During the past two decades, Mexico has proven itself a pioneer in Latin America in encouraging private sector participation in the economy. In the last decade, Mexico has also made major gains in infrastructure service provision. However, for Mexican enterprises to compete effectively and profit from open trade particularly within NAFTA, they will increasingly require higher quality infrastructure services, particularly in the water and energy sectors.'Private Solutions for Infrastructure in Mexico' begins with a review of Mexico's recent macroeconomic performance and the business environment. This book considers various sources of financing for infrastructure investment, and reviews recent legal and regulatory reforms that are critical to attracting private sector financing. The remainder of the book explores current issues as well as prospects and concerns regarding private entry and investment in each infrastructure sector-telecommunications, natural gas, urban water and sanitation, toll roads, railroads, ports, civil aviation and airports.

Abbreviations

vii

Acknowledgments

viii

Executive Summary

1

(7)

Part 1. Infrastructure Investment Challenges In Mexico

8

(9)

Main Issues and Challenges

8

(9)

Overview and Cross-Sectoral Concerns

8

(9)

Recent Economic Performance

9

(1)

Business Environment and Institutional Issues

10

(1)

Government Liabilities and Debt Management

11

(1)

Financing Infrastructure Investment

12

(1)

Regulatory Issues

13

(1)

Government Role in Lowering Risk

14

(3)

Part 2. Sector Reviews

17

(79)

Telecommunications

17

(18)

Government Strategy and Policy

17

(1)

Private Sector Participation Experience

18

(2)

Institutional and Regulatory Framework

20

(1)

Sector Performance

21

(5)

Performance Comparisons with other Latin American Countries

26

(2)

Regulatory Assessment

28

(4)

Recommendations for Reform

32

(3)

Natural Gas

35

(11)

Government Policy and Institutional Framework

35

(2)

International Comparisons

37

(1)

Regulatory Framework

37

(3)

Private Sector Participation Experience

40

(1)

Prospective Demand and Future Private Participation

41

(1)

Principal Policy and Regulatory Challenges

42

(4)

Urban Water Supply and Sanitation

46

(15)

Institutional Framework

46

(1)

Government Policy and Regulatory Framework

47

(1)

Sector Performance

48

(4)

Private Sector Participation Experience

52

(1)

Prospective Demand and Future Private Participation

53

(3)

Principal Policy and Regulatory Challenges and Recommendations

56

(3)

Conclusions

59

(2)

Toll Roads

61

(9)

Sector Performance

61

(2)

Government Policy and Strategy for the Sector

63

(1)

Institutional and Regulatory Structure

64

(1)

Private Sector Participation Experience

65

(3)

Recommendations

68

(2)

Railroads

70

(7)

Government Strategy

70

(1)

Regulatory Framework and Institutional Structure

71

(2)

Private Sector Participation Experience

73

(2)

Future Demand and Investment Needs

75

(1)

Recommendations and Remaining Issues

75

(2)

Ports

77

(7)

Sector Structure and Performance

77

(1)

Government Strategy

78

(1)

Regulatory Framework and Institutional Structure

78

(1)

Private Sector Participation Experience

79

(3)

Future Demand and Investment Needs

82

(1)

Remaining Issues

82

(2)

Civil Aviation

84

(3)

Sector Performance

84

(1)

Regulatory Framework and Institutional Structure

85

(1)

Government Strategy

85

(1)

Remaining Issues

86

(1)

Airports

87

(4)

Sector Performance and Characteristics

87

(1)

Government Strategy

87

(1)

Regulatory Framework and Institutional Structure

88

(1)

Private Sector Participation Experience

88

(1)

Impact of Privatization

89

(1)

Remaining Issues

89

(2)

Multimodality and Commercial Transport

91

(5)

Impact of Reform

91

(1)

Remaining Issues

92

(1)

Freight Road Transport

93

(1)

Passenger Road Transport

94

(1)

Conclusions

95

(1)

Part 3. Policy Recommendations

96

(1)

Proposed Action Program

96

(2)

Cross-Sectoral Issues

98

(1)

Sectoral Issues

99

(1)

Telecommunications

99

(1)

Natural Gas

100

(2)

Urban Water Supply and Sanitation

102

(1)

Toll Roads

103

(1)

Railroads

104

(1)

Ports

105

(1)

Passenger Road Transport

106

(1)

Airports

107

(1)

Freight Road Transport

107

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