In 1989, the Mexican Government launched an ambitious $5.3 billion toll road programme with the aim of having 6,226 km of four lane private toll roads built or under construction by the end of 1994. This programme is remarkable not only for its size and rapid implementation, but also for the extensive use of foreign capital, and very high tolls. The limited availability of local finance makes the use of international funds essential. However, international finance brings with it problems such as the mismatch between project revenue in Mexican Peso and debt service payments in dollars, and the Mexican Country risk perceived by foreign investors. At present, neither local nor international investors are willing investors are willing to lend on a non-recourse basis to toll road projects for more than ten years, with the unfortunate consequence that tolls have to be high to repay debt quickly. Typical tolls of 15 cents per kilometre per car are high relative to local incomes (GDP per capita is 16% of the US average), and hence the willingness and ability of sufficient users to pay these tolls is a key issue. However, there are a number of successful toll roads which clearly demonstrate the contribution which can be made by mixed public-private schemes. (A)
Abstract