​ATCO moves further into Mexico with US$90 million hydro plant buy

Image: ATCO

Calgary-based ATCO has announced its second significant investment in less than a month in Mexico’s newly liberalized power and energy sectors.

Through its subsidiary, Canadian Utilities Limited, ATCO has entered into an agreement to purchase control of a 35 MW hydroelectric power station in the Gulf of Mexico state of Veracruz.

The company said it has signed a deal with Conduit Capital Partners to acquire Electricidad del Golfo, which owns the hydro station. Conduit is a private equity investment firm focused on the power and energy sectors in Latin America and the Caribbean.

The hydro station, which has been in operation since 2014 and taps its hydro output from the Apatlahuaya River, is backed up by long-term power purchase agreements.

ATCO said the purchase price for the proposed transaction is about US$90 million (including the assumption of about US $26 million of net debt). The transaction is subject to close in the first quarter of 2018.

It was the second significant investment announced by the company in the last month.

In mid-December ATCO announced signed an agreement with Monterrey, Mexico-based CYDSA S.A.B., a large mining and hydrocarbon storage company, to work together to develop midstream opportunities in the country.

ATCO said the initial focus will be on developing underground hydrocarbon storage in salt caverns and depleted reservoirs. In addition, the companies will pursue opportunities in gas gathering and processing, as well as natural gas liquids extraction and fractionation.

ATCO entered the Mexican market in 2014, when it won a contract with the country’s state-owned utility to build a US $50-million natural gas pipeline near the town of Tula in the state of Hidalgo. The company has since won a contract, along with Mexican-based companies, to build a 450 MW gas-fired cogeneration plant at the Miguel Hidalgo refinery owned by state-controlled Petroleos Mexicanos (Pemex).

ATCO said its latest investment in the hydro facility further cements its position in Mexico’s power market, which, as was the case in the oil and gas sector prior to the end of the monopoly of in 2013, was controlled by a state-owned entity.

“The energy sector is changing, and we are playing a key role in enabling that transition for our customers around the world,” ATCO’s Wayne Stensby said in a statement.

“Our existing presence in Mexico affords us invaluable knowledge of the local operating environment, regulatory framework and community relationships, all of which are crucial as we continue to grow our footprint in this diverse and vibrant market.”

ATCO also recently announced it had partnered with RANMAN Energy to develop an innovative distributed power generation solution in the World Trade Centre Industrial Park, located in the fast-growing central Mexican industrial city of San Luis Potosi.