LatinNews Daily - 05 April 2023

MEXICO: Gov’t buys Iberdrola power plants in ‘new nationalisation’

On 4 April, Mexico’s President Andrés Manuel López Obrador announced his government had bought 13 power plants from Spanish energy company Iberdrola.


The purchase of 12 combined cycle gas plants and one wind power plant is a boost for energy nationalist López Obrador as he pursues his goal of making the country self-sufficient in energy generation. Not only does the deal significantly raise the market share of state-owned power company Comisión Federal de Electricidad (CFE), but it also negates the power of Iberdrola, which had been a major player in Mexico’s energy market and a frequent target of attacks from the president. However, the deal is likely to further fuel concerns, particularly in the US and Canada, that López Obrador’s nationalist policies are side-lining foreign energy companies.

  • López Obrador posted a message on Twitter saying the government had reached an agreement to buy the 13 power plants, which would be operated by CFE and “form part of public patrimony”. He said the deal represented “a new nationalisation” and would keep energy prices down for consumers.
  • In a statement, Iberdrola confirmed it had signed a memorandum of understanding with asset manager Mexico Infrastructure Partners (MIP) to sell 8,436 megawatts (MW) of capacity from its gas-fired plants, and its 103MW wind plant La Venta III. Iberdrola stated that the agreed value for the sale was approximately US$6bn, which may change based on the closing date of the transaction and other adjustments.
  • According to a government statement, the plants will increase CFE’s share of Mexico’s electricity market from 39% to 55%. Furthermore, by the end of López Obrador’s term in 2024, the CFE will control around 65% of all electricity generation in Mexico, due to the construction of new plants and modernisation of hydroelectric plants.
  • López Obrador has repeatedly accused Iberdrola of unfairly benefitting from contracts granted under previous administrations and engaging in corruption. The company has also been the target of fines levelled by the energy regulator (CRE).
  • In a statement, Iberdrola said it would continue to be “the leading private generator of renewable energy in Mexico”.
  • López Obrador had initially attempted to enact his energy self-sufficiency plans via a constitutional reform, which was ultimately rejected, leaving him to seek alternatives.

Looking Ahead: The purchase will be paid for via Mexico’s national infrastructure fund (Fonadin) and other public financial entities and will be completed towards the end of this year.

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