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Mexico electricity reforms will remove subsidies

A report in Mexico’s Reforma newspaper on Thursday said that proposals to reform the country’s electricity industry will include the phasing out of price subsidies. The package of measures is due to be put before congress this year.

The government plans to gradually increase tariffs above the rate of inflation according to the Mexico City newspaper.

The plan is to eliminate subsidies in the rates charged by the state-run power companies over a ten-year period. Rates in recent years have been pegged to the underlying rate of inflation in Mexico.

Mexican domestic consumers and agricultural users have been accustomed to heavily subsidized electricity.

The government reforms will be part of an overall shake-up aimed at liberalizing the electricity sector and attracting outside investors. Increases in tariffs can be made without a change in legislation but the removal of subsidies is seen as an integral part of the market-based changes.