Mexico's Fox Pushing For Energy Reforms
Mexican President Vicente Fox said that he will push strongly to allow
private investment in the country's state-run electricity commission because
without it, the country will have to practically beg for help from the United
States to meet its energy needs. He insisted, however, at an economic summit
in central Mexico last week that there are no plans to privatize the country's
state-run electricity commission or its state-run oil company.
Without a program to allow more private investment to modernize the country's
energy industry, Fox said that in six years, Mexico "would be almost
on its knees asking the United States to sell us, please, electricity, diesel
fuel, gasoline and natural gas that we don't have."
"These are reforms that cannot be delayed," said Fox of his
proposal to open the power industry to private investment, which would finance
development. He said that the investments would "create better conditions
for accelerated, sustainable growth."
This month, Fox will send a massive tax reform package to the legislature
to simplify the tax system. He also plans to send an energy package, which
will include the private investment changes, but one Mexican official said
recently that the two packages coming at the same time may make the energy
package difficult to pass.
Speaking at the Cambridge Energy Research Associates meeting in Houston
in February, the general director of Mexico's Comision Federal de Electricidad
(CFE), Afredo Elias Ayub, said he was pessimistic that the Mexican Congress
would consider reforming electricity laws at the same time it was reforming
tax laws (see NGI, Feb. 19).
"It will take legal changes to go from a big monopoly to a market
with several generators," Elias said. "We've had some trouble
getting laws approved in Congress that would stop the monopoly." Currently,
Mexico's Congress has three parties, and none holds the majority. In the
past, Mexicans have opposed privatization of any sort.
However, Mexican energy officials estimate that the country will need
about $50 billion in investments to develop more energy infrastructure to
support its growth in the next 10 years (see NGI, Dec.
11, 2000). If new natural gas production does not come on-stream in
Mexico in the next two to three years, the country will have to import more
than half of its gas needs, according to a report from the country's energy
regulator Comision Reguladora de Energia (CRE). The country now imports
about 7% of its gas, mostly from South Texas.
Electric power demand in Mexico is forecast to grow at an annual rate
of 6% in the next 10 years, which will require an annual investment of US$5
billion. However, the existing infrastructure will only last until 2004,
CRE warned, and new investments are necessary to install more generating
capacity and modernize transmission and distribution grids.
Carolyn Davis, Houston