FONADIN to Finance Purchase of Iberdrola’s 13 Generation Plants
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FONADIN to Finance Purchase of Iberdrola’s 13 Generation Plants

Photo by:   Image by nikiko from Pixabay
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Emilio Aristegui By Emilio Aristegui | Junior Journalist and Industry Analyst - Thu, 04/20/2023 - 12:01

The acquisition of 13 electric generation plants belonging to Iberdrola will not put the Mexican government in debt, as it will be financed mainly by the National Infrastructure Fund (FONADIN), according to the Ministry of Finance and Public Credit (SHCP). The ministry adds that the funds used to purchase the plants will be recovered in 10 years, as numerous banks in Mexico have shown interest to provide financing.  

Rogelio Ramírez de la O, Minister of Finance, informed that the purchase would initially cost US$5.94 billion, as the verification of the plants’ status could modify the final costs. The SHCP will allocate FONADIN MX$45 billion (US$2.5 billion) for 51% of the value of the risk capital. The contribution allows for the control of the assets of the operation. The project’s flows are expected to generate MX$66.5 billion (US$3.69 billion). Banobras, Nacional Financiera, Bancomext and other large banks in Mexico have been considered to finance the acquisition. 

While FONADIN will be the acquirer, asset manager Mexico Infrastructure Partners (MIP) will oversee the contracts and payments on behalf of the investors. The SHCP highlighted that MIP is a 100% Mexican company that manages US$4 billion and is the largest of its kind in Latin America. The decision to include MIP considered that the group has previously worked with FONADIN on numerous projects, explained the SHCP via a press release.

 Following the acquisition, Mexico’s Federal Electricity Commission (CFE) is expected to expand generation to 55% to reach a capacity of 52.7GW. Mexico’s peak demand is 48.1GW, according to SHCP. CFE already generates operating profits "and that is what was taken into account for this acquisition," says Ramírez de la O. The Megawatt (MW) average cost of the purchase is US$695,000, which is below the Latin American average of US$700,000 and lower than previous transactions.

BBVA, Santander, Bank of America, Banorte and Inbursa are also interested in financing the government's purchase of Iberdrola's power plants, as reported by MBN.

Photo by:   Image by nikiko from Pixabay

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