South Korean energy and construction firms are gearing up to make inroads into Mexico’s electricity market, which has recently been opened up to private firms.

Following a series of reforms in the sector, Mexican President Enrique Pena Nieto’s administration opened the sector to private investment for the first time in 76 years.

The Mexican government is allowing private entities including foreign companies to take part in the electricity generation and supply market, which was previously monopolized by its public electric utility the Federal Electricity Commission, or the CFE.

The CFE announced that it would invest $4.6 billion to build or renovate power utilities with the aim of reducing power dissipation to 10 percent from a current 15 percent.

By 2018, the CFE will have allocated a total of 16 projects, including eight power transmission and distribution projects and a hydroelectric power modernization project.

Some eight major Korean energy enterprises and builders are already preparing to bid for the 786 MW and 899 MW thermal plant projects, called Noroeste and Noreste and worth more than $1 billion and $1.4 billion, respectively.

POSCO E&C set up a consortium with French energy company GDF SUEZ to focus on the engineering, procurement and construction while the partner firm takes charge of development for the Noroeste project.

“Competition among Korean and foreign companies is heating up over the Mexican electricity market,” said a POSCO E&C official. “We will keep expanding our presence in Latin America with our experience in building thermal plants in Peru and Chile,” he said.

Samsung C&T, Hyundai E&C and Daelim Energy are also eyeing the $1.4 billion Noreste project. The winning bid is expected to be announced in February.

By Park Han-na (hnpark@heraldcorp.com)