Interview: Alejandro de la Borbolla and Bernardo Martínez-Negrete  

"We are seeing a transition towards mixed models, with state participation in the development of projects, seeking to include private capital."
 

Latin Counsel has had the privilege of speaking with Alejandro de la Borbolla and Bernardo Martínez-Negrete, co-heads of the Infrastructure and Projects practice at the elite firm Galicia.
Recently, this team was recognized with the "2025 Projects Firm of the Year Mexico" award by The Legal 500, a distinction that reaffirms its leadership and excellence in the market for more than 3 decades. In a context marked by political evolution, legal uncertainty and nearshoring opportunities, both experts share their views on the structural transformations that the sector is going through in Mexico.
From the shift towards medium-term contracts to the need to redefine public-private partnerships, they analyze the strategic opportunities in key sectors such as social infrastructure, water, health, transportation and mobility in Mexico.

Latin Counsel: What have been the main transformations in infrastructure financing in Mexico over the last decade?

Alejandro de la Borbolla: There have been many changes in the last decade due to several factors. One of them is that, during this period, we have had three different administrations in government, each with different visions regarding the development of infrastructure projects and public services, as well as the participation of the private sector.
In the first stage, we had a PRI-led government, whose president had a vision focused on promoting infrastructure development with private sector participation. This administration actively promoted the granting of concessions, public-private partnership schemes and long-term contracts.
In the second stage, with the change of administration led by Morena, infrastructure projects were slowed down to a great extent and were practically reduced to three mega-projects: the Mayan Train, the Felipe Angeles Airport in Mexico City and the Dos Bocas Refinery. This meant that other types of projects were no longer promoted and the model changed. The public-private partnership (PPP) scheme was completely abandoned. These three projects were mainly carried out through public works contracts.
In the current stage, under the administration of President Claudia Sheinbaum of the Morena party, there are signs that there is an intention to boost the development of infrastructure projects in various sectors. However, it is not yet completely clear which model or scheme will be used.
There are indications that they will seek to encourage the participation of the private sector through mixed investment schemes with the public sector, which seem to be quite similar to PPPs. The invitation or project awarding processes have not yet begun, but the signs point to this intention.
Given that there have been so many changes in the structure, financing has had to adapt. We have noticed a decrease in project financing under the traditional project finance model, since most of the recent projects have been executed through public works, which has reduced the need for external financing.
Currently, there is a greater use of corporate type financing schemes, with shorter terms or aimed at covering specific project needs while a clear flow is beginning to be generated under the contracts.

Latin Counsel: Which infrastructure sectors do you see as the most dynamic for the coming years?

Alejandro de la Borbolla: First of all, there is a great need to develop energy projects to increase generation, modernize and expand power transmission grid projects. There are also indications that we are looking to increase oil production. There is no doubt that the energy sector must be developed in a very important way, as in the past administration this development slowed down. The need for energy supply is growing every day.
Secondly, water: it is increasingly necessary to develop projects both for the supply -as it is an indispensable resource- and for the sanitation of aquifers, irrigation systems and the regularization of concessions in the water sector.
Two other sectors that will clearly require a major boost are transportation -both railways, with the construction of passenger and freight railways- and highways, airports and urban transportation; and a strategic sector, ports, which is also linked to the nearshoring trend. There are already signs of port rehabilitation, modernization and expansion projects.

Bernardo Martínez-Negrete: I would add the health sector. Although it has not traditionally been one of the main focuses in terms of infrastructure, the current government is trying to promote it through new projects.
There is a very relevant precedent on which we worked in our office: the first public-private partnership (PPP) for the manufacture of vaccines in Mexico, based on a long-term project. It was a self-financing PPP, where the Mexican government supplies an important part of the demand for various vaccines. The current government is looking to replicate this type of initiative.
In fact, just a few days ago President Sheinbaum announced that companies with infrastructure installed in the country will have certain preferential treatment in future public tenders. This is very relevant, because it opens the door to projects with foreign direct investment in the health sector and that could be structured with financing from development banks, commercial banks and long-term models with similar structures to those already implemented in sectors such as transportation or water, particularly in PPP-type projects.
We are enthusiastic about the potential of this sector, which is shaping up to have a strong industrial and long-term component.

Latin Counsel: What challenges do foreign investors interested in long-term projects in Mexico face today?

Alejandro de la Borbolla: As a result of the environment we described, there are several challenges. One of them is to understand what will be the scheme or structure under which the projects will be developed. Depending on that, financing will have to be adapted.
Another challenge will be to understand the role of development banking. In the past administration, development banking focused mainly on the aforementioned mega-projects, leaving aside its traditional role of supporting diverse projects at the federal and state levels. Development banking has been a fundamental part of the country’s progress over the years and I believe its role will be relevant now.
As Bernardo commented, there is a clear intention for new projects to have a greater Mexican component, both in terms of labor and inputs. This represents a challenge for foreign investors, who will have to find ways to meet these requirements, possibly through alliances with local companies.
Another challenge will be the social impact. This is an issue that is changing. Projects will have to assess their potential social impact, for example, ensuring that they do not affect indigenous communities or pilgrimage sites. This will require social consultations, which implies additional time and resources.
Another relevant issue has to do with how the judiciary will be formed. As you know, a few days ago, for the first time in the history of our country, elections were held to select ministers, magistrates and judges. This is generating a lot of uncertainty and is forcing private companies -especially foreign ones- to seek alternative dispute resolution mechanisms, such as international arbitration or mediation.
Adapting to this environment will be a major challenge. The issue of the judiciary has profound implications that we can comment on later.

