Spanish Bet on Mexican Energy Sector Is Long Term: CAMESCOM

Amid the rather frictional number of episodes between foreign companies in the energy sector and the Mexican government, the President of the Spanish Chamber of Commerce (CAMESCOM) in Mexico confidently asserted that the country should continue to benefit from Spanish investments focused on developing renewable energy.

In an interview with EFE, Antonio Basagoiti, President, CAMESCOM justified his country’s betting on Mexico. When Spanish energy companies invest in the Mexican industry, this often materializes into long-term projects that deliver valuable commodities and lead to development for the country, said Basagoiti. He also emphasized that foreign companies often use renewable energy sources and are thus more aligned with the decarbonization trend.

Spain is the second most significant foreign investor in Mexico, overshadowed by the US, with more than 6,885 companies employing over 1 million people. In 2021, Spanish foreign direct investment (FDI) in Mexico totaled US$4.335 billion, fueling a trade balance between both countries of US$643.961 billion.

Basagoiti also commented on some determining conditions of the current investing climate in Mexico. Firstly, he highlighted that the influx of capital not only benefits Spanish assets but also those of other companies looking to set up their production lines in Mexico. Secondly, Basagoiti pointed out that the investing environment has continued to evolve and adapt to different market dynamics. For example, nowadays, SMEs seem to operate with better leadership, even in internationally competitive markets. Admittedly, this breakthrough behavior is more common in sectors like infrastructure and energy, which Basagoiti credits to transnational companies paving the way for smaller groups in their expansion overseas.

Despite this continued investment and its benefits, 2022 has posed several challenges to some Spanish companies operating in the energy sector. After the Energy Regulatory Commission (CRE) fined Spanish energy giant Iberdrola US$444 million on account of selling via illegal self-supply contracts, a precedent was set for any other company accused of similar misconduct. Even if Iberdrola was recently granted a suspension to the fine, for the time being, the company is still unable to carry on with operations at its power plant in Dulces Nombres. It will still have to wait for the case to be resolved in court.

Spanish investment has not stopped, however, even amid these discussions. In an interview with MBN, Óscar Bernal, General Manager in Mexico, Eosol Energy, said that these events caused more of a psychological reaction rather than an operational one, and went on to clarify that the relationship between both countries is amicable.