01/28 19:12

Mexico faces crunch time over electricity supply, Tellez says

By Michael Christie

MEXICO CITY, Jan 28 (Reuters) - Mexico has reached the moment of truth in ensuring it can meet future electricity needs and must reform its state-dominated energy sector to survive in a competitive world, the nation's energy minister said on Thursday.

Energy Minister Luis Tellez said the government would present constitutional changes to Congress allowing greater private-sector involvement in the electricity sector "in the next days, the next weeks," but it was too early to say what those changes might be.

"There are decisions we cannot delay," Tellez told a U.S.-Mexican conference in Mexico City on the natural gas industry.

"Because in the electricity sector, failing to take decisions implies a shortfall or loss of value in the future. If we don't take decisions today, we'll suffer the loss in the future and in some cases, in the very near future," he added.

The new director of the government's Federal Electricity Commission (CFE), Alfredo Elias Ayub, said on Wednesday the Energy Ministry was working on a proposal that would increase private-sector involvement.

Private investors are already allowed to participate in power generation. But the CFE is the sole electricity retailer allowed under the Constitution. The CFE has begun tendering independent power producer plants (IPP) but companies also have pressed to be allowed to sell electricity directly to clients.

Tellez said the appetite for electricity was expected to increase at least 6 percent a year over the next six years as greater per capita income and industrial growth -- spurred by Mexico's free trade deal with the United States and Canada under Nafta -- boosted demand for energy.

Mexico would need to generate another 13,000 megawatts in capacity, involving some $25 billion in investment in generation, transmission and distribution.

"The challenges we face in electricity are massive," he said. Mexico needs changes in the sector "which will prevent our country from falling behind many other countries of the world, which have begun or concluded and put into operation important changes," in their electricity sectors, Tellez said.

Power generation using natural gas was a fundamental element of those changes.

Later, talking to reporters, the energy minister said it was too early to speculate about whether those changes might imply private-sector involvement in power distribution or anything else in particular.

"We are very close to having a final answer on what is the best way to promote private investment in various areas of the sector," he said. "(But) at this moment, we can't speak about the subject; it's a subject still under discussion."

===================================================== Sounds like y2k is not even on the radar down south.

Ray

-- Anonymous, January 28, 1999

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-- Anonymous, February 01, 1999