forever.

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