AMLO Expropriates EdoMéx Plots to Expand Suburban Train

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Just days after Mexican President Andrés Manuel López Obrador (AMLO) issued a decree to expropriate private railway lines operated by Ferrosur in the coastal Mexican state of Veracruz, owned by Grupo México, the federal executive on Monday, May 22, ordered “for reasons of public utility” the expropriation of 113,838 square meters of private land in the municipalities of Tultitlán, Tultepec and Nextlalpan in the State of Mexico (EdoMéx).

The “reasons of public utility” is mainly the expansion of the Suburban Train that will lead to the Felipe Ángeles International Airport (AIFA), one of López Obrador’s pet megaprojects. Pressed for time, and with a plan to inaugurate the new train route in December of this year to funnel passengers to the hard-to-get AIFA, AMLO has resorted to the expropriation of EdoMéx land, which was enforced after the publication Monday of the order in the Official Gazette of the Federation (DOF).

“The surface of 113,838 square meters of privately owned land located in the municipalities of Tultitlán, Tultepec and Nextlalpan, State of Mexico is expropriated for reasons of public utility. The expropriation includes the constructions and installations that are in the immovable property and that are part of it. The Secretariat of Infrastructure, Communications and Transportation (SICT) will proceed with the immediate occupation of the assets subject to expropriation,” said the DOF article.

“This electric rail service (the Suburban Train) is for mass passenger transport, which is competitive, efficient and safe. It will also reduce costs and travel time for people traveling from the Mexico City metropolitan area and the Valley of Mexico to the Felipe Ángeles International Airport.”

According to the DOF article, the SICT will cover with an authorized budget the amount of compensation to those whose lands were expropriated to expand the Suburban Train.

Meanwhile, according to economic experts, the Mexican government’s takeover on the morning of Friday, May 19, of private railroads belonging to Grupo México — the third-largest business conglomerate in the country, owned by billionaire Germán Larrea — could trigger complaints and lawsuits before international treaties if the railroads were backed by foreign capital.

Jorge Molina, an expert in international trade, pointed out that the seizure of the train lines raises important questions in relation to the international treaties to which Mexico is a signatory.

According to Molina, the government action against Grupo México could fall within the scope of the United States-Mexico-Canada Agreement (USMCA), the Trans-Pacific Agreement for Economic Cooperation (CPTPP) and several of the Agreements for the Promotion and Reciprocal Protection of Investments (APPRIs), which would have implications both on the national and international levels.

“In all cases, the Mexican government would be obligated to compensate affected investors according to the real value of the assets, regardless of the government’s opinion on what is considered appropriate,” Molina said.

Shortly after its Ferrosur railroads were seized, Grupo México accused the federal government of noncompliance, and said in an official statement Monday that at the beginning of 2022, an agreement was signed with the SICT for the construction of a second track “with operational independence, which would be delivered to the Secretariat of the Navy (Semar) for use by the Tehuantepec Isthmus Railroad.”

“Following the signing of the agreement, Grupo México immediately began the construction work of the second railroad and shelled out several hundred millions of pesos for the expenses,” said the statement. “Unfortunately, the agreement was scrapped by the government months later.”

A day after Grupo México issued its statement, López Obrador on the morning of Tuesday, May 23, in his daily press conference, accused the Mexican conglomerate of “demanding billions of pesos from the government,” thus the decision to seize the railroads. AMLO likewise said that it was not an act of expropriation but a move “to recover a concession that belongs to the nation.”

“I don’t know what lawyers, advisers, experts gave him. Maybe (Grupo México) was given bad advice. It came up with a proposal for us to pay 9.5 billion pesos,” López Obrador said. “Well, this is no longer possible. That’s not even a fair price; that’s abuse.”

On Tuesday, the government said it would pay 7 billion pesos for the expropriated railways.

When asked in the press conference whether the seizure of Ferrosur’s railroads was permanent, AMLO’s reply was that “It depends on the attitude of the company.”

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