Fox to put energy sector reforms to Mexico’s Congress

15 August 2002 – Mexico’s president Vincente Fox plans to introduce reforms to the country’s constitution, which would allow higher private participation in the energy sector, according to reports in local newspapers.

Fox intends to revamp articles 27 and 28 which establish the government exclusive control of the energy sector but the move is likely to meet with resistance from the opposition Institutional Revolutionary Party, or PRI, and Democratic Revolution Party, or PRD, reject the idea. An attempt by Fox to liberalize the energy sector to allow private generators and cogenerators to sell excess capacity to the Federal Electricity Commission (CFE) last year was rejected by the Supreme Court, which said that only Congress could make those changes.

Reform of the state power industry is a delicate subject in the political arena but Fox insists that without reform, the country will not be able to attract the investment needed to satisfy a growing demand for power.

The reforms would open up the electricity sector and some refining and gas operations to private investors according to local dailies, the proposal will include five major reforms for the energy sector that will require extensive constitutional changes in articles 27 and 28.

The proposal is also expected to include modifications to the legal definition of “public service” for the electricity sector, allowing large consumers, such as industries, to buy power directly from private generators.

Under changes made in the law in 1992, private concerns can generate electricity for their own use, or as independent power producers under contract to the Federal Electricity Commission, the state-owned utility also known as CFE. Cogeneration, which produces power alongside heat such as steam for industrial processes, is also allowed.

Meanwhile, Mexico’s Energy Minister Ernesto Martens has said that new power projects will help cover the country’s electricity needs for the next five years. Generation capacity will rise per cent this year – the largest increase for the past eight years.

Mexico’s power generation capacity is currently around 40 000 MW. The government estimates the country will require 60 000 MW by 2010, with investment needs of $5bn a year. Total investments to be made this year by the Federal Electricity Commission, the state-owned utility also known as CFE, will amount to close to $4 billion, Martens said.

Martens said approved investments for transmission and distribution projects this year rose 200 per cent to about $1.8bn. Next year’s budget is expected to include three cogeneration projects that will boost capacity by 1400 MW with an investment of $1.3bn. Cogeneration produces power alongside heat such as steam for industrial processes.

Fox’s government expects to build 11 power plants until 2006, increasing installed capacity by 6300 MW.

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