October 2, 2013 / 10:20 PM / in 6 years

Brazil's Odebrecht bets on Mexico, eyes oil reform

MEXICO CITY (Reuters) - Brazilian conglomerate Odebrecht has an $8.1 billion investment plan to expand in Mexico’s petrochemical and infrastructure sectors, the chief executive of its Mexican business said on Wednesday.

Luis Weyll, chief executive of Odebrecht's Mexico unit, talks to Reuters in Mexico City October 2, 2013. REUTERS/Claudia Daut

“We expect strong growth in Mexico in the next few years,” Luis Weyll, chief executive of Odebrecht’s Mexican operation, told Reuters in an interview.

However, Odebrecht SA ODBES.UL, which had global revenue of $41 billion last year, has no plans yet to take part in any opening of Mexico’s energy sector, preferring to watch from the sidelines as the government tries to overhaul the oil industry.

One of Latin America’s biggest family-owned companies, most of Odebrecht’s spending in Mexico is on a plant to make ethylene, a building block for plastics and textiles, Weyll said.

The company expects to spend about $4 billion on the project, including building the plant and operational costs, and it should contribute to revenue starting in 2015, he added.

Mexican President Enrique Pena Nieto’s office said on Wednesday that Odebrecht plans to spend $8.1 billion in Mexico over five years.

As well as the ethylene plant, Odebrecht is building a $450 million multipurpose dam in Mexico’s Veracruz state on the Gulf Coast, Weyll said. The dam will provide drinking water and hydroelectric power for the region.

Additional projects include a public-private partnership to build a highway, also in Veracruz state.

The group could also consider building railways and airports in Mexico, but that is not in the current plan, Weyll added.

Pena Nieto, who took office in December, has proposed or pushed through a series of reforms, including a new law on public-private partnerships, aimed at increasing competition and foreign investment in various sectors.

The government hopes a proposed energy reform to lure foreign investment into the sector will boost economic growth, but the measure must first pass Congress.

“We have to wait for the reform. While there’s no definition, we can’t take a position,” Weyll said.

Earlier this year, Odebrecht said it planned to invest $20 billion globally over the next three years, with a large part of that earmarked for Peru.

The family that runs the company has more than a century of experience with public works projects dating back to Emil Odebrecht, who emigrated to South America from Germany in the 1850s and built roads in southern Brazil.

More recently, Odebrecht has profited from good relations with Brazil’s ruling Workers’ Party, which wants to create “national champions” among Brazilian companies.

Brazil accounted for about 57 percent of Odebrecht’s revenue in 2012, with the rest of Latin America and the Caribbean contributing 28 percent.

Reporting by Ana Isabel Martinez and Elinor Comlay; Editing by Simon Gardner and Andre Grenon

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