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Gas Natural Charges Mexican Commission to Block Bid

Gas Natural Charges Mexican Commission to Block Bid

Despite the fact that it has been awarded similar contracts, Gas Natural Mexico charged last week that Mexico's anti-trust commission will not allow it to participate in an auction for a multi-million dollar natural gas distribution contract. The contract, scheduled to be awarded on June 21 by the Comision Reguladora de Energia (CRE), calls for a $100 million investment in the heavily populated Guadalajara metropolitan area. Nearly 4 million live there, and the Guadalajara contract will be one of the largest issued by the government for natural gas distribution.

Mexico's anti-trust commission, known as the CFC, did not comment, but Gas Natural Mexico, a unit of Spain's Repsol, said that it had been informed of CFC's objection to its contract bid in a letter. Along with Gas Natural Mexico, Tractebel of Belgium and Gaz de France had each submitted bids in April for the contract. An appeals process is permitted by Mexican law, but Gas Natural said it would not ask for a reconsideration.

Even though Gas Natural Mexico may lose out on the Guadalajara contract, it still will hold the strongest presence in the natural gas distribution market in Mexico. Through its Gas Natural Mexico company, Repsol holds permits for natural gas distribution for several geographic zones, including: Toluca, 47,279 users, with an investment of $31.6 million; Monterrey, 557,052 users, with an investment of $220 million; and El Bajio, 72,384 users, with an investment of $27 million. Five other geographic zones in Mexico also are serviced by a Repsol company, for a total of eight of 18 permits issued by the government thus far.

The CRE has defined 21 geographic zones for Mexico's natural gas distribution purposes and issued 18 permits, representing nearly $835 million in investment commitments with coverage for 77 municipalities.

Mexico's Deputy Energy Secretary Mauricio Toussaint said that week that the government, which runs the country's energy industries, has accelerated awarding new licenses to outside power projects to meet the country's growing energy needs. Mexico's electricity industry was nationalized in 1960, but in recent years, it has used energy supply contracts with private companies under cogeneration or independent power producer plans. Toussaint said Mexico has speeded up construction of new power generation plants because energy needs are growing at a rate of nearly 8% a year.

"Our margin of energy reserves is at one of its lowest levels in the past few years," Toussaint said. "We have to speed the process up."

Toussaint said that the Mexican Energy Ministry has called upon the electricity industry to use private investment. "If we do not find the sufficient investment flows to generate more electricity, the growth of the country will be limited."

Carolyn Davis, Houston

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