(Bloomberg) -- President Claudia Sheinbaum unveiled her vision for Mexico’s energy sector, promising to increase funding for power generation and transmission projects and streamline rules for private investors.
The plan, outlined Wednesday during Sheinbaum’s daily press conference, includes $23.4 billion in spending on energy infrastructure projects through 2030, allocating $12.3 billion to electricity generation and $11.1 billion to transmission and distribution networks.
Mexico will also reduce bureaucracy and costs for private companies seeking to invest in Mexico’s energy sector, Energy Minister Luz Elena Gonzalez said during the press conference.
Sheinbaum’s plan keeps in place a rule established by her predecessor allowing private companies to own up to 46% of Mexico’s renewable energy generation capacity. That leaves room to build up to 9.6 gigawatts of capacity through 2030, requiring an estimated $9 billion in private investment, Gonzalez said.
The proposals come as Sheinbaum seeks to jump-start Mexico’s transition to renewables and bolster an electricity sector beset by blackouts and failing infrastructure. She’s also tasked with rescuing the state oil company Petroleos Mexicanos, or Pemex, from flagging production and a nearly $100 billion debt burden.
“We need to recover the planning capacity and strength of our public companies,” Sheinbaum said. State utility Comision Federal de Electricidad “is a very solid, efficient company and we are going to make it even more so.”
Mexico will continue to hone the rules for private investors through the passage of secondary laws, Sheinbaum said.
Sheinbaum previously announced goals to convert Mexico’s grid to 45% renewable energy by the end of her term in 2030, a target some analysts derided as a “pipe dream.” During her campaign, Sheinbaum promised to spend about $13.6 billion on building new power plants, fortifying transmission networks and keeping oil production close to current levels.
Last month, Mexico’s legislature passed a law reclassifying state energy companies as public entities, giving the government more control over them and no longer requiring them to turn a profit. That has raised questions among investors over exactly how private companies will be able to partner with Pemex and CFE.
“There’s an ongoing view among global investors that Mexico has become an attractive and interesting destination for international investment, even if some of the public-private partnership proposals may be met with caution,” said Robert da Silva Ashley, a partner at law firm DLA Piper.
“Exactly how these partnerships will work from a deal-structuring perspective, and how they track with investors’ expected rates of return will be key in how investment in Mexico develops over the next 18 to 24 months,” he said.
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