Spanish utility giant Iberdrola has signed an agreement with Mexico to sell its combined cycle gas plants in the country for $6 billion in a deal previously described by Mexican President Andres Manuel Lopez Obrador as “a new nationalization of our electric industry.”

Iberdrola, which is increasingly focused on wind and solar power generation in Europe and the Americas, is selling 55% of its Mexican business to Mexico Infrastructure Partners (MIP). The sale includes 99% of Iberdrola’s combined cycle gas plants and 87% of Iberdrola plants operating under the Independent Power Producer regime, contracted with the Federal Electricity Commission (CFE).  

In total, Iberdrola is selling 13 gas-fired power plants to an entity of the Mexican government.

The company will keep its renewables portfolio of 6,000 megawatts (MW) in Mexico to provide power to its private customers and aims to further grow its renewables presence in the country.

When an initial agreement on the deal was announced earlier this year, Lopez Obrador said the deal would give state-owned utility Comision Federal de Electricidad majority control over the Mexican electricity market and called it “a new nationalization of our electric industry.”

Mexico’s government has been on the nationalization path since coming into office. This has led to growing tensions with the United States, which has repeatedly warned its southern neighbor to open up its market instead of closing it to private businesses. 

What the Lopez Obrador government has been doing is essentially reversing as many policies introduced by the previous government as possible. This has naturally caused an outcry in international business circles as their access to potentially lucrative projects in Mexico, including oil and gas but also wind and solar, as well as power plant operation, has shrunk.

Iberdrola, for its part, is heavily investing in wind and solar power generation in Europe, the United States, and Latin America.

Just this week, the Spanish firm signed a $1.08 billion (1 billion euros) loan with the European Investment Bank (EIB) to co-finance the construction of 22 renewable energy plants in Spain, Portugal, and Germany with a total installed capacity of 2.2 GW.

By Tsvetana Paraskova for Oilprice.com

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