Mexico City — Mexico’s state-owned power utility Comisión Federal de Electricidad (CFE) has obtained a loan for $333.6 million from JP Morgan and HSBC to invest in the refurbishment and modernization of seven hydroelectric plants, with the aim of meeting an anticipated increase in demand for electricity driven by companies relocating to the company as part of the nearshoring trend.
The loan has a 15-year term with a five-year grace period and is guaranteed by the World Bank Group’s Multilateral Investment Guarantee Agency, CFE said.
“These projects will contribute with CFE to reduce greenhouse gas emissions, accelerate Mexico’s energy transition and expand CFE’s capacity to meet the growing demand for electricity derived from the nearshoring phenomenon,” the company said.
CFE responded to Bloomberg Línea that the interest rate was SOFR (Secured Overnight Financing Rate) for six months plus a spread of 85 basis points. The New York Federal Reserve detailed that the SOFR reference rate as of June 30 was 5.39064%, according to Bloomberg data.
CFE’s objective is to replace electromechanical and auxiliary equipment such as turbines, electric generators, runners, power transformers and cooling systems with a higher degree of obsolescence and a reduced useful life, and to take advantage of civil works and transmission lines to increase the physical and operating capacity of the plants, extend their life and improve their efficiency and reliability.
The hydroelectric plants to be refurbished are La Villita, Infiernillo, Ingeniero Fernando Hiriart Balderrama (Zimapan), Humaya and Ángel Albino Corzo (Peñitas) in the states of Michoacán, Guerrero, Hidalgo, Sinaloa and Choapas, while Mazatepec and Malpaso, located in Puebla and Chiapas, respectively, will be partially modernized.
The investment will increase electricity generation capacity by 113 MegaWatts (MW) and improve efficiency by 6%, the CFE said.