Mexico set to nationalize Iberdrola assets through US$6bn buyout
Mexico wants to nationalize the assets of Spanish generation giant Iberdrola by paying US$5.94bn for 13 power plants.
The deal, pending potential modifications, was announced by President Andrés Manuel López Obrador, the head of public utility CFE, Manuel Bartlett, finance minister Rogelio Ramírez de la O and Iberdrola's top executives on Tuesday.
The goal of the transaction is to position CFE as owner of more than 50% of Mexico's power generation, a long-term goal that was also pursued through a failed constitutional reform last year. With the new capacity, CFE would generate 55% of Mexico's electric power, up from 39%.
It will also boast a much larger footprint in the northeast, where it will generate 45% of total power instead of 7%. Given CFE's plan to expand generation capacity – and the government's curtailment of private capacity expansion – authorities expect CFE to produce 65% of Mexico's electric power by the end of 2024.
Iberdrola currently operates 17 combined cycle and cogeneration plants in Mexico, seven wind farms, and three solar parks, according to its website, for total capacity of 11GW, with natural gas plants making up the majority of the capacity. The full portfolio of plants included in the purchase agreement was not disclosed.
"This means the definitive rescue of the public company, to guarantee a permanent supply of electric power, and cover rising demand," López Obrador said during the announcement. "It is also a new nationalization of the electric power industry."
The move marks a landmark achievement. The government has tried for years to increase CFE's share and control over Mexico's electric power market, with varying degrees of success.
It’s also a victory against Iberdrola, which López Obrador turned into a symbol of what he called the neoliberal period, during which key electric infrastructure was developed by private players. López Obrador has criticized the company for years and deployed unorthodox regulatory measures to prevent Iberdrola from developing and operating its Mexican projects.
CFE’s control over the power sector will ensure end-user prices will not rise, López Obrador added, at least during his term, which ends in September 2024. End-user prices have been frozen since he assumed office in 2018.
To avoid burdening both the federal budget and CFE, the government decided the transaction will be made through infrastructure fund Fonadin, said Ramírez de la O.
"[Fonadin] is likely to put up the majority of the capital for this transaction, and will be the special vehicle through which we will refinance the operation," he said. The purchase "will not add to Mexico's public debt, because Fonadin sits outside the public balance and can go to the market to refinance the operation by itself."
The parties aim to finalize the deal within five months.
Iberdrola CEO José Ignacio Sánchez Galán said his company had listened to the president's call for direct negotiation.
"We have understood your country's energy policy, and this has led us to seek a resolution that is good for the people of Mexico and complies with the interests of our shareholders," Galán said.
Subscribe to the leading business intelligence platform in Latin America with different tools for Providers, Contractors, Operators, Government, Legal, Financial and Insurance industries.
News in: Political Risk & Macro (Mexico)
Nearshoring: 400 companies expected to land in Mexico in 2024-25
Real estate developers and trusts expect the pace seen in 2023 to be sustained this year and next.
US lawmakers seek retaliation for expropriation of quarry in Mexico
President López Obrador signed a decree creating a new protected natural area in Quintana Roo of more than 53,000ha, including Vulcan’s limestone q...
Subscribe to Latin America’s most trusted business intelligence platform.
Other projects
Get key information on thousands of projects in Latin America, from current stage, to capex, related companies, key contacts and more.
- Project: Fótons de São Patrício 1 photovoltaic plant (Tianguá photovoltaic complex)
- Current stage:
- Updated:
17 hours ago
- Project: San Martín Solar Photovoltaic Plant (ex La Joya Solar)
- Current stage:
- Updated:
17 hours ago
- Project: Bellavista de Punitaqui solar project
- Current stage:
- Updated:
17 hours ago
- Project: ITC SE Lambayeque North 220 kV with sectioning of the TL 220 kV Chiclayo West – La Niña/ Felam, extensions and associated substations
- Current stage:
- Updated:
17 hours ago
- Project: Tortugo hydro plant project
- Current stage:
- Updated:
17 hours ago
- Project: Cerro Rayoso hydroelectric plant
- Current stage:
- Updated:
17 hours ago
- Project: Cundinamarca eastern perimeter corridor
- Current stage:
- Updated:
18 hours ago
- Project: Paving of Linden - Lethem Route, Phase 2 (Mabura Hill - Lethem)
- Current stage:
- Updated:
18 hours ago
- Project: Modernization of Five Generating Units of the Belisario Domínguez Hydroelectric Plant (Angostura)
- Current stage:
- Updated:
17 hours ago
- Project: Expansion and Improvement of Drinking Water and Sewerage Systems in the Districts of Comas and Independencia
- Current stage:
- Updated:
18 hours ago
Other companies
Get key information on thousands of companies in Latin America, from projects, to contacts, shareholders, related news and more.
- Company: Puna Mining S.A.  (Puna Mining)
-
Puna Mining S.A. is an Argentinean joint venture incorporated in the year 2017 in Salta whose 77.5% interest was acquired in the same year by the Australian mining exploration a...
- Company: Odin Mining del Ecuador S.A.  (Odin Mining del Ecuador)
-
Odin Mining del Ecuador S.A., a subsidiary of Canada's Lumina Gold, is an exploration and development firm focused on gold and copper projects in Ecuador. Quito-based Odin Minin...
- Company: Prefeitura de São Paulo
- Company: NEXT Mobilidade
-
The description contained in this profile is taken directly from an official source and has not been edited or modified by BNamericas researchers, but may have been machine tran...
- Company: Kappes, Cassiday & Associates  (KCA)
-
Kappes, Cassiday & Associates (KCA) is a US-based company engaged in the development, engineering and implementation of extractive metallurgical processes for the mining industr...
- Company: Fomento do Brasil Mineração Ltda.  (Fomento do Brasil)
-
The description contained in this profile was taken directly from an official source and has not been edited or modified by BNamericas researchers, but may have been automatical...
- Company: Ausenco Chile Ltda.  (Ausenco Chile)
-
Ausenco Chile Ltda. Is a subsidiary of the Australian firm Ausenco, which provides process infrastructure and engineering solutions in Chile since 1995. Based Santiago, Ausenco ...
- Company: Yacimientos de Litio Bolivianos  (YLB)
-
Yacimientos de Litios Bolivianos (YLB), created in 2017, is a state decentralized company, under the Ministry of Energy of Bolivia, which is aimed at developing the production o...
- Company: Proyectos de Inversión Vial del Oriente S.A.S.  (Proinvioriente)
-
The description contained in this profile was taken directly from an official source and has not been edited or modified by BNamericas researchers, but may have been automatical...