Investment projects in the Mexican energy sector

The Federal Government has promoted the construction of new infrastructure and the improvement of the existing one in the energy sector, seeking to turn the country into a world-class logistics platform, promoting a balanced regional development, as well as sustainable urban development. Within the electricity sector, it is worth mentioning that plans and schemes are developed in energies such as wind, geothermal, hydraulic, solar and thermal, making the investment, among others, for the design, construction, equipment, installation, operation and maintenance of the equipment needed for these projects.

Investment projects in electricity and energy involve a cycle of planning, identification, structuring, authorization, registration, bidding, financing until the execution thereof. They can be public or private and consist of contracts to form public or private state or federal associations, among others.

Currently, in the different investment sectors, there are 287 projects in operation in Mexico, of which 39 correspond to the electricity sector and the energy subsector.

On the other hand, it is worth mentioning that Mexico is a competitive investment option in energy projects and in other sectors due to its excellent geographic location and wealth in natural resources. However, Mexico is one of the main markets worldwide that has great potential of resources for the generation of energy through renewable sources, particularly hydro, geothermal, wind and solar.

Considering the average age of the Mexican population and considering that more than 130,000 engineers and technologists graduate each year, Mexico has physical human capital and is apt to develop energy projects. Currently, the economy of Mexico is the 2nd largest in Latin America and the 15th in the world, being evidence that Mexico is an attractive destination for private investment in infrastructure. It has been a strategic objective of the Mexican authorities in generating a competitive destination for investment, business development and productivity, offering competitive conditions for the participation of the private sector in the development of infrastructure projects such as:

1. A commitment to public investment on a constant basis;
2. A defined strategy and long-term planning;
3. Diversity and availability of financing sources, both public and private; as well as,
4. A regulatory framework and solid institutions.

The participation of the authorities in charge will depend on the project in question, being able to involve BANOBRAS / Fiduciary FONADIN, Federal Electricity Commission, National Water Commission, Federal Government and / or State Governments, Energy Secretariat, Ministry of the Interior and Ministry of Finance and Public Credit, among others. However, it should be noted that in terms of energy, the Ministry of Energy is the unit of the Mexican Federal Government in charge of controlling, managing and regulating all energy resources in the country and defining the national energy policy, with support from different areas and units. administrative bodies dependent on it, and other bodies of the public administration. The Secretariat also relies on the Clean Energy National Inventory (INEL), which is a public system of statistical and geographic services that collects information on the potential of renewable energies and projects
for the generation of electrical energy from renewable sources. This allows, on the one hand, to identify the proven and probable potential of the energy options, and on the other, to see the georeferenced location of the clean energy generating plants, it includes climate risk maps; protected natural areas and archaeological zones; and document indigenous presence to indicate where a free and informed prior consultation should take place.

In Mexico there are several sources of long-term financing in domestic and foreign currency for infrastructure projects, highlighting the public investment made by the Federal Government. In addition, in recent years, several multilateral development agencies such as the Inter-American Development Bank (IDB), the International Finance Corporation (IFC), the Multilateral Investment Fund (MIF), among others, have supported the development of infrastructure in Mexico. in sustainable, integrating projects that benefit society in general.

Finally, it should be emphasized that Mexico has signed a total of 32 Agreements for the Reciprocal Protection of Investments (APPRI), which encourage the promotion and protection of investment by foreigners in our country and that of Mexicans abroad. This contributes directly to the establishment of a favorable climate for business development, including mechanisms to resolve, through international arbitration, possible disputes that may arise between the two countries participating in an APPRI, in the interpretation or application of said agreement, or between the investor and the country receiving the investment.

Mexico has signed and in force agreements to avoid double taxation with more than 61 countries from all regions of the world, which strengthens commercial and investment relations by standardizing the application of taxes and preventing the duplication of taxes on economic activity between the signatory countries.

Tax Stimuli

Within the current fiscal stimuli in federal taxes, it is considered that it is applicable for companies with activities in the energy sector, as well as the development of energy transmission projects, the stimulation of research and technological development (RTD) projects. , which provides for Article 202 of the LISR, consisting of a tax credit equivalent to 30% of expenses and investments made in RTD, by taxpayers of the ISR in the fiscal year, against the ISR caused in the year by the taxpayer. The tax credit is equivalent to 30% of the amount of RTD expenditures and investments made in the year, which exceed the average of the RTD expenditures and investments made in the previous three years. Said stimulus may not be greater than 50 million pesos per taxpayer.

It is important to note that in order to benefit from the fiscal stimulus, an application must be submitted to the National Council of Science and Technology (CONACYT) (www.conacyt.mx) with prior authorization from the Interinstitutional Committee responsible for granting said stimulus (www.conacyt.mx). general information and that of the investment project in RTD, which is dealt with based on the applicable rules for this (General Rules and in the General Requirements of the Fiscal Stimulus for Research and Develop- ment of Technology). The submitted requests must follow the phases of the corresponding technical evaluation process.

To know in detail how to request the fiscal stimulus, you can contact our offices for one of our advisors to help you.

Mexico is an appealing private investment destination