Dino Barajas Talks Mexican Energy Reform with SNL

Akin Gump global project finance partner Dino Barajas discussed the energy market in Mexico and the country’s recent proposed power sector reforms with SNL Financial in its article “Mexico's power reforms could have 'unintended' effect on investment, attorney says.”

From the firm’s “The Global Energy Industry: 2014 Mid-Year Energy Briefing,” the article quoted Barajas as saying that as Mexico implements its new power sector reforms, it will need private entities to continue investing and that “the challenge for the private sector is that there is going to be little appetite from the financing community to finance the development of merchant power plants in Mexico.”

In an in-depth interview with the publication, Barajas discussed the following topics, among others:

  • Mexican government’s momentum in implementing the reforms: “They would have been better to focus first on the opening of oil and gas and then at some point in time see how you can push the envelope in terms of power. One of the reasons that they may have done it all at once is they had all the momentum.”
  • Overcoming large commercial and industrial customers delay in signing power purchase agreements: “The challenge is going to be for some of the private investors to get in front of some of the consumers and explain to them the benefits of getting into a long-term PPA for 20 or 25 years as the market is evolving.”
  • Developers’ appeal for the Mexican market: “Mexico is one of the more attractive markets just because it was fairly deep in terms of opportunities. If you didn't get the first or second deal, there was definitely going to be a third, fourth and fifth. In other markets, if you didn't get the first or the second, there weren't any additional opportunities because of limited contracting availability.”
  • Advice to power plant developers: “If I were you, I wouldn't lose momentum. As other new entrants into the market decide to also wait and see how the dust settles, they're going to lose their queue in line and if you continue to move forward with your development, you're going to be that much further ahead of the curve when people realize that there is not going to be a functioning wholesale energy market in the near term.”