Slim, AMLO Reunite on Mexican Pipeline After Feud Over Airport

(Bloomberg) -- After a chilly 10 months, the relationship between Mexico’s president and its richest man is warming up.

Carlos Slim personally negotiated Grupo Carso SAB’s agreement to settle a months-long dispute with the government to carry natural gas through the country.

Tuesday’s news conference to announce the deal was the first time that Slim and Andres Manuel Lopez Obrador had shared a stage since the president took office in December. The billionaire and the leftist politician previously had been surprisingly cordial, dating to a collaboration in the early 2000s restoring central Mexico City. But relations cooled last October when Lopez Obrador said he would cancel an airport project in which Slim was heavily invested.

“What we need is massive investment to generate economic activity and jobs,” Slim said Tuesday. “We’re working on launching an important investment program that will turn things around. There’s a lot of interest in Mexico, a lot of confidence.”

Mexican government bonds can yield 8%, he said, an attractive investment compared with Europe and Japan. Slim said he isn’t anxious about signs of weakness in Mexico.

“There are many projects that can be done, and I’m very confident they’ll start soon.” he said.

Lopez Obrador singled out Slim’s company as the first company to reach agreement with the Federal Electricity Commission on the pipelines. Sempra Energy’s Mexico unit IEnova and Canada’s TC Energy Corp. then “acted responsibly” by also signing on, he said. The benchmark IPC index rose 1.5% at 1 p.m. in Mexico City.

Under the settlement, the companies will charge a fixed rate to the government for the pipelines, instead of rates that increase.

That will allow the companies to finance other needed infrastructure improvements, Slim said. The projects are likely to be focused in the southeast, he said, where the government has announced plans to build two trains and a refinery.

Carlos Salazar, the head of the CCE business group, said Tuesday’s deal gives investors certainty following concerns that the government might unilaterally change contracts it deemed unfavorable.

To contact the reporter on this story: Andrea Navarro in Mexico City at anavarro30@bloomberg.net

To contact the editors responsible for this story: Brendan Case at bcase4@bloomberg.net, Tony Robinson

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