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Friday, July 1, 2022

Mayan Train is long on ambitions, short on investors

Where Lopez Obrador sees opportunity to develop an overlooked region, critics see a boondoggle that risks upending a fragile ecosystem

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The Calakmul Biosphere Reserve would be busier if a Mayan Train took tourists there. Photo: Getty

Even more difficult than building new tracks in the jungle is finding enough investors to finance the Mayan Train.

Fonatur opened bidding for engineering work on the Mayan Train in May. The tender elicited enough questions from interested yet confused parties to fill a 253-page document, according to Bloomberg News. The session scheduled to respond to those queries had to be delayed a month to allow Fonatur enough time to come up with answers.

The federal project, meant to connect various spots on the Yucatan Peninsula by rail, will cost an estimated 150 billion pesos (about US$7.9 billion). The Mexican government hasn’t specified how it came up with that number, nor has it commissioned a study to prove there will be sufficient passenger and cargo volume to make the line commercially ­viable.

The government’s finances are in doubt, according to the treasury minister who resigned today over “many discrepancies in economic matters” and “public policy decisions … made without sufficient sustenance.”

“I am convinced that all economic policy must be based on evidence, taking care of the various effects that this may have, and free of all extremism, be it from the right or from the left. However, during my term, those convictions did not find an echo,” said Carlos Urzua, head of the Ministry of Finance and Public Credit, in a resignation letter he shared with the public.

The Mexican peso dropped against the dollar following the resignation, erasing last week’s earnings.

The federal agency in charge of the Mayan Train endeavor, Fonatur, has described it as a “social” project whose main goal is boosting the economy of the Yucatan Peninsula by way of hotel construction and tourism.

“What we’re looking for is for the towns along the train’s routes to be profitable, and that goes beyond how many tourists use the train,” says Aaron Rosado, the Yucatan liaison at Fonatur, the national fund for tourism promotion.

Rusty railways dating to the 1950s cover less than half of the proposed route, but they will have to be completely overhauled. For the rest of the route, crews will have to cut through miles of rainforest, home to pumas and endangered jaguars.

Fonatur chief Rogelio Jimenez Pons told Bloomberg in February that “a group of 100 of Lopez Obrador’s closest friends” has funded studies that contain traffic projections, but his agency “can’t share them just yet.”

Peña Nieto’s administration also studied the idea of building a train in the southeast. It would have been about five times smaller, but ultimately he shelved the project when oil prices fell and the federal budget took a hit.

AMLO’s government is looking to fund 90% of the Mayan Train through a so-called Fibra—a hybrid of a master limited partnership and a real estate investment trust. This is the same vehicle that was used to fund part of the $13 billion cost of building a new airport for Mexico City, which the president canceled late last year, triggering a sell-off in Mexican bonds, stocks and the peso.

Environmentalists have voiced concerns about the impact from a project this size. The proposed route is home to an estimated 800 to 1,200 jaguars, an already endangered species,.

To allow the animals to roam freely, the government is considering building large overpasses along sections of the track, likely modeled on those built in Canada’s Banff National Park for grizzly bears, beavers, and other big mammals. Canada’s reportedly cost as much as US$2 million each.

The train’s route will include a stop near the Calakmul Biosphere Reserve, one of Mexico’s largest protected areas and home to 2,400-year-old Mayan ruins. The area around the reserve has few hotels and roads and isn’t used to big crowds, mainly because it isn’t easy to get to. In all of 2018 it had only 43,000 visitors. Building hotels, restaurants, and other accommodations for a large influx of visitors may strain the area’s precious resources, including water, which would have to be piped in from adjacent towns.

Experts’ warnings are unlikely to sway AMLO, Bloomberg’s story opines.

“This is not just a whim or an imposition,” the president said during a ceremony asking the gods for permission to build the rail line. “It’s an act of justice, because the southeast has been a­bandoned for too long. It’s their time.”

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