OBG talks to Francisco Arturo Vega de Lamadrid, Governor of Baja California (BC)

Interview: Francisco Arturo Vega de Lamadrid

How does not being connected to the national power grid affect power intensive industries?

FRANCISCO ARTURO VEGA DE LAMADRID: Thanks to our location adjacent to the eighth largest regional economy in the world, the US state of California, the BC region benefits from enough imported power to service all new investment spaces. The majority of products and services in the area are covered by the North American Free Trade Agreement, which covers the linking of distribution systems for electricity and gas. This, in turn, provides security and improves supply to both sides of the border.

In addition to wind-generated power, what types of clean energy can be produced in BC?

VEGA: BC has many renewable resources. We have one of the highest levels of solar irradiation both in the country and world, and the state is Mexico’s biggest generator of geothermal energy, with an installed capacity of 540 MW at the Cerro Prieto geothermal plant. We also have a 150-MW wind power park under construction. Furthermore, BC has the resources to develop tidal and wave hydropower, as well as the potential to tap biogas from landfills. Currently, we have a private firm working on a system for processing methane from cattle manure to generate electricity. Finally, we are working through the State Energy Commission to identify public-private partnership (PPP) opportunities for renewable energy generation. Thus the state law requires that 50% of electricity consumed in government buildings must come from renewable sources.

Alongside the MXN65bn ($5.05bn) of government-funded infrastructure projects under way, what opportunities exist for the private sector?

VEGA: The government of BC has identified more than 100 strategic projects that will support development, help generate employment and boost the welfare of all families in BC. Investment opportunities arise in various areas of economic activity, covering a wide spectrum of projects dealing with urban, economic, social and other issues. Included in these projects are improvements to Mexico’s road network, such as better links to the border crossings into the US via California. Airport cargo and passenger seaports facing the Pacific Ocean in the BC region are also receiving attention. In addition to these key focus points, there are a number of other projects to improve logistics and transportation infrastructure. Within this scope, government support is being provided for road paving equipment, social welfare initiatives, programmes to boost safety, as well as for renewable energy projects in both wind and solar.

The state government is set to spend a record budget over the next six years. Furthermore, we now have the opportunity to carry out projects via PPPs, where the investment risk is shared between the collaborating sides. This provides a level of legal certainty for firms involved in the upgrading of the region’s infrastructure and logistics platforms.

What measures is the government taking to support small and medium-sized enterprises (SMEs)?

VEGA: In BC, 99.5% of companies are SMEs and they account for approximately 68% of employment in the state. We have created a Business Services Centre where SMEs can receive training and support in terms of joining the formal economy if they are not part of it already. The centre also aims to develop a friendlier business framework, with easier procedures and less red tape. We also provide guidance on management of operating costs and financing options available for new businesses, in addition to training, advice and technical assistance to help strengthen operations.

Through the State Programme for the Development of Providers, small businesses are made aware of the opportunities available for fulfilling the needs of big business and industry. The programme also provides support for certification, business management, access to funds and introduction to export events and seminars. Our main goal is to help companies realise the benefits of formality, thereby strengthening the economy.