Ciudad de México — A billion-dollar deal between Spanish company Iberdrola and the Mexican government, valued at US$6 billion for the sate’s acquisition of 13 power plants, is now in the hands of Mexico’s antimonopoly regulator, the Federal Economic Competition Commission (Cofece).
A source familiar with the deal, who requested anonymity, told Bloomberg Línea that the sale of the power plants is awaiting the regulatory authority’s decision. Cofece is currently chaired by Andrea Marván Saltiel.
On April 4, 2023, Ignacio Sánchez Galán, Iberdrola’s president, and Andrés Manuel López Obrador (AMLO), Mexico’s president, announced an agreement on 12 combined-cycle natural gas and steam power plants, along with a wind farm, which were to be sold to the government and subsequently run by the state-owned Federal Electricity Commission (CFE).
“Once the final agreement and regulatory approvals are secured, the transaction is expected to close by the end of the year,” stated Iberdrola in an investor presentation in April 2023.
Barclays financial group and development bank Banobras had previously informed Bloomberg Línea that the operation would conclude by the end of 2023.
Bloomberg Línea reached out to Cofece, but the regulator declined to comment on the matter. The Ministry of Finance did not respond to the information request.
The 8,539 megawatts of electrical generation capacity involved in the sale represent 80% of Iberdrola’s total capacity in Mexico.
For López Obrador, the sale of the power plants symbolizes a “new nationalization” of the Mexico’s electricity industry, following years of conflict with Iberdrola over a self-supply scheme, labeled by the president as “fraud.” CFE will not own the plants but will operate them.
The acquisition deal includes a complex financing scheme through a federal fund from the Ministry of Finance and Public Credit, development and private banking, and the issuance of the financial vehicle known as a Development Capital Certificate (CKD), to be managed by the private firm Mexico Infrastructure Partners (MIP).
On April 19, 2023, Finance Secretary Rogelio Ramírez de la O stated that all revenue flows from the power plants would accrue in favor of the Mexican state from January 1, 2024, according to the memorandum of understanding reached with Iberdrola.
Additionally, Iberdrola will receive an annual interest rate of 3.6% on the flows until the completion of the purchase, providing an incentive for the Ministry of Finance to close the deal quickly, according to Ramírez de la O.
The Mexican government’s approach to Iberdrola, through the Energy Regulatory Commission, has changed significantly since the announcement of the deal, which accommodated to some of the company’s requests. Iberdrola is facing a US$500-million fine for the alleged illegal sale of energy under its self-supply permit, an operation prohibited by Mexican legislation.
