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Mexico’s Cancelled $13-Billion Zombie-Airport Refuses to Die

Summary:
The people voted to scrap the project that was one-third finished, billion over budget, mired in allegations of corruption, and built on an unstable lake-bed. But it has a life of its own. By Nick Corbishley, for WOLF STREET: A year ago, the Mexican people — albeit a small fraction of the electorate — voted to scrap a new -billion airport for the capital that was almost one-third finished, at least billion over budget, and mired in allegations of corruption. Around billion had already been poured into the new Texcoco airport, which was to feature a futuristic, X-shaped terminal designed by Norman Foster. Another .3 billion was earmarked to finish it. And for the foreseeable future, Mexico City, one of the world’s largest metropolises, must continue to make do with an

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The people voted to scrap the project that was one-third finished, $4 billion over budget, mired in allegations of corruption, and built on an unstable lake-bed. But it has a life of its own.

By Nick Corbishley, for WOLF STREET:

A year ago, the Mexican people — albeit a small fraction of the electorate — voted to scrap a new $13-billion airport for the capital that was almost one-third finished, at least $4 billion over budget, and mired in allegations of corruption. Around $5 billion had already been poured into the new Texcoco airport, which was to feature a futuristic, X-shaped terminal designed by Norman Foster. Another $8.3 billion was earmarked to finish it.

And for the foreseeable future, Mexico City, one of the world’s largest metropolises, must continue to make do with an ancient airport, Benito Juarez, that is already overwhelmed by passenger numbers, has no room for further growth, and in some places, like many parts of Mexico City, is gradually sinking into the bed of one of the lakes on which the center of the city was originally built.

The final decision to undo years of construction work on Texcoco, at an estimated cost of $9 billion, ultimately fell to Mexico’s new president, Andrés Manuel Lopez Obrador (AMLO), who had spearheaded the opposition to the project in the first place, mainly on grounds of corruption and lack of transparency. A staggering 70% of the contracts for the project, some of which had a duration of 50 years (with the option of extending them to 100 years), were awarded without tender, in direct contravention of the Mexican government’s own anti-corruption laws.

But the biggest problems with the Texcoco airport are structural and environmental. The site chosen for its development is a drained lake bed that happens to attract much of Mexico City’s run-off water. The ground still has extremely high water content and low resistance to stress. For the big construction companies involved, it would have been the perfect boondoggle: once the airport was built, the chronic structural problems that ensued would have necessitated huge amounts of maintenance work, just to keep the land fit for purpose.

“The Texcoco lake bed is the worst land imaginable for building any kind of construction on,” said José Luis Luege Tamargo, the former head of Mexico’s water regulator, in an interview. Under Texcoco’s marshy land is one of Mexico City’s most important aquifers, but it is being depleted at an alarming rate. As a result, the land above it is sinking at an average rate of between 20 and 40 centimeters a year, further increasing the risk of flooding at Texcoco. In 2014, Luege Tamargo alerted the consortium in charge of the project to these risks but his warnings were ignored.

Yet while the airport project may have been cancelled and some of the bonds issued to finance its construction have already been repaid, it is still far from dead and buried. An avalanche of more than 140 lawsuits brought by a tenacious, well-funded coalition of business leaders, airline representatives and lobbyists has prevented AMLO’s government from dismantling the work on Texcoco and proceeding with his alternative project, to build two commercial runways at the Santa Lucia air force base and a new runway at Toluca Airport..

It was only in the last month that AMLO was given the green light to commence work on Santa Lucia, which is 55 kilometers from downturn Mexico City. The project is scheduled to be inaugurated in May 2022, though large-scale projects like these have an annoying habit of falling behind schedule and running well over budget.

The projected budget for Santa Lucia has already shot up three times in the last year, first from $3.64 billion to $4.07 billion, then to $4.76 billion, and most recently to $4.93 billion. That, together with the fact that the Ministry of Defense is overseeing the project and has deemed it classified, has intensified opposition to AMLO’s plans among business leaders and amplified calls for the original Texcoco project to be reinstated.

The coalition to save the Texcoco airport is led by a group called #NoMasDerroches (No More Splurges) whose members include Mexico’s most powerful business lobby group, Coparmex. “We’re not moved by politics. We simply believe the president’s decision to cancel Texcoco and build Santa Lucia is legally and financially unjustified,” Gerard Carrasco, a spokesman of the group, told Bloomberg. “It’s a waste of public resources.”

The government’s latest plan for Texcoco is to restore the former lake there and build a national park around it, which would deliver the definitive blow to the half-finished airport. Given the vast sums of money at stake in the Texcoco project, not just in its construction and future maintenance but also the long-hatched plans to build an “aerotropolis” — a vast multimodal “airport city” — around the airport, which investors hoped would become the biggest transport/infrastructure hub in the whole of Latin America, the companies and individuals invested in the project will do whatever it takes to stop that from happening. Those investors include:

  • The Atlacomulco Group, a secretive political network operating in the State of Mexico, where the new airport was being built. They were very closely connected to AMLO’s predecessor, Enrique Peña Nieto, who launched the NAIM project, and are alleged to have bought up much of the land on which the new airport and surrounding aerotropolis was to be built.
  • Large Mexican companies such as ICA, Prodemex, GIA, and Grupo Hermes, which is owned by Carlos Hank, a billionaire banker with close ties both to Peña Nieto and now to AMLO.
  • Carlos Slim, Mexico’s richest man. His construction company, Grupo Carso, had three major building contracts worth an estimated $5 billion. When AMLO threatened to cancel Texcoco, Slim famously warned that suspending the project “would mean suspending the country’s growth.’’

Given that Mexico’s economy has barely grown since the cancellation of Texcoco, Slim’s statement has so far proven to be eerily prescient. The construction and infrastructure sector has been particularly hard hit. As for the biggest infrastructure project of all, the Texcoco Airport, its future, despite AMLO’s best efforts, remains — if you’ll excuse the pun — up in the air. By Nick Corbishley, for WOLF STREET.

The slowdown in Mexico is not just in construction, exports, and manufacturing – but in services as well. Read…  Global Slowdown? Mexico’s GDP Declines Year-Over-Year for First Time Since 2009

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Mexico’s Cancelled $13-Billion Zombie-Airport Refuses to Die

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