Changes, Risks for Financing Energy Projects in Mexico

The historic energy reform in Mexico approved in December 2013 is a constitutional reform that fully opens generation and supply within the Mexican electricity and oil and gas sectors. In 2014, most of the implementing legislation and corresponding regulations were issued. During 2015 the new legal framework should be completed, including the corresponding technical standards, model contracts, permit guidelines, administrative guidelines and other detailed rules.

There is no question that this landmark reform will provide significant benefits to the Mexican economy by bringing, among other things, key investments, jobs, new technology, better infrastructure and world-class industry practices. Nevertheless, the overhaul of the Mexican legal framework has established a completely different regulatory environment. Some of these changes have already impacted non-recourse project finance in Mexico. Mexican and foreign banks were very comfortable with the credit rating and risk of the traditional major government off-takers such as Comisión Federal de Electricidad and Petróleos Mexicanos.

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