Mexico readies $4 billion in financing to back energy projects

Mexican finance officials are exploring the possibility of creating an umbrella-financing package for renewable-energy projects that could be supported by more than $4 billion from development bank Banco Nacional de Obras y Servicios Publicos, the bank’s head said.

The government is planning to invite more private sector bids to partner with the Comision Federal de Electricidad for renewable energy and storage projects given the interest from global investors in the recent, first tender of such projects by the government, said Jorge Mendoza, the chief executive officer of the bank known as Banobras.

Mexico’s Finance Ministry and Banobras are weighing options such as creating a single vehicle to finance multiple projects, Mendoza said, adding that the government is currently in talks with institutional investors, Mexican pension funds and banks to put together financing.

Mendoza said he expected most of the financing would lined up over the next 12 months, with a chunk done by December this year.

Mexican President Claudia Sheinbaum has been ramping up infrastructure projects in the country. Still, plans have been sluggish at times and a robust pipeline of projects hasn’t fully materialized.

Mendoza said the government is now set to announce more power, oil, highway and ports projects over the next six months, benefiting from the country’s push to develop new models for public-private investment efforts.

“Everything that we worked for over the last year-and-a-half, it’s going to start rolling right now,” Mendoza said in an interview from the bank’s headquarters in Mexico City. “We need to make sure that whoever wins, or partners up with the government, has the financing capacity to do so.”

Investors have been putting more money into Mexico’s struggling electricity sector after the government clarified rules earlier this year. Sheinbaum has pivoted toward welcoming private investment in power after the previous administration shuttered an opening in the state-run energy sector.

Banobras will be able to fund as much as 80 billion pesos ($4.6 billion), funneling that money either directly into projects or through the umbrella facility that’s under consideration, Mendoza said. The financing would back the roughly three dozen projects that were awarded last month to 18 companies. Most of those were for solar-energy ventures.

Mendoza said that an umbrella vehicle would reduce costs and streamline due diligence, by piggybacking on the government’s own evaluation of projects. The umbrella vehicle could combine funds from the government, banks and institutional investors, he said. 

The group could consider cheaper financing for those sourcing materials, such as machinery or components, locally to help incentivize companies to use Mexican supply chains, he said. 

Mendoza also said that Banobras was working with Mexico’s national infrastructure fund, or Fonadin, on 18 highway projects that are estimated to cost around 212 billion pesos. He said he expected to award 13 of those projects before the end of the year, with the others following in the first six months of 2027. 

The country has seen more interest in public-private projects than purely private energy ventures, he said.

“Private players are seeing it as a way to mitigate risks — regulation risk, judicial risk — if you partner up with the government,” he said. 

Mendoza said major global funds were seeing past the noise of US trade talks and geopolitical risks that have weighed on investments. There had been a drought of projects under the past administration, and now the new efforts by the government to accommodate private capital is drawing major investors back.

“They want to take the opportunity of doing things now before the risks disappear,” Mendoza said. “I’m sure that Mexico is going to end up in a much better place than many other countries in terms of trade with the US, regional integration and competitiveness. And once there’s no risks, then there’s going to be many more players coming into Mexico and then you lose the timing and advantage of being early.” 

(By Michael O’Boyle and Kelsey Butler)