NO

ASPECTS

DESCRIPTION

12.

Facilities Available to Facilitate Project Structuring and Transaction Advisory

• The Federal Government agencies will give priority to projects developed under public-private partnership schemes, in the assessment and procedures regarding compliance with the requirements of environmental protection provisions, human settlements, urban development, construction, land use and others that may be applicable at the federal level.

• The Federal Government agencies involvement on public-private partnerships projects may be developed using resources of the National Infrastructure Fund (FONADIN): a) Recoverable Loans and b) UnrecoverableLoans.

• In order to maximize the private capital participation in infrastructure projects promoted by Federal Government agencies, with low financial returns but high social returns, FONADIN could grantsubsidies, in order to contribute to their financial stability

13.

Role of Local Government

• PPT Law applies to local projects, only when they are developed with federal funds, that is, when the states and municipalities contributions as a whole, are lower. Those funds established in the Chapter 5 of the Fiscal Coordination Law, does not applyfor purposes of this calculation.

• In terms of land acquisition and land use, local governments are also competent for PPP development projects.

14.

Risk Sharing Policies/Practices

• General rule: operation, provision of services, infrastructure developing and project financing risks, will be borne by the developer.

• The risks should be allocated to the agent who is best able to bear them or handle them and which, therefore, will reduce their costs.

15.

Financing Mix Options Allowed

• FONADIN grants subordinated and / or convertible loans to private sector entities that receives any license, permit or other contracts that allows public-private partnerships to build, operate, and / or maintain infrastructure projects.

• Also FONADIN grants warranties or financial coverage, in order to facilitate funding access for infrastructure projects.

• Finally, the FONADIN is authorized to make complementary and temporal risk capital contributions (equity) that allows corporations to have enough capital resources to carry out infrastructure projects.

16.

PPP Promotions/ Marketing Mechanisms

• Private Equity Funds: capital market is the main alternative funding source for infrastructure projects in the short and medium term. Returns of investment offered by Mexican infrastructure assets are high relative to that observed historically, resulting in a combination of attractive risk-return and a unique opportunity for the investor.

17.

Monitoring and Evaluation

• The Ministry of Public Administration (SFP) will supervise the preparation, initiation and conferment of public-private partnerships projects.

• Only the highly technical aspects of PPP projects will not be subject to the supervision of the Ministry of Public Administration

• Monitoring the provision of services, projectdevelopment and general compliance public-private partnership projects, will correspond to the contracting federal entity.

18.

Dispute Resolution Mechanism

• In case of technical or economic divergence, the parties will try to resolve by mutual agreement and with good faith principle.

• Negotiation stage will have a term for that purpose agreed by the parties. In the event that the parties fail to reach a term agreement the dispute should be submitted to a committee made of three experts, one appointed by each party and the third appointed by the latter.

• The committee will know those technical or economic divergence issues, but will be unable to know legal issues.

• Furthermore, parties of a public-private partnership contract may agree to an arbitration, to resolve disputes arising on the contract implementation.