Mexican builder ICA’s 17.7-billion peso ($1.1 billion) aqueduct project, threatened to be quashed by a regional politician, probably will move forward but with a lower price tag, according to two people with knowledge of the matter.
The new cost hasn’t been decided and negotiations are ongoing, according to one of the people, who asked not to be identified as the decision isn’t final. Empresas ICA SAB was assigned the project along with other companies last year.
The threats to cancel the Monterrey aqueduct made by Jaime Rodriguez, who was elected governor of Nuevo Leon state in June, battered ICA’s bonds and helped send the stock plunging the most on the IPC Index this year.
ICA shares fell 0.2 percent to 8.24 pesos in Mexico City.
ICA, which relies on public-sector clients for about 80 percent of pending contracts, said in April that the 230-mile (370-kilometer) aqueduct was the second-biggest project in its backlog as of Dec. 31.
The water pipeline project came under fire by business groups that complained of high costs and for the participation of Grupo Higa, a government contractor that sold homes to President Enrique Pena Nieto’s wife and Finance Minister Luis Videgaray.
The first lady and Videgaray have denied wrongdoing.
Fernando Elizondo, picked by Rodriguez to be cabinet chief, had said in June the incoming administration, which takes office in October, was likely to suspend work on the aqueduct during a review.
ICA declined to comment. A spokeswoman for Rodriguez said that while the state doesn’t have the money to fund such a large project, the governor-elect is studying whether there is an urgent need for the aqueduct.
“I don’t doubt that if the analysis that he commissioned finds that it’s necessary, he’ll seek a way to finance it, but it won’t be right away,” Diana Sayuri, the spokeswoman, said in an e-mail.
She added that Rodriguez told President Enrique Pena Nieto during a meeting last month that if the federal government wanted the aqueduct, it could pay for the project.