From “truculent” contract to “historic” agreement: how López Obrador's relationship with Iberdrola changed

Things were very different in January 2018. “In what country in the world does a company that produces electricity receive, in addition to payment for the energy it sells, a subsidy?

In no country are these gruesome contracts that have been made throughout this entire neoliberal period,” Andrés Manuel López Obrador said at a rally during his campaign for the presidency.

The comment was a reference to Iberdrola, the second largest electricity company in the world.

During that event in Chiapas, and throughout his campaign, López Obrador used the Spanish private company as an example of why the 2013 constitutional reform, which opened the electricity market, was, according to his reading, a mistake.

Some time later, he criticized that one of his political enemies, former President Felipe Calderón (2006 – 2012), joined the Board of Directors of a subsidiary years after leaving power.

Surely it was because during the Calderon administration Iberdrola had managed to gain a lot of business, said López Obrador.

Perhaps not even the López Obrador of 2018 would have imagined that five years later, he would be posing for a photo with a smile while shaking the hand of the president of Iberdrola, Ignacio Sánchez Galán, in the National Palace.

Despite the “discrepancies” of the past, he assured, a “historic” agreement was reached.

Iberdrola agreed to sell 13 power plants to a fund at a price of $6 billion.

The plants, said the president, will be operated by the state company Compañía Federal de Electricidad (CFE) to ensure preponderance in the market.

On Thursday, Mexico's antitrust regulator imposed conditions before approving the transaction.

The 2013 energy reform, which opened the market to private companies for the first time in 70 years, is the raison d'être of Morena, the political party that López Obrador founded.

The politician managed to mobilize thousands who opposed hydrocarbon and renewable resources being exploited by private parties.

Eventually, this became one of the axes of his successful presidential campaign.

Once in power, López Obrador dedicated himself to throwing darts at his opponents and included several companies, mostly foreign, in the mix.

In February 2019, having taken power less than three months before, the director of CFE, Manuel Bartlett, took the stage of the daily press conference with the “mission” of “remembering” who was responsible for the “destruction.” of the CFE” until turning it, he said, “into this company that has been reduced.”

Among those mentioned were Calderón, for having been an independent director of Iberdrola's subsidiary in the United States, Avangrid, and Georgina Kessel, an official in the Ministry of Energy (Sener) under Calderón, independent director and director of Iberdrola in Mexico.

Alejandro Fleming, also a Sener official under Calderón, joined Iberdrola as an advisor, Bartlett said.

For none of those mentioned did he offer specific information about how exactly they had reduced or destroyed CFE.

Bartlett announced that the “leonine contracts” signed between CFE and private parties under past administrations would be reviewed.

The rhetoric against Spanish companies escalated and, in 2022, López Obrador said that Repsol, OHL and Iberdrola itself “abused Mexico.”

To strengthen state companies and guarantee CFE a market monopoly, the president proposed modifications to the Electricity Industry Law and accused Iberdrola of lobbying

to

pressure against its approval.

A year later, in April 2023, Iberdrola announced that it would divest 80% of its generation business in the Latin American country by selling 13 electricity generation plants to the Mexico Infrastructure Partners (MIP) fund.

“With this transaction, the company continues to be the main private generator of renewable energy in Mexico and promotes compliance with its decarbonization commitments,” he said in a statement at that time.

For López Obrador, the purchase of the plants was a “nationalization,” since the MIP will put CFE in charge of the operation of the plants, even if it is not the owner.

This will allow CFE to generate about 65% of the electricity nationwide, the president said in a recorded message.

The conciliatory tone seems to put an end to the attacks on Iberdrola.

“We are very grateful to Iberdrola, its CEO, its global president, for their willingness to reach an agreement,” the president said at the time.

“We have had some disagreements, but dialogue conquers everything, dialogue and good will.

From those differences, from those discrepancies, something extraordinary emerges.”

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