The Federal Commission for Economic Competition (Cofece) has set conditions for López Obrador's government to approve the state's purchase of 13 Iberdrola power plants. The antitrust authority has decided that the acquisition of this electricity package, for which the federal administration will pay $6 billion, is subject to certain obligations. Among other things, generation plants must operate independently on the market and avoid the exchange of sensitive or strategic information between competitors. Once the parties expressly and unconditionally accept Cofece's terms and conditions, the transaction will be approved. If they do not comply with the accepted conditions, they will be sanctioned.
In addition, the Antitrust Authority requires the National Infrastructure Fund to reduce and maintain its investments by a maximum of 51%, which must be achieved within a period of 24 months. “It is necessary to appoint an independent specialist administrator (MIP) responsible for decisions related to the operation of electricity generation facilities on the market and to put in place controls and mechanisms that bind those responsible for the operation of electricity generation.” “ We enable the factories to operate independently and without conflicts of interest,” Cofece said in his statement.
The plenary session of Cofece discussed for three days in an extraordinary closed session the mega purchase of the electricity package, the file of which came into their hands last September. The operation includes 12 combined cycle power plants with a capacity of 8,436 megawatts and a wind farm in Oaxaca with a capacity of 103 megawatts. The combined cycle power plants that the CFE will operate include Monterrey I and II, Altamira III and IV, Altamira V, Escobedo and La Laguna.
The antitrust authority in Mexico is responsible for verifying that these business arrangements comply with the country's economic competition laws and do not lead to the formation of market concentrations. In this case, the CFE operates the systems but is not the owner of the systems. Private company Mexico Infrastructure Partners FF – administrator of the mega transaction’s financial vehicle – will own the assets. As an operator, the CFE only receives a fixed or variable remuneration for the energy generated in these factories, but no direct income.
Last year, the government announced with style and under the narrative of “nationalization” the agreement with Iberdrola to acquire the 13 power plants already operating in the country. Since the founding of Morena, built in the image of President Andrés Manuel López Obrador, the goal has been to make the state a major player in the energy sector. The now formalized purchase is not nationalization, but it is a victory for his political project.
To preserve these assets, the Ministry of Finance has launched a complex financing program involving the National Infrastructure Fund, commercial banks and a financial instrument managed by Mexico Infrastructure Partners (MIP). The contract between MIP and Iberdrola was signed last June. MIP's Energy Director is Juan Carlos Zepeda, who served as President and Commissioner of the National Hydrocarbons Commission (CNH) during the previous federal administration.
Gonzalo Monroy, an expert in energy issues, explains that all income from the operation of these power plants goes not into the hands of the CFE, but into the fund created by the private MIP. “Now it becomes a problem for Mexico Infrastructure Partners as many of the assets purchased are already close to reaching their useful life and require more preventive and corrective maintenance, which means they will not be operational and therefore will not be operational. “ Receive income. “It was a very good operation for Iberdrola because it decarbonizes its portfolio in Mexico, Iberdrola gets money, eliminates headaches and gets a safer way to continue its operations in Mexico,” he comments.
The expert also explains that although the purchase is supported by the government, one cannot speak in good terms of electricity nationalization, as the executive proclaims, since the assets will pass into the hands of MIP, a private company, and not directly into the state treasury of the semi-state electricity company CFE. On the other hand, Iberdrola has already announced that it will invest the $6,000 million of the transaction in renewable projects in Mexico.
Cofece's important decision on this mega government purchase comes precisely at a time when this autonomous organization and a handful of other organizations are in danger of extinction due to President López Obrador's initiative to Congress to abolish seven autonomous regulatory bodies. The proposal also includes the National Hydrocarbons Commission (CNH), the National Institute of Transparency, Access to Information and Protection of Personal Data (INAI) and the Federal Telecommunications Institute (IFT).
The López Obrador government's intention to acquire the Iberdrola electricity park is part of its project to strengthen the parastatal energy companies Pemex and CFE. In the past, before the conclusion of this purchase and sale agreement, the President had launched sharp attacks against the Spanish company's activities in Mexico. The president had described these contracts as “abusive.” Months later, in April 2023, Iberdrola President Ignacio Sánchez Galán and López Obrador posed together and shook hands at the National Palace to seal the energy mega-purchase.
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