Antonio Navalón
Day after day and morning after morning, almost five years have passed in which we have been hearing about all the mistakes and areas of opportunity, but, above all, about the errors that Iberdrola had made in its development and activity in Mexico. The first mistake highly criticized was hiring Dr. Georgina Kessel, former Secretary of Economy of Mexico, as a board member. Subsequently, the Spanish company decided to hire former President Felipe Calderón Hinojosa as a board member, an unforgivable mistake for the current leader of the Mexican administration, which he even described as “shameful and embarrassing”.
Since the beginning of his term for President López Obrador’s administration, Iberdrola was an energy company incompatible with his way of seeing things. It was inconceivable for the Mexican leader to commit a sin like the one involved in hiring former President Calderón and still get away with it. Incorporating the former Mexican president into its payroll was one of the reasons Iberdrola became part of the list of unforgivable enemies of President López Obrador.
After the Federal Electricity Commission (CFE), Iberdrola positioned itself as the most significant presence in Mexico. Still, more importantly, after billions of dollars, it managed to position itself as the company with the best energy production capacity in the country. However, its growing capacities and presence in the country were threatening the ever-increasing desire for nationalization of the electricity sector, according to the parameters and deep conviction of President López Obrador.
For Iberdrola, there seemed to be no way to escape the prohibitions imposed by the Energy Regulatory Commission, the fines, and the conflicts. Politically, there was no way to fix the situation without handing over the loot, selling, or losing ownership. Therefore, the operation that involved the sale of the 13 power plants that were previously owned by the Spanish company and which has in itself all the doubts in the world involved also has one particular thing: it is the most brilliant operation made by Iberdrola’s CEO, Ignacio Galán, in the almost twenty years he has been at the helm of the company.
It is difficult to see that a company that developed thanks to its capacity to produce hydroelectric energy was born under the opposition of the majority government of Felipe Gonzalez and, little by little, was positioned as the leading electricity generation company in Spain and with a significant presence in other countries, such as England, where, although it is not the most important energy company, it does have a meaningful participation. It must be acknowledged that Iberdrola has managed to position itself as one of the leading companies in the generation of renewable energies and has managed to place – in the most rational way – the transfer and placement of green energies and everything that involves the optimization of energy production using sustainable methods, on the runway towards the future. But not only that, but Iberdrola has also been a very astute and active company in creating subsidiaries and related companies to gain more market share, which makes it have, after having inherited, exploited, and sold to Siemens its 8% stake in Gamesa for more than one billion euros.
There are many doubts about who will provide the remaining six billion dollars for the transaction. Although it is said that it will be the banks, if one analyzes the current situation and sees how current interest rates are, it will be interesting to see how the Mexican government will make this a purchase that, beyond indebting it, will end up being a good deal. Moreover, it is a reality that Mexico does not have the infrastructure or resources necessary to maintain the quality or quantity of production it had when the purchased plants were in the hands of Iberdrola.
Years will pass, and it is possible that, after López Obrador departs from the National Palace, the electric companies will once again re-privatize the electric sector in Mexico. In any case, it is evident that faced with the impossibility of solving a political problem and the inability to live in terms of modernity and structuring the future energy business, the best thing Iberdrola and its CEO could do was sell and sell well. It is evident that it sold very well. In addition to ceasing to be the bad guy in the movie for the current administration, Iberdrola is still on the map since its investments continue to be significant in the country. Another thing will be when the operation needs to be justified operationally and financially. There will be a need to justify the accounts and why this decision was taken, with all that it entails, and how much the country has been compromised in an operation that seems more politically than economically, financially, or energetically based.
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