Mexico City — Mexico’s state-owned electric power utility Comisión Federal de Electricidad (CFE) will this year begin to operate the 13 electricity generation plants that Spanish company Iberdrola will sell to private company Mexico Infrastructure Partners (MIP).
The 12 combined cycle gas and steam plants, plus a wind farm, which represent 80% of Iberdrola’s assets in Mexico, will be managed by the CFE and will charge MIP through an operation and maintenance services contract, a source with knowledge of the operation told Bloomberg Línea.
The plants will be operated by subsidiary company CFE Generación.
However, time is running out for the government of President Andrés Manuel López Obrador (AMLO). In April, Mexican authorities agreed with Iberdrola to pay annual interest of 3.6% on the plants’ revenues in order to conclude the $6 billion transaction quickly.
CFE will not own the plants
But CFE will not own the Iberdrola plants, said the person familiar with the matter, but MIP, which will use the revenues from the sale of electricity to pay for the loans with which the plants will be purchased.
The financing of the operation will be composed of a capital contribution (40%) and financing (60%). The country’s national infrastructure fund, Fondo Nacional de Infraestructura (Fonadin), will provide 51% of the $2.35 billion in capital contributions, while private institutional investors will disburse 49%.
The remaining financing of $3.6 billion, will come from private banks and the market, as well as Banobras, Nacional Financiera, and Bancomext, part of Mexico’s public administration development bank.
Finance Minister Rogelio Ramírez de la O. said on April 19 that the operation will be financed with debt, but will be outside the national budget through a financial vehicle to be implemented by MIP.
López Obrador had boasted that the transaction with Iberdrola will be a “new nationalization” of the electricity sector, in reference to the one that took place on September 27, 1960, implemented by President Adolfo López Mateos.