Mexico will buy Iberdrola plants mostly with bank financing

The announced purchase of 13 plants of the Spanish energy giant Iberdrola in Mexico will be financed 60% by banks and the remaining 40% by a state infrastructure fund, which will assume the majority of the venture capital, the finance secretary said on Wednesday. of the Latin American nation.

Mexico announced at the beginning of April that it agreed to buy 12 combined cycle plants and one wind power plant from Iberdrola, in a US$6 billion operation that President Andrés Manuel López Obrador described as a “new nationalization” of the electricity market.

The Secretary of Finance, Rogelio Ramírez de la O, said that the National Infrastructure Fund (Fonadin) will contribute 45,000 million pesos (US$2,490 million), equivalent to 51% of the venture capital, while 66,500 million pesos (US$3,690 million) will be obtained through financing.

“Fonadin ensures that it has majority control of venture capital assets”Ramírez de la O said during López Obrador’s morning press conference.

“In addition, these types of operations are financed with risk capital and with debt or financing, and that is the whole, but what interests us is that Fonadin has 51% of the risk capital”, he added.

Although the secretary first said that the operation was not going to mean debt for the country, then he qualified that it was a form of indebtedness but outside the national budget and that the financing will be “supported by flows” of the plants.

When the purchase was announced, it was reported that the state generator, Comisión Federal de Electricidad (CFE), will assume the operation of the plants. The company will record the energy from these facilities as its own and in this way will be able to produce more than 50% of the electricity in the country, a goal of the López Obrador government.

Ramírez de la O said then that the purchase would close in about five months.

It is not yet clear what will happen to Iberdrola’s current workers at the plants in the agreement or whether the CFE will receive payment for the operation of those facilities, the generation of which the state company already received by contract.

López Obrador, a nationalist on energy matters, has frequently lashed out at Iberdrola, which he has accused of benefiting from past Mexican governments.corrupt” and has accused her of trying to mount a media campaign against him in conjunction with his political opponents.

The operation comes at a time when Mexico is embroiled in a dispute over its energy policy with the United States and Canada, which argue that it harms their companies and violates a regional trade agreement.

Source: Reuters