The benefits of the energy reform: Latin Trade Speaks with Pedro Joaquin Coldwell, Secretary of Energy, Mexico.

Author:Ramirez, David
Position::Interview
 
FREE EXCERPT

"The reform is yielding important results."

LT: WHAT ARE THE MOST IMPORTANT ACHIEVEMENTS OF THE ENERGY REFORM SO FAR?

PJC: The reform is yielding important results. Let's take, for example, two contract bids for exploration and exploitation of hydrocarbons, which will leave the Mexican government a minimum of 70 percent of the profits that are produced, which will create about $5.8 billion in investment over the next five years, and which will produce 90,000 barrels of petroleum by 2019.

Another important result from the reform is the expansion of the gas pipeline system. The construction of 9,800 kilometers is now underway, and this will expand the network by 84 percent. There are also some very important advances in the electricity sector. In Mexico, the rates have gone up substantially but now they are falling: by almost 30 percent for industry (which increases its competitiveness!, about 18 percent for business, 8 percent for high consumption users, and 2 percent lower for residential consumption. We expect that with the creation of the electricity market we will generate incentives for more competition and rationalize the rates a bit more. That's one of the major objectives of the reform.

LT: AND HOW IS THE REFORM IN THE ELECTRICITY SECTOR GOING?

PJC: We have the National Development Program for the Electricity Sector ready. It is a 15-year vision of the needs both of the state companies and the private generators. As well, we have completed the bases of the new electricity market and the dispatch office that will operate the national network. This wilt ensure a level playing field for all of the generators.

In addition, we have issued the rules for clean energy certificates, and we are providing important financial incentives: for example, the percent deductibility in investments in machinery and equipment for renewable energy. At the same time, we are converting the old CFE fuel plants for dual use with gas, which will enable us to lower costs and the negative environmental effects.

LT: HOW MUCH INVESTMENT DO YOU EXPECT FROM THE ELECTRICITY REFORM?

PJC: There will be a lot of investment in the electricity sector. In the next few months we will carry out the first long-term auction for basic electricity services and the first open bid in the private sector for high-technology transmission lines. We expect investments of around $40 billion over the next 15 years, mainly in generation. There are segments of the industry that are showing...

To continue reading

FREE SIGN UP