Slim, ICA Set to Lose Airport-Building Riches to Mexico Military

(Bloomberg) -- Builders angling for work at an alternative Mexico City airport project are set to lose out to a tough new competitor: the Mexican military.

The land for the proposed Santa Lucia hub belongs to the Defense Ministry and the military will be in charge of construction, at least at first, Deputy Finance Minister Arturo Herrera said in an interview with radio show Aristegui Noticias. The initial budget is 15 billion pesos ($745 million), he said.

That would leave out billionaire Carlos Slim, embattled construction company Empresas ICA SAB and other rivals with contracts to build a $13 billion airport in nearby Texcoco. President Andres Manuel Lopez Obrador, who vowed to cancel that project even though it was one-third built, had previously opened the door to moving the contracts to Santa Lucia. But he never specified how the transfer would work.

‘Military Engineers’

Lopez Obrador’s defense chief said he opposed private-sector builders in Santa Lucia, which is currently home to a military airport.

“Construction companies will not enter,” Defense Minister Luis Sandoval said Dec. 7, according to a report published Tuesday by Grupo Imagen, which said it obtained a copy of a speech he gave. ”Military engineers will be in charge of construction of the entire airport.”

For a look at why Lopez Obrador isn’t talking about Texcoco anymore, click here

Construction at the Texcoco airport is continuing while Lopez Obrador’s administration, which took office Dec. 1, negotiates a potential $1.8 billion bond buyback from creditors. Officially canceling the project could be grounds for bondholders to demand immediate repayment of all $6 billion of outstanding airport notes sold under Lopez Obrador’s predecessor.

Earlier this year, Aristegui Noticias reported that a wall for the Texcoco airport being built by the military was 89 percent overpriced. At least two shell companies were involved in the project, according to the report.

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, Susan Warren

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