Bernardo Martínez-Negrete: I would add the long-term challenges in this type of project. Mexico is no exception. One of the biggest risks for a private investor is the early termination of the project.
In the few months that this administration has been in office, it has shown interest in long-term projects with private participation. The change in approach with respect to the previous government is radical. The new government -although belonging to the same political ideology- has tried to maintain a discourse open to private investment and the long term.

Latin Counsel: What is the impact on the nearshoring phenomenon in the development of new infrastructure in Mexico?

Bernardo Martínez-Negrete: The nearshoring issue was very relevant three or four years ago, and it continues to be a great opportunity. What happened is that the necessary infrastructure decisions were not made in time to take advantage of it. Today, with the tariff war initiated by President Trump with the whole world, Mexico has benefited, in inverse proportion to how China, among other countries, has been attacked. In other words, the greater the pressure on China (and our main competitors), the greater the benefit for Mexico, which makes having a presence in the country more attractive from a nearshoring perspective.
The main problem is that there has been no smart investment in infrastructure in the last six or seven years - not in transportation, not in water, and much less in energy. Although many companies are interested in coming to Mexico, there are major bottlenecks in certain regions, which limits the potential for nearshoring in the country.
The opportunity is still there, it has not changed, the appetite and geopolitical interest in Mexico remains strong. But it will be key to start making decisions in the right direction to see results. With nearshoring, some of the fruits will begin to show. For now, the impact is moderate. Some sectors have grown very aggressively, such as data centers and the industrial sector in certain areas of the country.
The government is also looking to boost areas of our country such as the Isthmus -in Oaxaca and the southeast- through the Isthmus Train, with the intention of generating development poles and encouraging investment in the region.

Alejandro de la Borbolla: We have seen a very important impact in the industrial real estate sector. There has been considerable growth and development, especially in the north of the country, through industrial real estate FIBRAs. Everything else is still uncertain, although we are starting to see some progress in the sector.

Latin Counsel: What role does legal certainty play in attracting international capital?

Bernardo Martínez-Negrete: Everything! It is the currency. The secret of a country’s success lies in sending the message that you are going to respect the rules of the game: "Walk the talk". That is legal certainty. However, there has been an important erosion in this sense. The judicial reform has generated a lot of uncertainty, both in the risk committees of banks and in the investment committees of companies. Clearly, this does not generate confidence.
Today, there is a great unknown as to what will happen in Mexico given that the judicial issue is central. Mexico has enormous potential, its population is very young and large; it is an economy that, although growing moderately, has solid macroeconomic fundamentals. But the uncertainty of how a judge might resolve a contract, especially if it involves the government, generates a relevant level of risk.
This does not mean that there are no investors interested in Mexico. There will probably be a change in the type of investors willing to take certain risks. Some are used to investing in more complex environments than the Mexican one and will be able to weight it within their risk matrices, others will go to other countries.
It is not a catastrophic scenario, but we should be able to send better signals in this sense.

Latin Counsel: How do you evaluate the current regulatory environment for the development of projects under PPP or concession schemes?

Alejandro de la Borbolla: As we mentioned, the environment seems to be becoming less favorable to concession schemes and more inclined towards PPP schemes, although with a change in semantics. The PPP concept was highly criticized in the previous administration, but today there is a clear recognition that both private and public sector participation is needed. What they are doing now is calling it a "mixed investment scheme".
There are even some initiatives to issue a Mixed Investment Law. It is at a very early stage, but it is actually very similar to the current Public-Private Partnerships Law. They change some aspects and incorporate new concepts, such as the need for consultations and social studies, but in general the framework is very similar to that of PPPs.
We will see the new projects under this mixed investment scheme, and we will see how it lands. Another model (applicable to the highway sector) that is already being implemented is the medium-term contracts known as CMROs (Construction, Maintenance, Rehabilitation and Operation), which allow the construction, maintenance, rehabilitation and operation of an asset for five or ten years.
Here, the financial and risk thesis is different from that of a concession. In a concession, the financial risk falls on the "traffic risk" (the collection of tolls or for the use of the infrastructure), in the CMRO, on the contrary, it implies a risk of payment by the government throughout the life of the contract.

Bernardo Martínez-Negrete: Unlike the traditional PPP schemes that we saw in previous administrations, where the private party had a very broad autonomy in the project’s partnership and its management, now there is a government interest in participating more directly in the equity of the company developing the project, and having a greater benefit from its "upside".
It is not in conflict with private investment, but the administration seeks to have more involvement in the development of the project and in the benefits, taking advantage of the developer’s know-how to carry it out, but also assuming part of the risk. We believe that this is the change of dynamics in this government.

Latin Counsel: How has the relationship between the public and private sectors evolved in large-scale projects?

