Mexican power utility CFE seeks US$190mn in arbitration with Iberdrola

Mexico’s state-owned electricity utility CFE is seeking payment of US$190mn from Spanish energy giant Iberdrola as part of an ongoing international arbitration process, according to local media. 

The case dates back to March 2021 and focuses on the Topolobampo III combined cycle plant (pictured) in Sinaloa state.

It is also one of several disputes playing out between the CFE, Mexican authorities and Iberdrola, which saw a long-expected permit for construction of the Merida IV CC plant denied in April, as well as a legal battle over amending permits at Iberdrola’s Dulces Nombres plant in Nuevo León state.

Iberdrola Generación México (IGM) won the contract to build the 697MW CC Topolobampo III plant in March 2017. The company promised to have the plant up and running in 30 months. 

According to the BNamericas project database, IGM said the plant had begun operations in December 2020 and was almost 46% under budget at US$344mn, compared with an initial estimate of US$631mn.

CFE, however, contends that the plant is not yet operational and reportedly asked Iberdrola to pay a US$16mn fine to allow the unit to start operating after the 30-month deadline was reached in September 2019, according to energy news outlet Energy & Commerce. 

While construction at the facility is complete, it has yet to produce power commercially, as the private sector company has yet to receive required documentation to start commercial generation, reported media outlet Expansión, citing anonymous sources.

The arbitration case is one of several underway involving CFE.

According to comments in CFE’s financial reports cited by Expansión, the company is handling 21 international arbitration procedures, though little detail is given other than they are being managed by the company’s attorneys.

“As of the date of the financial statements, we cannot reasonably determine if an adverse final result in these procedures would have a negative effect that generates an increase in the additional provision for litigation,” the results statement reads, according to Expansión.