Mexico's electricity sector is struggling. The previous administration opposed private sector involvement in energy. Now the government wants to change that. But it has not yet built the tools to attract large amounts of private capital.
The Push for Private Capital
They also had a breakfast with representatives from the pension funds, called Afores.
Finance Minister Edgar Amador and President Claudia Sheinbaum are pushing for more private investment. So far, a renewable-energy bidding process completed in June will add 7,411 megawatts of electricity generation capacity. Guillermo Zamarripa, head of the pension-fund association Amafore, said: "Pension savings have a long-term horizon, making them naturally compatible with the financing of well-structured infrastructure projects. This type of investment contributes to diversification while offering reasonable returns. Mexico needs infrastructure investment."
Infrastructure projects often match the long-term liabilities of pension funds, making them a natural investment target. However, the returns must be sufficient to meet the mid-teens expectations of Mexican Afores, which have historically favored lower-risk instruments like government bonds.
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What Pension Funds Want
But they will only invest if returns are attractive.
Pension funds are unlikely to invest in early-stage "greenfield" projects, which carry too much risk. They want a mix of new and established projects.
Macquarie Asset Management has been investing in Mexico for nearly two decades. Its Mexico head, Ernesto Gonzalez, said: "Overall a positive meeting as it gave asset managers the opportunity to speak directly with the government about infrastructure investment. One of the topics that came up was the importance of a framework for engagement. A stable regulatory environment and arbitration process for dispute resolution are essential for attracting and retaining investment needed to drive major infrastructure projects in Mexico."
What to Watch
Finance Ministry officials discussed how the new law could be improved. But questions remain about which types of projects investors will back.
Some positive signs exist: private investment in Mexico's electricity sector has increased. And the government's openness to private investment is a change from the previous administration.
Historical Context
The former administration's hostility toward private involvement in energy led to underinvestment and strained grid reliability. This shift in policy - spurred by President Sheinbaum's team - marks a critical pivot. While the new approval law removes some bureaucratic hurdles, officials acknowledge that dedicated investment structures, such as project-specific funds or public-private partnerships, are still being designed. Without those vehicles, pension funds and global asset managers remain cautious about committing capital to early-stage ventures.
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