MONTERREY, Mexico & NEW YORK--(BUSINESS WIRE)--In a recent report highlighting the financial impact of street light retrofit projects on municipality's finances, Fitch Ratings reveals some trends identified in Mexico.
Street light modernization projects arise because of high and rising energy costs - a consequence of the sector's tariff structure and the urbanization process. In addition, there is now a greater and more sophisticated technological supply in the regional lighting market that could provide electricity consumption savings. These factors show the need to save and optimally allocate resources used in the provision of the municipal public lighting service.
Given this, Fitch has observed that some entities from the group of municipalities rated by Fitch (GMF) are replacing the technology used in their street lighting systems with more efficient alternatives; i.e., with a widespread adoption of Light-Emitting Diode (LED) technology. It should be noted that saving on electricity consumption is an important factor in the financial viability of street light retrofit projects.
Nationally, a financial leasing arrangement is among the available alternatives that some administrations are using to fund their street lighting modernization projects. However, there are some factors (mentioned in the special report) that may evolve into possible contingencies for those entities that formalize leases for these types of works.
It is important for municipalities to conduct a thorough assessment of the costs and benefits associated with the various financing options available to carry out their street light retrofit projects. Therefore, Fitch will monitor the leasing agreements of street light retrofit projects between the municipalities of the GMF group rated by Fitch and the private sector.
The special report titled: "Street Light Retrofit Projects - Trends in Mexico's Municipalities" is available at www.fitchratings.com or by clicking on the link.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research: Street Light Retrofit Projects (Trends in Mexico's Municipalities)