Mexico to postpone and may cancel Punta Colonet port

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A drop in traffic on the Pacific Coast has made it more difficult for possible bidders to get financing, an official says. The port could potentially compete with Southern California terminals.

Mexico will postpone construction of its planned Punta Colonet port on the Pacific Coast and may scrap the project entirely as interested bidders struggle to find financing for the $4.88-billion complex.

The first simultaneous recession in the U.S., Japan and Europe since World War II has led to a 30% drop in port traffic on the U.S. and Canadian Pacific coasts, making it difficult for potential bidders to get financing, Mexican Communications and Transportation Minister Luis Tellez said in Mexico City.

"We are working with banks to see if this will be possible," he said Tuesday. "There is still interest in the project; it is just a matter of timing."

The port, in northern Baja California, was the single biggest portion of Mexican President Felipe Calderon's pledge to spend 570 billion pesos ($41.2 billion) a year in public and private money on road, port and other infrastructure projects through 2012. The plans called for building an airport, highways and a rail link to the U.S. as part of Colonet.

Citigroup Inc. and another U.S. bank are advising Mexico on Colonet and will present a plan by the end of the month that recommends whether the port should be built, Tellez said.

Mexican officials had said the port, 150 miles south of San Diego, would triple the amount of cargo the country could handle and might lure traffic from terminals in the U.S.

Mexico will go forward with other projects for which companies have said they will probably find financing, including building an airport on the Riviera Maya, near Cancun.