Electrical “nationalization” after the purchase of plants from the Spanish company Iberdrola

First modification: 04/05/2023 – 01:24

“Today the Government of Mexico signed an agreement to buy 13 electricity generation plants from Iberdrola that will form part of the public patrimony and will be operated by the CFE (Federal Electricity Commission). It is a new nationalization,” López Obrador said on Twitter. .

The operation, which was formalized this Tuesday through a memorandum of understanding, reaches an amount close to 6,000 million dollars, said the Secretary of Finance, Rogelio Ramírez, during a meeting with López Obrador and the executive president of Iberdrola, Ignacio Sánchez Galán, in Mexico City.

In this way, the CFE will increase from 39% to 55% its capacity over the total electricity generated in the country, the secretary highlighted in a video of the meeting.

It is a “historic day,” said the leftist president, who has promoted several reforms to limit foreign participation in the electricity sector.

López Obrador, who considers companies in the energy sector to be strategic for Mexico’s security, managed to get the Supreme Court to endorse laws that give priority to the CFE in electricity generation, after a more ambitious reform failed in Congress.

side stresses

His nationalist policy in the sector has generated controversies with the United States and Canada within the framework of the North American Trade Agreement (T-MEC) and strained diplomatic relations between Mexico and Spain.

López Obrador has been particularly critical of Iberdrola, which he accuses of having subordinated the CFE with the complicity of previous governments in both countries.

Last May, the Mexican regulator fined the company $466 million for alleged irregularities in the generation permits, but a judge stopped the measure.

“We are very grateful to Iberdrola, its CEO (…) for their willingness to reach an agreement. We have had some discrepancies, but dialogue and goodwill can do anything. From these differences comes something extraordinary, historic” and “beneficial for the people of Mexico,” said López Obrador this Tuesday together with Sánchez Galán.

The Iberdrola boss recalled that the agreement came two years after López Obrador urged that company to adjust its operation to the government’s nationalist policy that will end next year.

“We have understood the energy policy of your government (…) and that policy has led us to seek a situation that is good for the people of Mexico and that meets the interests of our shareholders,” Sánchez Galán said.

The executive also expressed his “desire to continue collaborating with Mexico, in the way the government wishes,” recalling that Iberdrola is the second largest electricity company in the world by capitalization and the first in Europe.

guaranteed generation

López Obrador said that he took note of this offer, and estimated that at the end of his government the State will concentrate 65% of electricity generation to meet the growing demand derived from a boom in foreign investment, which includes Tesla’s recent announcement to build an electric car plant for 5,000 million dollars in the city of Monterrey (north, on the border with the United States).

With this, “we guarantee that prices to consumers will not increase, as has been the case in the last four years,” he said.

Iberdrola obtained a record profit of 4,340 million euros in 2022 (4,625 million dollars), thanks to the increase in its renewable production capacity and the rise in the price of energy.

This profit was 12% higher than in 2021 (3,880 million), which had already been a record, and exceeded the company’s forecasts, which expected to achieve between 4,000 and 4,200 million euros of profit.