Transmission Leader Diversifies Activities in MexicoWed, 02/24/2016 - 17:16
Q: What role does Mexico play in Elecnor’s growth strategies?
A: A year ago, Elecnor set three priority countries for its global operations in the Americas: Chile, Brazil, and Mexico. These are the countries where different geographic regions are going to be managed. In the case of Mexico, this is where we will manage all our Central American operations. Around 80% of our projects are carried out with CFE, mainly in the power lines and substations market. Mexico is becoming increasingly important for Elecnor because of the changes that the Energy Reform will bring about as well as the expectations surrounding it. However, at Elecnor we want to be cautious until we see a return from this reform process. This does not mean we are halting activities, but it means we are analyzing the sectors in which we can invest, and our possible market options.
Q: What are Elecnor’s main objectives in Mexico, and in which sectors is the company present?
A: The company has a strong presence in transmission lines and substations. Three years ago we obtained the Morelos contract, our first contract for pipelines, and the contract for Agua Prieta, in a co-ownership with CFE. Elecnor has a subsidiary called Enerfín, which develops wind farms, and another one dedicated to water treatment called Hidroambiente. Enerfín recently established a base in Mexico, although the subsidiary has already bid for tenders in the country from Spain. We have also made offers for satellite imaging. The main objective is to expand and increase our presence in the Mexican market by taking advantage of the opportunities brought about by the Energy Reform. We are carefully selecting which projects to invest in. Pipelines will definitely be in our portfolio, we are interested in wind energy, and we are keeping an eye on tenders for energy generation.
Our most distinguishing trait is the quality of our work and our delivery of quality projects on time. The market for transmission lines and substations is fiercely competitive and the prices have dropped. In the case of Elecnor, we have not been awarded a contract for transmission lines in a few years, although I do not think tenders should be based solely on price, since quality is beneficial for the country.
Q: How will the relationship between Elecnor and CFE evolve, and are you working in conjunction with any other companies?
A: For us it is very important to be able to establish partnerships with companies such as CFE and PEMEX in order to seize investment projects. We are already in talks with these companies to discuss possible partnerships, although we do not know if these could include transmission lines. As I mentioned, we are interested in investing in ducts, wind energy, and generation, and in Brazil we have several assets in transmission lines. CFE could benefit from this too, but everything depends on the Reform.
We also established an alliance with APG Asset Management as part of our eagerness to grow. The specific goal is to carry out energy transmission projects in Latin America. Since in the present financial climate resources are limited, partnerships with major investment firms such as APG provide an attractive lever for continued growth. Over the past 15 years, we have invested a lot of resources in Brazil for wind energy and transmission, and we have also invested in Canada. The objective was to have the support of a fund to be able to invest in countries like Mexico.
Q: What are Elecnor’s immediate ambitions for its Mexican operations?
A: Mexico is a key country for Elecnor, where we want to establish a strong and renowned company beyond substations and transmission lines. Elecnor would like to operate in Mexico like we do in other countries, providing services such as dumping site sealing, biodigestors, and solar energy projects. We want to be strong in renewables and sustainable solutions. Railways are also an important segment for Elecnor, and the company even has its own design for overhead lines. We are trying to get the Ministry of Communications and Transportation to tender projects, but the bids that have been issued have been aimed at manufacturers of rolling stock and we feel that it is a shame that we have to work with these manufacturers instead of working directly with the Ministry. We would like to be recognized not only for what we have done, but also as a diversified company. Our company views Mexico as a priority area for growth over the medium and long term.