The Mexican state of Oaxaca has the potential to receive as much as $1 billion in investments in renewable energy projects this year as logistical and regulatory hurdles have been resolved, Governor Alejandro Murat Hinojosa said.

The state is going ahead with a $1.2 billion wind farm led by Mitsubishi Group, after protests from local indigenous groups who demanded to be consulted on the plans and financing woes stalled the project for 6 years. Eólica del Sur will be the largest wind farm in Latin America in terms of investment and size, with 132 wind turbines and a total capacity of 396 megawatts. 

“We are working hard to create the right atmosphere to do business,” Murat told LatinFinance during the World Economic Forum on Latin America in Sao Paulo this week. “We are competitive, and we want to make Oaxaca much more competitive, especially in energy and logistics,” he added.

Oaxaca is the heart of the renewable energy boom in the country, and projects are set to keep growing after Mexico pledged to increase renewable energy sources to 30 percent of the total energy mix by 2030 within the UN Agenda for Sustainable Development. 

Mexico’s wide-ranging energy reform, which began in 2013, set out clear rules of consultation procedures, which posed crucial snags in wind farms such as the Mitsubishi project and scared away investors. Murat said that new rules on social investment to provide benefits to affected communities was also a key change in Oaxaca’s business landscape. 

With Oaxaca’s renewable energy growth plan back on track, Murat is focusing on the state’s potential to become a logistics hub. Strategically located between the Gulf of Mexico and the Pacific Ocean, Oaxaca state can become a gateway zone for investors from Asia, Europe, Africa and the Americas, to assemble and transport goods. A special zone status granted by federal decree to the port city of Salina Cruz is also expected to attract investment, as it gives the area tax and labor incentives as well as a more flexible regulatory and customs framework.

One project that’s already in the works is the modernization of the “Transístmico” corridor, combining train, port, highway and airport infrastructure to connect the Gulf and the Pacific through the Isthmus of Tehuantepec, the region with the shortest distance between the two coasts.

“I’ve been contacted by three countries that are leaders in infrastructure investment and who are interested in investing in these projects because it makes a lot of sense,” Murat said, adding there are also “several” private-sector players analyzing the project.

Projects like the logistics corridor don’t depend so heavily on the North American Free Trade Agreement (NAFTA), and Mexico has been working to diversify its trade and business partners, as well as its production sectors, making its economy less dependent on NAFTA and on key industries as oil and auto manufacturing.

Paulo Carreño King, who leads Promexico, the country’s agency to promote direct investment, exports and the expansion of Mexican companies abroad, says the current challenges Mexico faces of dealing with the US government’s nationalistic rhetoric will have positive effects in the medium and long term.

“The arrival of Trump and his nationalistic views and decision to renegotiate NAFTA has actually helped us do our job of pushing businesses and the private sector to look for other markets,” Carreño told LatinFinance during the World Economic Forum in Sao Paulo. “It’s a silver lining, because now other trade partners are looking at Mexico with a renewed interest.”

Carreño also sees the possibility of a victory by left-leaning candidate Andres Manuel Lopez Obrador in presidential elections in July as a natural result of a healthy democracy. Mexico has strong institutions and Lopez Obrador will need to negotiate with Congress any radical changes he proposes to make, said Carreño.

“The election is not really a concern, even if it may affects risk perception in the short term,” he said.