Bernardo Martínez-Negrete: Twenty years ago, with the PAN governments, there was a horizontal relationship between the private sector and the government. There were concessions, public-private partnerships; it was a contractual relationship between equals. Since the Peña Nieto administration, that relationship has begun to change and there has been a return to schemes more focused on financed public works, some PPPs, but fewer concessions, making a shift towards a more vertical relationship. In this model, the government has the power of command, the authority over the strategic project, and the private sector acts more as a contractor. It is no longer a relationship between equals. This became more acute during the last six-year term. Evidently, this model turned out to be very deficient. This administration has already realized that a very valuable opportunity was lost in this verticality. That is why they are now trying to build a new, hybrid horizontality.

Latin Counsel: What are the challenges and opportunities facing Mexican law firms in an increasingly globalized market?

Bernardo Martínez-Negrete: There is an increasing presence of international law firms in Latin America, mainly through the acquisition of small or medium-sized firms, and Mexico is no exception. The main challenge for local firms is attracting and retaining talent. That is key. It is fundamental to invest in the new generations, to have a solid presence in the best universities and to become a pole of attraction for the best talent, from early stages in their professional careers. The secret is talent.
We believe that local firms have a better capacity to retain that talent and understand its dynamics. Foreign firms, except those that have acquired Mexican firms and have been "Mexicanizing," still lack that sensitivity. That remains an important competitive advantage.
In addition, our close relationship with Mexican companies also represents a great value. Many relevant companies in the country still have family management structures, they value being spoken to in their own language, with their own accent, and they have trusted us for many years. This drives us to excel and remain competitive in terms of our firm’s performance.
The vast majority of our lawyers have an international academic background, comparable to the European and even American elites, precisely so that we do not lose our advantage in the face of these international standards.

Alejandro de la Borbolla: An additional very important point is institutionalization.
Many Mexican firms have had a hard time moving from a small, boutique, even family model to an institutional firm model. The firms that have been able to change and evolve to this culture are seeing the success and benefits of this, and those that are starting to do so now are lagging behind.
Another key aspect is the collaboration scheme. Not all firms have it, and in Galicia it has been a factor of strength and differentiation against the competition. This culture allows us to offer a more comprehensive, professional and specialized service in all our practice areas.

Latin Counsel: What is the impact of Trump’s tariffs on infrastructure in Mexico?

Bernardo Martínez-Negrete: We see an inverse relationship between the size of the tariffs that Trump imposes on our main competitors-China, Vietnam and Korea-and our competitiveness, which increases thanks to our proximity to the U.S. market. In that sense, the tariff war has favoured us. Mexico has not been exempt from tariffs, but it is to the administration’s credit that it has managed to build bridges, even when at first it was not thought possible.
All of this is linked to the free trade agreement between the US, Mexico and Canada (USMCA), which has been key. We believe that it does not currently represent a serious risk for Mexico. Recently, a U.S. court blocked tariffs globally, and the federal government won that ruling. The case will likely go to the U.S. Supreme Court, but we do not view it with particular concern.
We believe that the current U.S. administration has already understood that nobody wins in this tariff war, and that even U.S. industry and taxpayers are the ones who suffer the most as they face inflation and higher associated costs. Indeed, one of the key factors for the current administration to win the election was the high inflation that Americans suffered during the Biden administration. That is why we think that the tariff issue will gradually lose strength and the risks will be different.

Alejandro de la Borbolla: We are still at a stage in which this issue generates a lot of uncertainty, and it is hard for the private sector and foreign investors to make decisions, especially because it is not easy right now to make a financial model for a project with so many variables and uncertainty. As the situation normalizes, this volatile environment should change and allow the development of projects.

Latin Counsel: Do you have anything to add about the Judicial Power Reform and its impact on investments?

Alejandro de la Borbolla: In the past administration, the judiciary played a very relevant role as a counterweight to the actions of the executive branch. There were many actions, especially in the energy sector -legal reforms, revocation of permits, cancellation of projects-, and the judiciary was active and successful in stopping several of these measures, many of which were unconstitutional.
The proposed reform to the judiciary from the previous administration is inherited by President Sheinbaum with little room for maneuver given the ideological overlap. It is difficult to anticipate how it will be implemented in practice. We will see in the coming months. We have received many inquiries from clients interested in migrating their contracts and projects to arbitration mechanisms, instead of judicial courts, in search of greater certainty. However, in infrastructure projects this is not as simple as in other types of projects. The government does not usually readily accept non-judicial dispute resolution mechanisms, and litigation remains the traditional route.

Bernardo Martínez-Negrete: As a final note, although the reform is clearly controversial, it is important to understand its real scope. What was on the ballot last June 2 was the election of judges, magistrates and ministers, but it is not about immediately dismissing the entire judiciary.
Although there will be an immediate change of judges and magistrates, the support staff (agreement secretaries and staff, who are the ones who draft rulings, study precedents and collaborate between courts) will remain in principle. This could provide some continuity and smooth the change. How the new members of the judiciary will act is uncertain. We do not want to be totally pessimistic. That would be the most constructive angle we can find.

galicia.com.mx