Mexico´s state-owned electricity company began accepting bids for a hydroelectric power plant that may cost US$850 million as the country seeks to diversify its electricity supply away from natural gas generation.

The winning bid will be announced in three months, Alfredo Elias Ayub, chief executive officer of the Federal Electricity Commission, said in an interview today on Radio Formula.

The project is part of an effort by President Felipe Calderón to boost spending on infrastructure to create jobs and spur economic growth. Last year, the construction industry expanded 6.9 percent, the highest rate since 1997.

"We want to get started before the first 100 days of the Calderón government," Elias said. "Infrastructure projects are fundamental for the country to be competitive and to generate jobs."

The project, called La Yesca, will generate 750 megawatts of electricity and consists of a 220-meter (722-feet) high dam. La Yesca will take about five years to build and create 10,000 jobs, with many workers from El Cajón, Elias said.

La Yesca is 40 kilometers from El Cajón, a hydroelectric plant with a 186-meter dam that´s about to begin operations in the western state of Nayarit. The commission said today it paid US$525 million to a unit of Empresas ICA SAB, Mexico´s largest construction company, for completing the first part of El Cajón.

CFE, as the federal power company is known, said it raised the money by selling 30-year peso-denominate bonds in the Mexican market and by selling debt to international investors.

The federal company attempted to bid out La Yesca last year and canceled the process because offers were either too expensive or didn´t meet technical specifications. The CFE has relaxed some bidding regulations that will allow Mexican companies to participate without teaming with foreign partners, Elias said.

"This should be good news for the Mexican construction industry," he said.

The CFE is trying to move forward on another hydroelectric project called La Parota in the southern state of Guerrero. That project has been blocked by lawsuits filed by members of small, collective farms in the area.