Mexico's Electricity Reform Not Expected Soon

Tax reform is taking front seat to electricity reform in Mexico, and officials say that hope is fading to change the country's state-run power sector until the next session of congress convenes in September. The current congress adjourns April 30.

President Vicente Fox wants the electricity sector open to more private investments, and has made energy reform a priority of his administration. However, Fox also pushed for fiscal reform, and a battle has loomed in the congress, which is expected to last through the month. The prospect of a delay was expected --- in February, the general director of Mexico's Comision Federal de Electricidad (CFE) told NGI that he was not enthusiastic about an electricity reform package making it through congress this spring (see NGI, March 12; Feb. 19).

CFE General Director Afredo Elias Ayub said for the country to "go from a monopoly to an open market will require changes in the Mexican electricity sector," but he said those changes would not come easily.

Mexico's power plants themselves are not monopoly-owned, and Elias said he was in the United States to encourage more bidders on proposed power plant projects. On tap currently are nine plants this year; six in 2002; eight in 2003 and four more in 2004 to add about 6,000 MW within five years. However, the state still would control power sales. Without secure financing to expand and update Mexico's power sector, the country faces electricity blackouts similar to California's as soon as 2004, according to experts.

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